/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/120615.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, June 15, 2012, Vol. 16, No. 165 Headlines 3D RESORTS-BLUEGRASS: Insurance Lawsuit Goes to Bankruptcy Court 5995 REALTY: Case Summary & Unsecured Creditor 829 REALTY: PD Trust Wants Case Dismissed for Bad Faith Filing 829 REALTY: Court Approves Moritt Hock as Bankruptcy Counsel AB RESORTS: Case Summary & 20 Largest Unsecured Creditors ARCAPITA BANK: Seeks to Hire E&Y Bahrain as Auditor ARCAPITA BANK: Has Interim OK to Hire KPMG UK as Valuation Advisor ARCAPITA BANK: Proposes Aug. 30 as Claims Bar Date ARCAPITA BANK: Creditors Hire Hassan Radhi as Bahraini Counsel ARCAPITA BANK: Committee Hiring FTI as Financial Advisor ARCTIC GLACIER: Posts Notice of Settlement of Class Suit ART APPLIED: Case Summary & 20 Largest Unsecured Creditors AUSTIN DEVELOPMENT: The Shoppes Owner Files for Chapter 11 AUTOPARTS HOLDINGS: Moody's Affirms 'B2' CFR/PDR; Outlook Neg. BAKERS FOOTWEAR: Incurs $1 Million Net Loss in April 28 Quarter BALL GROUND: Schedules Filing Moved Amid Counsel's Family Vacation BBB ACQUISITION: Randy L. Royal Appointed as Plan Administrator BBB ACQUISITION: Consensual Liquidating Plan Wins Confirmation BERNARD L. MADOFF: Investor Calls on 2nd Circ. to Oust Picard BERRY PETROLEUM: Moody's Raises CFR/PDR to Ba3; Outlook Stable BHFS I LLC: Frisco Square Owners File Chapter 11 in Texas BIOVEST INTERNATIONAL: Delays Note Interest Payment Until Nov. BLITZ USA: To Close on July 31; Leaves 117 Workers Jobless BOSTON BIOMEDICAL: Moody's Lowers Rating on Bonds to 'Ba3' BUFFETS INC: Plan Confirmation Hearing Adjourned to June 27 BUNGE LIMITED: Fitch Puts 'BB+' Rating on Preference Shares CANO PETROLEUM: Plan Confirmation Hearing Scheduled for July 16 CAPSTONE AUTO: Case Summary & 20 Largest Unsecured Creditors CDC CORP: China.com Inc. Withdraws 1st Amended Reorganization Plan CHINESEWORLDNET.COM INC: Auditor Raises Going Concern Doubt CIRCLE ENTERTAINMENT: Borrows $450,000 from Directors, et al. CLAIRE'S STORES: James Fielding Named Chief Executive Officer CLAYTON PROFESSIONAL: PNC Bank Can Proceed With Receivership DETROIT, MI: Fitch Junks Ratings on Three Bond Classes DEWEY & LEBOEUF: Ex-Partner Files $7MM Fraud Suit vs. Execs DOUGLAS BATTERY: Judge Aron Converts Case to Chapter 7 Proceeding DVS SHOE: Files Schedules of Assets and Liabilities DYNCORP INTERNATIONAL: Moody's Affirms 'B1' CFR; Outlook Stable DYNEGY INC: May File for Chapter 11 to Carry Out Settlement DYNEGY INC: Affirms Commitment to Morro Bay Power Plant DYNEGY INC: Holdings' Plan Filing Exclusivity Extended to July 16 DYNEGY INC: U.S. Bank Drops Lawsuit After Deal Reached DYNEGY INC: Claren Road Drops Appeal on Access to Docs EASTMAN KODAK: Wants Former Employee's Lawsuit Halted EASTMAN KODAK: Proposes to Hire Deloitte as Tax Adviser EASTMAN KODAK: Proposes to Expand PwC Work EASTMAN KODAK: To Add 40 Jobs at Colorado Plant FIN'L GUARANTY: Regulator Has Pressure Not to Favor Policyholders FREDERICK'S OF HOLLYWOOD: Posts $3.3MM Income in April 28 Qtr. FULLER BRUSH: Intends to Sell Business by August GENERAL AUTO: Won't Have Creditors Committee HAWKER BEECHCRAFT: Committee Taps Akin Gump as Counsel HOUGHTON MIFFLIN: Schedules Filing Extended to July 9 HOUGHTON MIFFLIN: Can Hire Kurtzman Carson as Claims Agent HOUGHTON MIFFLIN: Has Green Light to Hire Paul Weiss as Counsel HOUGHTON MIFFLIN: Moody's Corrects May 31 Ratings Release IL LUGANO: Plan to be Funded by Cash on Hand and Sale Proceeds INFINITE SPIRITS: SHAKERS Vodka Brand to be Auctioned on June 26 INNER CITY: Seeks Extension to File Creditor-Payment Plan INTERLINE BRANDS: Moody's Cuts CFR/PDR to 'B2'; Outlook Stable LI-ON MOTORS: Incurs $241,000 Net Loss in April 30 Quarter LICHTIN/WADE LLC: Bankr. Administrator Wants Confirmation Denied LIGHTSQUARED INC: Theoretically Has Cash Use to November 2013 MSR RESORT: Deloitte Tax OK'd as the Arizona Biltmore Tax Advisor NET ELEMENT: To Merge with Cazador Acquisition NEWLEAD HOLDINGS: PwC Greece Raises Going Concern Doubt NORTHCORE TECHNOLOGIES: Six Directors Elected at Annual Meeting ORAGENICS INC: Intrexon Discloses 26.5% Equity Stake OTERO COUNTY: Plan Outline Hearing Scheduled for June 19 PENINSULA HOSPITAL: Court Okays Foy Advisors as Consultant PENINSULA HOSPITAL: Court Okays Public Liquidation Sale PENINSULA HOSPITAL: Trustee Can Hire Friedman as Zoning Consultant PETTERS CO: Ex-EpsteinBeckerGreen Partner Faces Clawback Suit PHARMACEUTICAL RESEARCH: Moody's Corrects May 31 Ratings Release PRINCE SPORTS: Pachulski Stang Approved as Bankruptcy Counsel PROTEONOMIX INC: Hires Manela as New Accounting Firm PUGET ENERGY: Moody's Rates $450MM Senior Secured Notes 'Ba1' QUAD/GRAPHICS INC: Moody's Affirms 'Ba2' CFR/PDR; Outlook Stable RENAISSANCE CAPITAL: Moody's Lowers LT Issuer Ratings to 'B3' RR DONNELLEY: Moody's Cuts CFR/PDR to 'Ba2'; Outlook Still Neg. SK FOODS: Judge Sends Trustee's Malpractice Suit to District Court SMART BALANCE: Moody's Assigns 'B1' CFR/PDR; Outlook Stable SOLYNDRA LLC: Renews Sale Efforts for Fremont, Calif. Facility SPECTRE PERFORMANCE: Taps Burr Pilger as Tax Accountant SPECTRE PERFORMANCE: Hires Greines Martin to Appeal K&N Action SPECTRE PERFORMANCE: Taps Hopkins-Carley to Prosecute K&N Action SPECTRE PERFORMANCE: Taps Shulman Hodges as General Counsel STOCKTON, CA: Moody's Says Debt Default Likely SUSQUEHANNA AREA: Fitch Affirms 'BB+' $23.3 Million Revenue Bonds TELVUE CORP: Four Directors Elected at Annual Meeting TRIBUNE CO: Fails to Reach Deal With Henke on $100-Mil. Claim TEXASBANC CAPITAL: Fitch Lowers Rating on Preferred Stock to 'BB-' TOWER OAKS: CWCapital Asks Court to Convert Case to Chapter 7 TRIBUNE CO: Valuation Research May Face Litigation TW2 LLC: Case Summary & 20 Largest Unsecured Creditors UNIGENE LABORATORIES: Hires Ashleigh Palmer as CEO UNIVISION COMMUNICATIONS: Fitch Affirms 'B' Issuer Default Rating URBAN WEST: Asks for Dismissal of Chapter 11 Cases VERTIS INC: Moody's Withdraws 'Caa1' Corporate Family Rating VITRO SAB: US Ruling Effectively Precludes Mexican Plan WINLAND ELECTRONICS: Gets Extension to Regain Compliance With NYSE WORLDSPACE INC: Case Converted to Chapter 7 Liquidation XTREME IRON: Heavy Equipment Rental Files for Chapter 11 in Dallas * Moody's Says Anemic Macroeconomic Recovery to Hit US Telcos * Moody's Says Insurance Brokerage Sector Faces Integration Risk * Guggenheim Partners Launches Restructuring Advisory Business * McGlinchey Stafford Taps H. Weinzetl for Fort Lauderdale Office * BOOK REVIEW: Learning Leadership ********* 3D RESORTS-BLUEGRASS: Insurance Lawsuit Goes to Bankruptcy Court ---------------------------------------------------------------- District Judge Thomas B. Russell sent an insurance coverage action commenced by Philadelphia Indemnity Insurance Company against 3D Resorts-Bluegrass, LLC, to the U.S. Bankruptcy Court for the United States District Court, Western District of Kentucky, Owensboro Division, for determination of whether the case constitutes a "core proceeding" within the meaning of 28 U.S.C. Sec. 157(b). The District Court cancelled a telephonic conference scheduled for June 15, 2012. On July 10, 2010, Philadelphia Indemnity filed the insurance coverage action against 3D Resorts-Bluegrass, LLC, and 3D Resort Communities, LLC, stemming from a Feb. 26, 2010 fire loss. The Plaintiff seeks a declaration that the insurance policy it issued to the Defendants does not cover the building damaged by the fire. The Defendants asserted counterclaims against the Plaintiff for breach of contract, negligence, and reformation of an insurance contract. The case is PHILADELPHIA INDEMNITY INSURANCE CO., Plaintiff, v. 3D RESORTS-BLUEGRASS, LLC 3D RESORTS COMMUNITIES, LLC, Defendants, Case No. 3:10-CV-502 (W.D. Ky.). A copy of the District Court's June 12, 2012 Opinion and Order is available at http://is.gd/nEYdX7from Leagle.com. 3D Resorts-Bluegrass, LLC, is represented in the case by Michael A. Fiorella, Esq., and R. Michael Sullivan, Esq., at Sullivan, Mountjoy, Stainback & Miller, P.S.C. 3D Resorts Communities, LLC, filed a Chapter 7 bankruptcy petition (Bankr. W.D. Tex. Case No. 11-53809) on Oct. 31, 2011. 3D Resorts-Bluegrass, LLC, filed a Chapter 7 bankruptcy petition (Bankr. W.D. Tex. Case No. 11-54001) on Nov. 16, 2011. On Dec. 8, 2011, the Texas bankruptcy court converted 3D Bluegrass's case to a Chapter 11 bankruptcy case, ordered the appointment of a trustee, and transferred venue of the case to the Western District of Kentucky. 5995 REALTY: Case Summary & Unsecured Creditor ---------------------------------------------- Debtor: 5995 Realty Corp. P.O. Box 347857 Miami, FL 33234 Bankruptcy Case No.: 12-24336 Chapter 11 Petition Date: June 12, 2012 Court: United States Bankruptcy Court Southern District of Florida (Miami) Judge: Laurel M. Isicoff Debtor's Counsel: Richard R Robles, Esq. LAW OFFICES OF RICHARD R. ROBLES, P.A. 905 Brickell Bay Dr #228 Miami, FL 33131 Tel: (305) 755-9200 E-mail: rrobles@roblespa.com Scheduled Assets: $2,664,577 Scheduled Liabilities: $2,847,628 The Company's list of largest unsecured creditors contains only one entry: Entity Nature of Claim Claim Amount ------ --------------- ------------ Robert & Maritza Loans to Debtor $449,572 Jacobson P.O. Box 347857 Miami, FL 33234 The petition was signed by Robert Jacobson, president. 829 REALTY: PD Trust Wants Case Dismissed for Bad Faith Filing -------------------------------------------------------------- PD Family Credit Shelter Trust asks the U.S. Bankruptcy Court for the Eastern District of New York for (a) an order dismissing the Chapter 11 case of 829 Realty LLC; or, in the alternative, (b) appointing PD Trust as the responsible party for the Debtor; or, (c) appointing a chapter 11 trustee. PD Trust asserts that the case was commenced in bad faith. According to PD Trust, Reuven Finkelstein, along with his family members and their associated entities caused the involuntary petition to be filed in bad faith. To satisfy 11 U.S.C. Sec. 303's requirement that at minimum three creditors join in the involuntary filing, it appears that the Finkelstein Family misrepresented some or all of the other Petitioning Creditors' consent to filing the Involuntary Petition. PD Trust also requests that sanctions be imposed against those members of the Finkelstein Family who commenced the involuntary proceeding in bad faith, including the attorney's fees incurred by PD Trust in conjunction with the bad faith proceeding. About 829 Realty LLC On Feb. 28, 2012, Full Line Hardware, Empire State Supply, Arsh General Construction, and Low Voltage Solutions filed an involuntary chapter 11 petition against 829 Realty, LLC (Bankr. E.D. N.Y. Case No. 12-41415) Bankruptcy Judge Jerome Feller presides over the case. Moritt Hock & Hamroff LLP represents the Debtor in its restructuring effort. The petitioners is represented by Gary F. Herbst, Esq., at Lamonica Herbst and Maniscalco. The Court entered an order for relief on March 30, 2012. No trustee, examiner, or committee of unsecured creditors has been appointed. 829 REALTY: Court Approves Moritt Hock as Bankruptcy Counsel ------------------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of New York authorized 829 Realty, LLC, to employ Moritt Hock & Hamroff LLP as counsel. On Feb. 28, 2012, Full Line Hardware, Empire State Supply, Arsh General Construction, and Low Voltage Solutions filed an involuntary chapter 11 petition against 829 Realty, LLC (Bankr. E.D. N.Y. Case No. 12-41415) Bankruptcy Judge Jerome Feller presides over the case. The petitioners is represented by Gary F. Herbst, Esq., at Lamonica Herbst and Maniscalco. The Court entered an order for relief on March 30, 2012. No trustee, examiner, or committee of unsecured creditors has been appointed. AB RESORTS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: AB Resorts, LLC dba Vaughn LLC dba Atlantic Bay Resorts 160 Sterling Road Tavernier, FL 33070 Bankruptcy Case No.: 12-24290 Chapter 11 Petition Date: June 12, 2012 Court: United States Bankruptcy Court Southern District of Florida (Miami) Judge: Laurel M. Isicoff Debtor's Counsel: Bradley S. Shraiberg, Esq. SHRAIBERG, FERRARA, & LANDAU P.A. 2385 NW Executive Center Dr. #300 Boca Raton, FL 33431 Tel: (561) 443-0801 Fax: (561) 998-0047 E-mail: bshraiberg@sfl-pa.com Scheduled Assets: $2,300,000 Scheduled Liabilities: $3,238,578 A copy of the Company's list of its 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/flsb12-24290.pdf The petition was signed by Robert R. Vaughn, manager. ARCAPITA BANK: Seeks to Hire E&Y Bahrain as Auditor --------------------------------------------------- Arcapita Bank B.S.C.(c) and its debtor-affiliates ask the Bankruptcy Court for authority to employ Ernst & Young in Bahrain as auditor to the Debtors, nunc pro tunc to March 19, 2012. EY Bahrain provides clients with a broad array of services relating to audit and risk, business community training, technology and IT security and transaction advisory services. EY Bahrain's client base includes the Middle East's leading conventional and Islamic banks and financial institution, major companies in the oil and manufacturing sectors, government departments and organizations, and leading hotels. The Debtors have employed EY Bahrain as their auditor since the Debtors' inception around November 1996. EY Bahrain will provide auditing services under the terms of the engagement letters entered into by the Debtors and EY Bahrain prior to the commencement of the Chapter 11 Cases, as well as additional auditing assignments, which will be governed by separate engagements for comparable work, to be entered into by the Debtors and EY Bahrain. EY Bahrain's fees for services performed are charged on a fixed- rate basis, with fees determined on an engagement-by-engagement basis. A summary of the Compensation Arrangement, together with estimates of the fees to be charged by EY Bahrain, estimated on the assumption that EY Bahrain receives appropriate assistance from the Debtors' staff and employees: * ESOP SPV Engagement: 34,500 Bahraini Dinars (approximately $91,425), which is equal to 46 audits at BD750 (approximately $1,988) per audit. * NRAL and AIPL Engagements: BD14,000 (approximately $37,100), which is equal to 28 audits at BD500 (approximately $1,325) per audit. * Istisna'a Engagement: BD10,000 (approximately $26,500). * Investment SPV Engagement: BD750 (approximately $1,988) per audit. EY Bahrain's Tariq Sadiq ascertains that (a) EY Bahrain 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 and as required by Section 327(a) and referenced by section 328(a) of the Bankruptcy Code; and (b) EY Bahrain does not hold or represent an interest materially adverse to the Debtors and their estates, and otherwise meets the standards for employment under the Bankruptcy Code. 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. Houlihan Lokey Capital, Inc., serves as its financial advisor and investment banker. 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: Has Interim OK to Hire KPMG UK as Valuation Advisor ------------------------------------------------------------------ Judge Sean H. Lane issued an interim order permitting Arcapita Bank B.S.C.(c) to employ KPMG UK as valuation advisor. The May 14 edition of the Troubled Company Reporter ran a story on Arcapita Bank's hiring of KPMG as tax consultants and valuation advisors. Informal comments were received from the Office of the United States Trustee for the Southern District of New York. The Official Committee of Unsecured Creditors lodged an objection. The Court will hold another hearing on the matter on June 26. KPMG UK is represented in the case by: Robin Spigel, Esq. Willkie Farr & Gallagher LLP 787 7th Avenue New York, NY 10019 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. Houlihan Lokey Capital, Inc., serves as its financial advisor and investment banker. 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: Proposes Aug. 30 as Claims Bar Date -------------------------------------------------- To formulate a confirmable plan of reorganization and provide accurate disclosure, Arcapita Bank B.S.C.(c) said the Debtors require, among other things, complete and accurate information regarding the nature, validity, number and amount of the claims that will be asserted in the Chapter 11 cases. Accordingly, Arcapita Bank and its affiliated debtors, including Falcon Gas Storage Company, Inc., ask the Bankruptcy Court to fix Aug. 30, 2012, at 5:00 p.m. (prevailing U.S. Eastern Time) as the last date and time that proofs of claim against any of the Debtors may be filed by any party other than governmental units as defined in section 101(27) of the Bankruptcy Code. The Debtors propose Sept. 17, 2012 at 5:00 p.m. (prevailing U.S. Eastern Time), as the Governmental Bar Date. The Debtors also ask the Court to approve the form and manner of notice proposed by the Debtors. They also seek approval of certain methods to provide notice of the Bar Date, including publishing a notice of the Bar Date in The Wall Street Journal (International Edition) and The Financial Times on one occasion at least 28 days prior to the Bar Date. 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. Houlihan Lokey Capital, Inc., serves as its financial advisor and investment banker. 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: Creditors Hire Hassan Radhi as Bahraini Counsel -------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in the Chapter 11 cases of Arcapita Bank B.S.C.(c) and its affiliated debtors seeks permission from the Court to retain Hassan Radhi & Associates as counsel to advise the Committee with respect to all aspects of Bahraini law; advise the Committee on issues related to real estate in the Kingdom of Bahrain owned or leased by the Debtors; attend hearings in any related Bahraini proceedings and monitor other developments (e.g., regulatory, governmental, etc.) with respect to the Debtors and their affiliates in Bahrain. A. Jalil Al Aradi, Esq., a partner at HR&A, attests his firm does not have any connection with or represent any other entity having an interest adverse to the Debtors, their creditors or any other party in interest, or their attorneys, accountants or other professionals. The standard hourly rates charged by HR&A range from $730 to $660 for partners, $560 for counsel, associates and senior attorneys, $450 to $400 for junior attorneys, and $180 for paralegals. 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. Houlihan Lokey Capital, Inc., serves as its financial advisor and investment banker. 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: Committee Hiring FTI as Financial Advisor -------------------------------------------------------- Arcapita Bank's Official Committee of Unsecured Creditors wants permission from the Court to retain FTI Consulting, Inc., together with its wholly owned subsidiaries, agents, independent contractors and employees, as its financial advisor. FTI will be principally responsible for providing to the Committee financial analyses of the Debtors' liquidity, cash activities, cash controls, intercompany activities, as well as tax-related advice, claims analysis and a review of potential avoidance actions. Meanwhile, Houlihan Lokey will be primarily responsible for advising the Committee on the financial and strategic elements of the Debtors' business plan (including assessment of all investments, proposed deal funding, relevant valuations and the viability of a stand-alone plan of reorganization), potential merger and acquisition transactions, and financing alternatives for the Debtors, including exit financing. While both FTI and Houlihan Lokey recognize that it is difficult to predict how these complex cases will proceed, they will undertake to coordinate all of their services to the Committee in order to minimize, wherever possible, any unnecessary duplication of services and any potential burden on the Debtors and their professional advisors. FTI is owed roughly $45,000 with respect to pre-petition fees and expenses. FTI has waived its rights to receive payment. FTI's Samuel E. Star ascertains that his firm does not hold or represent any interest adverse to the estate, and is eligible to represent the Committee under Section 1103(b) of the Bankruptcy Code. FTI professionals will be paid at these hourly rates: Senior Managing Directors $780-895 Directors/Managing Directors 560-745 Consultants/Senior Consultants 280-530 Administrative/Paraprofessionals 115-230 In addition, FTI will seek reimbursement of actual and necessary expenses incurred by FTI as well as indemnification. 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. Houlihan Lokey Capital, Inc., serves as its financial advisor and investment banker. 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. ARCTIC GLACIER: Posts Notice of Settlement of Class Suit -------------------------------------------------------- This notice is to all individuals and entities, wherever they may reside or be domiciled, who purchased Units of Arctic Glacier Income Fund during the period from March 13, 2002 to Sept. 16, 2008. In September 2008, the plaintiffs commenced a class proceeding against Arctic Glacier, Arctic Glacier Inc., and certain officers and directors of Arctic Glacier in the Ontario Superior Court of Justice. The class action arises out of Arctic Glacier's announcement of an investigation by the United States Department of Justice into anti-competitive conduct in the packaged ice industry. Following that announcement, Arctic Glacier suspended its distributions to its unit-holders, and the trading price of the units declined significantly. By order issued March 1, 2011, the Court certified the class action. The Defendants sought leave to appeal the certification order and leave to appeal was granted on Feb. 1, 2012. On Feb. 22, 2012, Arctic Glacier and Arctic Glacier Inc. applied for protection from their creditors pursuant to the Companies' Creditors Arrangements Act in the Court of Queen's Bench for Manitoba and pursuant to Chapter 15 of the United States Bankruptcy Code in the United States Bankruptcy Court of the District of Delaware. Each of these Courts granted orders staying all legal proceedings against Arctic Glacier and Arctic Glacier Inc. for the purpose of permitting them to restructure their affairs. Those orders currently prohibit the commencement or prosecution against Arctic Glacier and Arctic Glacier Inc. and certain of their current or former officers and directors. It is not currently known when or if such stays of proceedings will be lifted. Those proceedings may result in further orders of the Restructuring Courts compromising or extinguishing the claims of Class Members. On June 1, 2012, the Court approved the Settlement Agreement, dated April 25, 2012. The Settlement is a compromise of disputed claims and is not an admission of liability, wrongdoing or fault on the part of any of the Defendants, all of whom have denied, and continue to deny, the allegations against them. The Settlement provides for the payment of CAD$13,750,000 in full and final settlement of the claims of Class Members, including legal fees, disbursements, taxes and administration expenses in return for releases and a dismissal of the class action. The Defendants, members of the immediate families of the Individual Defendants, any officers, directors or employees of the Income Fund or Arctic or any subsidiary of the Income Fund or Arctic, any entity in respect of which any such person has a legal or de facto controlling interest, and any legal representatives, heirs, successors or assigns of any such person or entity, are not permitted to participate in the Settlement. Administration of the Settlement Agreement The Court has appointed NPT RicePoint as the Administrator of this Settlement Agreement. The Administrator will oversee the claims and opt-out processes and will distribute the Settlement Amount. Those Class Members who wish to receive compensation from the Settlement Amount must mail or otherwise submit a completed Claim Form and any supporting documents to the Administrator, no later than Sept. 11, 2012, at the following address: Arctic Glacier Income Fund Securities Litigation Claims Administrator P.O. Box 3355 London, ON N6A 4K3 The Class Members who do not opt out and who file a valid claim will be paid a pro rata share of the balance of the Settlement Amount after payment of fees, expenses, and taxes. The Long Form Notice contains the complete details of the process for filing a Claim Form and how the Settlement Amount will be distributed. All Class Members will be bound by the terms of the Settlement Agreement unless they "opt out." This means that Class Members who do not opt out will not be able to bring or continue any other claim or legal proceeding against the Defendants, or any other person released by the Settlement Agreement in relation to the matters alleged in the class action. If you do not want to be bound by the Settlement Agreement you must opt out. Please note however, that by opting out you will be barred from making a claim and receiving compensation from the Settlement Amount. If you wish to opt out you must submit a fully completed Opt-Out Form along with the documents identified therein to the Administrator, no later than Aug. 13, 2012. If you are considering opting out, you should have specific regard to the impact of the orders which have been or may be made by the Restructuring Courts on your ability to pursue litigation against the Defendants in this action. Those orders may severely limit or eliminate your ability to commence or continue litigation against the Defendants named in this action. ART APPLIED: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: ART Applied Reimbursement Techniques, Inc. dba Applied Reimbursement Techniques fka Applied Reimbursement Technologies, Inc. 739 N. University Blvd., Suite 104 Mobile, AL 36608 Bankruptcy Case No.: 12-02036 Chapter 11 Petition Date: June 12, 2012 Court: United States Bankruptcy Court Southern District of Alabama (Mobile) Debtor's Counsel: Irvin Grodsky, Esq. IRVIN GRODSKY, P.C. P.O. Box 3123 Mobile, AL 36652-3123 Tel: (251) 433-3657 E-mail: igpc@irvingrodskypc.com Estimated Assets: $100,001 to $500,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/alsb12-02036.pdf The petition was signed by Ralph E. Patrick, president/CEO. AUSTIN DEVELOPMENT: The Shoppes Owner Files for Chapter 11 ---------------------------------------------------------- Chris Bagley, staff writer at Triangle Business Journal, reports that Austin Development Group Inc. filed for Chapter 11 bankruptcy reorganization in the U.S. Bankruptcy Court for the Eastern District of North Carolina on June 11. Austin Development Group owns The Shoppes at River Oaks Landing in Garner, North Carolina. The Company listed $1.5 million in debts and $2 million in assets. According to the report, Austin Development identified The Shoppes as its primary asset, and said it owed Capital Bank $1.48 million, secured by the shopping center. The Shoppes generated nearly $160,000 in gross income in each of the last two years. The report says the filing lists Austin's owners as Mark and Elizabeth Simpson of Carolina Beach and Ryan and Kathryn Roberts of Raleigh. The report notes George Mason Oliver, Esq., represents the company. AUTOPARTS HOLDINGS: Moody's Affirms 'B2' CFR/PDR; Outlook Neg. -------------------------------------------------------------- Moody's Investors Service affirmed the ratings of Autoparts Holdings Limited -- Corporate Family and Probability of Default Ratings, at B2. In a related action Moody's affirmed the B1 rating of the company's senior secured first lien bank credit facilities, and the Caa1 rating of the senior secured second lien term loan. The rating outlook was changed to negative from stable. The following ratings were affirmed: Autoparts Holdings Limited: Corporate Family Rating: B2; Probability of Default: B2; Fram Group Holdings Inc./Prestone Holdings Inc./Fram Group (Canada) Inc., as co-borrowers: US$50MM Senior Secured First Lien revolving credit facility due 2016: B1 (LGD3, 38%) US$530MM Senior Secured First Lien Term Loan due 2016: B1 (LGD3, 38%) US$150MM Senior Secured Second Lien Term Loan due 2017: Caa1 (LGD5, 85%) Ratings Rationale The B2 Corporate Family Rating continues to reflect Autoparts' strong competitive market position balanced by the company's high leverage and modest size. The company's operating performance has been adversely impacted by higher costs for a key raw material, ethylene glycol (EG), the recent unseasonably mild winter, and the mild domestic economic recovery. As a result of these pressures, Autoparts' profit margins have deteriorated well below 5% for the LTM period ending March 31, 2012, and debt/EBITDA was well above 6x. Management is addressing these issues through the identification and implementation of additional operational improvements which are expected to result in approximately $91 million of run rate cost savings over the near-term. In addition, the company has announced certain pricing actions to better position its products. Supporting these actions are Autoparts' portfolio of leading brand name aftermarket products, including Fram (auto filters), Prestone (antifreeze & coolant), and Autolite (spark plugs), and favorable long-term trends in the market for automotive aftermarket parts. The negative rating outlook reflects Moody's concern that, even with the benefit of the above mentioned cost saving opportunities, covenant cushions under the bank credit facilities will continue to reduce over the intermediate-term. In addition higher cost pressure on ethylene glycol, a key raw material in antifreeze, is expected to remain as global automotive demand trends remain positive. Autoparts' adequate liquidity profile is anticipated to be maintained over the near-term supported by cash balances and availability under the $50 million senior secured revolving credit facility. As of March 31, 2012, the company had $48 million of cash and cash equivalents on hand. Availability under the revolving credit facility was $31.5 million after $12 million of borrowings and $5.6 million of outstanding letters of credit. Moody's expects Autoparts to be free cash flow positive over the near-term, inclusive of modest required amortization under the first lien term loan. The primary financial covenants under the senior secured facilities include a maximum total leverage ratio, a minimum interest coverage ratio, and a maximum capital expenditure limitation. While Autoparts is expected to remain in covenant compliance over the near-term, covenant cushions are expected to weaken due to the company's recent performance. Alternative liquidity is limited as essentially all of the company's domestic assets secure the bank credit facilities. Future events that could potentially improve the company's outlook or ratings include: improvement in revenues and operating margins through organic growth and debt reduction from free cash flow generation. Consideration for a higher outlook or rating could arise if any combination of these factors were to result in EBIT/Interest approaching 2.5x, and leverage approaching 4.0x. Future events that could drive Autoparts' ratings lower include: a deteriorating liquidity profile; a deteriorating economic environment, or market share losses which would drive lower operating margins. Consideration for a lower rating would result if the company is unable to stabilize operating performance such that EBIT margins improve to 5%, EBIT/Interest improves to above 1.5x, and debt/EBITDA reduces to below 6x. The principal methodology used in rating Autoparts was the Global Automotive Supplier Industry Methodology published in January 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. Autoparts Holdings Limited, headquartered in Lake Forest, IL, is a leading manufacturer of high quality, non-discretionary products for the automotive and heavy-duty aftermarket. The company's brands include FRAM(R), Prestone(R) and Autolite(R). For fiscal year 2011, the Autoparts had sales of approximately $1 billion. The company is owned by an affiliate of Rank Group Ltd, a New Zealand based private equity firm. BAKERS FOOTWEAR: Incurs $1 Million Net Loss in April 28 Quarter --------------------------------------------------------------- Bakers Footwear Group, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $1.05 million on $44.31 million of net sales for the 13 weeks ended April 28, 2012, compared with a net loss of $2.51 million on $47.01 million of net sales for the 13 weeks ended April 30, 2011. The Company's balance sheet at April 28, 2012, showed $41.90 million in total assets, $59.49 million in total liabilities and a $17.59 million total shareholders' deficit. A copy of the Form 10-Q is available for free at: http://is.gd/K1ySIT About Bakers Footwear St. Louis, Mo.-based Bakers Footwear Group, Inc. (OTC BB: BKRS.OB) is a national, mall-based, specialty retailer of distinctive footwear and accessories for young women. The Company's merchandise includes private label and national brand dress, casual and sport shoes, boots, sandals and accessories. The Company currently operates 231 stores nationwide. Bakers' stores focus on women between the ages of 16 and 35. Wild Pair stores offer fashion-forward footwear to both women and men between the ages of 17 and 29. The Company reported a net loss of $10.95 million for the year ended Jan. 28, 2012, a net loss of $9.29 million for the year ended Jan. 29, 2011, and a net loss of $9.08 million for the year ended Jan. 30, 2010. After auditing the Company's financial results for fiscal 2012, Ernst & Young LLP, in St. Louis, Missouri, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred substantial losses from operations in recent years and has a significant working capital deficiency. The Company reported a net loss of $10.95 million on $185.09 million of net sales for the 52 weeks ended Jan. 28, 2012, compared with a net loss of $9.29 million on $185.62 million of net sales for the 52 weeks ended Jan. 29, 2011. Bankruptcy Warning The Company said in the Form 10-K for the year ended Jan. 28, 2012, that if it does not achieve its updated business plan and its margin improvement and cost reduction plan, or if the Company were to incur significant unplanned cash outlays, it would become necessary for the Company to quickly seek additional sources of liquidity, or to find additional cost cutting measures. Any future financing would be subject to the Company's financial results, market conditions and the consent of the Company's lenders. The Company may not be able to obtain additional financing or it may only be able to obtain such financing on terms that are substantially dilutive to the Company's current shareholders and that may further restrict the Company's business activities. If the Company cannot obtain needed financing, its operations may be materially negatively impacted and the Company may be forced into bankruptcy or to cease operations. BALL GROUND: Schedules Filing Moved Amid Counsel's Family Vacation ------------------------------------------------------------------ The Bankruptcy Court gave Ball Ground Recycling LLC until June 21, 2012, to file its schedules of assets and liabilities and statement of financial affairs. The documents were originally due June 8, 2012. The Debtor said its counsel would be out of the state on family vacation the week of June 4 through 8. Therefore, the Debtor and its counsel require an extension of time to complete the Schedules and Statement. Based in Canton, Georgia, Ball Ground Recycling, LLC, filed for Chapter 11 protection (Bankr. N.D. Ga. Case No. 12-63101) on May 25, 2012. Judge Margaret Murphy presides over the case. Herbert C. Broadfoot, II, Esq., at Ragsdale, Beals, Seigler, Patterson & Gray, LLP, represents the Debtor. The Debtor estimated both assets and debts of between $10 million and $50 million. BBB ACQUISITION: Randy L. Royal Appointed as Plan Administrator --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Wyoming approved the appointment of Randy L. Royal as plan administrator for the Consensual Plan of Liquidation proposed by BBB Acquisition, LLC, The Dillard Family Trust u/a/d 8/6/03 and Fifth Third Bank. The Dillard Family Trust, with the consent of Fifth Third Bank and the Debtor, nominated Mr. Royal to act as plan administrator. Pursuant to Article VII of the Plan, the Plan is to be administered by a plan administrator, who will serve without bond. The plan administrator will be a person who has experience and expertise in administering the affairs of Reorganized BBB. According to the Trust, Mr. Royal is a member of the panel of Chapter 7 trustees in the District of Wyoming with extensive experience and expertise required to liquidate the Debtor's assets in the case and to administer the Debtor's assets in accordance with the Plan. Mr. Royal has reviewed the Plan and Disclosure Statement and has agreed to the terms of the plan administrator agreement attached hereto. Mr. Royal's fees for serving as plan administrator will be based on a rate of $250/hour, billed in quarter-hour increments. The Trust represents that Mr. Royal is an independent person with no prior representation or affiliation with the Trust and the Bank has indicated that Mr. Royal is an independent person with no prior representation or affiliation with the Bank, and to the best of their knowledge has no prior professional or personal relationship with the Debtor. About BBB Acquisition, LLC BBB Acquisition, LLC, in Cincinnati, Ohio, is the developer of the Bar-B-Ranch in Teton County, Wyoming. The residential development consists of 16 parcels, each in excess of 35 acres in size, located adjacent to the Snake River. BBB filed for Chapter 11 bankruptcy (Bankr. D. Wyo. Case No. 10-21002) on Aug. 24, 2010. Brent R. Cohen, Esq., at Rothgerber Johnson & Lyons LLP, in Denver, Colorado, represents the Debtor as counsel. The Debtor disclosed $57,239,218 in assets and $35,613,501 in liabilities. BBB ACQUISITION: Consensual Liquidating Plan Wins Confirmation -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Wyoming approved the Disclosure Statement and confirmed the Consensual Plan of Liquidation proposed by BBB Acquisition, LLC, The Dillard Family Trust u/a/d 8/6/03 and Fifth Third Bank. On Jan. 12, 2012, the Court entered an order conditionally approving Disclosure Statement. The Consensual Plan dated Dec. 29, 2011, provides that after approval of the Plan by the Bankruptcy Court, the Plan Administrator will take over operation of the Debtor's business, pay Allowed Administrative Claims, General Priority Claims, Convenience Claims and Noninsider unsecured claims and attempt to sell or otherwise liquidate the Debtor's assets, first by private sale and then by auction if required. The insiders of the Debtor will forfeit any right to payment of their Claims under the Plan and the Members making up the Class 9 Equity Interests in the Debtor will surrender their economic interest in the Debtor and lose their right to manage Reorganized BBB. The Plan designates 7 Classes of Claims and Interests: Class 1. General Priority Claims. Class 2. Secured Claims of Fifth Third Bank Class 3. Claim of the Dillard Trust Class 4. Convenience Claims Class 5. Noninsider Claims Class 6. Insider Claims Class 7. General Unsecured Claims Class 8. Contingent Contractor Claims Class 9. Membership Interests. Classes 1, 4 and 5 are not impaired under the Plan. Accordingly, these Classes will be deemed to have accepted the Plan. Class 2 consists of the secured claim of Fifth Third Bank, which filed a Proof of Claim on Nov. 19, 2010, for $21,300,343. The Allowed Class 2 Claim will bear interest at the rate of 30-day LIBOR plus 2.50% per annum, commencing as of the last date interest was paid current on the Class 2 Claim. Reductions of the amount of the Allowed Class 2 Claim will be made from Net Sale Proceeds of the Fifth Third Collateral. In the event such Net Sale Proceeds are insufficient to fully satisfy the Class 2 Claim, the holder of the Class 2 Claim will be treated as a General Unsecured Claim under Class 7 for the difference between the Net Sale Proceeds from sale of the Fifth Third Collateral and the unpaid balance of the Class 2 Claim. The Class 2 Claim will also be entitled to one-half of any Net Sale Proceeds that exceed the amount required to pay in full all of the Claims under the Plan, but in no event will the amount of such Class 2 Claim exceed the LLW Settlement Payment actually paid to the Plan Administrator. This provision will not apply in the event that the Bank or the Dillard Trust submit a credit bid as provided in Section 7.3(e) of this Plan that is accepted. The Class 3 Claim held by Dillard Trust will be treated and paid as follows: 1. The holder of the Class 3 Claim will retain title to Ranches 1A and 1B free and clear of any interest of BBB, legal or equitable. 2. The holder of the Class 3 Claim will be treated as a General Unsecured Claim under Class 7 for a claim in the amount of $6,000,000. 3. The Class 3 Claim will be entitled to: a) one-half of any Net Sale Proceeds that exceed the amount required to pay in full all of the Claims under the Plan up to the amount of the LLW Settlement Payment, and b) all of such remaining Net Sale Proceeds that exceed the LLW Settlement Payment. This provision will not apply in the event that the Bank or the Dillard Trust submit a credit bid as provided in Section 7.3(e) of this Plan that is accepted. Each holder of a Class 7 Allowed General Unsecured Claim will receive such holder's Pro Rata share of distributions from the Creditor Fund, after payment of Allowed Class 1, 2, 4 and 5 Claims, until paid in full, plus interest at the rate of 4% per annum, calculated from the Petition Date. The right of Allowed Class 7 Claims to distributions is subject to the condition that any funds available to pay such claims will be first remitted to the Dillard Trust, up to the amount of the Administrative Claim Payment actually paid by Mr. Dillard plus interest at 5.00% per annum, with all remaining funds to be distributed Pro Rata to holders of Class 7 Claims. Class 9 consists of the membership interests of members of the Debtor. The holders of Class 9 membership interests will retain no economic interest in the Debtor. Upon the Effective Date, all other rights of Class 9 membership interests will be, and will be deemed to have been, transferred and assigned by the holders of such membership interests to the Plan Administrator, and the holders of Class 9 membership interests will have no right to implement or execute the Plan and no distributions under the Plan. A copy of the Disclosure Statement for the Joint Creditors and Debtor's Consensual Plan of Liquidation is available for free at: http://bankrupt.com/misc/bbbacquisition.doc350.pdf About BBB Acquisition, LLC BBB Acquisition, LLC, in Cincinnati, Ohio, is the developer of the Bar-B-Ranch in Teton County, Wyoming. The residential development consists of 16 parcels, each in excess of 35 acres in size, located adjacent to the Snake River. BBB filed for Chapter 11 bankruptcy (Bankr. D. Wyo. Case No. 10-21002) on Aug. 24, 2010. Brent R. Cohen, Esq., at Rothgerber Johnson & Lyons LLP, in Denver, Colorado, represents the Debtor as counsel. The Debtor disclosed $57,239,218 in assets and $35,613,501 in liabilities. BERNARD L. MADOFF: Investor Calls on 2nd Circ. to Oust Picard ------------------------------------------------------------- Max Stendahl at Bankruptcy Law360 reports that an investor bilked in Bernard L. Madoff's Ponzi scheme asked the Second Circuit on Tuesday to oust Madoff's liquidation trustee, claiming he withheld information about a $220 million sweetheart settlement with a Madoff associate's heirs. According to Bankruptcy Law360, Marsha Peshkin appealed a New York federal judge's Feb. 16 ruling denying her motion to remove Bernard L. Madoff Investment Securities LLC trustee Irving H. Picard. The trustee allegedly concealed material information about a settlement with Madoff associate Norman Levy, a real estate developer who died in 2005. 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. BERRY PETROLEUM: Moody's Raises CFR/PDR to Ba3; Outlook Stable -------------------------------------------------------------- Moody's Investors Service upgraded Berry Petroleum Company's (Berry) Corporate Family Rating (CFR) and Probability of Default Rating (PDR) to Ba3 and upgraded its senior unsecured notes rating to B1. The outlook is stable. This action concludes Moody's review for upgrade, which commenced on April 2, 2012. "The upgrade reflects Berry's high cash margins on production," commented Andrew Brooks, Moody's Vice President. "With oil comprising 73% of first quarter 2012 production, Berry is well placed to take advantage of high oil prices. Accumulated acreage in the Permian ensures that the company has substantial development potential for future oil production growth." Issuer: Berry Petroleum Company Upgrades: Corporate Family Rating, Upgraded to Ba3 from B1 Probability of Default Rating, Upgraded to Ba3 from B1 Senior Unsecured Regular Bond/Debenture, Upgraded to B1 from B2 Multiple Seniority Shelf, Upgraded to (P)B1 from (P)B3 Multiple Seniority Shelf, Upgraded to (P)B2 from (P)Caa1 Multiple Seniority Shelf, Upgraded to (P)B3 from (P)Caa2 Outlook Actions: Outlook, Changed To Stable From Rating Under Review Rating Rationale Berry's Ba3 Corporate Family Rating (CFR) reflects its growing production, its high quality asset base, the extent to which production is dominated by crude oil, which contributes to its strong cash margins, offset by its relatively high debt leverage and modest size. A series of asset acquisitions have increased debt leverage, but diversified Berry's reserve base, supported by its long-lived, positive cash-flowing legacy California crude oil production. Moody's expects Berry's oil production will increase to approximately 75% of its total production in 2012, up from 69% in 2011, a function of its continuing three-basin focus in California, the Permian and the Uinta Basin. Total production in 2012 is expected to average 38,000-39,000 Boe per day, up roughly 8% from 2011, driven by an approximate 20% increase in oil production. Berry has largely mitigated commodity price risk, hedging 70% of its expected 2012 oil production and 40% in 2013. While the company has not hedged its natural gas production, its gas-fired steam requirements for enhanced oil recovery (EOR) in California effectively act as a natural hedge for the bulk of its natural gas production. Berry's 47% Proved Undeveloped Reserves (PUDs) and 21 year Proved Reserve life afford the company substantial drilling upside, minimizing the need for further acquisitions to generate growth. Its Permian Basin acreage is comprised of 71% PUDs at December 31, 2011, where Berry has identified over 450 potential drilling locations and will run a five rig program in 2012. The SGL-2 rating reflects good liquidity through mid-2013. At March 31, 2012 on a pro forma basis, the company had approximately $824 million of availability under its $1.2 billion ($1.4 billion borrowing base) secured revolving credit facility, which matures in May 2016. The pro forma adjustment is the result of Berry's repayment of $350 million of its senior and senior subordinated notes subsequent to quarter-end with the proceeds of March 2012's $600 million senior notes issue. Berry's funds from operations and revolver availability should sufficiently cover capital expenditures and working capital requirements through 2013. The revolving credit facility has one financial covenant - a minimum EBITDAX to interest of 2.75x. There is ample headroom under the covenant and Moody's expects full compliance through 2013. Substantially all of Berry's assets are pledged as collateral for the secured revolving credit facility. The stable outlook reflects growth in Berry's production approaching a sustained level of 45,000 Boe per day in 2013, and the assumption that the company will only moderately outspend cash flow in 2012. An upgrade would be considered if Berry appears able to de-lever to below $30,000 debt to average daily production, and grows production to levels approaching 60,000 Boe per day. A downgrade would be considered should Berry's production fail to grow as projected, resulting in relative debt leverage failing to drop below $40,000 per Boe of average daily production. The B1 rating on the senior unsecured notes reflects both the overall probability of default of Berry, to which Moody's assigns a PDR of Ba3, and a loss given default of LGD5 (74%). Berry's senior unsecured notes are subordinate to its $1.2 billion ($1.4 billion borrowing base) secured revolving credit facility's potential priority claim to the company's assets. The size of the potential senior secured claims relative to Berry's outstanding senior unsecured notes results in the notes being rated one notch below the Ba3 CFR under Moody's Loss Given Default Methodology. The principal methodologies used in rating Berry were the Independent Exploration and Production Industry methodology published in December 2011, and the Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA, published in June 2009. Berry is a mid-sized independent E&P company headquartered in Denver, Colorado. BHFS I LLC: Frisco Square Owners File Chapter 11 in Texas --------------------------------------------------------- BHFS I LLC and its affiliates, owners of the Frisco Square master- planned development in the Dallas suburb of Frisco, filed for Chapter 11 protection June 13 in Sherman (Bankr. E.D. Tex. Case No. 12-41581 to 12-41585). The Debtors own and operate substantial office, retail, and residential rental space at the highly regarded project known as "Frisco Square," in Frisco, Texas. The project has 103,120 square feet of rentable office space in three buildings, 110,395 square feet of retail space in six buildings, including a 12-screen, 41,464 square-foot Cinemark theater, and 114 high-end multifamily rental units in two buildings, all built between 2000 and 2010. Occupancy rates are more than 85% for the office and retail space and almost 95% for multifamily space. The Debtors claim the businesses are profitable, despite the recent severe economic downturn. In addition, the Debtors own approximately 37.5 acres of fully developed office, retail, multifamily, hotel and parking garage development sites. BHFS I estimated assets and debts of $10 million to $50 million. The Debtors owe $48.5 million to senior secured lenders Bank of America and Regions Bank. The Debtors' loans matured in January 2012, and the lenders accelerated all obligations in February 2012. The Debtors have proposed multiple restructuring mechanisms to their senior secured lenders which, due mostly to the lenders' internal disagreements, have not led to any meaningful progress. An inability to refinance their obligations in light of market conditions, and the continued and severe downturn in the commercial real estate markets have led the Debtors to file the Chapter 11 cases to restructure their obligations, reorganize their businesses, preserve going concerns, and maximize the returns for all creditors and stakeholders. At the behest of the Debtor, Bankruptcy Judge Brenda T. Rhoades held an emergency hearing for June 14. First day motions filed by the Debtors include requests to access cash collateral, maintain the prepetition cash management system, and pay employee obligations and benefits. The Debtors are also seeking joint administration of the Chapter 11 cases and an extension of the deadline to file schedules and statements. BIOVEST INTERNATIONAL: Delays Note Interest Payment Until Nov. -------------------------------------------------------------- Biovest International, Inc., and Corps Real, LLC, entered into an Amendment No. 1 to the Plan Secured Promissory Note dated Nov. 17, 2010, in the original principal amount of $3,169,223, payable by the Company to Corps Real. The Note, which has an outstanding balance of approximately $2.3 million as of May 31, 2012, was amended by the Note Amendment to suspend the Company's monthly interest payments under the Note for a three-month period beginning June 1, 2012. Interest that is deferred during that three-month period will become due and payable on the maturity date of the Note, which is Nov. 17, 2012. Except for the suspension of the monthly interest payments, no further amendments were made to the Note. A copy of the amendment is available for free at http://is.gd/yMAnxR About Biovest International Biovest International, Inc. -- http://www.biovest.com/-- is an emerging leader in the field of active personalized immunotherapies. In collaboration with the National Cancer Institute, Biovest has developed a patient-specific, cancer vaccine, BiovaxID(R), with three clinical trials completed, including a Phase III study, demonstrating evidence of safety and efficacy for the treatment of indolent follicular non-Hodgkin's lymphoma. Headquartered in Tampa, Florida, with its bio-manufacturing facility based in Minneapolis, Minnesota, Biovest is publicly- traded on the OTCQB(TM) Market with the stock-ticker symbol "BVTI", and is a majority-owned subsidiary of Accentia Biopharmaceuticals, Inc. (OTCQB: "ABPI"). Biovest, along with its subsidiaries, Biovax, Inc., AutovaxID, Inc., Biolender, LLC, and Biolender II, LLC, filed for Chapter 11 bankruptcy protection (Bankr. M.D. Fla. Case No. 08-17796) on Nov. 10, 2008. Biovest emerged from Chapter 11 protection, and its reorganization plan became effective, on Nov. 17, 2010. In its audit report for the fiscal 2011 financial statements, CHERRY, BEKAERT, & HOLLAND L.L.P., in Tampa, Fla., expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company incurred cumulative net losses since inception of approximately $161 million and cash used in operating activities of approximately $4.6 million during the two years ended Sept. 30, 2011, and had a working capital deficiency of approximately $2.2 million at Sept. 30, 2011. The Company reported a net loss of $15.28 million on $3.88 million of total revenue for the year ended Sept. 30, 2011, compared with a net loss of $8.58 million on $5.35 million of total revenue during the prior year. The Company's balance sheet at March 31, 2012, showed $5.14 million in total assets, $41.81 million in total liabilities and a $36.66 million total stockholders' deficit. BLITZ USA: To Close on July 31; Leaves 117 Workers Jobless ---------------------------------------------------------- Wally Kennedy at the Joplin Globe reports that Blitz USA will close on July 31, putting 117 employees out of work. "This is a sad day in the 46-year history of Blitz and for our 117 employees," the report quotes Rocky Flick, president of the company, as stating. "We appreciate the support of our employees and their families in our efforts to reorganize and develop a viable business plan. Unfortunately, we were not able to address the costs of the increased litigation associated with our fuel- containment products." According to the report, Amanda Emerson, external affairs manager for Blitz USA, said the company is facing numerous lawsuits with regard to its portable fuel containers. The company has spent $30 million defending product-liability suits and owes $3.5 million in lawyer fees. The report relates the company had hoped the Chapter 11 bankruptcy would help it find a solution for its litigation and insurance costs. The report says Blitz has begun efforts to market its business and its remaining assets for sale. The sale process, which likely will take three months, is subject to approval by the bankruptcy court. The statement released by the company said it is premature to say whether the sale will be successful or if it will allow the resumption of manufacturing activities in Miami. Blitz U.S.A. Inc., is a Miami, Oklahoma-based manufacturer of plastic gasoline cans. The company, controlled by Kinderhook Capital Fund II LP, filed for bankruptcy protection to stanch a hemorrhage resulting from 36 product-liability lawsuits. Parent Blitz Acquisition Holdings, Inc., and its affiliates filed for Chapter 11 protection (Bankr. D. Del. Case Nos. 11-13602 thru 11-13607) on Nov. 9, 2011. The Hon. Peter J. Walsh presides over the case. Blitz USA disclosed $36,194,434 in assets and $41,428,577 in liabilities in its schedules. Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, represents the Debtors in their restructuring efforts. The Debtors tapped Zolfo Cooper, LLC, as restructuring advisor; and Kurtzman Carson Consultants LLC serves as notice and claims agent. Lowenstein Sandler PC from Roseland, New Jersey, represents the Official Committee of Unsecured Creditors. The Chapter 11 case is financed with a $5 million secured loan from Bank of Oklahoma. Bank of Oklahoma, as DIP agent, is represented by Samuel S. Ory, Esq., at Frederic Dorwart Lawyers in Tulsa. In April 2012, Hopkins Manufacturing Corp. acquired the assets of Blitz USA's unit, F3 Brands LLC, a major manufacturer of oil drains, drain pans, lifting aids and automotive ramps. Blitz USA said in court documents the sale netted the Debtors $14.6 million, which was applied against secured debt. BOSTON BIOMEDICAL: Moody's Lowers Rating on Bonds to 'Ba3' ---------------------------------------------------------- Moody's Investors Service has downgraded Boston Biomedical Research Institute's (BBRI or Institute) rating on the Series 1999 bonds to Ba3 from Ba1. The rating action impacts $12.9 million of rated debt. The bonds were issued through the Massachusetts Development Finance Agency. The rating remains under review for possible further downgrade. Moody's expects to conclude Moody's next review of the rating in the next few months. Moody's review will focus on updated FY 2012 financials and financial covenants and FY 2013 budget. Summary Ratings Rationale The rating downgrade to Ba3 reflects a significant decline (25%) in the Institute's operating revenue during FY 2012, unusually high endowment draws and a long-term decline in cash and investments. The rating remains on review for further potential downgrade. Challenges * Significant multi-year operating deficits, by Moody's calculation. The institute is expecting to have operating deficit in FY 2012, the seventh consecutive year of imbalanced operations * Deteriorating financial resources relative to debt and operations due to multiyear operating deficits, investment losses, and elevated endowment draws. The FY 2011 expendable financial resources at $6.7 million was down 61% from FY 2007 level. The deterioration of financial resources is particularly concerning as the institute anticipates an unusually high endowment draw of 21% in FY 2012, up from 8% in FY 2011. * Heavy dependence on grants and contracts (87.8% of operating revenue in FY 2011), with federal funding representing the bulk of research funding. With the current slowdown in federal research funding, BBRI's grant and contract revenue is projected to decline by approximately $3 million to $8.5 million in FY 2012. * Breach of the debt service coverage covenant contained within the Loan and Trust Agreement. In 2009 and 2010, BBRI did not meet the debt service coverage covenant (FY 2009: negative 260% and FY 2010: 74% as compared to 110% required). Based on projections for FY 2012, BBRI will not meet this covenant and will hire a financial consultant, as required per the Agreement. The Institute has met the liquidity ratio covenant within the Loan and Trust Agreement (FY 2009: 70.5% FY 2010: 69.2%, and FY 2011:72.5% as compared to 50% required) and expects to meet this covenant for FY 2012. * Very small scale of operations ($12.8 million revenue base in FY 2011) and limited fundraising support ($488,000 of annual gift revenue in FY 2011). Strengths * Liquid financial resource base (75% of financial resources are expendable) provides some financial flexibility, coupled with all fixed-rate debt structure. * Expansion of the board of trustees, adding new members who bring scientific and technology transfer expertise. * Debt service reserve fund, security interest in gross receipts, and first mortgage on the research facility provide some additional bondholder security. What Could Make the Rating Go Up A rating upgrade is highly unlikely in the intermediate term. In the long term, significant growth in liquidity, coupled with strengthening of operating performance and revenue diversification. What Could Make the Rating Go Down The rating could be downgraded in the event that the institute does not demonstrate significant progress towards improving its operating performance, including revenue growth and diversification and significant expense containment. In addition, borrowing without commensurate growth of financial resources and continuation of elevated endowment draws could result in a downgrade. Principal Methodology Used The Rating was assigned by evaluating factors believed to be relevant to the credit profile of Boston Biomedical Research Institute, such as i) the business risk and competitive position of the issuer versus others within its industry or sector, ii) the capital structure and financial risk of the issuer, iii) the projected performance of the issuer over the near to intermediate term, iv) the issuer's history of achieving consistent operating performance and meeting budget or financial plan goals, v) the nature of the dedicated revenue stream pledged to the bonds, vi) the debt service coverage provided by such revenue stream, vii) the legal structure that documents the revenue stream and the source of payment, and viii) and the issuer's management and governance structure related to payment. These attributes were compared against other issuers both within and outside of the Institute's core peer group and the rating is believed to be comparable to ratings assigned to other issuers of similar credit risk. BUFFETS INC: Plan Confirmation Hearing Adjourned to June 27 ----------------------------------------------------------- The Hon. Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware adjourned the hearing scheduled for June 13, 2012, to June 27, at 1 p.m., to consider the confirmation of Buffets Inc., et al.'s Amended Plan of Reorganization. As reported in the May 8 edition of the Troubled Company Reporter, the plan requires the company to close more units as it tries to rebuild traffic. The plan calls for a $50 million first-lien exit facility, of which $35 million would be drawn at the time of the exit as a term loan. The company plans to increase its capital expenditures in fiscal year 2013 to start turning around traffic at remaining units. Buffets expects that it would emerge from bankruptcy with 398 company-owned units, comprising 170 Ryan's locations, 217 Old Country Buffet or HomeTown Buffet units, and 11 Tahoe Joe's restaurants. The plan, as revised to gain the support of the official creditors' committee, provides that unsecured creditors will receive a recovery of 6% to 9% on $44.6 million in claims. Before the change, unsecured creditors were to receive nothing. There will be a trust for unsecured creditors that will pursue lawsuits and be funded with at least $4 million. First-lien lenders are to receive the new stock in return for $251.8 million owing on the existing first-lien facility. About Buffets Inc. Buffets Inc., the nation's largest steak-buffet restaurant company, operates 494 restaurants in 38 states, comprised of 483 steak-buffet restaurants and 11 Tahoe Joe's Famous Steakhouse(R) restaurants, and franchises 3 steak-buffet restaurants in two states. The restaurants are principally operated under the Old Country Buffet(R), HomeTown(R) Buffet, Ryan's(R) and Fire Mountain(R) brands. Buffets employs 28,000 team members and serves 140 million customers annually. Buffets Inc. and all of its subsidiaries filed Chapter 11 petitions (Bankr. D. Del. Lead Case No. 12-10237) on Jan. 18, 2012, after it reached a restructuring support agreement with 83% of its lenders to eliminate virtually all of the Company's roughly $245 million of outstanding debt. In its schedules Buffets Inc. disclosed $384,810,974 in assets and $353,498,404 in liabilities. The Debtors are seeking to reject leases for 83 underperforming restaurants. Buffets had 626 restaurants when it began its prior bankruptcy case (Bankr. D. Del. Case Nos. 08-10141 to 08-10158). It emerged from bankruptcy in April 2009. Higher gasoline and energy costs, along with a decline in guest count, have hampered the Debtors' ability to service their long- term debt and caused a liquidity strain, forcing the Company to return to Chapter 11 bankruptcy. In the new Chapter 11 case, Buffets Inc.'s legal advisors are Paul, Weiss, Rifkind, Wharton & Garrison LLP and Young, Conaway, Stargatt & Taylor, LLP. The Company's financial advisor is Moelis, Inc. Epiq Bankruptcy Solutions LLC serves as claims, noticing and balloting agent. An ad hoc committee of secured lenders is represented by Willkie Far & Gallagher LLP and Blank Rome LLP as counsel and Conway, Del Genio, Gries & Co. as financial advisors. Credit Suisse, as DIP Agent and Prepetition First Lien Agent, is represented by Skadden Arps Slate Meagher & Flom as counsel. The U.S. Trustee has appointed a 5-member Official Committee of Unsecured Creditors in the Debtors' cases. In March 2012, Buffets Inc. received court approval for an incentive bonus program that may pay as much as $2.3 million to executives if cash flow targets are met. There was an April 30 hearing schedule on another program to pay bonuses for a successful sale of the business that could cost $2.7 million. In April 2012, Buffets Inc. filed an amended bankruptcy exit plan that proposes to pay $4 million to a pool of unsecured creditors who are owed more than $44 million. Unsecured creditors are expected to recover about 9% of their claims. BUNGE LIMITED: Fitch Puts 'BB+' Rating on Preference Shares ----------------------------------------------------------- Fitch Ratings has assigned a 'BBB' rating to Bunge Limited Finance Corp.'s (BLFC) proposed $400 million senior unsecured notes due 2017. The notes will be fully and unconditionally guaranteed by BLFC's parent company, Bunge Limited (together, Bunge). The Rating Outlook is Negative. Debt Issuance Details: Fitch expects Bunge to utilize net proceeds from this issuance toward general corporate purposes including the repayment of upcoming debt maturities. The notes contain a Change of Control Triggering Event. Upon the occurrence of a both a change of control and ratings downgrades below investment grade, the company is required to repurchase the notes at 101% of principal plus accrued interest. The notes will be issued under a new indenture that will contain certain limitations on liens, sale/leasebacks and mergers. Rating Drivers: Bunge's ratings are supported by the company's position as the world's leading oilseed processor and by modest diversification from its food and ingredients business. Bunge's largest segment, Agribusiness, is also its most stable on an annual basis, generating $1 billion or more of EBITDA in each of the past five years. A long-term favorable agribusiness outlook, driven by growing protein consumption in developing countries and higher demand for biofuels, is also a key rating factor. Fitch expects ample liquidity to support Bunge's ratings through periodic earnings volatility and heightened working capital usage that are characteristic of agricultural commodity cycles. Bunge's borrowings increase during periods of rising commodity prices to finance working capital. Negative Outlook: While Bunge's operating performance improved significantly in 2011, Fitch is maintaining the Negative Outlook in order to ascertain the sustainability of the performance improvement trend. Fitch remains cautious, given Bunge's earnings volatility and lack of earnings visibility. The company's high capital expenditures in relation to its cash generation also remain a concern as Bunge has not been able to consistently generate positive free cash flow (FCF; cash flow from operations less capital expenditures and dividends), even excluding working capital swings. The $1.4 billion Moema sugar mills acquisition in Brazil in 2010 was expected to provide diversification after the divestiture of the company's Brazilian fertilizer nutrients business, but so far has trailed expectations with disappointing performance. Sugar & Bioenergy and the remaining retail fertilizer business have yet to materially contribute to Bunge's earnings, although improvement is anticipated in 2012. Guidelines for Further Rating Actions: Fitch could revise the Outlook to Stable if Bunge's earnings show stability and growth on an annual basis in 2012 versus 2011 and unadjusted leverage (total debt to EBITDA) in the mid-2 times (x) to 3x range appears achievable during most years. The first quarter, which is seasonally slow, had weaker operating performance than Fitch had anticipated. However, the large North American crops expected in the fall of 2012 and increased sugarcane milling volumes in Brazil should lead to strong second half earnings in 2012. If Bunge can demonstrate that its sugar business is on track to generate EBIT of more than $100 million in 2012, this would also support a Stable Outlook. That level of earnings would be a significant improvement from the negative $20 million Sugar & Bioenergy segment EBIT in 2011, and demonstrate progress toward the generation of annual segment EBIT greater than $150 million in future years. Fitch could implement a negative rating action if Bunge's EBITDA generation of $1.7 billion in 2011 proves to be unsustainable, or if the company engages in a large, debt-financed acquisition, leading to a material increase in unadjusted leverage. The ratings could also be pressured if FFO is insufficient to cover Bunge's capital expenditures and dividends and results in material incremental borrowing. Any negative rating action is likely to be limited to a one notch downgrade. Cash Flow and Liquidity: In 2011, Bunge's FCF was $1.3 billion, a significant improvement from a $3.7 billion deficit in 2010 which was driven by working capital needs due to escalating agricultural commodity prices and inventories. For the first quarter ending March 31, 2012, FCF swung negative again, to a deficit of $581 million, due to working capital usage. Although Fitch believes high agricultural commodity prices are likely to remain, driven by solid long-term global demand, working capital could become a source of funds if commodity prices experience even a moderate pullback. Correspondingly, if commodity prices stabilize at heightened levels, working capital usage should flatten out. Bunge has $3.4 billion of committed liquidity including a $600 million fully backstopped liquidity facility for its commercial paper (CP) program, a $1.75 billion revolving credit facility due in April 2014 and a $1 billion revolving credit facility expiring in November 2016. As of March 31, 2012, the company did not have any CP outstanding and it had a total of $2.1 billion available under its committed facilities. The credit facilities contain certain financial covenants. Bunge is in compliance with its financial covenants. Adjustments for Liquid Inventories: Bunge's liquidity includes its agricultural commodity inventories such as soybeans, soybean oil, soybean meal, corn, wheat, sugar, etc., classified as readily marketable inventories (RMI). Commodities that fall into the RMI classification, which are very liquid due to widely available markets and international pricing mechanisms and generally hedged, provide an important source of liquidity for agribusiness companies. RMI was $4.2 billion at March 31, 2012, factoring Fitch's 10% discretionary 'haircut' to Bunge's reported RMI. In addition to evaluating traditional credit measures, Fitch's analysis of agribusiness companies considers leverage ratios that exclude debt used to finance RMI. Interest expense on debt used to finance RMI is reclassified as 'cost of goods sold' and thus is excluded from interest expense. Fitch utilizes significant discretion in these calculations. With the adjustments described above, Bunge's total debt/operating EBITDA was 1.0x for the latest 12 months ended March 31, 2012. Unadjusted total debt (with 50% equity credit for the $690 million convertible preference shares) to operating EBITDA was 3.5x, operating EBITDA to gross interest expense was 5.1x and FFO fixed charge coverage was 3.5x for the same period. Unadjusted leverage is high for the rating level but should improve with stronger second half 2012 earnings. Total debt with equity credit increased $1.2 billion to $5.6 billion at March 31, 2012 from Dec. 31, 2011, primarily due to higher working capital. Upcoming Maturities: Bunge's debt maturities include $300 million of senior unsecured notes due in May 2013 and a $300 million term loan due in December 2013. Beyond these maturities, Bunge also has $570 million of debt coming due in 2014. Fitch currently rates Bunge and its subsidiaries as follows: Bunge Limited -- Long-term Issuer Default Rating (IDR) 'BBB'; -- Preference shares 'BB+'. Bunge Limited Finance Corp. (BLFC) -- Long-term IDR 'BBB'; -- Senior unsecured notes 'BBB'; -- Senior unsecured term loans 'BBB'; -- Senior unsecured credit facilities 'BBB'. Bunge Finance Europe B.V. (BFE) -- Long-term IDR 'BBB'; -- Senior unsecured credit facilities 'BBB'. Bunge N.A. Finance L.P. (BNAF) -- Long-term IDR 'BBB'; -- Senior unsecured notes 'BBB'. The Rating Outlook is Negative. CANO PETROLEUM: Plan Confirmation Hearing Scheduled for July 16 --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas will convene a hearing on July 16, 2012, at 9 a.m., (prevailing Central time), to consider the confirmation of Cano Petroleum Inc., et al.'s Second Amended Plan of Reorganization dated May 30, 2012. Objections, if any, are due July 6, at 5 p.m. The confirmation hearing will be combined with (a) an evidentiary hearing to consider the sale of the property and approval of the successful bid relating to the transaction and (b) an evidentiary hearing on any objections raised to the assumption or rejection of any "desired 365 Contract." Ballots accepting or rejecting the Plan will be due July 6, at 5 p.m. Ballots must be addressed to: By hand delivery or overnight mail at: BMC Group, Inc. Re: Cano Petroleum, Inc. 18675 Lake Drive East Chanhassen, MN 55317 By first class mail at: BMC Group, Inc. Re: Cano Petroleum, Inc. P.O. Box 3020 Chanhassen, MN 55317-3020 According to the Second Amended Disclosure Statement, the primary purpose of the Plan is to facilitate the restructuring of the Debtors pursuant to the Purchase and Sale Agreement. A reorganization strategy other than a sale, is not possible given the position taken by various creditors of the Debtors, the lack of availability in the credit markets, and the Debtors' inability to sustain operations given their current cash balances. The Plan is structured to enable the Debtors to facilitate a flexible transaction which is expressly subject to a process to solicit higher or better offers for the Debtors' assets and equity interests. Additionally, the Plan contemplates the creation of a Liquidating Trust to liquidate certain Liquidating Trust Assets and distribute any remaining funds (after the payment of Allowed Plan Carve Out Claims), in accordance with the Plan. The Plan proposes these recoveries for these creditors: Claims/Interest Estimated Range Estimated Percentage --------------- of Allowed of Recovery Claims/Interests -------------------- ---------------- Senior Secured Claims $60,756,864 Unknown until the auction is complete UBE Junior Secured Unknown until the Claims $16,567,376 auction is complete Miscellaneous Secured Claims $0 - $150000 100% General Unsecured $2,000,000 - 4% - 14% Claims $5,000,000 Intercompany Claims $0 0% Royalty Claims $0 100% Preferred Stock $0 0% Interests 0% A full-text copy of the Second Amended Disclosure Statement is available for free at: http://bankrupt.com/misc/CANO_PETROLEUM_ds_2amended.pdf About Cano Petroleum Cano Petroleum, Inc. (NYSE Amex: CFW), an independent Texas- based energy producer with properties in the mid-continent region of the United States, filed for Chapter 11 bankruptcy (Bank. N.D. Tex. Lead Case No. 12-31549) on March 7, 2012. Other affiliates also sought bankruptcy protection: Cano Petro of New Mexico, Ladder Companies, Inc., Square One Energy, Inc., Tri-Flow, Inc., W.O. Energy of Nevada, Inc., W.O. Operating Company, Ltd., W.O. Production Company, Ltd., and WO Energy, Inc. The cases are jointly administered. The Debtors filed for bankruptcy to pursue a sale under a joint plan of reorganization filed on the petition date. Cano Petroleum have entered into a Stalking Horse Stock Purchase Agreement with NBI Services Inc., pursuant to which NBI would purchase all of the shares of common stock that would be issued by Reorganized Cano under the Plan for $47.5 million. The deal is subject to higher and better offers and a possible auction. The petitions were filed by James R. Latimer, III, chief executive officer. Judge Barbara J. Houser oversees the case. The Debtors are represented by lawyers at Thompson & Knight LLP, in Dallas Texas. Cano Petroleum's consolidated balance sheet at Sept. 30, 2011, showed $63.37 million in total assets, $116.25 million in total liabilities, and a $52.88 million total stockholders' deficit. In schedules filed with the Court, Cano Petroleum disclosed $1.16 million in assets and $82.5 million in liabilities. Union Bank of California, the administrative agent and issuing lender under the Debtors' prepetition senior credit facility; and UnionBanCal Equities, Inc., the administrative agent and issuing lender, under the junior credit facility, are represented by: William A. "Trey" Wood III, Esq., at Bracewell & Giuliani LLP. CAPSTONE AUTO: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Capstone Auto Group, Inc. dba Smith Ford P.O. Box 615 Crawford, GA 30630 Bankruptcy Case No.: 12-30860 Chapter 11 Petition Date: June 12, 2012 Court: United States Bankruptcy Court Middle District of Georgia (Athens) Debtor's Counsel: Todd E. Hennings, Esq. MACEY, WILENSKY, KESSLER & HENNINGS, LLC 230 Peachtree Street, N.W., Suite 2700 Atlanta, GA 30303-1561 Tel: (404) 584-1200 Fax: (404) 681-4355 E-mail: thennings@maceywilensky.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/gamb12-30860.pdf The petition was signed by M. Daniel Smith, president. CDC CORP: China.com Inc. Withdraws 1st Amended Reorganization Plan ------------------------------------------------------------------ China.com, Inc., notified the U.S. Bankruptcy Court for the Northern District of Georgia that it has withdrawn its (i) First Amended Plan of Reorganization and the explanatory Disclosure Statement for CDC Corporation. As reported in the Troubled Company Reporter on May 21, 2012, CDC's official committee of equity security holders filed with the Court an objection to China.com's First Amended Disclosure Statement for it First Amended Plan. The committee asserted, "Instead of a beneficial interest in a liquidation trust as proposed under the Joint Plan, under the China.com Plan Equity Holders will be given an option to receive either (a) a pro rata distribution of shares in the Reorganized Debtor, or (b) to exchange such shares in the Reorganized Debtor for 'a portion of the Cash Election Software Distribution corresponding to the value of the Reorganized Debtor Shares being so exchanged' . . . The Disclosure Statement does not explain how the 'value' of the Reorganized Debtor Shares being so exchanged will be determined." CDC also filed an objection to the Disclosure Statement, explaining, " . . . the First Amended China.com Disclosure Statement does not contain adequate information within the meaning of Section 1125 of the Bankruptcy Code." The TCR reported on April 27, 2012 CDC shareholder China.com's filing of a First Amended Plan. "Under the CRO/EC Plan, the CRO and Equity Committee propose to liquidate the remaining assets of the Debtor. However, there is a significant risk that the CRO and the Equity Committee will not be able to realize full value and therefore deliver such value when such assets are liquidated in a distressed sale. China.com believes such assets have substantial value as going concern businesses. Under the China.com Plan, those Holders that participate in the Cash Election option will receive a fixed amount of cash for their shares that are included in the Cash Election. There is a risk that the value received under the Cash Election option will be less than the value such Holder would receive under the CRO/EC Plan. On the other hand, retaining an interest in the Reorganized Debtor as provided under the China.com Plan, would give such Holders the ability to receive greater value than under the CRO/EC Plan if the Reorganized Debtor successfully reorganizes and grows its businesses. The CRO/EC Plan seeks to liquidate the Debtor and its subsidiaries, proposing that Holders agree to receive a cash distribution of an unknown amount and at uncertain times. The Plan Proponent submits that the China.com Plan maximizes the value of the Debtor's Estate and is in the best interests of the Holders of Claims and Interests, and that any alternative to Confirmation of the China.com Plan would result in significant delays and additional costs to the Debtor and its Estate," according to the Disclosure Statement obtained by BankruptcyData.com. About CDC Corp. Based in Atlanta, CDC Corp. (Nasdaq: CHINA) -- http://www.cdccorporation.net/-- is the parent company of CDC Software (Nasdaq: CDCS). CDC Software is based dually in Shanghai, China, and Atlanta and produces enterprise software applications, IT consulting services, outsourced applications development and IT staffing. The company's owners include Asia Pacific Online Ltd., Xinhua News Agency and Evolution Capital Management. CDC Corp., doing business as Chinadotcom, filed a Chapter 11 petition (Bankr. N.D. Ga. Case No. 11-79079) on Oct. 4, 2011. James C. Cifelli, Esq., at Lamberth, Cifelli, Stokes & Stout, PA, in Atlanta, Georgia, serves as counsel. Moelis & Company LLC serves as its financial advisor and investment banker. Marcus A. Watson at Finley Colmer and Company serves as chief restructuring officer. The Debtor estimated assets and debts at US$100 million to US$500 million as of the Chapter 11 filing. The Official Committee of Equity Security Holders of CDC Corp. is represented by Troutman Sanders. The Committee tapped Morgan Joseph TriArtisan LLC as its financial advisor. The stock of CDC Software Corp. was sold for $249.8 million to an affiliate of Vista Equity Holdings. The Debtor's Plan provides that in addition to paying creditors in full and distributing the excess to shareholders, the plan would allow filing lawsuits against insiders who CDC claims were behind the motion to dismiss. China.com filed a competing reorganization plan. CDC interprets the plan as giving releases of claims that CDC's plan would prosecute instead. CHINESEWORLDNET.COM INC: Auditor Raises Going Concern Doubt ----------------------------------------------------------- Vancouver, Canada-based MNP LLP, Chartered Accountants, said in an April 27, 2012 report that there is substantial doubt on the ability of Chineseworldnet.Com Inc. to continue as a going concern. MNP audited the Company's consolidated balance sheet as at Dec. 31, 2011, the related consolidated statements of stockholders' equity, operations and comprehensive income (loss) and cash flows for the year then ended. MNP said the Company had recurring losses and requires additional funds to maintain its planned operations. These factors raise substantial doubt about its ability to continue as a going concern. For the year ended Dec. 31, 2011, the Company recorded a net income of $138,040 with a net income of $198,966 attributable to common stockholders, compared to a net income of $296,604 of which $188,746 was attributable to common stockholders for the year ended Dec. 31, 2010. The decrease of net income of $158,564 was primarily due to the increase of salary expenditures, the recognition of deferred income tax expenses as well as loss in foreign exchange transactions. In Fiscal 2011, the Company recorded revenue of $1,675,875 compared to $1,733,329 in Fiscal 2010. The decrease of revenue of $57,454 was primarily due to the consolidation of the operation result for CWN Capital in Fiscal 2010. The Company said the continued weakened western economy has caused increased demand for access to Chinese sources of funding for its targeted client companies as well as increased demand for information by individual investors was the primary factor of its continued increases of overall revenue. The Company generates revenue from its Portal, IR/PR and Conference businesses. The Company's revenue sources come from these products and services offered -- GCFF Conference Business, Road Show Business, Various IR/PR Service, Chinese Webpage Design, Hosting and Maintenance, and Online Marketing Service. Other revenue sources include Banner Advertising, Publication Service, CWN Membership and Online Service, Translation Service, and others. The Company also said China's emergence as a global economic power and the continued weakness of the North American capital markets have had a positive impact on its businesses in Fiscal 2010 and Fiscal 2011 as shown in increased revenues, client base and conference attendance and sales. As the Company's business development strategies in the Greater China region continued to mature, the Company has significantly increased the revenues from its GCFF Conference Business and all other aspects of its businesses showed positive growth in sales revenue, other than the CWN Membership and Online Service. Going forward, with the Company said its established networks of partners and sponsors in both North America and China and its continued successful implementation of various strategies and models, the Company sees continued growth in overall revenue. As of Dec. 31, 2011, the Company had total assets of $3,182,417 against total liabilities, all current, of $1,123,354. A copy of the Company's Annual Report filed with the U.S. Securities and Exchange Commission on Form 20-F for the fiscal year ended Dec. 31, 2011, is available at http://is.gd/cw0Hni About ChineseWorldNet.Com ChineseWorldNet.Com Inc., incorporated under the Company Law (1998 revision) of the Cayman Islands on Jan. 12, 2000, has four principal businesses: (1) the financial web portal business, conducted under the ChineseWorldNet.com brand via the www.chineseworldnet.com Web site; (2) the investor relations and public relations business, conducted under the NAI500 brand via a number of media channels including the www.nai500.com and en.nai500.com Web sites, as well as certain other promotional services; (3) the North America and Greater China cross-border business partnering conferences business, conducted via the brand of Global Chinese Financial Forum and its www.gcff.ca Web site; and (4) the financial content and information distribution business. The www.chineseworldnet.com Web site is a web-based portal that provides up-to-date financial content and information and financial management tools in the Chinese language targeting the Chinese investor community in North America. The Portal business provides financial news and covers corporate information of more than 98% of the listed stocks on major North American exchange markets, including New York Stock Exchange, American Stock Exchange, NASDAQ Stock Market, OTC Bulletin Board, Toronto Stock Exchange, and Toronto Venture Exchange. CIRCLE ENTERTAINMENT: Borrows $450,000 from Directors, et al. ------------------------------------------------------------- Certain of the directors, executive officers and greater than 10% stockholders of Circle Entertainment Inc. made unsecured demand loans to the Company totaling $450,000, bearing interest at the rate of 6% per annum, on June 7, 2012, through June 11, 2012. The Company intends to use the proceeds to fund working capital requirements and for general corporate purposes. Because certain of the directors, executive officers and greater than 10% stockholders of the Company made the Loans, a majority of the Company's independent directors approved the transaction. About Circle Entertainment Circle Entertainment Inc. (CEXE.PK), formerly FX Real Estate and Entertainment Inc., owns 17.72 contiguous acres of land located at the southeast corner of Las Vegas Boulevard and Harmon Avenue in Las Vegas, Nevada. The Las Vegas Property is currently occupied by a motel and several commercial and retail tenants with a mix of short and long-term leases. On June 23, 2009, as a result of the default under the first mortgage loan, the first lien lenders had a receiver appointed to take control of the property. The Company is headquartered in New York City. The Company's Las Vegas subsidiary filed for Chapter 11 bankruptcy on April 21, 2010, and a plan of liquidation or reorganization will eventually be implemented under which the Company will surrender ownership of the Las Vegas Property. Under such a plan, it is extremely unlikely the Company will receive any material interest or benefit. The Company's balance sheet at March 31, 2012, showed $6.48 million in total assets, $13.72 million in total liabilities, and a $7.23 million total stockholders' deficit. L.L. Bradford & Company, LLC, in Las Vegas, Nevada, expressed substantial doubt about the Company's ability to continue as a going concern following the 2011 financial results. The independent auditors noted that the Company has limited available cash, has a working capital deficiency and will need to secure new financing or additional capital in order to pay its obligations. CLAIRE'S STORES: James Fielding Named Chief Executive Officer ------------------------------------------------------------- Claire's Stores, Inc., announced that the Board of Directors has appointed James D. Fielding as Chief Executive Officer. Mr. Fielding will assume the CEO Position on June 18, 2012, and will also join the Company's Board of Directors. Peter P. Copses, Chairman of the Board of Directors, commented, "After conducting an extensive search and considering many capable candidates, we are pleased to appoint Jim Fielding the CEO of Claire's. Jim is a proven retail executive with 25 years of experience who possesses a compelling combination of leadership skills and merchandising acumen. At Disney Stores, Jim successfully managed a specialty retailer with significant international operations and a well-developed e-commerce business. Jim joins a talented and experienced senior management team at Claire's today who have helped to build a successful foundation on which the Company is well positioned to grow. We are confident in Jim's ability to lead this team and to capitalize on the many growth opportunities available to Claire's today. We would also like to thank Jim Conroy and Jay Friedman for their stewardship of the Company since we began the search in January." Mr. Fielding added, "I am enthusiastic about the opportunity to lead Claire's, a company with a longstanding heritage, an excellent market position, and an experienced management team. In addition to driving same store sales through best-in-class merchandising and marketing strategies, I look forward to capitalizing on the many growth initiatives available to the company, including new stores, development of the Icing concept, continued international expansion in markets such as Mexico, India and China, and optimization of e-commerce. I join a talented management team who share my excitement about the opportunities in front of us." Mr. Fielding joins Claire's from The Walt Disney Company, where he was most recently President of Disney Stores Worldwide. In this capacity, Mr. Fielding was responsible for all global operations of the 360 Disney Stores in twelve countries as well as the DisneyStore.com business in five countries. He served as the architect of the Company's brand and merchandising strategy, new store expansion including successful launch of a new concept in June 2010, the acquisition and turnaround of the Disney Stores Japan business, and the development and expansion of the Company's global e-commerce business, among other initiatives. Prior to his most recent role, he served as the EVP, Global Retail Sales and Marketing for the Disney Consumer Products division, where he was responsible for account management, retail operations, franchise development and brand imaging for all consumer products categories. Prior to joining The Walt Disney Company, Mr. Fielding held the position of General Merchandise Manager for the coed division of Lands' End, Inc., a direct merchant offering casual apparel for men, women and children. At Lands' End, he managed all channels of distribution including Internet, catalog and stores. Earlier in his career, Mr. Fielding held several merchandising positions with The J. Peterman Company, The Gap, and Dayton Hudson Department Store. James G. Conroy, the Company's Chief Operating Officer, has resigned, effective immediately. Mr. Conroy's duties will be assumed by Claire's newly appointed CEO, James Fielding. Peter P. Copses, Chairman of the Board of Directors, commented, "We thank Jim Conroy for his efforts since joining Claire's shortly after the going-private transaction in 2007. Jim played a key role in improving Claire's merchandising, defining its target customer strategy, expanding the Company's global footprint and launching its e-commerce site. We wish Jim well in all his future endeavors." In connection with his employment with the Company, the Company and Mr. Fielding entered into an Employment Agreement dated May 31, 2012, to be effective June 18, 2012. Pursuant to the terms thereof, Mr. Fielding will receive an annual base salary of $900,000 and an annual target bonus of 100% of his base salary. The actual amount of the bonus will depend upon the achievement of certain annual performance objectives, but for the first year of employment, will be no less than 100% of base salary paid to Mr. Fielding during Fiscal 2012. About Claire's Stores Claire's Stores, Inc. -- http://www.clairestores.com/-- operates as a specialty retailer of fashion accessories and jewelry for preteens and teenagers, as well as for young adults in North America and internationally. It offers jewelry products that comprise costume jewelry, earrings, and ear piercing services; and accessories, including fashion accessories, hair ornaments, handbags, and novelty items. Based in Pembroke Pines, Florida, Claire's Stores operates under two brands: Claire's(R), which operates worldwide and Icing(R), which operates only in North America. As of Jan. 31, 2009, Claire's Stores, Inc., operated 2,969 stores in North America and Europe. Claire's Stores also operates through its subsidiary, Claire's Nippon, Co., Ltd., 213 stores in Japan as a 50:50 joint venture with AEON, Co., Ltd. The Company also franchises 198 stores in the Middle East, Turkey, Russia, South Africa, Poland and Guatemala. The Company's balance sheet at April 28, 2012, showed $2.77 billion in total assets, $2.80 billion in total liabilities, and a $39.53 million stockholders' deficit. Bankruptcy Warning If the Company is unable to generate sufficient cash flow and is otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on its indebtedness, or if the Company otherwise fail to comply with the various covenants, including financial and operating covenants in the instruments governing its indebtedness, the Company could be in default under the terms of the agreements governing those indebtedness. In the event of that default: * the holders of those indebtedness may be able to cause all of the Company's available cash flow to be used to pay those indebtedness and, in any event, could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest; * the lenders under the Company's Credit Facility could elect to terminate their commitments thereunder, cease making further loans and institute foreclosure proceedings against the Company's assets; and * the Company could be forced into bankruptcy or liquidation. CLAYTON PROFESSIONAL: PNC Bank Can Proceed With Receivership ------------------------------------------------------------ PNC Bank, N.A., successor to RBC Bank (USA) f/k/a RBC Centura Bank, won dismissal of the chapter 11 case of Clayton Professional Center, LLC. PNC Bank has indicated that if the case is dismissed, the bank will proceed with the appointment of a state court receiver to manage and market the Debtor's property. In granting the bank's request, Bankruptcy Judge Stephani W. Humrickhouse said receivership provides a superior tool for liquidating the Property because of a receiver's ability to market the Property with the backing of the bank over a longer period of time. Unlike a chapter 7 trustee, a receiver would have sufficient time and revenue to find additional tenants, increase rent, and attract potential investors. Because a fully-rented property has greater value due to its greater income potential, a receiver has a better chance of obtaining a greater return on the debtor's Property as compared to a chapter 7 trustee. It is apparent that dismissal offers the stronger opportunity for property management and maximizing the estate's value, and that dismissal of the chapter 11 case is in the best interest of both the creditors and the bankruptcy estate. The debtor's primary liabilities include its obligation to PNC Bank, which holds a promissory note in the original principal amount of $1,475,000 dated June 18, 2007. The Note is secured by a Deed of Trust Securing Future Advances covering the debtor's Property. The debtor also executed a separate Assignment of Rents and Leases on June 18, 2007. Furthermore, as additional consideration for the Note, Douglas K. Cross, Lisa M. Bookert, M.D., and Lisa M. Bookert, M.D., P.A. each executed Guaranty Agreements in favor of RBC Bank dated June 18, 2007. The debtor defaulted under the Note and Deed of Trust after failing to make monthly payments when due. Subsequently, PNC Bank initiated foreclosure proceedings on Oct. 28, 2011. The outstanding balance owed to PNC Bank as of the petition date is $1,475,028, including $300,281 estimated as arrears. A copy of the Court's June 12, 2012 Memorandum Opinion is available at http://is.gd/zcsEEUfrom Leagle.com. Clayton Professional Center, LLC, filed a voluntary Chapter 11 petition (Bankr. E.D.N.C. Case No. 11-09011) on Nov. 29, 2011. Judge Stephani W. Humrickhouse presides over the case. Stephon John Bowens, Esq., at Bowens Law, PLLC, serves as the Debtor's counsel. It scheduled $2,034,150 in assets and debts of $1,351,707. The petition was signed by Douglas K. Cross, member. Clayton Professional Center manages a 7,290-square-foot medical office building located on roughly 13.3 acres at 900 S. Lombard Street, in Clayton, North Carolina. Although the site has been approved for the construction of three office buildings, at present only one has been built; a medical office building containing three subdivided office units, with two units currently leased (Laboratory Corp. of America and Lisa M. Bookert, M.D., d/b/a Clayton Family Medical Practice, respectively). The Debtor is a single asset real estate debtor as defined by 11 U.S.C. Sec. 101(51B). DETROIT, MI: Fitch Junks Ratings on Three Bond Classes ------------------------------------------------------ Fitch Ratings has downgraded the following ratings for Detroit, Michigan (the city): -- Approximately $511 million unlimited tax general obligation (ULTGO) bonds to 'CCC' from 'B'; -- Approximately $453 million limited tax general obligation (LTGO) bonds to 'CC' from 'B-'; -- Approximately $1.5 billion pension obligation certificates of participation (COPs) series 2005-A, 2006-A, and 2006-B issued through the Detroit Retirement Systems Funding Trust, Michigan to 'CC' from 'B'. The pension COPs remain on Rating Watch Negative. SECURITY: ULTGO bonds are supported by the city's unlimited property tax pledge. LTGO bonds are a first budget obligation. Pension COPs are unconditional contractual obligations of the city, not subject to appropriation. If the city fails to make a COP debt service payment, the contract administrator may file a lawsuit against the city to enforce the obligation, and a court can compel the city to raise the payment through the levy of taxes without limit as to rate or amount pursuant to Michigan law. KEY RATING DRIVERS: DEBT SERVICE PAYMENT IN JEOPARDY: The city stated the possibility that it would not make a debt service payment due on June 15 on its pension COPs. Fitch believes there are actions available to both the city and the state of Michigan that would insure the payment is made but that the current level of uncertainty so close to a bond repayment date is consistent with a higher probability of default than the prior B-category ratings implied. CITY ATTORNEY SUIT: The city attorney has challenged the legality of the recently enacted Fiscal Stability Agreement (FSA) between the state and the city. The suit is based on the contention that the city cannot enter into a contract with an entity that has defaulted on an obligation to the city, and that the state owes funds to the city and therefore constitutes such an entity. The state asserts it is not delinquent on any payments to the city. POTENTIAL LIQUIDITY CRISIS: In addition to the near-term debt service payment, this suit threatens the city's much-needed ability to refinance bond anticipation notes issued by the Michigan Finance Authority (MFA) to avoid depletion of general fund cash balances. Fitch's belief that the inability to refinance increases the prospects of a cash crisis is supported by the city CFO's assertion that cash will be depleted once the next payroll is met. PENSION COPs BELOW ULTGOs: Fitch has historically rated the pension COPs on par with the city's ULTGOs, one notch above the LTGO bonds. However, given the clear indication that the mechanism to levy a property tax may not function to avoid a default, Fitch has re-evaluated this distinction and now rates the COPs below the ULTGOs and on par with the LTGOs. FINANCIAL AND POLITICAL INSTABILITY: The fragility of both the city's financial position and the relationships among branches of city government and between the city and state is highlighted by the instability triggered by the city attorney's suit. Even if this Friday's debt service payment is made, unless the suit is settled promptly Fitch believes the city will likely imminently face another liquidity crisis. ADDITIONAL LEGAL UNCERTAINTY: An effort to overturn the state's Public Act 4 (PA4), which forms the basis for a number of provisions in the FSA including the suspension of collective bargaining requirements, is ongoing despite setbacks. A Michigan Court of Appeals ruling on whether repeal will be on the November ballot is pending. SIGNIFICANT OPERATING DEFICITS CONTINUE: Officials project a $100- $110 million operating deficit for the current fiscal year, although the balance is expected to decline only $30-$40 million due to the deficit financing mentioned above. The deficit continues a trend of significant budget variances and increases the accumulated deficit from already high levels. NEW BUDGET PROCEDURES UNTESTED: The FSA includes budgeting procedures that Fitch believes should help remedy the city's historical over-estimation of revenue. The proposed fiscal 2013 budget includes deep spending cuts including police and fire as well as a decline in revenues from the fiscal 2012 budget. Fitch believes revenues, budgeted flat to current year actuals, may still be optimistic and that the sustainability of spending cuts is questionable. The FSA requires that the fiscal 2013 budget be approved by the state treasurer. WHAT COULD TRIGGER A RATING ACTION MISSED DEBT SERVICE PAYMENT: If the city does not make its payment on the COPs on Friday the rating on the COPs will be downgraded to 'D', and the ULTGO and LTGO ratings will likely be adjusted to a level somewhat above 'D'. RE-EMERGENCE OF A LIQUIDITY CRISIS: Absent a default the ratings could also be adjusted if a potential pending liquidity crisis results in an inability of the city to make payments on basic governmental obligations such as payroll. FURTHER OBSTACLES TO FSA: Fitch believes a number of possible hurdles that are not all identifiable could further hinder what appeared to be the shared goals of the mayor, city council, and governor to avoid a deepening of the fiscal crisis. DEWEY & LEBOEUF: Ex-Partner Files $7MM Fraud Suit vs. Execs ----------------------------------------------------------- Henry Bunsow, former co-chair of Dewey & LeBoeuf LLP's IP litigation group, on Wednesday filed a $7 million lawsuit against the Company's former executive committee for allegedly misleading him about Dewey's financial condition when recruiting him in 2010. The Wall Street Journal's Jennifer Smith reports that Mr. Bunsow, a litigator who joined the firm's San Francisco office in 2011, accuses Steven Davis and other former leaders of Dewey of running a "Ponzi scheme" that used money invested by new partners to enrich themselves and others. WSJ relates Mr. Bunsow alleges that Mr. Davis, Dewey's former chairman, and other leaders of the firm misrepresented Dewey's troubled finances to get him and other "successful partners" to join the firm, and then used the capital they invested -- $1.8 million in Mr. Bunsow's case -- to pay themselves and other partners. According to the report, Mr. Bunsow's lawsuit is the first to target Dewey's former leadership. The lawsuits have been expected for months, ever since a wave of partners began to leave the firm amid disputes over compensation and concerns about its financial condition. Recent lawsuits by vendors and a former Dewey employee have named the firm itself, not individual partners or executives. Mr. Bunsow's lawsuit also names as defendants former Dewey executives Stephen DiCarmine and Joel Sanders, as well as former partners Jeffrey Kessler and James Woods. Mr. Bunsow is now a partner at Bunsow De Mory Smith & Allison LLP in San Francisco. Mr. Davis has hired counsel in the Dewey case: Kathryn A. Coleman, Esq. Ned H. Bassen, Esq. HUGHES HUBBARD & REED LLP One Battery Park Plaza New York, NY 10004-1482 E-mail: kcoleman@hugheshubbard.com bassen@hugheshubbard.com 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. The Former Partners hired Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt & Winters, LLP, as counsel. Dewey & LeBoeuf has won Court authority to use lenders' cash collateral through July 31, 2012. DOUGLAS BATTERY: Judge Aron Converts Case to Chapter 7 Proceeding ----------------------------------------------------------------- Richard Craver at Winston-Salem Journal reports that Bankruptcy Court Judge Catharine Aron converted the Chapter 11 case of Douglas Battery Manufacturing Co. to a Chapter 7 proceeding to try to expedite the sale of most of its properties. According to the report, Judge Aron approved Joseph Burns as the Chapter 7 trustee. A hearing for creditors has been set for 9 a.m. July 27 at the U.S. Bankruptcy Court in Winston-Salem, 226 S. Liberty St. According to the report, the development comes about two weeks after attorneys for Lexington Road Properties Inc., owner of Douglas Battery Manufacturing, requested an additional 60 days to file a reorganization plan. Douglas Battery Manufacturing, based in Winston-Salem, said in January 2010 it would be going out of business. It sold its brands and designs to EnerSys of Reading, Pa., for an undisclosed price. It stopped making industrial batteries in March 2010, eliminating 90 of its remaining 125 jobs. The report notes the bankruptcy does not affect Douglas Battery & Auto Care, a retail service center with shops in Winston-Salem and Lexington. The report adds the decision to convert to a Chapter 7 case was made voluntarily by Lexington Road, according to William Sullivan, a Womble Carlyle Sandridge & Rice LLP attorney representing the company. According to the report, the company said in a filing Feb. 15 that its real property was worth $3.94 million, primarily $1.95 million for its 73,800-square-foot distribution center at 2955 Starlight Drive in Winston-Salem and $1.4 million for its 45,700-square-foot headquarters and plant at 500 Battery Drive, also in the city. The report says the properties have been examined by Piedmont Industrial Services to determine whether they are environmentally contaminated. Based in Winston-Salem, North Carolina, Lexington Road Properties Inc., fka Douglas Battery Manufacturing Company, filed for Chapter 11 protection on Jan. 27, 2012 (Bankr. M.D.N.C. Case No. 12-50121). William B. Sullivan, Esq., at Womble Carlvle Sandridqe & Rice, LLP, represents the Debtor. Lexington Road declared in a Feb. 15 filing it had $4.9 million in real and personal assets and $1.1 million in liabilities. DVS SHOE: Files Schedules of Assets and Liabilities --------------------------------------------------- DVS Shoe Co., Inc., filed with the Bankruptcy Court its schedules of assets and liabilities, disclosing: NAME OF SCHEDULE ASSETS LIABILITIES ---------------- ------ ----------- A - Real Property $0 B - Personal Property $7,375,479 C - Property Claimed as Exempt D - Creditors Holding Secured Claims $7,609,054 E - Creditors Holding Unsecured Priority Claims $171,414 F - Creditors Holding Unsecured Nonpriority Claims $4,301,119 ------ ----------- TOTAL $7,375,479 $12,081,588 The Debtor's assets include $1.2 million in bank accounts, $2.45 million in accounts receivables, and $3.4 million in inventory. About DVS Shoe Westminster, California-based DVS Shoe Co., Inc., a designer, manufacturer and marketer of athletic shoes, filed a bare- bones Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-16209) on May 17, 2012, in Santa Ana. The Debtor estimated assets and debts of $10 million to $50 million. Judge Catherine E. Bauer presides over the case. Robert E. Opera, Esq., at Winthrop Couchot PC, serves as the Debtor's counsel. The petition was signed by Kevin L. Dunlap, chairman of the board. The Debtor has a deal to sell its assets for $4 million to DVS Footwear Inc. DVS Shoe intends to complete the sale of assets before the end of June. Bank of America N.A., the primary and senior secured creditor of DVS Shoe Co., is owed in excess of $6.5 million under a revolving working capital loan. BofA is represented in the case by Jennifer K. Brooks, Esq., and William B. Freeman, Esq., at Pillsbury Winthrop Shaw Pittman LLP. DYNCORP INTERNATIONAL: Moody's Affirms 'B1' CFR; Outlook Stable --------------------------------------------------------------- Moody's Investors Service affirmed the B1 corporate family rating and all instrument ratings of DynCorp International Inc., and the SGL-3 speculative grade liquidity assessment. Separately, Moody's changed DynCorp's ratings outlook to stable from negative. The stable outlook reflects clear evidence of DynCorp's improved operating performance, notably coming during a very challenging climate for all defense service contractors, as well as the early repayment of a meaningful portion of the LBO-incurred debt in 2H of 2011 from free cash flow. While cyclical risks continue, some of the performance improvement stems from business realignment undertaken by a new management team and is likely to be sustained. The SGL-3 speculative grade liquidity assessment reflects DynCorp's overall adequate liquidity profile supported by solid free cash flow generation, some reliance on its $150 million of revolving credit facilities and sufficient cushion under the bank facility financial covenants. Rating Affirmations: Issuer: DynCorp International Inc. Corporate Family Rating/Probability of Default Rating, Affirmed at B1 Senior Secured Bank Credit Facility, Affirmed at Ba2 (LGD2, 20%) Senior Unsecured Notes, Affirmed at B2 (LGD5, 75%) Outlook Changed to Stable from Negative Speculative Grade Liquidity Assessment SGL-3 Rating Rationale Moody's believes that DynCorp's operating earnings and cash flows are likely to grow during 2012, as the company continues to receive a large allotment of the LOGCAP contract (logistics and support services, primarily in Afghanistan) and expands its Aviation division through new contract wins. These trends should lead to further improvements to key credit metrics, such that Debt-to-EBITDA will likely be below 5.0 times and Free Cash Flow- to-Net Debt likely approaching the high single-digit level over the next 12-to-18 months -- both supportive of the B1 rating. DynCorp's Q1 earnings release showed sharp revenue growth (+18% year-over-year) and some decline in operating margins, due mainly to one-off losses in the Security Services Group. Operating margins remain in the low 4% range, mostly driven by the LOGCAP contract (+40% of total sales, and about 3.5% operating margin). However, the relatively low margin on LOGCAP is in line with the returns for executing under a cost-plus, indefinite delivery, indefinite quantity (IDIQ) contract. Award fees are growing for LOGCAP, boosting margins and offsetting volume declines in CivPol (Iraq and Afghanistan police training) and other areas. Notably Moody's believes that the LOGCAP contract revenues will decline longer-term, so continued execution on this contract is critical to position DynCorp to win new Defense and State Department business. DynCorp's operating profits should remain steady, and could grow longer-term to the mid-single-digit range as Aviation (maintenance of military aircraft; now about 30% of total sales and 7% operating margin) becomes a larger portion of DynCorp's business. The Aviation division's new NASA contract for aircraft maintenance and operational support (worth up to $177 million over 3 years) demonstrates the company's ability to win new business outside of the Department of Defense. Moody's believes that DynCorp could further reduce the debt incurred to fund Cerberus Capital Management's leveraged acquisition of the company (in 2010). DynCorp repaid about $155 million of its bank credit facility term loan during fiscal 2011, through applying free cash flow. Internally generated cash flows should remain solid during Fiscal 2012, leading to stable free cash flow generation in line with Fiscal 2011 levels - which could be applied to additional debt reduction. Importantly, forward cash commitments are low as DynCorp has low levels of capital spending (about $7 to $8 million annually) and moderate working capital need. The B1 Corporate Family Rating reflects DynCorp's good size (total revenue of $3.9 billion, twelve months to March 31 2012) and global scale, well established position as a contractor for the Department of Defense and Department of State and diverse revenue streams in logistics/support, aircraft MRO, police and linguistics training. While unlikely to occur over the near term, DynCorp's ratings could be upgraded should Debt-to-EBITDA approach 4 times and EBIT-to-Interest be sustained above 2 times. A downward revision in the rating and/or outlook could occur if DynCorp is unable to sustain improvements to operating performance or maintain an adequate liquidity profile, such that Debt-to-EBITDA is sustained above 5 times and Retained Cash Flow-to-Debt sustained below 10%. Loss of significant contracts, and/or failure to de-lever over time, could also pressure down the rating or outlook. DynCorp International Inc., headquartered in Falls Church, VA, operates in six strategic business groups: LOGCAP, Aviation, Training and Intelligence Solutions, Global Logistics & Development Solutions, Security Services, and Global Linguist Solutions, a 51% owned joint venture. Principal services provided by DynCorp include: law enforcement training and support, security services, base and logistics operations, intelligence training, rule of law development, construction management, platform services and operations (managing aviation and surface vehicle services and assets for the U.S. military at locations across the U.S. and abroad) and linguist services. Revenues for the twelve months ended March 31, 2012 were approximately $3.9 billion. DYNEGY INC: May File for Chapter 11 to Carry Out Settlement ----------------------------------------------------------- Dynegy Inc. may file for Chapter 11 protection to carry out a settlement with creditors holding more than $2.7 billion of claims against Dynegy Holdings LLC, according to an outline of the company's revised Chapter 11 plan of reorganization. Dynegy Inc. will also merge with Dynegy Holdings, with the parent being the surviving entity. Details of the merger are still being worked out and should be filed by June 18, according to the plan. Dynegy Holdings filed the revised plan on June 8 after Judge Cecelia Morris of the U.S. Bankruptcy Court for the Southern District of New York approved the settlement on June 1. Under the revised plan, $200 million cash and 99% of the merged companies' stock will be given to holders of $4.2 billion general unsecured claims against Dynegy Holdings. The claims include $3.487 billion on six issues of senior notes, $110 million for Resources Capital Management Corp.'s claim, $540 million on lease guaranty claims and $55 million on claims asserted by holders of subordinated debt. The plan also provides for the distribution of 1% of the merged companies' stock to holders of administrative claims. Only holders of general unsecured claims are entitled to vote on the revised plan. Holders of priority claims, secured claims and so-called "convenience claims" are deemed to have accepted the plan. Meanwhile, holders of securities claims and equity interests are not entitled to any recovery, and are deemed to have rejected the plan. Full-text copies of Dynegy Holdings' revised plan and the disclosure statement are available without charge at: http://bankrupt.com/misc/Dynegy_3rdAmendedPlan.pdf http://bankrupt.com/misc/Dynegy_3rdDS.pdf The Settlement Judge Morris approved the settlement earlier this month after Dynegy debt holders dropped their opposition to the deal. The debt holders including Claren Road Asset Management LLC, DO S1 Limited and Wells Fargo Bank N.A. accepted the settlement after Dynegy Holdings agreed to revise its terms, which include granting the bank a $55 million general unsecured claim against the company. Claren and DO S1, which hold a portion of the $200 million worth of subordinated notes, had accused Dynegy Holdings of using the settlement to avoid the so-called "absolute priority rule." Under the absolute priority rule, equity holders are entitled to nothing unless all creditors are paid in full or otherwise agree. The settlement also drew flak from Cleo Zahariades, an investor in Dynegy Inc., who is suing the company's directors in Delaware Chancery Court over the sale of the coal-powered plan assets. Although not a party to the settlement, Mr. Zahariades eventually dropped his objection, which Dynegy lawyers described as "nuisance" and an attempt to obtain discovery for his suit in Delaware. The settlement, meanwhile, drew support from Dynegy Inc., holders of senior debt, the committee representing general unsecured creditors, and David Hershberg, Dynegy Holding's manager. In a statement, Robert Flexon, president and chief executive officer of Dynegy Inc., said approval of the settlement "establishes the foundation for the remaining steps in the restructuring process." "We are pleased that all major creditor groups are now a part of the settlement agreement and look forward to their continued support as we work together towards a fall 2012 Chapter 11 emergence date," Mr. Flexon said. The agreement calls for the settlement of lawsuits between Dynegy Holdings and its parent related to the transactions investigated by a court-appointed examiner including Dynegy Inc.'s acquisition of coal-powered plant assets. The agreement also settles a lawsuit U.S. Bank N.A. brought against Dynegy Holdings and two other subsidiaries of Dynegy Inc. A copy of the revised settlement agreement is available without charge at http://bankrupt.com/misc/Dynegy_RevSettlement.pdf As part of the settlement, Dynegy Holdings and Dynegy Inc. inked another agreement on June 5, under which the latter contributed and assigned to Dynegy Holdings its stake in Dynegy Coal Holdco, LLC. In exchange, the parent company will have an administrative claim against Dynegy Holdings. A copy of the June 5 agreement is available without charge at http://is.gd/owGFzd About Dynegy Inc. Through its subsidiaries, Houston, Texas-based Dynegy Inc. (NYSE: DYN) -- http://www.dynegy.com/-- produces and sells electric energy, capacity and ancillary services in key U.S. markets. The power generation portfolio consists of approximately 12,200 megawatts of baseload, intermediate and peaking power plants fueled by a mix of natural gas, coal and fuel oil. In August, Dynegy implemented an internal restructuring that created two units, one owning eight primarily natural gas-fired power generation facilities and another owning six coal-fired plants. Dynegy missed a $43.8 million interest payment Nov. 1, 2011, and said it was discussing options for managing its debt load with certain bondholders. Dynegy Holdings LLC and four other affiliates of Dynegy Inc. sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-38111) Nov. 7 to implement an agreement with a group of investors holding more than $1.4 billion of senior notes issued by Dynegy's direct wholly-owned subsidiary, Dynegy Holdings, regarding a framework for the consensual restructuring of more than $4.0 billion of obligations owed by DH. If this restructuring support agreement is successfully implemented, it will significantly reduce the amount of debt on the Company's consolidated balance sheet. Dynegy Holdings disclosed assets of $13.77 billion and debt of $6.18 billion, while Roseton LLC and Dynegy Danskammer LLC each estimated $100 million to $500 million in assets and debt. Dynegy Holdings and its affiliated debtor-entities are represented in the Chapter 11 proceedings by Sidley Austin LLP as their reorganization counsel. Dynegy and its other subsidiaries are represented by White & Case LLP, who is also special counsel to the Debtor Entities with respect to the Roseton and Danskammer lease rejection issues. Dynegy was advised by Lazard Freres & Co. LLC and the Debtor Entities' financial advisor is FTI Consulting. The Official Committee of Unsecured Creditors has tapped Akin Gump Strauss Hauer & Feld LLP as counsel nunc pro tunc to November 16, 2011. Bankruptcy Creditors' Service, Inc., publishes DYNEGY BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Dynegy Inc. (http://bankrupt.com/newsstand/or 215/945-7000). DYNEGY INC: Affirms Commitment to Morro Bay Power Plant ------------------------------------------------------- Dynegy's Morro Bay power generation facility continues to provide Californians with safe, reliable and environmentally compliant electricity. Until recently, output from the facility was under contract to a local utility. That contract was cancelled in mid- May and the cancellation will likely result in a shift of earnings and cash flows between periods. Dynegy is actively seeking other commercial arrangements for the facility and has been offering the facility's output in the day- ahead market administered by the California Independent System Operator since May 19, 2012. Dynegy will continue to respond to requests for offers from California utilities seeking to procure electric capacity needed to serve their customers. While Dynegy has been successful in winning contracts through this resource adequacy process in the past, Dynegy believes that a more forward-looking, transparent, market-based solution to securing electric supply would benefit consumers, utilities and independent generators. Dynegy has no plans to retire the facility at this time, and as long as the plant is economically viable, Dynegy will continue to operate it. The Morro Bay Power plant is located at 1290 Embarcadero Road, just east of Coleman Park. About Dynegy Inc. Through its subsidiaries, Houston, Texas-based Dynegy Inc. (NYSE: DYN) -- http://www.dynegy.com/-- produces and sells electric energy, capacity and ancillary services in key U.S. markets. The power generation portfolio consists of approximately 12,200 megawatts of baseload, intermediate and peaking power plants fueled by a mix of natural gas, coal and fuel oil. In August, Dynegy implemented an internal restructuring that created two units, one owning eight primarily natural gas-fired power generation facilities and another owning six coal-fired plants. Dynegy missed a $43.8 million interest payment Nov. 1, 2011, and said it was discussing options for managing its debt load with certain bondholders. Dynegy Holdings LLC and four other affiliates of Dynegy Inc. sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-38111) Nov. 7 to implement an agreement with a group of investors holding more than $1.4 billion of senior notes issued by Dynegy's direct wholly-owned subsidiary, Dynegy Holdings, regarding a framework for the consensual restructuring of more than $4.0 billion of obligations owed by DH. If this restructuring support agreement is successfully implemented, it will significantly reduce the amount of debt on the Company's consolidated balance sheet. Dynegy Holdings disclosed assets of $13.77 billion and debt of $6.18 billion, while Roseton LLC and Dynegy Danskammer LLC each estimated $100 million to $500 million in assets and debt. Dynegy Holdings and its affiliated debtor-entities are represented in the Chapter 11 proceedings by Sidley Austin LLP as their reorganization counsel. Dynegy and its other subsidiaries are represented by White & Case LLP, who is also special counsel to the Debtor Entities with respect to the Roseton and Danskammer lease rejection issues. Dynegy was advised by Lazard Freres & Co. LLC and the Debtor Entities' financial advisor is FTI Consulting. The Official Committee of Unsecured Creditors has tapped Akin Gump Strauss Hauer & Feld LLP as counsel nunc pro tunc to November 16, 2011. Bankruptcy Creditors' Service, Inc., publishes DYNEGY BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Dynegy Inc. (http://bankrupt.com/newsstand/or 215/945-7000). DYNEGY INC: Holdings' Plan Filing Exclusivity Extended to July 16 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York extended the period during which Dynegy Holdings LLC has the exclusive right to file its Chapter 11 plan to July 16, 2012. Dynegy Holdings has until Sept. 14, 2012, to solicit votes on the plan from creditors. In light of the substantial strides toward plan confirmation that have been made to date, it is critical that the Debtors be permitted to continue this process without disruption, Debtors' counsel Sophia P. Mullen, Esq., at Sidley Austin LLP, in New York, said in the exclusivity motion. About Dynegy Inc. Through its subsidiaries, Houston, Texas-based Dynegy Inc. (NYSE: DYN) -- http://www.dynegy.com/-- produces and sells electric energy, capacity and ancillary services in key U.S. markets. The power generation portfolio consists of approximately 12,200 megawatts of baseload, intermediate and peaking power plants fueled by a mix of natural gas, coal and fuel oil. In August, Dynegy implemented an internal restructuring that created two units, one owning eight primarily natural gas-fired power generation facilities and another owning six coal-fired plants. Dynegy missed a $43.8 million interest payment Nov. 1, 2011, and said it was discussing options for managing its debt load with certain bondholders. Dynegy Holdings LLC and four other affiliates of Dynegy Inc. sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-38111) Nov. 7 to implement an agreement with a group of investors holding more than $1.4 billion of senior notes issued by Dynegy's direct wholly-owned subsidiary, Dynegy Holdings, regarding a framework for the consensual restructuring of more than $4.0 billion of obligations owed by DH. If this restructuring support agreement is successfully implemented, it will significantly reduce the amount of debt on the Company's consolidated balance sheet. Dynegy Holdings disclosed assets of $13.77 billion and debt of $6.18 billion, while Roseton LLC and Dynegy Danskammer LLC each estimated $100 million to $500 million in assets and debt. Dynegy Holdings and its affiliated debtor-entities are represented in the Chapter 11 proceedings by Sidley Austin LLP as their reorganization counsel. Dynegy and its other subsidiaries are represented by White & Case LLP, who is also special counsel to the Debtor Entities with respect to the Roseton and Danskammer lease rejection issues. Dynegy was advised by Lazard Freres & Co. LLC and the Debtor Entities' financial advisor is FTI Consulting. The Official Committee of Unsecured Creditors has tapped Akin Gump Strauss Hauer & Feld LLP as counsel nunc pro tunc to November 16, 2011. Bankruptcy Creditors' Service, Inc., publishes DYNEGY BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Dynegy Inc. (http://bankrupt.com/newsstand/or 215/945-7000). DYNEGY INC: U.S. Bank Drops Lawsuit After Deal Reached ------------------------------------------------------ U.S. Bank N.A. entered into an agreement that calls for the dismissal of its lawsuit against Dynegy Holdings LLC and two other subsidiaries of Dynegy Inc. The agreement comes after the U.S. Bankruptcy Court for the Southern District of New York approved a settlement between Dynegy Inc. and creditors holding more than $2.7 billion of claims against Dynegy Holdings. The settlement calls for the resolution of the U.S. Bank lawsuit. U.S. Bank sued the Dynegy units following their proposal to end leases on power plants that will be sold to creditors, and to determine the bank's claims resulting from the rejection of those contracts under U.S. bankruptcy law. At the heart of the lawsuit is the issue of whether the power plants are real properties as claimed by Dynegy Holdings or they are personal properties as claimed by U.S. Bank. Whether the plants are real or personal property determines whether bankruptcy law puts a cap on damages from terminating the leases through bankruptcy. If the leases for the plants are real property leases, the Dynegy units are liable for damages limited to three years rent. If the leases are for personal property, there is no limit on resulting damages pursuant to bankruptcy law. About Dynegy Inc. Through its subsidiaries, Houston, Texas-based Dynegy Inc. (NYSE: DYN) -- http://www.dynegy.com/-- produces and sells electric energy, capacity and ancillary services in key U.S. markets. The power generation portfolio consists of approximately 12,200 megawatts of baseload, intermediate and peaking power plants fueled by a mix of natural gas, coal and fuel oil. In August, Dynegy implemented an internal restructuring that created two units, one owning eight primarily natural gas-fired power generation facilities and another owning six coal-fired plants. Dynegy missed a $43.8 million interest payment Nov. 1, 2011, and said it was discussing options for managing its debt load with certain bondholders. Dynegy Holdings LLC and four other affiliates of Dynegy Inc. sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-38111) Nov. 7 to implement an agreement with a group of investors holding more than $1.4 billion of senior notes issued by Dynegy's direct wholly-owned subsidiary, Dynegy Holdings, regarding a framework for the consensual restructuring of more than $4.0 billion of obligations owed by DH. If this restructuring support agreement is successfully implemented, it will significantly reduce the amount of debt on the Company's consolidated balance sheet. Dynegy Holdings disclosed assets of $13.77 billion and debt of $6.18 billion, while Roseton LLC and Dynegy Danskammer LLC each estimated $100 million to $500 million in assets and debt. Dynegy Holdings and its affiliated debtor-entities are represented in the Chapter 11 proceedings by Sidley Austin LLP as their reorganization counsel. Dynegy and its other subsidiaries are represented by White & Case LLP, who is also special counsel to the Debtor Entities with respect to the Roseton and Danskammer lease rejection issues. Dynegy was advised by Lazard Freres & Co. LLC and the Debtor Entities' financial advisor is FTI Consulting. The Official Committee of Unsecured Creditors has tapped Akin Gump Strauss Hauer & Feld LLP as counsel nunc pro tunc to November 16, 2011. Bankruptcy Creditors' Service, Inc., publishes DYNEGY BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Dynegy Inc. (http://bankrupt.com/newsstand/or 215/945-7000). DYNEGY INC: Claren Road Drops Appeal on Access to Docs ------------------------------------------------------ Claren Road Asset Management LLC dropped its appeal from a bankruptcy judge's ruling denying its request for public access to the report released by the examiner who investigated the sale of coal-powered plant assets of Dynegy Holdings LLC's subsidiary. Judge Cecelia Morris denied last month Claren's request that the unredacted portions of the report be made public, saying the hedge-fund manager "has not shown a compelling need for the report." The 159-page examiner report found that Dynegy Inc.'s acquisition of coal-powered plant assets was a fraudulent transfer that harmed creditors. Some portions of the report were not made public, however, because they allegedly contain information protected by attorney-client privilege. Claren Subpoeanas Quashed Meanwhile, Judge Cecelia Morris issued an order quashing the subpoena served on the examiner appointed to investigate the sale of the coal-powered plant assets of Dynegy Holdings LLC's subsidiary. Claren Road Asset Management served the subpoena to force Susheel Kirpalani, the court-appointed examiner, to turn over documents he collected during his investigation. Mr. Kirpalani refused to turn over the documents, saying it would compromise the integrity of his investigation, and would violate the bankruptcy court's previous decisions prohibiting him from sharing the documents with any party except the bankruptcy court. About Dynegy Inc. Through its subsidiaries, Houston, Texas-based Dynegy Inc. (NYSE: DYN) -- http://www.dynegy.com/-- produces and sells electric energy, capacity and ancillary services in key U.S. markets. The power generation portfolio consists of approximately 12,200 megawatts of baseload, intermediate and peaking power plants fueled by a mix of natural gas, coal and fuel oil. In August, Dynegy implemented an internal restructuring that created two units, one owning eight primarily natural gas-fired power generation facilities and another owning six coal-fired plants. Dynegy missed a $43.8 million interest payment Nov. 1, 2011, and said it was discussing options for managing its debt load with certain bondholders. Dynegy Holdings LLC and four other affiliates of Dynegy Inc. sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-38111) Nov. 7 to implement an agreement with a group of investors holding more than $1.4 billion of senior notes issued by Dynegy's direct wholly-owned subsidiary, Dynegy Holdings, regarding a framework for the consensual restructuring of more than $4.0 billion of obligations owed by DH. If this restructuring support agreement is successfully implemented, it will significantly reduce the amount of debt on the Company's consolidated balance sheet. Dynegy Holdings disclosed assets of $13.77 billion and debt of $6.18 billion, while Roseton LLC and Dynegy Danskammer LLC each estimated $100 million to $500 million in assets and debt. Dynegy Holdings and its affiliated debtor-entities are represented in the Chapter 11 proceedings by Sidley Austin LLP as their reorganization counsel. Dynegy and its other subsidiaries are represented by White & Case LLP, who is also special counsel to the Debtor Entities with respect to the Roseton and Danskammer lease rejection issues. Dynegy was advised by Lazard Freres & Co. LLC and the Debtor Entities' financial advisor is FTI Consulting. The Official Committee of Unsecured Creditors has tapped Akin Gump Strauss Hauer & Feld LLP as counsel nunc pro tunc to November 16, 2011. Bankruptcy Creditors' Service, Inc., publishes DYNEGY BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Dynegy Inc. (http://bankrupt.com/newsstand/or 215/945-7000). EASTMAN KODAK: Wants Former Employee's Lawsuit Halted ------------------------------------------------------ Eastman Kodak Co. asked the U.S. Bankruptcy Court in Manhattan to extend the automatic stay to all defendants in a lawsuit filed by a former employee of the company. The move comes after Ronald Haywood, a former employee of Eastman Kodak, allegedly refused the company's request that the automatic stay be also applied to his claims against his former supervisor, Richard Klaus. Mr. Haywood sued the company and Mr. Klaus for racial discrimination after he was terminated from his job. In his complaint, Mr. Haywood alleged his supervisor worked with other Kodak officials in selecting the employees who should be terminated. Eastman Kodak's bankruptcy filing automatically stayed Mr. Haywood's claims against the company but not his claims against the other defendant. The automatic stay is an injunction that halts actions by creditors against a company in bankruptcy protection. In court papers, Andrew Dietderich, Esq., at Sullivan & Cromwell LLP, in New York, said the automatic stay should also be applied to Mr. Haywood's claims against Mr. Klaus since any liability that may be found against the supervisor will be imputed against the company. "If the Haywood litigation is allowed to proceed against Mr. Klaus, Kodak will risk having inextricably linked claims decided against it without an opportunity to litigate, incurring the cost of defending the litigation and a potential judgment against Mr. Klaus," Mr. Dietderich argued. A court hearing on Eastman Kodak's request is scheduled for June 25, 2012. Objections are due by June 18, 2012. 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: Proposes to Hire Deloitte as Tax Adviser ------------------------------------------------------- Eastman Kodak Co. and its affiliated debtors have filed an application to employ Deloitte Tax LLP as their tax adviser. As tax adviser, the firm will be tasked to review existing global organizational and tax entity structure. Deloitte Tax will also analyze Eastman Kodak's entity rationalization pertaining to local country tax laws, meet with management regarding the rationalization, among other services. Eastman Kodak proposed to pay Deloitte on an hourly basis and reimburse the firm for its expenses. The firm's hourly rates are: Personnel Hourly Rates --------- ------------ Partner/Principal/Director $651-$875 Senior Manager $564-$693 Manager $494-$609 Senior $375-$483 Staff $210-$280 In a declaration, Robert Bentley, Esq., at Deloitte Tax, disclosed that the firm does not hold interest adverse to Eastman Kodak or its affiliated debtors. The application will be considered at the June 25 hearing. Objections are due by June 18. 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: Proposes to Expand PwC Work ------------------------------------------ Eastman Kodak Co. has filed a supplemental application to expand the scope of PricewaterhouseCoopers LLP's services. If approved, PwC would provide audit services with respect to the company's consolidated financial statements as of December 31, 2012. The firm would also review Eastman Kodak's unaudited consolidated quarterly financial information for each of the first three quarters in the year ending December 31, 2012, before its quarterly report is filed. The hourly rates that will be charged by PwC professionals for the additional services are: Personnel Hourly Rates --------- ------------ National Office $838 Assurance/Tax/Risk Assurance Partner $690 Director $479 Senior Manager $413 Manager $287 Senior Associate $221 Associate $144 PwC will also be reimbursed for any expenses incurred in connection with those services. A court hearing on the supplemental application is scheduled for June 18. Objections are due by June 14. 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: To Add 40 Jobs at Colorado Plant ----------------------------------------------- Eastman Kodak Co. is planning to add at least 40 new jobs in its coating and finishing operations in Colorado as part of an operations shutdown at its Rochester-based headquarters, The Wall Street Journal reported. The company is transferring the work because the Colorado plant has two coating machines, which produce thermal media used in Kodak picture kiosks, while there is only one in its Rochester plant. About 80 employees who work at the operation in Rochester will lose their jobs, according to the report. 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 ). FIN'L GUARANTY: Regulator Has Pressure Not to Favor Policyholders ----------------------------------------------------------------- Bibeka Shrestha at Bankruptcy Law360 reports that as the New York Department of Financial Services moves toward a historic takeover of troubled bond insurer Financial Guaranty Insurance Co., the regulator faces intense pressure not to favor FGIC's municipal bond policyholders at the expense of its structured finance policyholders, experts said. With FGIC's consent, DFS head Benjamin Lawsky petitioned a New York state court Monday for approval of a state-led rehabilitation of FGIC, according to Bankruptcy Law360. About FGIC Based in New York, Financial Guaranty Insurance Company -- http://www.fgic.com/-- is a bond insurer. As of March 31, 2010, Financial Guaranty had admitted assets of $1.807 billion against total liabilities of $3.447 billion. Financial Guaranty in June agreed to be taken over by New York insurance regulators. The result will be a rehabilitation proceeding presided over by the state court. As an insurance company, Financial Guaranty isn't eligible for bankruptcy reorganization. If it's eventually liquidated, the liquidation will be supervised by the state court, not federal bankruptcy court. Financial Guaranty is a wholly owned subsidiary of FGIC Corporation, an insurance holding company. FGIC Corp. filed for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No. 10-14215) on Aug. 3, 2010. Paul M. Basta, Esq., and Brian S. Lennon, Esq., at Kirkland & Ellis LLP, in New York, serve as counsel to FGIC Corp. Garden City Group, Inc., is the Debtor's claims and noticing agent. The Official Committee of Unsecured Creditors tapped David Capucilli, Esq., at Morrison & Foerster LLP, in New York as its counsel. The Debtor disclosed $11,539,834 in assets and $391,555,568 in liabilities as of the Petition Date. FGIC Corp. on April 23, 2012, won the signature of the bankruptcy judge of an order confirming a Chapter 11 plan that replaces a prepackaged reorganization that fell apart. The basis for the confirmed plan is an agreement where the insurance subsidiary will contribute $10 million so the cash distribution to unsecured creditors will be in the range of 5.5% to 6%. FREDERICK'S OF HOLLYWOOD: Posts $3.3MM Income in April 28 Qtr. -------------------------------------------------------------- Frederick's of Hollywood Group Inc. filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing net income of $3.31 million on $30.18 million of net sales for the three months ended April 28, 2012, compared with a net loss of $387,000 on $32.59 million of net sales for the three months ended April 30, 2011. The Company reported a net loss of $2.55 million on $91.06 million of net sales for the nine months ended April 28, 2012, compared with a net loss of $4.87 million on $93.79 million of net sales for the nine months ended April 30, 2011. The Company's balance sheet at April 28, 2012, showed $43.69 million in total assets, $45.65 million in total liabilities and a $1.95 million total shareholders' deficiency. Thomas Lynch, the Company's Chairman and Chief Executive Officer, stated, "The positive steps that we have taken over the past two years to streamline and improve our operations have brought us closer to long term profitability. While there is still much left to accomplish, the Company now has a more stable foundation upon which to build. As a result of these positive steps, we recently secured a $24 million revolving credit line, which we believe is a sign of confidence for our business from the financial markets." A copy of the Form 10-Q is available for free at: http://is.gd/1rgxD7 About Frederick's of Hollywood Frederick's of Hollywood Group Inc. (NYSE Amex: FOH) -- http://www.fredericks.com/-- through its subsidiaries, sells women's intimate apparel, swimwear and related products under its proprietary Frederick's of Hollywood brand through 122 specialty retail stores, a world-famous catalog and an online shop. Frederick's of Hollywood sought bankruptcy in July 10, 2000. On Dec. 18, 2002, the court approved the company's plan of reorganization, which became effective on Jan. 7, 2003, with the closing of the Wells Fargo Retail Finance exit financing facility. FULLER BRUSH: Intends to Sell Business by August ------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Fuller Brush Co. said in a court filing this week that it is "working expeditiously" to sell the business by "early August." The statements were made in the company's first request for an enlargement of the exclusive right to propose a reorganization plan. If granted by the bankruptcy judge in Manhattan at a June 27 hearing, the deadline will be pushed out by three months to Sept. 19. About The Fuller Brush Company The Fuller Brush Company -- http://www.fuller.com/-- sells branded and private label products for personal care, commercial and household cleaning and has a current catalog of 2,000 cleaning products. Some of Fuller's retail partners include Home Trends, Bi-Mart, Byerly's, Lunds, Home Depot, Do-It-Best, Primetime Solutions, Vermont Country Store and Starcrest. Founded in 1906 and based in Great Bend, Kansas, The Fuller Brush Company, Inc., and its parent, CPAC, Inc., filed for Chapter 11 protection (Bankr. S.D.N.Y. Case Nos. 12-10714 and 12-10715) in Manhattan on Feb. 21, 2012. Fuller Brush filed for bankruptcy five years after the company was taken over by private equity firm Buckingham Capital Partners. Fuller said it will be business as usual while undergoing Chapter 11 restructuring. But it said that while in reorganization, it intends to trim about half of the current catalog of cleaning products. Herrick Feinstein LP is the bankruptcy counsel. Fuller, which has 180 employees as of the Chapter 11 filing, disclosed $22.9 million in assets and $50.9 million in debt. The official committee of unsecured creditors has tapped the law firm of Kelley Drye & Warren LLP as counsel. The reorganization is being financed with a $5 million loan from an affiliate of Victory Park Capital Advisors LLC, the secured lender owed $22.7 million that plans to buy the business in exchange for debt. GENERAL AUTO: Won't Have Creditors Committee -------------------------------------------- General Auto Building, LLC, won't have a statutory committee of unsecured creditors after the U.S. Trustee was unable to appoint one pursuant to 11 U.S.C. 1102(a). Despite efforts to contact eligible unsecured creditors, the U.S. Trustee said it has not received a sufficient number of creditors willing to serve on a committee of unsecured creditors. General Auto Building, LLC, filed for Chapter 11 bankruptcy (Bankr. D. Ore. Case No. 12-31450) on March 2, 2012. The Debtor is an Oregon limited liability company formed in 2007 with its principal place of business in Spokane, Washington. It was formed to renovate and lease its namesake commercial property located at 411 NW Park Avenue, Portland, Oregon. As of the Petition date, the Debtor has developed virtually all of the General Automotive Building and has leased approximately 98% of the building's space to retail and commercial tenants. The Debtor continues to seek tenants for the remaining spaces. Judge Elizabeth L. Perris presides over the case. Albert N. Kennedy, Esq., and Ava L. Schoen, Esq., at Tonkon Torp LLP, serve as the Debtor's counsel. The Debtor estimated $10 million to $50 million in assets and debts. HAWKER BEECHCRAFT: Committee Taps Akin Gump as Counsel ------------------------------------------------------ BankruptcyData.com reports that Hawker Beechcraft's official committee of unsecured creditors filed with the U.S. Bankruptcy Court motions to retain Akin Gump Strauss Hauer & Feld (Contact: David H. Botter) as counsel at these hourly rates: partner at $570 to $1,200, senior counsel and counsel at $425 to $850, associate at $350 to $625 and paraprofessional at $150 to $310 and Kurtzman Carson Consultants (Contact: Albert Kass) as information agent. About Hawker Beechcraft Hawker Beechcraft Acquisition Company, LLC, headquartered in Wichita, Kansas, manufactures business jets, turboprops and piston aircraft for corporations, governments and individuals worldwide. Hawker Beechcraft reported a net loss of $631.90 million on $2.43 billion of sales in 2011, compared with a net loss of $304.30 million on $2.80 billion of sales in 2010. Hawker Beechcraft Inc. and 17 affiliates filed for Chapter 11 reorganization (Bankr. S.D.N.Y. Lead Case No. 12-11873) on May 3, 2012, having already negotiated a plan that eliminates $2.5 billion in debt and $125 million of annual cash interest expense. The plan, to be filed by June 30, will give 81.9% of the new stock to holders of $1.83 billion of secured debt, while 18.9% of the new shares are for unsecured creditors. The proposal has support from 68% of secured creditors and holders of 72.5% of the senior unsecured notes. Hawker is 49%-owned by affiliates of Goldman Sachs Group Inc. and 49%-owned by Onex Corp. The Company's balance sheet at Dec. 31, 2011, showed $2.77 billion in total assets, $3.73 billion in total liabilities and a $956.90 million total deficit. Other claims include pensions underfunded by $493 million. Hawker's legal representative is Kirkland & Ellis LLP, its financial advisor is Perella Weinberg Partners LP and its restructuring advisor is Alvarez & Marsal. Epiq Bankruptcy Solutions LLC is the claims and notice agent. Sidley Austin LLP serves as legal counsel and Houlihan Lokey Howard & Zukin Capital Inc. serves as financial advisor to the DIP Agent and the Prepetition Agent. Wachtell, Lipton, Rosen & Katz represents an ad hoc committee of senior secured prepetition lenders holding 70% of the loans. Milbank, Tweed, Hadley & McCloy LLP represents an ad hoc committee of holders of the 8.500% Senior Fixed Rate Notes due 2015 and 8.875%/9.625% Senior PIK Election Notes due 2015 issued by Hawker Beechcraft Acquisition Company LLC and Hawker Beechcraft Notes Company. The members of the Ad Hoc Committee -- GSO Capital Partners, L.P. and Tennenbaum Capital Partners, LLC -- hold claims or manage accounts that hold claims against the Debtors' estates arising from the purchase of the Senior Notes. Deutsche Bank National Trust Company, the indenture trustee for senior fixed rate notes and the senior PIK-election notes, is represented by Foley & Lardner LLP. An Official Committee of Unsecured Creditors appointed in the case has selected Daniel H. Golden, Esq., and the law firm of Akin Gump Strauss Hauer & Feld LLP as legal counsel. HOUGHTON MIFFLIN: Schedules Filing Extended to July 9 ----------------------------------------------------- The Bankruptcy Court granted Houghton Mifflin Harcourt Publishing Company and its affiliated debtors an additional 35 days from the petition date, through and including July 9, 2012, to file their schedules of assets and liabilities and statements of financial affairs. If an order confirming a plan of reorganization is entered on or before July 9, the Debtors will not be required to file Schedules and Statements as required under section 521(a) of the Bankruptcy Code and Bankruptcy Rule 1007(b) and (c). 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. The Debtor disclosed assets of $2.68 billion and debt totaling $3.535 billion as of the Chapter 11 filing. In March 2012, significant holders of claims under the Debtors' first lien credit facility and 10.5% Notes formed an informal creditor group. Since its formation, the Informal Creditor Group and its advisors have engaged in constructive dialogue with the Debtors regarding a comprehensive restructuring of the Debtors' outstanding debt and equity. After months of good faith, arm's-length negotiations among the Debtors and the Informal Creditor Group and their advisors, the parties reached an agreement on the terms of a restructuring to completely delever the Debtors' balance sheet. The Debtors have commenced these cases to implement the terms of the agreement. The Debtors filed a Prepackaged Joint Plan of Reorganization together with their Chapter 11 petitions. Although the solicitation period remains open, as of the Petition Date, 90.3% of the total amount of creditors entitled to vote on the Prepackaged Plan voted in favor of the Plan and 76% in amount of equity holders entitled to vote accepted the Plan. The Debtors did not receive any ballots rejecting the Prepackaged Plan. As a result of the overwhelming support for the Prepackaged Plan, the Debtors intend to move forward with confirmation of the Prepackaged Plan at the Court's earliest available date. Unsecured creditors are to be paid in full under the Plan. 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 Bankruptcy Court has scheduled a confirmation hearing on June 21 to approve the plan. HOUGHTON MIFFLIN: Can Hire Kurtzman Carson as Claims Agent ---------------------------------------------------------- Houghton Mifflin Harcourt Publishing Company and its affiliated debtors won Bankruptcy Court authority to employ Kurtzman Carson Consultants LLC as the claims and noticing agent in the case. The Debtors have estimated there are in excess of 4,650 creditors in the chapter 11 cases; and the receiving, docketing and maintaining of proofs of claim would be unduly time consuming and burdensome for the Clerk. Enter KCC. The Debtors need the firm to, among other things, (i) distribute required notices to parties in interest, (ii) receive, maintain, docket and otherwise administer the proofs of claim filed (if any) in the Debtors' chapter 11 cases, and (iii) provide other administrative services, as required by the Debtors, that would fall within the purview of services to be provided by the Clerk's Office. Prior to the Petition Date, the Debtors provided KCC a $50,000 retainer. The firm will first apply the retainer to all prepetition invoices, and thereafter, to have the retainer replenished to the original retainer amount, and thereafter, to hold the retainer during the chapter 11 cases as security for the payment of fees and expenses incurred. 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. The Debtor disclosed assets of $2.68 billion and debt totaling $3.535 billion as of the Chapter 11 filing. In March 2012, significant holders of claims under the Debtors' first lien credit facility and 10.5% Notes formed an informal creditor group. Since its formation, the Informal Creditor Group and its advisors have engaged in constructive dialogue with the Debtors regarding a comprehensive restructuring of the Debtors' outstanding debt and equity. After months of good faith, arm's-length negotiations among the Debtors and the Informal Creditor Group and their advisors, the parties reached an agreement on the terms of a restructuring to completely delever the Debtors' balance sheet. The Debtors have commenced these cases to implement the terms of the agreement. The Debtors filed a Prepackaged Joint Plan of Reorganization together with their Chapter 11 petitions. Although the solicitation period remains open, as of the Petition Date, 90.3% of the total amount of creditors entitled to vote on the Prepackaged Plan voted in favor of the Plan and 76% in amount of equity holders entitled to vote accepted the Plan. The Debtors did not receive any ballots rejecting the Prepackaged Plan. As a result of the overwhelming support for the Prepackaged Plan, the Debtors intend to move forward with confirmation of the Prepackaged Plan at the Court's earliest available date. Unsecured creditors are to be paid in full under the Plan. 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 Bankruptcy Court has scheduled a confirmation hearing on June 21 to approve the plan. HOUGHTON MIFFLIN: Has Green Light to Hire Paul Weiss as Counsel --------------------------------------------------------------- The Bankruptcy Court granted Houghton Mifflin Harcourt Publishing Company and its affiliated debtors authority to employ Paul, Weiss, Rifkind, Wharton & Garrison LLP as Chapter 11 counsel. Paul Weiss has been representing the Debtors since April 2009 in connection with various issues, including, without limitation, the Debtors' financing and capital structure. Paul Weiss' billing rates currently range from $830 to $1,120 per hour for partners, $760 to $795 per hour for counsel, $425 to $720 per hour for associates and $200 to $250 per hour for paraprofessionals. The attorneys who will have primary responsibility for representing the Debtors are: * Alan W. Kornberg (Partner) 34 years of experience $1,120 per hour; * Jeffrey D. Saferstein (Partner) 22 years of experience $1,100 per hour; * Tarun Stewart (Partner) 15 years of experience $1,010 per hour * Thomas V. de la Bastide III (Partner) 15 years of experience $985 per hour; * Elizabeth McColm (Partner) 13 years of experience $895 per hour * Stephen K. Koo (Counsel) 24 years of experience $760 per hour; * Philip Weintraub (Associate) 5 years of experience $695 per hour * Oksana Lashko (Associate) 4 years of experience $635 per hour * Abigail Clark (Associate) 2 years of experience $575 per hour; * Karen Zeituni (Associate) 2 years of experience $575 per hour; * Andrea F. Hernandez (Associate) Less than 1 year $425 per hour; Paul Weiss will also be reimbursed for necessary costs and expenses. Paul Weiss received a retainer from the Debtors in the amount of $500,000. Paul Weiss has applied $311,183 of the retainer to outstanding balances existing as of the Petition Date and $188,816 in fees and expenses remain outstanding. The remainder of the retainer will constitute a general retainer as security for postpetition services and expenses. Paul Weiss also received $2,199,339 from the Debtors in the 90 days prior to the filing of the Chapter 11 cases. Jeffrey D. Saferstein, Esq., attests that the partners, counsel, associates and paralegals of Paul Weiss (i) do not have any connection with any of the Debtors, their affiliates, their creditors or any other parties in interest, or their attorneys and accountants, (ii) are "disinterested persons'" as that term is defined in section 101(14) of the Bankruptcy Code, as modified by section 1107(b) of the Bankruptcy Code, and (iii) do not hold or represent any interest adverse to the Debtors or their estates. 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. The Debtor disclosed assets of $2.68 billion and debt totaling $3.535 billion as of the Chapter 11 filing. In March 2012, significant holders of claims under the Debtors' first lien credit facility and 10.5% Notes formed an informal creditor group. Since its formation, the Informal Creditor Group and its advisors have engaged in constructive dialogue with the Debtors regarding a comprehensive restructuring of the Debtors' outstanding debt and equity. After months of good faith, arm's-length negotiations among the Debtors and the Informal Creditor Group and their advisors, the parties reached an agreement on the terms of a restructuring to completely delever the Debtors' balance sheet. The Debtors have commenced these cases to implement the terms of the agreement. The Debtors filed a Prepackaged Joint Plan of Reorganization together with their Chapter 11 petitions. Although the solicitation period remains open, as of the Petition Date, 90.3% of the total amount of creditors entitled to vote on the Prepackaged Plan voted in favor of the Plan and 76% in amount of equity holders entitled to vote accepted the Plan. The Debtors did not receive any ballots rejecting the Prepackaged Plan. As a result of the overwhelming support for the Prepackaged Plan, the Debtors intend to move forward with confirmation of the Prepackaged Plan at the Court's earliest available date. Unsecured creditors are to be paid in full under the Plan. 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 Bankruptcy Court has scheduled a confirmation hearing on June 21 to approve the plan. HOUGHTON MIFFLIN: Moody's Corrects May 31 Ratings Release --------------------------------------------------------- Moody's Investors Service issued a correction to the May 31, 2012 ratings release of Houghton Mifflin Harcourt Publishers Inc. Moody's assigned Houghton Mifflin Harcourt Publishers Inc.'s (HMH) a B2 Corporate Family Rating (CFR), B2 Probability of Default Rating (PDR), SGL-3 speculative-grade liquidity rating, Ba2 senior secured revolver rating and B2 senior secured term loan rating based on the company's re-organized capital structure proposed upon completion of its pre-packaged bankruptcy. HMH intends to utilize the net proceeds from the term loan to fund $100 million of adequate protection payments to pre-petition lenders, fees and expenses associated with the bankruptcy, and for general corporate purposes. The rating outlook is stable. Moody's assumes in the ratings that HMH completes its proposed pre-packaged Chapter 11 bankruptcy reorganization based on the terms outlined in its May 11, 2012 Disclosure Statement. In the reorganization, the company plans to convert all of its $3.1 billion of pre-petition debt to equity. According to the company, approximately 90% of HMH's lenders and bondholders have agreed to the terms of the restructuring and Moody's assumes that the company emerges from bankruptcy by the end of June 2012. The debt restructuring will significantly reduce debt, leverage and cash interest expense and provides the company with additional financial flexibility to execute its planned investment strategy in an effort to stabilize and grow revenue. HMH's pre-petition debt instruments including its $250 million accounts receivable securitization facility will be terminated in conjunction with the bankruptcy reorganization. Assignments: Issuer: Houghton Mifflin Harcourt Publishers Inc. Corporate Family Rating, Assigned B2 Probability of Default Rating, Assigned B2 Speculative Grade Liquidity Rating, Assigned SGL-3 Senior Secured Bank Credit Facility (Term Loan), Assigned a B2, LGD4 - 54% Outlook Actions: Issuer: Houghton Mifflin Harcourt Publishers Inc. Outlook, Assigned Stable Ratings Rationale HMH's B2 CFR reflects the challenges associated with stabilizing and growing revenue in the K-12 education market due to ongoing pressure on school budgets, and HMH's marginal projected free cash flow generation given Moody's expectation that the company will increase investment spending. HMH's debt-to-EBITDA leverage is initially high (4.6x LTM 3/31/12 pro forma for the reorganization incorporating Moody's standard adjustments and factoring in cash pre-publication and restructuring costs as a reduction in EBITDA). Leverage is projected to decline to a 2.5x -- 3.0x range in the next 12-18 months as HMH resumes normal shipments in certain overseas markets that were negatively affected by the company's stricter enforcement of trade terms in 2011, its non-Basal K-12 and trade revenues increase, cash operational restructuring charges decline, and the benefits of the cost reduction program are realized. The projected leverage level is moderate for the B2 CFR, but Moody's considers the challenging market environment in which the company operates, the significant projected investment spending and marginal free cash flow as the more important rating drivers. HMH has a good market position within K-12 educational publishing, but the company is vulnerable to fluctuations in textbook adoption cycles and is dependent for a majority of revenue on state and local government funding that continues to face cutbacks or timing delays due to budget pressures. A broad portfolio of educational publishing products, relationships with school districts, large sales force and industry entry barriers support the market position. HMH continues to undergo a strategy shift to generate a larger share of its revenue from information/workflow system platforms and other services sold in K-12 education markets. The strategy is designed to generate recurring subscription revenue, further broaden underlying funding sources beyond state and local government Basal textbook budgets, and reduce reliance on volatile textbook adoptions. HMH is several years into the development of the strategy and has begun to win new business. Moody's expects HMH will utilize the additional financial flexibility gained through the bankruptcy to accelerate its strategic investments to expand its non-Basal product and service offerings and seek to stabilize its textbook business in the face of challenging market conditions. The initiatives will require continual investment over the next few years that will limit free cash flow generation. There are meaningful risks to achieving the company's growth plan including factors that are not in HMH's control such as state and local budget appropriations, the timing of expenditures, and the actions of competitors. The competitive landscape for non-Basal disciplines is also more fragmented than in K-12 publishing. Moody's projects the K-12 Basal textbook market will decline in a mid single digit percentage range in 2012 with new adoptions down meaningfully. An anticipated improvement in the new adoption calendar along with HMH's other revenue initiatives should support modest growth for the company in 2013. The SGL-3 speculative-grade liquidity rating reflects HMH's adequate liquidity position supported by existing cash (approximately $295 million as of 3/31/12 pro forma for the proposed refinancing) and an undrawn $250 million revolving credit facility that are projected to be sufficient to fund the company's highly seasonal cash flow (which varies by $200 - $300 million over the course of a year) and the 1% required annual term loan amortization. Moody's projects HMH will have flat to moderately positive free cash flow (less than $10 million) over the next 12 months and a meaningful cushion within the term loan financial maintenance covenants (maximum debt-to-EBITDA leverage and minimum interest coverage). Moody's does not expect the availability on the revolver to fall below the specified levels ($20 million or more depending on the borrowing base at the time) that would trigger the requirement to maintain a minimum 1.0x fixed charge coverage ratio. The senior secured credit facilities are joint and several obligations of co-borrowers HMH, Houghton Mifflin Harcourt Publishing Company and HMH Publishers LLC and consist of an unrated $250 million 5-year revolver and a $250 million 6-year term loan. The revolver is supported by a first lien on receivables and inventory and a second lien on other assets. Moody's believes the term loan collateral package (consisting of a second lien on receivables and inventory and a first lien on other assets) is less liquid and weaker than that of the revolver. The term loan is thus ranked behind the revolver in Moody's loss given default notching framework. Revolver borrowings are governed by a borrowing base consisting of a percentage of eligible receivables and inventory that is projected to range from $140 - $450 million based on the company's highly seasonal business. The credit facilities are guaranteed by HMH Holdings (Delaware), Inc. (HMH Holdings), which is the ultimate parent of the co-borrowers. The stable rating outlook reflects the company's adequate liquidity position that should support additional organic and acquisition investment flexibility over the next 12-18 months to execute growth initiatives and manage the effects of ongoing pressure on state and local government budgets. Moody's also assumes in the stable rating outlook that the shareholder base consisting initially of a group of distressed debt investors led by Paulson & Co. will not seek to distribute cash to shareholders or pursue other leveraging events over the near-term, although the investors' exit strategy creates event risk. The ratings could be downgraded if HMH is unable to stabilize revenue, if investment spending or operating weakness leads to negative free cash flow, or the company increases leverage through acquisitions or distributions to shareholders. A deterioration of liquidity would reduce the company's flexibility to invest and execute its growth initiatives and could also lead to downward rating pressure. The ratings could be upgraded if the K-12 educational spending market demonstrates stability, and HMH is able to stabilize and grow revenue on a consistent basis and generate free cash flow-to- debt that exceeds 7.5% of debt. HMH would also need to maintain a solid liquidity position to be considered for an upgrade. The principal methodology used in rating HMH was the Global Publishing Industry Methodology published in December 2011. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. HMH Holdings, headquartered in Boston, MA, is one of the three largest U.S. education publishers focusing on the K-12 market with approximately $1.3 billion of revenue for the twelve months ended March 2012. IL LUGANO: Plan to be Funded by Cash on Hand and Sale Proceeds -------------------------------------------------------------- Il Lugano LLC submitted to the U.S. Bankruptcy Court for the District of Connecticut a Disclosure Statement explaining the proposed Amended Plan of Reorganization. According to the Disclosure Statement, the sources of cash necessary for the payment of Allowed Claims under the Plan will be cash on hand as of the Effective Date from the operations of the Debtor, the net proceeds from the sale of the Debtor's assets, and any cash generated or received by the Debtor after the Effective Date from any other source. Under the Plan, the Debtor proposes that, among other things: 1. Class 3 -- SC Vegas Secured Claim ($143,754) will receive from the Debtor a cash payment equal to the Allowed amount of the claim within 30 days after the later of (a) the closing on a sale of the Collateral that secures the Allowed SC Vegas Secured Claim or (b) the Allowance Date with respect to the Allowed SC Vegas Secured Claim. 2. Class 4 -- Suffolk Secured Claim ($97,779) will receive from the Debtor a cash payment from the Collateral that secures the Suffolk Secured Claim equal to the Allowed amount of the Claim within 30 days of the Allowance Date with respect to the Allowed Suffolk Secured Claim. 3. Class 5 -- DB Secured Claim ($0) will retain its Lien in the Collateral that secures its Claim or the proceeds of the Collateral. 4. Class 6 -- Convenience Class ($129,962): except to the extent that a Holder of an Allowed Convenience Claim has been paid prior to the Initial Distribution Date, or agrees to a different treatment, each Holder of an Allowed Convenience Claim will be paid the lesser of (a) the Allowed amount of its Claim in full or (b) $10,000 in cash. 5. Class 7 -- Miscellaneous Secured Claims ($62,219) will receive (a) cash equal to the value of its Allowed Miscellaneous Secured Claim; (b) the Collateral securing the Allowed Miscellaneous Secured Claim, or (c) such other, less favorable treatment as to which such Holder and the Debtor agree upon in writing. 6. Class 8 -- General Unsecured Claims ($1,067,837) will receive from the Debtor a cash payment equal to the Allowed amount of the Claim within 30 days after the later of (a) the closing on a sale of the Collateral that secures the Allowed SC Vegas Secured Claim; or (b) the Allowance Date with respect to an Allowed General Unsecured Claim; provided, however, that no Distributions will be made to Holders of Allowed General Unsecured Claims until the Allowed SC Finance Administrative Claim has been paid in full. 7. Class 9 -- Interests Holder will retain its interests in reorganized Debtor. A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/IL_LUGANO_ds.pdf About Il Lugano Il Lugano LLC's main asset is a four-star, boutique-styled, luxury condominium and hotel property located in Ft. Lauderdale, Florida. Il Lugano filed for Chapter 11 bankruptcy (Bankr. D. Conn. Case No. 08-50811) on Aug. 29, 2008, Judge Alan H.W. Shiff presiding. Douglas J. Buncher, Esq. -- dbuncher@neliganlaw.com-- at Neligan Foley LLP in Dallas, Texas, and James Berman, Esq. -- jberman@zeislaw.com-- at Zeisler and Zeisler in Bridgeport, Connecticut, serve as the Debtor's bankruptcy counsel. When the Debtor filed for protection from its creditors, it estimated assets between $50 million and $100 million and debts between $1 million and $10 million. IL Lugano filed for bankruptcy to prevent any adverse judgment and subsequent enforcement actions against IL Lugano in a lawsuit filed by EPI NCL, LLLC, in the Circuit Court of the 17th Judicial Circuit of Broward County, Florida, which was set for trial on September 2, 2008, and to allow adequate time for completion of the restaurant and sale of the property. SageCrest II is also in chapter 11 proceedings (Bankr. D. Conn. Case No. 08-50754) before the Connecticut Bankruptcy Court. INFINITE SPIRITS: SHAKERS Vodka Brand to be Auctioned on June 26 ---------------------------------------------------------------- The SHAKERS(R) Vodka brand and equipment will be sold via online auction now through Tuesday, June 26 at noon central daylight time. Maas Companies Inc. of Rochester, Minn., an auction company specializing in selling real estate, industrial property and special assets is conducting the auction. Infinite Spirits, Inc., the maker of SHAKERS Vodka, filed voluntary bankruptcy protection in early 2012. Launched in 2003 by Infinite Spirits, Inc., SHAKERS Vodka is an ultra premium American spirit and brand. SHAKERS won rave accolades, scoring a perfect 100 from Wine Enthusiast, a first for a vodka, along with double gold medals and Best of Show from the San Francisco Spirit Competition. Unique to SHAKERS is its patented extractive distillation process, custom filtration and premium grain raw materials. In 2009, SHAKERS generated more than 1.6 billion impressions via social media, local events and radio. Created by the founders of Pete's Wicked Ale, a craft brewing phenomena, SHAKERS Vodka offers solid and unique product lines for a new owner. The SHAKERS brand will be sold along with bottling equipment and packaging materials, including recipes and processes, patents for the bottle design and distillation process, and trademarks for the distinctive penguin logo and SHAKERS name. The bottling line and surplus equipment will be sold in 39 lots unless an entirety purchase is accepted in advance of the auction date. The online auction process allows bidders to monitor the bidding activity and submit their bid any time prior to June 26 at noon CDT. Entirety offers are encouraged and must be presented by June 21. Potential buyers are encouraged to inspect the auction property Monday, June 25, 2012, onsite at 1262 98th Ave. NE, Blaine, Minn. between noon and 5 p.m. CDT or by private appointment. INNER CITY: Seeks Extension to File Creditor-Payment Plan --------------------------------------------------------- Marie Beaudette at Dow Jones' DBR Small Cap reports that Inner City Media Corp. is seeking to keep control over its Chapter 11 case for another two months as awaits regulatory approval to sell its assets. About Inner City On Aug. 23, 2011, affiliates of Yucaipa and CF ICBC LLC, Fortress Credit Funding I L.P., and Drawbridge Special Opportunities Fund Ltd., signed involuntary Chapter 11 petitions for Inner City Media Corp. and its affiliates (Bankr. S.D.N.Y. Case Nos. 11-13967 to 11-13979) to collect on a $254 million debt. The Petitioning Creditors are party to the senior secured credit Facility pursuant to which they (or their predecessors in interest) extended $197 million in loans to the Alleged Debtors to be used for general corporate purposes. More than two years ago, the Alleged Debtors defaulted under the Senior Secured Credit Facility, and in any event the entire amount of principal and accrued and unpaid interest and fees became immediately due and payable on Feb. 13, 2010. Inner City Media's affiliates subject to the involuntary Chapter 11 are ICBC Broadcast Holdings, Inc., Inner-City Broadcasting Corporation of Berkeley, ICBC Broadcast Holdings-CA, Inc., ICBC- NY, L.L.C., ICBC Broadcast Holdings-NY, Inc., Urban Radio, L.L.C., Urban Radio I, L.L.C., Urban Radio II, L.L.C., Urban Radio III, L.L.C., Urban Radio IV, L.L.C., Urban Radio of Mississippi, L.L.C., and Urban Radio of South Carolina, L.L.C. Judge Shelley C. Chapman granted each of Inner City Media Corporation and its debtor affiliates relief under Chapter 11 of the United States Code. The decision came after considering the involuntary petitions, and the Debtors' answer to involuntary petitions and consent to entry of order for relief and reservation of rights. Attorneys for Yucaipa Corporate Initiatives Fund II, L.P. and Yucaipa Corporate Initiatives (Parallel) Fund II, L.P. are John J. Rapisardi, Esq., and Scott J. Greenberg, Esq., at Cadwalader, Wickersham & Taft LLP. Attorneys for CF ICBC LLC, Fortress Credit Funding I L.P., and Drawbridge Special Opportunities Fund Ltd. are Adam C. Harris, Esq., and Meghan Breen, Esq., at Schulte Roth & Zabel LLP. Akin Gump Strauss Hauer & Feld LLP serves as the Debtors' counsel. Rothschild Inc. serves as the Debtors' financial advisors and investment bankers. GCG Inc. serves as the Debtors' claims agent. The United States Trustee said that an official committee under 11 U.S.C. Sec. 1102 has not been appointed in the bankruptcy case of Inner City Media because an insufficient number of persons holding unsecured claims against the Debtor has expressed interest in serving on a committee. INTERLINE BRANDS: Moody's Cuts CFR/PDR to 'B2'; Outlook Stable -------------------------------------------------------------- Moody's Investors Service downgraded Interline Brands, Inc.'s corporate family and probability of default ratings to B2 from B1. In a related rating action, Moody's confirmed the B2 rating on the company's existing senior subordinated notes and assigned a Caa1 rating to the proposed senior unsecured notes. In addition, Moody's assigned a speculative grade liquidity assessment of SGL- 3. The rating outlook is stable. The following ratings were affected by these actions: Corporate Family Rating downgraded to B2 from B1 Probability of Default Rating downgraded to B2 from B1 $300 million Senior Subordinated Notes due 2018 confirmed at B2 (LGD3, 46%) (previously LGD4, 68%) $375 million Senior Unsecured Notes due 2018 rated Caa1 (LGD5, 84%) Speculative Grade Liquidity assessment of SGL-3 assigned Ratings Rationale The downgrade reflects the increase in pro forma adjusted debt leverage to approximately 6.5x debt-to-EBITDA from 3.5x at March 30, 2012 following the partially debt-financed purchase of the firm by Goldman Sachs Capital Partners and P2 Capital Partners. The action also takes into consideration Moody's belief that Interline has not met Moody's expectations for organic revenue growth or operating margin expansion over the past 12 months. The B2 corporate family rating reflects Moody's expectations that Interline's adjusted debt-to-EBITDA will remain elevated over the next 12 to 18 months. It also considers Moody's expectations that interest coverage, measured as adjusted (EBITDA-Capex) to adjusted interest expense, could weaken to close to 1.5x by the end of fiscal 2013 from 2.9x at March 30, 2012 (ratios incorporate Moody's standard accounting adjustments). However, also factored into the rating are Interline's stable mid- to high-single digit adjusted EBITA margins and its ability to consistently generate cash through the recession. Over 50% of total revenues are tied to janitorial/sanitation and plumbing products that benefit from relatively non-cyclical demand, particularly from large multi- family housing and institutional facilities, adding further support to the rating. The rating also takes into account Interline's diverse customer base, its broad national distribution network and its success in improving its cost structure during the downturn through facility consolidations. The SGL-3 speculative grade liquidity assessment reflects Interline's adequate liquidity, limited primarily by its weak pro forma cash position following the proposed transaction. The company's liquidity profile is supported by a large asset-based revolver with sufficient remaining availability to cover potential shortfalls. The assessment also considers the lack of debt maturities until the revolver expires in 2017, which is a credit positive. It acknowledges that the company generates sufficient cash flow to cover annual working capital requirements and capital expenditures. However, Interline expects to apply free cash flow to debt reduction over the next two to three years, which will limit its ability to build short-term liquidity. Finally, alternate liquidity options are constrained since the company's assets are encumbered to secure its bank borrowings. The stable outlook reflects Moody's view that stable demand from Interline's key end markets will enable it to continue generating healthy free cash flow until a sustainable economic recovery takes hold. This should allow the company to gradually reduce balance sheet debt over the next 12 to 18 months. The corporate family and probability of default ratings are being reassigned to Interline Brands, Inc. (a Delaware Corp), the holding company issuing the proposed senior unsecured notes, from the operating company, Interline Brands, Inc. (a New Jersey Corp). The reason for this change is that the holding company is now the highest-ranked issuer of Moody's-rated debt in Interline's corporate structure. The company may experience positive ratings movement if it is able to achieve and maintain adjusted (EBITDA-Capex) to adjusted interest expense above 2.0x and adjusted debt-to-EBITDA sustained below 3.8x (all ratios incorporate Moody's standard accounting adjustments). In addition, an upgrade could result from demonstrating the ability to extract greater value from its acquisitions through improved organic sales growth rates. The ratings or outlook may come under pressure if the company's liquidity profile deteriorates or if operating performance weakens such that EBITA margin remains in the mid-single digits. Also, the rating or outlook could be revised downward if Interline pursues debt-financed acquisitions of lower margin businesses. In addition, adjusted debt-to-EBITDA sustained above 5.0x or adjusted (EBITDA-Capex) to adjusted interest expense below 1.5x could result in ratings pressures. The Caa1 rating assigned to the $375 million senior unsecured notes due 2018 is two notches below the corporate family rating. This is because the notes are being issued by the holding company and are therefore structurally subordinated to the existing senior subordinated notes issued by the operating company. As a result, the rating reflects the notes position as the (structurally) junior-most debt in the capital structure. The B2 rating on the existing $300 million senior subordinated notes due 2018 is in line with the corporate family rating. This is because the notes, which were previously rated one notch below the corporate family rating, now benefit from the structural subordination of the senior unsecured notes. The principal methodology used in rating Interline Brands, Inc. was the Global Distribution & Supply Chain Services Industry Methodology published in November 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. Interline Brands, Inc., headquartered in Jacksonville, FL, is a national distributor and direct marketer of maintenance, repair and operations products. Revenues for the 12 months ended March 30, 2012, totaled approximately $1.27 billion. LI-ON MOTORS: Incurs $241,000 Net Loss in April 30 Quarter ---------------------------------------------------------- Li-ion Motors Corp. filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $241,019 on $48,250 of total revenue for the three months ended April 30, 2012, compared with a net loss of $53,957 on $287,457 of total revenue for the same period during the prior year. The Company reported a net loss of $2.64 million on $765,946 of total revenue for the nine months ended April 30, 2012, compared with net earnings of $522,544 on $541,930 of total revenue for the same period during the prior year. The Company's balance sheet at April 30, 2012, showed $2.14 million in total assets, $4.72 million in total liabilities and a $2.58 million total stockholders' deficiency. A copy of the Form 10-Q is available for free at: http://is.gd/ZQlgOu About Li-On Motors Las Vegas, Nev.-based Li-ion Motors Corp. was incorporated under the laws of the State of Nevada in April 2000. The Company is currently pursuing the development and marketing of electric powered vehicles and products based on the advanced lithium battery technology it has developed. The Progressive Insurance Automotive X-Prize, competition was announced in April 2008 as a way to spur the development of clean, high-mileage vehicles, and is funded for a total of $10 million, which will be divided among three separate categories. The Company was the winner in its entry class. On Oct. 27, 2010, the Company received net proceeds of approximately $2.30 million from X-Prize and was recorded as other income in the Company's consolidated statement of operations for the year ended July 31, 2011. The Company does not currently have any arrangements for financing and it may not be able to find such financing if required. Obtaining additional financing would be subject to a number of factors, including investor sentiment. Market factors may make the timing, amount, terms or conditions of additional financing unavailable to it. These uncertainties raise substantial doubt about the ability of the Company to continue as a going concern. Madsen & Associates, CPA's Inc., Murray, Utah, expressed substantial doubt about Li-on Motors' ability to continue as a going concern. The independent auditors noted that the Company did not have any revenue from vehicle sales in 2011, does not have cash flows to support its current operations and needs reserve to cover expenses in future periods as the Company continues to incur losses from operations. LICHTIN/WADE LLC: Bankr. Administrator Wants Confirmation Denied ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of North Carolina continued until July 10, 2012, at 9:30 a.m., the hearing to consider adequacy of the Disclosure Statement explaining Lichtin/Wade LLC's Chapter 11 Plan. Previously, the Bankruptcy Administrator asked the Court to deny confirmation of the Debtor's Chapter 11 Plan dated April 11, 2012. The Bankruptcy Administrator believes that the Debtor's plan, among other things: -- is not feasible; and -- fails to satisfy the absolute priority rule. According to the Bankruptcy Administrator, the Debtor believes that the value of the buildings and building pads total $38.3 million. The Debtor estimates that it will receive yearly rental income of approximately $4 million per year. The property is subject to a notes and deeds of trust held by ERGS in the amount of $43,518,388. The Debtor intends to fund its plan through the collection of rents. The Bankruptcy Administrator notes that under the Plan, among other things: 1. The administrative claims will be paid within ten days of the effective date. If administrative claims are not paid within ten days of the effective date, they will accrue interest at 6% until paid in full. 2. Class 2 consists of real property tax claims. The Debtor owes this class approximately $460,000. The debtor proposes to pay the class in quarterly installments over five years from the date relief. 3. The Debtor proposes to pay priority tax claims within 5 years of the date of relief. 4. Class 4 consists of the secured claims of ERGS II, LLC. The creditor holds four separate notes that total approximately $43.5 million. Notes 1, 3, and 4 are secured by the all of the land. 5. The Debtors propose to combine the notes into one note and provide it a value of $35,250,000. 6. The Debtor proposes to make interest only payments on the note for 18 months at the interest rate of 4.25%. After the 18 months, the Debtor proposes to amortize the balance over 30 years with the rate of interest. A balloon payment of the full amount will be due after the seventh year. The Debtor estimates that the monthly payment on the note will be $173,408. 7. The Debtor proposes treat Note 2 as the land note. The Debtor proposes to treat the note a secured in the amount of $3,140,000. The Debtor proposes pay the note monthly interest only payments at 4.25% on the balance owed. The Bankruptcy Administrator estimates that the monthly payment will be $11,120 per month. The Debtor does not propose any principal and interest payments. The Debtor does not propose a maturity date for said note. The Bankruptcy Administrator asserts that the treatment of Note 2 is vague as to what collateral secures the note. Each note is secured by all of the property owned by the Debtor. In paragraph 4 of the Note 2 treatment, the Debtor proposes that the creditor release its liens against the three building pads upon certain benchmarks being met. The Debtor proposes that upon payment of $1.1 million from the building note the creditor will release its lien on a building pad. Upon receiving $2.2 million from the building note, the creditor will release its lien on another building pad. The creditor will do the same upon the payment of $3.3 million on the last building pad. Based on the proposed building note amortization, the Debtor will own three building pads free and clear of liens in less than three years. The Bankruptcy Administrator believes that the treatment is not fair and equitable. The debtor cannot force a secured creditor to remove its lien before the claim is paid. About Lichtin/Wade Lichtin/Wade LLC filed for Chapter 11 bankruptcy (Bankr. E.D.N.C. Case No. 12-00845) on Feb. 2, 2012. Lichtin/Wade, based in Wake County, North Carolina, owns and operates an office park known as the Offices at Wade, comprised of two Class A office buildings and vacant land approved for additional office buildings. The buildings are known as Wade I and Wade. Each building is over 90% leased, with only three vacant spaces remaining between the two buildings. Judge Randy D. Doub presides over the case. Trawick H. Stubbs, Jr., Esq., and Laurie B. Biggs, Esq., at Stubbs & Perdue, P.A., serve as the Debtor's counsel. The Debtor estimated $10 million to $50 million in assets and debts. The petition was signed by Harold S. Lichtin, president of Lichtin Corporation, the Debtor's manager. LIGHTSQUARED INC: Theoretically Has Cash Use to November 2013 ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that LightSquared Inc. received permission from the bankruptcy court theoretically entitling the company to use cash representing collateral for the two secured lender groups until November 2013. Mr. Rochelle notes that the permission to the use so-called cash collateral is theoretical because the lenders at any time can return to bankruptcy court claiming the use of cash should be halted because they're not adequately protected from diminution in their collateral. Authority to use cash resulted from three days of hearings and negotiations this week. Mr. Rochelle's report relates that the two lender groups are comprised of the so-called Inc. lenders owed $322.3 million and the so-called LP lenders on account of the $1.7 billion owing from a secured borrowing in October 2010 by LightSquared LP. Both lender groups are given new liens on their same collateral packages. LightSquared must pay professional fees incurred by both lender groups. Neither lender group was given liens on collections from lawsuits. The LP lenders will be paid $6.25 million a month, in addition to reimbursement for professional fees. If it's later decided that the LP lenders were not fully secured and weren't entitled to payment of interest and fees, the amounts paid will be deducted from principal. According to the report, the official creditors' committee was given permission to use $100,000 of the lenders' cash to investigate whether any of the liens can be set aside in bankruptcy. Any challenge to lien validity must be made by Aug. 11. If LightSquared's business is sold, the lenders will have the right to bid at auction using secured debt rather than cash. 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. MSR RESORT: Deloitte Tax OK'd as the Arizona Biltmore Tax Advisor ----------------------------------------------------------------- The Hon. Sean H. Lane of the U.S. Bankruptcy Court for the Southern District of New York authorized MSR Resort Golf Course LLC, et al., to employ Deloitte Tax LLP as the tax advisor to the Arizona Biltmore Debtors. The scope of engagement will include, among other things, these connection with representation and assistance for refund claims filed by and audit issued to KSL Biltimore resort, Inc. and CNL Resort Lodging Tenant Corporation: -- development and document of underlying facts; -- gather and review supporting documentation; and -- interface with Arizona Department of Revenue and City of Phoenix tax officials. The hourly rates of the firm's personnel are: Partner $480 Director $465 Senior Manager $420 Manager $350 Senior $300 Associate $200 The Arizona Biltmore Debtors will be authorized to indemnify and hold harmless Deloitte Tax pursuant to terms and conditions of the Deloitte Tax Engagement Letter; provided, however, that is no event will Deloitte Tax be indemnified or receive contribution, or other payment from the Arizona Biltmore Debtors from and against any actions or claims that a court of competent jurisdiction has determined by final order to have resulted from bad faith, self dealing, breach of fiduciary duty (if any), gross negligence, or willful misconduct on the part of Deloitte Tax. A full-text copy of the order with the Deloitte Tax Engagement Letter is available for free at: http://bankrupt.com/misc/MSRRESORT_deloitte_agreement.pdf About MSR Resort MSR Hotels & Resorts, formerly known as CNL Hotels & Resorts Inc., owns a portfolio of eight luxury hotels with over 5,500 guest rooms, including the Arizona Biltmore Resort & Spa in Phoenix, the Ritz-Carlton in Orlando, Fla., and Hawaii's Grand Wailea Resort Hotel & Spa in Maui. On Jan. 28, 2011, CNL-AB LLC acquired the equity interests in the portfolio through a foreclosure proceeding. CNL-AB LLC is a joint venture consisting of affiliates of Paulson & Co. Inc., a joint venture affiliated with Winthrop Realty Trust, and affiliates of Capital Trust, Inc. Morgan Stanley's CNL Hotels & Resorts Inc. owned the resorts before the Jan. 28 foreclosure. Following the acquisition, five of the resorts with mortgage debt scheduled to mature on Feb. 1, 2011, were sent to Chapter 11 bankruptcy by the Paulson and Winthrop joint venture affiliates. MSR Resort Golf Course LLC and its affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 11-10372) in Manhattan on Feb. 1, 2011. The resorts subject to the filings are Grand Wailea Resort and Spa, Arizona Biltmore Resort and Spa, La Quinta Resort and Club and PGA West, Doral Golf Resort and Spa, and Claremont Resort and Spa. James H.M. Sprayregen, P.C., Esq., Paul M. Basta, Esq., Edward O. Sassower, Esq., and Chad J. Husnick, Esq., at Kirkland & Ellis, LLP, serve as the Debtors' bankruptcy counsel. Houlihan Lokey Capital, Inc., is the Debtors' financial advisor. Kurtzman Carson Consultants LLC is the Debtors' claims agent. The five resorts had $2.2 billion in assets and $1.9 billion in debt as of Nov. 30, 2010, according to court filings. In its schedules, debtor MSR Resort disclosed $59,399,666 in total assets and $1,013,213,968 in total liabilities. The resorts have agreement with lenders allowing the companies to remain in Chapter 11 at least until September 2012. Donald Trump has a contract to buy the Doral Golf Resort and Spa in Miami for $170 million. There will be an auction to learn if there is a better bid. The resorts have said that Trump's offer price implies a value for all the properties "significantly" exceeding the $1.5 billion in debt. The Official Committee of Unsecured Creditors is represented by Martin G. Bunin, Esq., and Craig E. Freeman, Esq., at Alston & Bird LLP, in New York. NET ELEMENT: To Merge with Cazador Acquisition ---------------------------------------------- Net Element and Cazador Acquisition Corporation announced the execution of a merger agreement that will infuse up to $81 million into Net Element and provide the necessary financial resources for the Company's next stage of growth. The combined entity, which will be named "Net Element International," is applying to be listed on NASDAQ under the ticker symbol "NETE." Upon completion of the business combination, Net Element, which currently operates several entertainment and lifestyle online destinations and is developing a mobile commerce and payment-processing platform for emerging markets, will name Cazador's current CEO, Francesco Piovanetti, as its CEO. Net Element also will add several key members of Cazador's asset management team. The business combination is subject to the approval of Cazador and Net Element's respective shareholders as well as other customary closing conditions. Assuming the closing conditions are met, the business combination is expected to be completed during the third quarter 2012. A SPAC is a collective investment mechanism that enables public stock market investors to invest in private equity type transactions. SPACs are shell companies that have no operations but go public with the intention of merging with or acquiring a company with the proceeds of the SPAC's initial public offering (IPO). In this case, Cazador, with approximately $46 million in cash and approximately $35 million of additional paid in capital if the outstanding shareholder warrants are exercised, is the SPAC that will be merged with Net Element. "Cazador's investment in Net Element reaffirms the value of Net Element's innovation and potential to become a leading mobile- based commerce and payment processing platform, as well as Net Element's growth strategy for our content and technology properties," said Mike Zoi, Net Element's board chairman. "The merger will help Net Element to optimize its balance sheet and allocate resources to achieve our business goals. It also will bring the significant expertise and thought-leadership of Cazador's top executives to our team, giving us an additional competitive advantage as we execute our business plan." Added Cazador's Piovanetti: "We are truly excited about the immediate positive impact of our capital infusion, knowing that it will help strengthen Net Element's mobile commerce and payment platform in addition to providing much-needed capital to promote and market its online content destinations. This will catalyze Net Element's proprietary technologies and media properties, which are ideally poised for additional investment and scalability." As part of the business combination, each Net Element share will be exchanged for 0.025 of a newly issued Cazador share. Upon completion of the business combination, Cazador shareholders will own approximately 19% of the outstanding common stock of the combined company, assuming no redemptions. All directors and executive officers of Net Element will roll over their ownership to the combined entity and will be subject to a 180-day lock-up provision. The proposed business combination follows recent share purchases by global investor Kenges Rakishev and leading Russian entertainment entrepreneur Igor Krutoy. Bilzin Sumberg Baena Price & Axelrod LLP provided legal counsel to Net Element. Reed Smith LLP provided legal counsel to Cazador. About Net Element Miami, Fla.-based Net Element, Inc. (formerly TOT Energy, Inc.) currently operates several online media websites in the film, auto racing and emerging music talent markets. Following the 2011 results, Daszkal Bolton LLP, in Fort Lauderdale, Florida, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has experienced recurring losses and has an accumulated deficit and stockholders' deficiency at Dec. 31, 2011. The Company reported a net loss of $24.85 million in 2011, compared with a net loss of $3.10 million in 2010. The Company's balance sheet at March 31, 2012, showed $2.34 million in total assets, $6.83 million in total liabilities, and a $4.49 million total stockholders' deficit. NEWLEAD HOLDINGS: PwC Greece Raises Going Concern Doubt ------------------------------------------------------- PricewaterhouseCoopers S.A. in Athens, Greece, said in a May 15, 2012 audit report NewLead Holdings Ltd. has incurred a net loss, has negative cash flows from operations, negative working capital, an accumulated deficit and has defaulted under its credit facility agreements resulting in all of its debt being reclassified to current liabilities. These raise substantial doubt about its ability to continue as a going concern, PwC said. As of May 14, 2012, NewLead had a fleet of five vessels but expects further reductions in the fleet. NewLead said it continues to negotiate with Piraeus Bank in respect of (a) the sale of the vessels Hiona and Hiotissa and (b) an agreement by which Piraeus will release the Company from all debt obligations arising under the related credit facilities in exchange for equity in the Company. According to NewLead, also included in the five vessels is one newbuilding. Due to the delay in NewLead's payment of an installment of $7.4 million, NewLead is currently in default under the shipbuilding contract of this hull and has not received delivery of this hull. NewLead is currently in discussions with the lenders, the shipyard and a potential buyer in respect of the sale of this hull and the release of its obligations under the loan agreement. NewLead also is in negotiations with WestLB to amend the terms of the parties' loan agreement, whereby the agreement will be amended and restated to enable NewLead to comply with certain of its covenants on an ongoing basis after the closing of a restructuring initiated by NewLead and enable the Newlead Victoria, a drybulk Panamax vessel, to stay within the group. This vessel is subject to a floating rate time charter which may expire as early as July 2012 or as late as October 2012. The vessel owner has the right to an earlier redelivery of the vessel, at any time within the charter duration, subject to the vessel owner tendering three months' advance notice to the charterers. NewLead also is in negotiations with Marfin to amend the terms of the loan agreement, whereby the agreement will be amended and restated to enable NewLead to comply with certain of its covenants on an ongoing basis after the closing of the Restructuring and enable the Newlead Markela, a drybulk Panamax vessel to stay within the group. Due to the economic conditions and operational difficulties of the Company, NewLead entered into restructuring discussions with each of the lenders under its facility and credit agreements, the holders of its 7% senior unsecured convertible notes and the counterparties to its capital leases. As part of those discussions, NewLead appointed Moelis & Company to act as financial advisors in respect of the overall restructuring proposal. The aim of the restructuring is to increase liquidity, normalize trade vendor payments and deleverage the Company on a going forward basis. Since June 2011, NewLead has defaulted under each of its Financing Documents in respect of certain covenants (including, in some cases, the failure to make amortization and interest payments, the failure to satisfy financial covenants and the triggering of cross-default provisions). To date, NewLead has not obtained waivers of these defaults from the lenders. From July 1, 2011 through May 14, 2012, and as part of NewLead's restructuring efforts, the lenders seized four of the Company's vessels and NewLead sold 13 vessels. The sales proceeds have been and are expected to be insufficient to fully repay the related debt and therefore, NewLead will continue to have significant debt. NewLead is also in discussions with the lenders regarding the future use of three of its five remaining vessels. During the Restructuring process, the lenders have continued to reserve their rights in respect of such defaults other than the Kamsarmax Syndicate Facility Agreements and the Northern Shipping Fund arrangement. Except for the Kamsarmax Syndicate Facility Agreements and the Northern Shipping Fund arrangement, the lenders have not exercised their remedies at this time including demand for immediate payment; however, the lenders could change their position at any time. NewLead said there can be no assurance that a satisfactory final agreement will be reached with all the lenders in the Restructuring or at all. On Nov. 8, 2011, NewLead and Moelis presented to each of the lenders under the Financing Documents a commercial presentation which set out a comprehensive global restructuring proposal. The Restructuring Proposal included, among other things, proposed amendments to the Financing Documents (including amortization relief and reset of financial covenants). The lenders have not yet approved the Restructuring Proposal and the changes have not been implemented as of the filing of the annual report. Notwithstanding, NewLead said it has made progress in completing various parts of the Restructuring Proposal and continues to remain in discussions with the remaining lenders. During 2011 and through May 15, 2012, NewLead has sold, disposed of or handed control over to the lenders a total of 17 of NewLead's vessels and hulls under construction (or its ownership of the shipowning subsidiaries) in connection with the restructuring. As of Dec. 31, 2011, NewLead's outstanding debt was $572.2 million, excluding the $71.6 million of unamortized beneficial conversion feature, or BCF, treated as a discount on the outstanding $125.0 million of NewLead's 7% Notes. From Jan. 1, 2012 through May 14, 2012, and as a result of the sale, disposal of or handing control of vessels and hulls to the lenders, NewLead's debt has been decreased by an aggregate amount of $157.1 million. NewLead said that, despite its restructuring efforts over the last several months, as of May 14, 2012, it continues to have: * $56.5 million ($31.2 million relating to the Marfin Credit Facility and $25.3 million relating to the WestLB loan agreement) of outstanding debt for vessels that NewLead expects will remain in its possession after the completion of the Restructuring. * $75.6 million ($69.8 million relating to the Piraeus Bank credit facilities and $5.8 million relating to the Handysize Syndicate Facility Agreement) of outstanding debt for vessels currently in NewLead's possession that NewLead expects to sell and apply the proceeds thereof against the related debt. * $158 million ($76.8 million relating to the Kamsarmax Syndicate Facility Agreements and $81.2 million relating to the Lemissoler Sale and Leaseback agreements) of liabilities for vessels that NewLead already handed control over to the lenders but has not yet obtained final releases. * $125 million of 7% Notes outstanding, for which NewLead is currently in negotiations to convert such notes to equity prior to the completion of the Restructuring. Last month, NewLead said net loss for the years ended Dec. 31, 2011 and 2010 was $290.4 million and $86.3 million, respectively. This loss included loss from discontinued operations of$32.2 million and $9.1 million in the years ended Dec. 31, 2011 and 2010, respectively, which were related primarily to (i) the Company's restructuring process which resulted in the sale of certain tanker and dry bulk vessels and(ii) its strategic decision to exit from the container market. As of Dec. 31, 2011, NewLead's currents assets amounted to $33.7 million, while current liabilities amounted to $583.6 million, resulting in a negative working capital position of $549.9 million. As of Dec. 31, 2011, the Company's liquidity reflected $5.4 million of total cash ($5.1 million of unrestricted cash and $0.3 million of restricted cash), compared with $110.8 million in total cash as of Dec. 31, 2010. The decrease of $105.4 million in total cash was attributable primarily to vessel acquisitions and vessels under construction, as well as debt service and was partially offset by the proceeds from the sale and leaseback of one vessel and the proceeds from the sale of four vessels. Total debt on the balance sheet as of Dec. 31, 2011 and Dec. 31, 2010 was $500.6 million and $578.0 million, respectively, representing a $77.4 million decrease. As of Dec. 31, 2011, total assets were $396.7 million against total liabilities of $599.1 million. A copy of the Company's Annual Report filed on Form 20-F with the U.S. Securities and Exchange Commission for the fiscal year ended Dec. 31, 2011, is available at http://is.gd/D59gIY NewLead Holdings Ltd., incorporated under the Bermuda Companies Act of 1981 on Jan. 12, 2005, has been an international shipping company engaged in the transportation of refined products, such as gasoline and jet fuel, and dry bulk goods, such as iron ore, coal and grain. Based in Piraeus, Greece, the Company currently operates a fleet of two double-hulled product tankers and three drybulk carriers. NORTHCORE TECHNOLOGIES: Six Directors Elected at Annual Meeting --------------------------------------------------------------- Northcore Technologies Inc. held its annual meeting of shareholders on June 6, 2012. Paul Godin, Christopher Bulger, Amit Monga, Jim Moskos, Ryan Deslippe and Marvin Igelman were eleced as directors to hold office until the next annual meeting of shareholders or until their successors are elected or appointed. The appointment of Collins Barrow Toronto LLP, Chartered Accountants as auditors of the Corporation for the current fiscal year was ratified. The shareholders approved an increase in the maximum number of options to be granted under the Stock Option Plan from 26,550,000 to 35,000,000 representing an increase by 1% to 15% of the shares issued and outstanding. About Northcore Toronto, Ontario-based Northcore Technologies Inc. (TSX: NTI; OTC BB: NTLNF) -- http://www.northcore.com/-- provides a Working Capital Engine(TM) that helps organizations source, manage, appraise and sell their capital equipment. Northcore offers its software solutions and support services to a growing number of customers in a variety of sectors including financial services, manufacturing, oil and gas and government. Northcore owns 50% of GE Asset Manager, LLC, a joint business venture with GE. Together, the companies work with leading organizations around the world to help them liberate more capital value from their assets. The Company reported a loss and comprehensive loss of C$3.93 million in 2011, compared with a loss and comprehensive loss of C$3.03 million in 2010. The Company's balance sheet at March 31, 2012, showed C$3.96 million in total assets, C$903,000 in total liabilities and C$3.06 million in total shareholders' equity. ORAGENICS INC: Intrexon Discloses 26.5% Equity Stake ---------------------------------------------------- In a Schedule 13D filing with the U.S. Securities and Exchange Commission, Randal J. Kirk and Intrexon Corporation disclosed that, as of June 5, 2012, they beneficially own 4,392,425 shares of common stock of Oragenics, Inc., representing 26.5% of the shares outstanding. A copy of the filing is available at: http://is.gd/upskhv About Oragenics Inc. Tampa, Fla.-based Oragenics, Inc. -- http://www.oragenics.com/-- is a biopharmaceutical company focused primarily on oral health products and novel antibiotics. Within oral health, Oragenics is developing its pharmaceutical product candidate, SMaRT Replacement Therapy, and also commercializing its oral probiotic product, ProBiora3. Within antibiotics, Oragenics is developing a pharmaceutical candidate, MU1140-S and intends to use its patented, novel organic chemistry platform to create additional antibiotics for therapeutic use. In its audit report for the 2011 financial statements, Mayer Hoffman McCann P.C., in Clearwater, Florida, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred recurring operating losses, negative operating cash flows and has an accumulated deficit. The Company reported a net loss of $7.67 million in 2011, compared with a net loss of $7.80 million in 2010. The Company's balance sheet at March 31, 2012, showed $1.94 million in total assets, $2.25 million in total liabilities, and a $314,253 total shareholders' deficit. Bankruptcy Warning The Company said in its annual report for the year ended Dec. 31, 2011, that its loan agreement with the Koski Family Limited Partnership matures in three years and select material assets of the Company relating to or connected with its ProBiora3, SMaRT Replacement Therapy, MU1140 and LPT3-04 technologies have been pledged as collateral to secure the Company's borrowings under the Loan Agreement. This secured indebtedness could impede the Company from raising the additional equity or debt capital the Company needs to continue its operations even though the amount borrowed under the Loan Agreement automatically converts into equity upon a qualified equity financing of at least $5 million. The Company's ability to repay the loan will depend largely upon the Company's future operating performance and the Company cannot assure that its business will generate sufficient cash flow or that the Company will be able to raise the additional capital necessary to repay the loan. If the Company is unable to generate sufficient cash flow or are otherwise unable to raise the funds necessary to repay the loan when it becomes due, the KFLP could institute foreclosure proceedings against the Company's material intellectual property assets and the Company could be forced into bankruptcy or liquidation. OTERO COUNTY: Plan Outline Hearing Scheduled for June 19 -------------------------------------------------------- The Hon. Robert H. Jacobvit of the U.S. Bankruptcy Court for the District of New Mexico will convene a hearing on June 19, 2012, at 9 a.m. MDT, to consider adequacy of the Disclosure Statement explaining Otero County Hospital Association, Inc.'s proposed First Amended Chapter 11 Plan of Reorganization dated May 23, 2012. Objections, if any, are due June 15, at 5 p.m. As reported in the Troubled Company Reporter on June 6, 2012, the Debtor related that it began negotiating with the holders of claims. Such holders constitute the overwhelming majority of the holders of claims arising from such procedures (United Tort Claimants). The Debtor also negotiated with Quorum Health Resources, LLC and Nautilus Insurance Company in order to reach a global resolution to the Trust Personal Injury Claims. QHR is the Debtor's management company and was also named in most of the lawsuits relating to the Trust Personal Injury Claims. Nautilus has written several insurance policies covering many of the Trust Personal Injury Claims. The Debtor noted that it's not possible to achieve a global settlement at this time; nevertheless, the Debtor has reached an agreement with the United Tort Claimants that would allow the Debtor to be reorganized in an efficient and expedited manner. The terms of that agreement are embodied in the Plan. According to the Disclosure Statement, the Plan has three main features. First, the Plan resolves the Debtor's exposure to the United Tort Claimants in a consensual manner, which was the Debtor's primary goal in commencing the Chapter 11 case. Second, the Plan contemplates that the Debtor will obtain Exit Financing to the extent necessary to satisfy the claims of its primary secured creditor, Bank of America, and provide the Debtor with sufficient capital to meet its other obligations under the Plan and continue its normal operations. Third, the Plan provides for payment in full of all trade and other unsecured creditors over a two year period and permits the Debtor to emerge from chapter 11 with its trade relationships intact and in a financially viable form. Under the Plan, the Debtor will assume its Collective Bargaining Agreement. The Plan will resolve the Trust Personal Injury Claims on a consensual basis; satisfy the claims of Bank of America in full; provide for the payment of trade and other unsecured creditors in full; and allow the Debtor to emerge from Chapter 11 in a strong position and with the ability to satisfy the medical needs of Otero County. The Debtor proposes a 100% recovery in most of the allowed claims except for Class 8 -- Subordinated Claims in which each holder of an Allowed Subordinated Claim will neither receive nor retain under the Plan any property of any kind or nature whatsoever, including, without limitation, cash, on account of the holder's Allowed Subordinated Claim. A full-text copy of the Amended Disclosure Statement is available for free at http://bankrupt.com/misc/OTERO_COUNTY_ds_1amended.pdf About Otero County Hospital Otero County Hospital Association Inc. filed for Chapter 11 protection (Bankr. D. N.M. Case No. 11-13686) in Albuquerque, New Mexico, on Aug. 16, 2011. The Alamogordo, New Mexico-based nonprofit developed and operates the Gerald Champion Regional Medical Center. GCRMC serves a total population of approximately 70,000 people. Otero County Hospital Association also does business as Mountain View Catering. Judge Robert H. Jacobvitz presides over the case. Craig H. Averch, Esq., and Roberto J. Kampfner, Esq., at White & Case, LLP, in Los Angeles; and John D. Wheeler, Esq., at John D. Wheeler & Associates, PC, in Alamogordo, New Mexico, serve as bankruptcy counsel. Kurtzman Carson Consultants, LLC, serves as claims agent. The Debtor disclosed $124,186,104 in assets and $40,506,759 in liabilities as of the Chapter 11 filing. Alice Nystel Page, U.S. Trustee for Region 20, appointed five creditors to serve on the Official Committee of Unsecured Creditors of the Debtor. Gardere Wynne Sewell LLP serves as the Committee's counsel. The Committee tapped James Morell of JCM Advisors, LLC, as healthcare management consultant. The U. S. Trustee appointed E. Marissa Lane PLLC as patient care ombudsman on Sept. 13, 2011. No trustee or examiner has been requested or appointed in the Chapter 11 Case. PENINSULA HOSPITAL: Court Okays Foy Advisors as Consultant ---------------------------------------------------------- Lori Lapin Jones, Chapter 11 Trustee for the estates of Peninsula Hospital Center and Peninsula General Nursing Home Corp. d/b/a Peninsula Center for Extended Care & Rehabilitation, obtained permission from the Hon. Elizabeth S. Stong of the U.S. Bankruptcy Court to employ Foy Advisors LLC as consultant. As reported by the Troubled Company Reporter on June 7, 2012, Foy Advisors has agreed to devote three days per week to the Chapter 11 Cases. Foy Advisors' responsibilities will include those commensurate with that of a chief operating officer. Foy Advisors will be deemed an independent contractor and will be responsible for payment of its own taxes in connection with any consulting fees paid to it. Foy Advisors' engagement is "at will" and can be terminated by either party upon written notice. About Peninsula Hospital Wayne S. Dodakian, Vinod Sinha, and Shannon Gerardi filed an involuntary Chapter 11 bankruptcy protection against Peninsula Hospital Center -- http://www.peninsulahospital.org/-- (Bankr. E.D.N.Y. Case No. 11-47056) on Aug. 16, 2011. Judge Elizabeth S. Stong presides over the case. Marilyn Cowhey Macron, Esq., at Macron & Cowhey, represents the petitioners. Peninsula Hospital Center and Peninsula General Nursing Home Corp., employed Alvarez & Marsal Healthcare Industry Group, LLC, as financial advisors. The Hospital employed Abrams Fensterman, et al., as their attorneys. Nixon Peabody served as their special counsel; GCG, Inc., serves as claims and noticing agent. Judge Stong appointed Daniel T. McMurray at Focus Management Group as patient care ombudsman. Neubert, Pepe & Monteith P.C. serves as PCO's counsel. Richard J. McCord, Esq., was appointed by the Court as examiner in the Debtors' cases. His task was to conduct an investigation of the Debtors' relationship and transactions with Revival Home Health Care, Revival Acquisitions Group LLC, Revival Funding Co. LLC, and any affiliates. Certilman Balin, & Hyman, LLP, which counts Mr. McCord as one of the firm's members, served as counsel for the Examiner. CBIZ Accounting, Tax & Advisory of New York, LLC and CBIZ, Inc., serve as financial advisors for the Official Committee of Unsecured Creditors. Robert M. Hirsh, Esq., at Arent Fox LLP, in New York, N.Y., represents the Committee as counsel. PENINSULA HOSPITAL: Court Okays Public Liquidation Sale ------------------------------------------------------- The Hon. Elizabeth S. Stong of the U.S. Bankruptcy Court for the Eastern District of New York has approved the motion filed by Lori Lapin Jones, as Chapter 11 trustee for Peninsula Hospital Center, et al., for the public liquidation sale of substantially all of the machinery, furniture and equipment of PHC. The Trustee is also authorized to donate or otherwise dispose of certain de minimus MF&E and miscellaneous personal property. The Court has also approved the trustee's employment of Great American Group as liquidator to the Trustee to conduct the public liquidation sale of the MF&E. Great American will be granted a priming lien and superpriority claim in the MF&E sale proceeds As reported by the Troubled Company Reporter on June 6, 2012, the Trustee has determined that there is insufficient current cash flow to continue the wind down of PHC and requires the liquidation of assets and the use of the cash derived therefrom to fund the wind down. The Trustee also determined that MF&E is no longer necessary. All of the MF&E is located at PHC's real property located at 51-15 Beach Channel Drive, Far Rockaway, New York. The MF&E consists of machinery, equipment, and furniture PHC used in the ordinary course of its business. All of the MF&E is owned by PHC. About Peninsula Hospital Wayne S. Dodakian, Vinod Sinha, and Shannon Gerardi filed an involuntary Chapter 11 bankruptcy protection against Peninsula Hospital Center -- http://www.peninsulahospital.org/-- (Bankr. E.D.N.Y. Case No. 11-47056) on Aug. 16, 2011. Judge Elizabeth S. Stong presides over the case. Marilyn Cowhey Macron, Esq., at Macron & Cowhey, represents the petitioners. Peninsula Hospital Center and Peninsula General Nursing Home Corp., employed Alvarez & Marsal Healthcare Industry Group, LLC, as financial advisors. The Hospital employed Abrams Fensterman, et al., as their attorneys. Nixon Peabody served as their special counsel; GCG, Inc., serves as claims and noticing agent. Judge Stong appointed Daniel T. McMurray at Focus Management Group as patient care ombudsman. Neubert, Pepe & Monteith P.C. serves as PCO's counsel. Richard J. McCord, Esq., was appointed by the Court as examiner in the Debtors' cases. His task was to conduct an investigation of the Debtors' relationship and transactions with Revival Home Health Care, Revival Acquisitions Group LLC, Revival Funding Co. LLC, and any affiliates. Certilman Balin, & Hyman, LLP, which counts Mr. McCord as one of the firm's members, served as counsel for the Examiner. CBIZ Accounting, Tax & Advisory of New York, LLC and CBIZ, Inc., serve as financial advisors for the Official Committee of Unsecured Creditors. Robert M. Hirsh, Esq., at Arent Fox LLP, in New York, N.Y., represents the Committee as counsel. PENINSULA HOSPITAL: Trustee Can Hire Friedman as Zoning Consultant ------------------------------------------------------------------ Lori Lapin Jones, Chapter 11 Trustee for the estates of Peninsula Hospital Center and Peninsula General Nursing Home Corp. d/b/a Peninsula Center for Extended Care & Rehabilitation, sought and obtained authorization from the Hon. Elizabeth S. Stong of the U.S. Bankruptcy Court for the Eastern District of New York to employ Friedman & Gotbaum, LLP, as zoning consultant. F&G will provide certain preliminary services and related zoning advice with regards to PHC's real property at 51-15 Beach Channel Drive, Far Rockaway, New York, and designated as Block 15843, Lot 1. The Trustee requires F&G's assistance in assessing whether the Property can be subdivided into two or more tax lots, which can ultimately be sold separately under the applicable zoning regulations. F&G will assess the feasibility and likehood of the approval of any applications by PHC to the City of New York seeking to subdivide existing PHC's tax lots into two or more tax lots for the purposes of establishing individual buildings on each individual tax lot. A sale of the Property in separate tax lots will maximize value for the Debtors' estates. F&G has agreed to the payment of a flat fee of $7,500. To the best of the Trustee's knowledge, F&G is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Peninsula Hospital Wayne S. Dodakian, Vinod Sinha, and Shannon Gerardi filed an involuntary Chapter 11 bankruptcy protection against Peninsula Hospital Center -- http://www.peninsulahospital.org/-- (Bankr. E.D.N.Y. Case No. 11-47056) on Aug. 16, 2011. Judge Elizabeth S. Stong presides over the case. Marilyn Cowhey Macron, Esq., at Macron & Cowhey, represents the petitioners. Peninsula Hospital Center and Peninsula General Nursing Home Corp., employed Alvarez & Marsal Healthcare Industry Group, LLC, as financial advisors. The Hospital employed Abrams Fensterman, et al., as their attorneys. Nixon Peabody served as their special counsel; GCG, Inc., serves as claims and noticing agent. Judge Stong appointed Daniel T. McMurray at Focus Management Group as patient care ombudsman. Neubert, Pepe & Monteith P.C. serves as PCO's counsel. Richard J. McCord, Esq., was appointed by the Court as examiner in the Debtors' cases. His task was to conduct an investigation of the Debtors' relationship and transactions with Revival Home Health Care, Revival Acquisitions Group LLC, Revival Funding Co. LLC, and any affiliates. Certilman Balin, & Hyman, LLP, which counts Mr. McCord as one of the firm's members, served as counsel for the Examiner. CBIZ Accounting, Tax & Advisory of New York, LLC and CBIZ, Inc., serve as financial advisors for the Official Committee of Unsecured Creditors. Robert M. Hirsh, Esq., at Arent Fox LLP, in New York, N.Y., represents the Committee as counsel. PETTERS CO: Ex-EpsteinBeckerGreen Partner Faces Clawback Suit ------------------------------------------------------------- The Am Law Daily reports the receiver overseeing the wind-down of convicted Ponzi schemer Tom Petters' various business interests has filed a federal clawback suit against former Dreier LLP and Epstein Becker & Green partner Paul Traub, Esq., over nearly $804,000 in fees he received for providing legal counsel to Petters between 2005 and 2008. The Am Law Daily says the complaint claims Mr. Traub was paid "an astonishing $125,000 per month ($1.5 million annually)" to serve as a consultant to Mr. Petters, who considered Mr. Traub's influence and expertise essential and who allegedly rewarded him with money and gifts. Gavin Broady at Bankruptcy Law360 reports that the new Minnesota federal court suit is part of an effort to claw back more than $2.46 million in fraudulent transfers Mr. Traub was allegedly paid as a consultant for convicted fraudster Tom Petters. Attorney Paul Traub was paid with proceeds from Petters' massive Ponzi scheme to promote Petters' business credibility and steer him towards new victims for his scam from August 2005 to May 2008, Bankruptcy Law360 relates citing a complaint filed June 5. About Petters Group Based in Minnetonka, Minn., Petters Group Worldwide LLC is a collection of some 20 companies, most of which make and market consumer products. It also works with existing brands through licensing agreements to further extend those brands into new product lines and markets. Holdings include Fingerhut (consumer products via its catalog and Web site), SoniqCast (maker of portable, WiFi MP3 devices), leading instant film and camera company Polaroid (purchased for $426 million in 2005), Sun Country Airlines (acquired in 2006), and Enable Holdings (online marketplace and auction for consumers and manufacturers' overstock inventory). Founder and chairman Tom Petters formed the company in 1988. Petters Company, Inc., is the financing and capital-raising unit of Petters Group Worldwide. Thomas Petters, the founder and former CEO of Petters Group, has been indicted and a criminal proceeding against him is proceeding in the U.S. District Court for the District of Minnesota. Petters Company, Petters Group Worldwide and eight other affiliates filed separate petitions for Chapter 11 protection (Bankr. D. Minn. Lead Case No. 08-45257) on Oct. 11, 2008. In its petition, Petters Company estimated its debts at $500 million and $1 billion. Parent Petters Group Worldwide estimated its debts at not more than $50,000. Fruth, Jamison & Elsass, PLLC, represents Douglas Kelley, the duly appointed Chapter 11 Trustee of Petters Company, Inc., et al. The trustee tapped Haynes and Boone, LLP as special counsel, and Martin J. McKinley as his financial advisor. Petters Aviation, LLC, and affiliates MN Airlines, LLC, doing business as Sun Country Airlines, Inc., and MN Airline Holdings, Inc., filed separate petitions for Chapter 11 bankruptcy protection (Bankr. D. Minn. Case Nos. 08-45136, 08-35197 and 08-35198) on Oct. 6, 2008. Petters Aviation is a wholly owned unit of Thomas Petters Inc. and owner of MN Airline Holdings, Sun Country's parent company. PHARMACEUTICAL RESEARCH: Moody's Corrects May 31 Ratings Release ---------------------------------------------------------------- Moody's Investors Service issued a correction the May 31, 2012 ratings release of Pharmaceutical Research Associates, Inc. Moody's assigned a Corporate Family Rating of B2 and a Probability of Default Rating of B3 to Pharmaceutical Research Associates, Inc. Concurrently, Moody's assigned a B1 rating to the proposed senior secured credit facility, which will include a $370 million Term Loan B and a $40 million revolving credit facility. The proceeds of the term loan, along with cash on hand, will be used to refinance all of the existing debt of PRA International (Delaware), a parent company of PRA, and Pharmaceutical Research Associates Group, BV, a subsidiary of PRA. The rating outlook is stable. Ratings Assigned to Pharmaceutical Research Associates, Inc. Corporate Family Rating of B2 Probability of Default Rating of B3 Proposed $40 million senior secured revolving credit facility, due 2017, rated B1 (LGD 3, 30%) Proposed $370 billion senior secured Term Loan B, due 2018, rated B1 (LGD 3, 30%) The outlook is stable. The following ratings will be withdrawn upon the closing of the transaction and the repayment of outstanding debt obligations. PRA International: Corporate Family Rating of B2 Probability of Default Rating of B2 Senior secured revolving credit facility due 2013, rated Ba2 (LGD2, 15%) Senior secured first-out term loan due 2014, rated Ba2 (LGD2, 15%) Senior secured last-out term loan due 2014, rated B2 (LGD3, 48%) Pharmaceutical Research Associates Group, BV: Senior secured revolving credit facility due 2013, rated Ba2 (LGD2, 15%) Senior secured first-out term loan due 2014, rated Ba2 (LGD2, 15%) Ratings Rationale The B2 Corporate Family Rating reflects PRA's considerable financial leverage, and Moody's expectation that leverage could increase further to fund future shareholder initiatives, such as dividends. The rating also reflects PRA's mid-tier scale versus several much larger competitors and Moody's expectation that the highly competitive industry will continue to face pricing pressure and margin compression. The ratings are supported by PRA's strong track record of execution of its growth strategy over the past several years. The ratings are also supported by Moody's expectation of good free cash flow generation and liquidity. Moody's could upgrade PRA's ratings if the company continues to grow its scale within the CRO industry (i.e., revenues approaching $700 million) and maintains adjusted financial leverage below 4.0 times and adjusted free cash flow to debt above 10%. Moody's could downgrade the ratings if PRA experiences an elevated level of contract cancellations or poor new business wins that leads to top-line deterioration. Further, increased pricing pressure or competitive pressures that lead to material erosion in EBITDA margins could also have negative rating implications. Specifically, if Moody's expects adjusted debt/EBITDA to be sustained above 5.5 times or free cash flow to turn negative, the ratings could be downgraded. The principal methodology used in rating Pharmaceutical Research Associates, Inc. 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. PRA International is a contract research organization that assists pharmaceutical and biotechnology companies in developing drug compounds, biologics, and drug delivery devices and gaining necessary regulatory approvals. The company was acquired by Genstar Capital in 2007. PRA generated net service revenues of approximately $568 million for the twelve months ended March 31, 2012. PRINCE SPORTS: Pachulski Stang Approved as Bankruptcy Counsel ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Prince Sports, Inc., et al., to employ Pachulski Stang Ziehl & Jones LLP as counsel. To the best of the Debtors' knowledge, PSZ&J is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Prince Sports Prince Sports, Inc. and its U.S. affiliates filed voluntary petitions for Chapter 11 reorganization (Bankr. D. Del. Lead Case NO. 12-11439) on May 1, 2012, with a Chapter 11 plan that contemplates the transfer of ownership to Authentic Brands Group (ABG)-Prince LLC. Founded in 1970, Prince Sports has a 42-year track record of developing premium quality products for the racquet sports industry. Prince sells its products through brands like "Ektelon," which sells racquetball racquets, footwear and gloves and "Viking Athletics," through which it sells platform tennis paddles, balls and gloves. Prince is distributed in over 100 countries. Lincolnshire Management Inc. acquired Prince from Benneton Group, the parent company of United Colors of Benneton, in 2003. Lincolnshire Management sold Prince to Nautic Partners in August 2007. Under the Plan, (ABG)-Prince LLC, which acquired the secured debt from GE Capital and Madison Capital, will get 100% of the new equity in exchange of the discharge of the debt. Attorneys at Pachulski Stang Ziehl & Jones serve as counsel to the Debtors. The Debtors have also tapped FTI Consulting, Inc., to provide David J. Woodward as Chief Restructuring Officer, as well as additional personnel. Epiq Bankruptcy Solutions LLC is the claims and notice agent. PROTEONOMIX INC: Hires Manela as New Accounting Firm ---------------------------------------------------- Proteonomix, Inc., engaged Manela & Co. as its independent registered public accounting firm on June 8, 2012. The decision to engage Manela as the Company's independent registered public accounting firm was approved by the Company's Board of Directors. Proteonomix was notified by Demetrius & Company, L.L.C., that it have resigned as the Company's independent registered public accounting firm. About Proteonomix Proteonomix, Inc. (OTC BB: PROT) -- http://www.proteonomix.com/-- is a biotechnology company focused on developing therapeutics based upon the use of human cells and their derivatives. The Company reported a net loss applicable to common shares of $1.38 million in 2011, compared with a net loss applicable to common shares of $3.47 million in 2010. The Company's balance sheet at Dec. 31, 2011, showed $3.34 million in total assets, $7.03 million in total liabilities, and a $3.69 million total stockholders' deficit. After auditing the financial statements for the year ended Dec. 31, 2011, KBL, LLP, in New York, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has sustained significant operating losses and is currently in default of its debt instrument and needs to obtain additional financing or restructure its current obligations. PUGET ENERGY: Moody's Rates $450MM Senior Secured Notes 'Ba1' ------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to the planned issuance of $450 million of senior secured notes by Puget Energy, Inc. (PE) and affirmed all of the company's existing ratings, including its Ba1 Issuer Rating and the Ba1 rating assigned to the company's $950 million of existing senior secured notes. PE anticipates using the net proceeds from the note offering to repay a like amount currently borrowed under a $1.0 billion senior secured credit facility. Concurrently, Moody's affirmed all of the existing ratings of PE's utility subsidiary, Puget Sound Energy, Inc. (PSE), including ratings as follows: A3 senior secured first mortgage bonds, medium-term notes and tax-exempt debt; Baa2 Issuer Rating and bank credit facilities; Baa3 junior subordinated notes; (P)A3/(P)Baa2 shelf rating for prospective issuance of senior secured and senior unsecured debt, respectively; and P-2 short-term rating for commercial paper. The rating outlook for PE and PSE is stable. Ratings Rationale The rating assignments and affirmations take into account the relatively low risk utility operations at PSE, the collaborative regulatory relationship that exist with the state regulator, the significant leverage profile of the consolidated entity and PE's consolidated financial performance. At year-end 2011, Moody's calculates that PE's cash flow (CFO-pre W/C) was 11.3% of consolidated debt, cash coverage of interest expense was 2.7x, and consolidated debt capitalization was 57%, all financial metrics that are reflective of a Ba1-rated consolidated enterprise. The Ba1 rating assigned to PE's new senior notes and $950 million of existing senior secured notes considers its subordinated position to approximately $4 billion of adjusted debt at PSE. Moreover, the rating at PE acknowledges, among other conditions, the ring-fencing limitations that exist at PSE, including the maintenance of a 44% equity ratio, which has indirect implications on the level of dividends that PSE can upstream to PE in any given year. For these reasons, there is a two notch differential between the rating at PE and the unsecured rating assigned to PSE. Moody's understands that the collateral provided to PE creditors consists mainly of all of the issued and outstanding stock in PE's wholly owned operating subsidiary, PSE. Moreover, Moody's understands that a primary reason for PE to complete the planned refinancing is to lengthen and diversify its debt maturity profile. The stable rating outlooks for PE and PSE reflect Moody's view that PSE can continue to sustain its recent financial performance under its private equity ownership structure. Moody's expectations assume that sufficiently conservative financing strategies are maintained at the consolidated concern and that PSE continues to receive credit supportive decisions from the Washington commission. An upgrade of PE or PSE is unlikely over the near-term. PE and PSE could be upgrade candidates in the intermediate term if stronger than anticipated consolidated financial results are achieved, specifically if PE can produce consolidated cash flow to debt in the mid-teens and cash flow coverage of interest that comfortably exceeds 3.0x. Conversely, rating pressure at PE and PSE could surface if the regulatory environment becomes less supportive evidenced by a decline in PE's consolidated financial performance such that consolidated cash flow to debt falls below 10% and consolidated cash flow coverage of interest below 2.3x for an extended period of time. PE is a holding company whose sole subsidiary is PSE, a combination electric and natural gas utility. Both companies are headquartered in Bellevue, Washington. The principal methodology used in this rating was Regulated Electric and Gas Utilities published in August 2009. PE is a holding company whose sole subsidiary is PSE, a combination electric and natural gas utility. Both companies are headquartered in Bellevue, Washington. QUAD/GRAPHICS INC: Moody's Affirms 'Ba2' CFR/PDR; Outlook Stable ---------------------------------------------------------------- Moody's Investors Service changed Quad/Graphics, Inc.'s rating outlook to stable from positive and affirmed all of the company's Ba2 ratings, i.e. its corporate family and probability of default ratings and its senior secured bank credit facilities. At the same time, Quad's speculative grade liquidity rating was upgraded to SGL-1 (very good) from SGL-2 (good). The rating action was influenced by the fact that Quad's revenues are declining at a time in which the general economy is showing modest growth as well as by Moody's assessment that North American commercial printing industry conditions continue to be very difficult. While it is acknowledged that Quad has solid margins and shows leading financial discipline, since the company is already operating near the bottom of its net debt-to-EBITDA guidance range of 2.0x-to-2.5x, it is unlikely that Moody's will observe significant incremental de-levering (the LTM March 31, 2012 measure was 2.2x; when Moody's standard adjustments are accounted for, the company's leverage range translates to approximately 2.5x-to-3.0x). Indeed, while Quad has shown caution in implementing and expanding its dividend, with its share price languishing, Moody's view is there may be pressure to use free cash flow to augment shareholder returns. With that, all Ba2 ratings were affirmed and the outlook was stabilized. With debt reduction activities having fully repaid the outstanding balance of the company's large, multi-year revolving credit facility, and with the company expected to be consistently cash flow positive now that ongoing restructuring activities having subsided to normalized levels, Quad now has very good liquidity arrangements. Accordingly, the company's liquidity rating was upgraded to SGL-1 (very good) from SGL-2 (good). The following summarizes the rating action and Quad's ratings: Issuer: Quad/Graphics, Inc. Outlook Actions: Outlook, Changed to Stable from Positive Rating Actions: Speculative Grade Liquidity Rating, Upgraded from SGL-1 from SGL-2 Corporate Family Rating, Affirmed at Ba2 Probability of Default Rating, Affirmed at Ba2 Senior Secured Bank Credit Facility, Affirmed at Ba2 with the loss given default assessment revised to (LGD3, 45%) from (LGD3, 47%) Ratings Rationale Quad's Ba2 ratings are influenced by declining revenues and exposure to the challenged commercial printing sector. Moody's expects Quad's top line to decline by 2%-to-3% over the next year or so even while the general economy shows modest positive growth. Even without specific product line and geographic issues that are causing Quad's top line to shrink, the entire North American industry continues to address ongoing operational challenges stemming from digital competition. Moody's expects industry-wide revenue and profitability to remain under significant pressure for the foreseeable future and also expect operational restructuring expenses to be a permanent feature of all companies' financial returns. These negative industry influences are mitigated by Quad's solid margins and financial conservatism which is displayed in ongoing active debt reduction to reduce leverage, maintaining company-defined net debt-to-EBITDA at the lower end of a publicly disseminated policy range of 2.0x-to-2.5x, maintaining solid liquidity arrangements and showing caution in providing cash returns to shareholders. Rating Outlook The outlook is stable based on expectations that the company will continue to show fiscal conservatism including operating at the lower end of its targeted unadjusted net debt-to-EBITDA range of 2.0x-to-2.5x. What Could Change the Rating - Up As Moody's does not expect industry fundamentals to improve or Quad to operate at leverage lower than its target range and, as well, do not expect the company to implement more conservative leverage policies, an upgrade is not anticipated. However, given solid liquidity and improved industry fundamentals and top-line growth, a ratings upgrade may be considered if (RCF-CapEx)/TD were expected to be sustained well above 10% while (EBITDA- CapEx)/IntExp was well above 4x (measures include Moody's standard adjustments). An upgrade would also involve clarity concerning dividend plans. What Could Change the Rating - Down Moody's would consider a downgrade if (RCF-CapEx)/Debt were expected to be sustained at approximately 5% or below and (EBITDA- CapEx)/IntExp was less than 3.5x (measures include Moody's standard adjustments). A significant debt-financed acquisition and/or adverse liquidity developments could also result in downward rating pressure. The principal methodology used in rating Quad/Graphics was the Global Publishing Industry Methodology published in December 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. RENAISSANCE CAPITAL: Moody's Lowers LT Issuer Ratings to 'B3' ------------------------------------------------------------- Moody's Investors Service has downgraded the long-term foreign and local currency issuer ratings of Renaissance Capital Holdings Limited to B3 with a negative outlook, from B2. The Not-Prime foreign and local currency short-term ratings remain unchanged. The rating action is based on the official disclosure of the new group structure as well as the unaudited IFRS accounts for the first nine months of 2011. Following the group's restructuring, Renaissance Capital Holdings Limited has not disclosed its audited annual financial statements as at year-end 2011, thus limiting the extent of information considered by Moody's. Ratings Rationale Moody's said the downgrade was triggered by the following factors: (i) the effect of increased structural subordination of Renaissance Capital Holdings Limited, following a significant group restructuring whereby an additional holding company layer (Renaissance Capital Investment Limited) was introduced between Renaissance Capital Holdings Limited and the main operating subsidiary company -- Renaissance Financial Holding Limited, rated B1/Negative; and (ii) the lowering of the weighted average rating of Renaissance Capital Holdings Limited's main operating subsidiaries to B2 from B1 following the inclusion of Commercial Bank "Renaissance Capital", rated B2/Stable, in the group. Renaissance Financial Holding Limited pools the bulk of the group's investment banking business under its umbrella, while Commercial Bank "Renaissance Capital" represents the Russian consumer segment of Renaissance Group. Moody's also notes the weak liquidity position of Renaissance Capital Holdings Limited because its funding is, to some extent, matched with assets which have limited liquidity such as receivables and loans from other segments of the group. At the same time, Moody's notes that (in case of need, and upon agreement with the joint shareholder of Renaissance Capital Investment Limited -- ONEXIM group), the key subsidiaries of the group -- i.e., Renaissance Financial Holding Limited and/or Commercial Bank "Renaissance Capital" -- could direct additional cashflows to support the holding company. Therefore, in Moody's view, a one-notch differential of the B2 weighted average rating of Renaissance Capital Holdings Limited's main operating subsidiaries sufficiently captures all the aforementioned factors. Moody's inter-group support assumption is based on the fact that any potential default of Renaissance Capital Holdings Limited could impose significant reputational damage on all Renaissance group entities, including those segments united under Renaissance Financial Holding Limited and Commercial Bank "Renaissance Capital", significantly impairing their operations and liquidity positions. The negative outlook on Renaissance Capital Holdings Limited's B3 issuer ratings reflects the negative outlook on the B1 ratings of its main operating subsidiary -- Renaissance Financial Holding Limited -- and the risk of a potential increase in illiquid positions which could compromise Renaissance Capital Holdings Limited's standalone liquidity position. What Could Change The Rating -- Down/Up Downward pressure could be exerted on Renaissance Capital Holdings Limited's long-term foreign and local currency issuer ratings as a result of a downgrade of the ratings of its key operating subsidiaries. A substantial deterioration in dividend upstreaming and liquidity could also have downward rating implications. Conversely, the long-term issuer ratings could be upgraded as a result of a substantial improvement in operations and an upgrade of the ratings of key operating subsidiaries, or diminishing effects of structural subordination. Principal Methodologies The principal methodology used in this rating was Global Securities Industry Methodology, published in December 2006. Renaissance Capital Holdings Limited reported total consolidated assets of approximately US$6.4 billion and total equity of approximately US$848 million under unaudited IFRS at end-Q3 2011. Renaissance Financial Holding Limited reported total consolidated assets of US$5.4billion and total equity of approximately US$915 million under audited IFRS at year-end 2011. Commercial Bank "Renaissance Capital" reported total consolidated assets of approximately US$1.9 billion and total equity of approximately US$422 million under audited IFRS at year-end 2011. RR DONNELLEY: Moody's Cuts CFR/PDR to 'Ba2'; Outlook Still Neg. --------------------------------------------------------------- Moody's Investors Service downgraded RR Donnelley & Sons Company's ratings to Ba2 from Ba1 while leaving the company's ratings outlook unchanged at negative. Affected ratings include the company's corporate family rating (CFR), its probability of default rating (PDR) and ratings for all senior unsecured debt instruments. The company's liquidity rating remains unchanged at SGL-1 (very good). The rating action was prompted by Moody's concerns that despite leverage being somewhat elevated in the face of secular industry decline, that management may continue to choose shareholder returns over improving financial risk. RR Donnelley's debt load and dividend pay-out were sized prior to recent industry contraction and ongoing margin compression that has reduced the magnitude of its EBITDA stream. Moody's expects that interest expense plus the dividend will consume an aggregate of nearly 45% of RR Donnelley's EBITDA. With capital expenditures consuming a further 25% of EBITDA and with cash income taxes increasing and with mandated pension funding Moody's estimates that conversion of EBITDA into free cash flow will be a relatively weak 5% (approximately) of debt (FCF/TD) for most of the next two years (all measures include Moody's standard adjustments). While the company's free cash flow profile affords some flexibility to permanently repay debt in advance of its maturity and while management has recently articulated a commitment to reduce debt, since RR Donnelley is already operating within its stated 2.5x-to- 3.0x debt-to-EBITDA leverage range (the March 31, 2012 measure was 2.9x), the extent to which debt and debt-like obligations will be reduced is uncertain. This later point results in the negative outlook. The following summarizes the rating actions and RR Donnelley's ratings: Issuer: R.R. Donnelley & Sons Company Ratings/Outlook Actions: Corporate Family Rating, Downgraded to Ba2 from Ba1 Probability of Default Rating, Downgraded to Ba2 from Ba1 Senior Unsecured Regular Bond/Debenture, Downgraded to Ba2 (LGD4 - 60%) from Ba1 (LGD4 - 58%) Senior Unsecured Shelf, Downgraded to (P)Ba2 from (P)Ba1 Speculative Grade Liquidity Rating, Affirmed at SGL-1 Outlook, Unchanged at Negative. Ratings Rationale RR Donnelley's Ba2 ratings result from the interrelationship of financial policies/leverage with difficult industry fundamentals. The broadly defined commercial printing sector is in secular decline and many segments are plagued by over-capacity and fragmented competition that dramatically suppresses margins. In addition, the visibility of forward activity levels is quite poor and the timing and magnitude of future growth or secular decline is highly uncertain. Activity levels are also susceptible to rebound-less decline with each recession. The company's debt load and dividend pay-out were sized prior to recent industry contraction and conversion of EBITDA into free cash flow has become increasingly limited. The company's industry-leading leading aggregate scale and product line and geographic diversification are positive considerations, as is a highly flexible cost structure that allowed RR Donnelley to remain cash flow positive through-out the recent recession. The company's strong liquidity profile is also credit-positive. Rating Outlook The outlook is negative given Moody's concerns about the secular decline of the commercial printing industry combined with management's historic bias towards shareholder returns vs. reducing financial risks. What Could Change the Rating - Up Given adverse systemic influences and the negative outlook, a near-term ratings upgrade is not anticipated. However, presuming stronger industry fundamentals and continuing solid liquidity, a ratings upgrade would be considered were FCF/TD to increase into the 10%-to- 15% range; Moody's adjusted debt-to-EBITDA would likely be in the 3.0x-to-3.5x range (all measures include Moody's standard adjustments). What Could Change the Rating - Down The CFR may be downgraded if it is concluded that Debt/EBITDA would not likely improve towards at least 3.75x (including Moody's standard adjustments), likely caused by a lack of debt reduction. A significant debt-financed acquisition and/or adverse liquidity developments could also result in downward rating pressure. The principal methodology used in rating RR Donnelley was the Global Publishing Industry Methodology published in December 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. SK FOODS: Judge Sends Trustee's Malpractice Suit to District Court ------------------------------------------------------------------ Jamie Santo at Bankruptcy Law360 reports that a California federal judge ruled Wednesday that the adversary complaint SK Foods' Chapter 11 trustee brought against a former attorney for the food processor can be removed to district court, as the majority of its claims are not core to the bankruptcy proceeding. According Bankruptcy Law360, Trustee Bradley D. Sharp brought the suit against Gary G. Perry, claiming the attorney's representation of SK Foods fell below the applicable standard of care. About SK Foods SK Foods LP ran a tomato processing facility. It filed for Chapter 11 bankruptcy protection after being dropped by its lending group. Creditors filed an involuntary Chapter 11 petition against SK Foods LP and affiliate RHM Supply/ Specialty Foods Inc. (Bankr. E.D. Calif. Case No. 09-29161) on May 8, 2009. SK Foods had said it was preparing to file a voluntary Chapter 11 petition when the creditors initiated the involuntary case. The Company later put itself into Chapter 11 and Bradley D. Sharp was appointed as Chapter 11 trustee. The Debtors were authorized on June 26, 2009, to sell the business for $39 million cash to a U.S. arm of Singapore food processor Olam International Ltd. The replacement cost for the assets is $139 million, according to Olam. As reported by the Troubled Company Reporter on Feb. 19, 2010, a federal grand jury returned a seven-count indictment charging Frederick Scott Salyer, former owner and CEO of SK Foods, with violations of the Racketeer Influenced and Corrupt Organizations Act, in connection with his direction of various schemes to defraud SK Foods' corporate customers through bribery and food misbranding and adulteration, and with wire fraud and obstruction of justice. SMART BALANCE: Moody's Assigns 'B1' CFR/PDR; Outlook Stable ----------------------------------------------------------- Moody's Investors Service assigned new ratings to Smart Balance, Inc., including a B1 Corporate Family Rating and a B1 Probability of Default Rating. Moody's also assigned a B1 rating to $280 million of senior secured credit facilities to be extended to several operating subsidiaries -- as joint-and-several obligors -- under a full, unconditional guarantee from Smart Balance, Inc. These facilities are comprised of a $40 million 5-year revolver and a $240 million 6-year term loan. A Speculative Grade Liquidity rating of SGL-2 was also assigned. The outlook for the ratings is stable. Proceeds from term loan will be used to facilitate the $125 million cash purchase of gluten-free food producer Udi's Healthy Foods, LLC and to refinance existing debt. Moody's assigned the following ratings: Smart Balance, Inc. Corporate Family Rating at B1 Probability of Default Rating at B1 Glutino USA, Inc., GFA Brands, Inc., and other operating subsidiaries as joint-and-several borrowers under a full, unconditional guarantee from Smart Balance, Inc. $40 million senior secured revolver expiring 2017 at B1 (LGD 3, 47%) $240 million senior secured term loan expiring 2018 at B1 (LGD 3, 47%) Speculative Grade Liquidity Rating of SGL--2 The outlook is stable. All ratings are subject to the conclusion of the syndication as proposed and Moody's review of final documentation. Ratings Rationale The B1 Corporate Family Rating reflects Smart Balance's limited scale, moderately high leverage, and the niche nature of its product offering. The rating also takes into account the favorable growth prospects of the functional food product category, the company's strong free cash flow, and the integration and execution risk inherent in its expansion into the gluten-free category. The rating also reflects the risks associated with the transition from an outsourced manufacturing business model to a hybrid in which it will manufacture approximately 20% of key products, and outsource manufacturing for the remainder. "We consider Smart Balance's product categories to be reasonably attractive with good growth prospects given the focus on health and wellness, though they are niche in nature," said Nancy Meadows, Senior Analyst at Moody's. "The acquisition of Udi's helps diversify Smart Balance's product portfolio beyond the spreads segment which is exhibiting slower growth," added Meadows. The stable outlook is based upon Moody's expectation that the company will continue to post robust organic revenue growth and generate stable free cash flow to reduce debt meaningfully over the next 12 to 18 months. The outlook also reflects the favorable growth prospects for functional foods and health and wellness products generally. The outlook also takes into account the execution risk associated with integrating Smart Balance's recent acquisitions and the company's small size. There is limited upward pressure on the rating given the company's limited scale in a competitive marketplace and niche product offering. Things that could drive an upgrade include Smart Balance meaningfully growing its size and scale, diversification of its product offering and geographic footprint, and achieving debt to EBITDA of 3.5 times or less on a sustained basis. Successful integration of Glutino's and Udi's and sound management of its hybrid manufacturing business model could also contribute to an upgrade. Downward ratings pressure could build if the company's credit metrics weaken, if liquidity becomes constrained, or if the company engages in any material debt funded acquisitions that increase leverage above 5 times for a sustained period. Other considerations that could drive the rating down would be EBIT margins deteriorating meaningfully for a sustained period or any material product recalls or supply chain issues that fundamentally weaken its brand equity. The principal methodology used in rating Smart Balance, Inc. was the Global Packaged Goods Industry Methodology published in July 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Paramus, New Jersey, Smart Balance, Inc. ("Smart Balance") is a marketer of functional food products. The company's products are sold in mass merchandise, grocery, natural food, and club stores, throughout the U.S. and Canada, with a majority of products sold through supermarket chains and food wholesalers. Smart Balance's core products include buttery spreads, peanut butter, cooking oil, mayonnaise, and most recently expanded into gluten-free products. For the twelve month period ending March 31, 2012, Moody's-adjusted revenues, and EBITDA were approximately $294 million, and $34 million respectively. SOLYNDRA LLC: Renews Sale Efforts for Fremont, Calif. Facility -------------------------------------------------------------- According to myfoxdfw.com, citing a Wall Street Journal report, Solyndra LLC is now making a second attempt to sell the site at 47488 Kato Rd. in Fremont, Calif., to help repay creditors and the federal government. The property consists of a 30-acre parcel of land with a 280,000-square-foot manufacturing space and a 30,000- square-foot office building. Solyndra received bids for the manufacturing facility but rejected all the offers as too low. According to the report, Greg Matter of property brokerage Jones Lang LaSalle said Solyndra is now receiving a new round of bids for the site. Jones Lang began handling the sale in February. The report also relates Mr. Matter said Solyndra hopes to recoup a portion of the $300 million it cost to build the manufacturing facility, but didn't specify a figure. He also declined to reveal how many bids have come in since February but says there have been multiple offers. He says the offers will be made public in coming months in bankruptcy filings. The report says Jones Lang has approached more than a dozen high-tech firms in Japan, China and Korea to gauge their interest in purchasing the site, as well as high-tech manufacturers in San Jose and the surrounding region. Mr. Matter declined to name the companies. About Solyndra LLC Founded in 2005, Solyndra LLC was a U.S. manufacturer of solar photovoltaic solar power systems specifically designed for large commercial and industrial rooftops and for certain shaded agriculture applications. The Company had 968 full time employees and 211 temporary employees. Solyndra has sold more than 500,000 of its panels since 2008 and generated cumulative sales of over $250 million. Fremont, California-based Solyndra and affiliate 360 Degree Solar Holdings Inc. sought Chapter 11 bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12799) on Sept. 6, 2011. Solyndra is at least the third solar company to seek court protection from creditors since August 2011. Judge Mary F. Walrath presides over the Debtors' cases. The Debtors are represented by Pachulski Stang Ziehl & Jones LLP as legal adviser. AlixPartners LLP serves as noticing claims and balloting agent. Imperial Capital LLC serves as the company's investment banker and financial adviser. The Debtors also tapped former Massachusetts Governor William F. Weld, now with the law firm McDermott Will & Emery, to represent the company in government investigations and related litigation. BDO Consulting, a division of BDO USA, LLP, as financial advisor and BDO Capital Advisors, LLC, serves as investment banker for the creditors' panel. Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed seven unsecured creditors to serve on the Official Committee of Unsecured Creditors of Solyndra LLC. The Committee has tapped Blank Rome LLP as counsel. In October 2011, the Debtors hired Berkeley Research Group, LLC, and designated R. Todd Neilson as Chief Restructuring Officer. Solyndra is at least the fourth solar company to seek court protection from creditors since August 2011. Other solar firms are Evergreen Solar and start-up Spectrawatt Inc., both of which filed in August, and Stirling Energy Systems Inc., which filed for Chapter 7 bankruptcy late in September. Solyndra owed secured lenders $783.8 million, including $527.8 million to the U.S. government pursuant to a federal loan guarantee, and held assets valued at $859 million as of the Petition date. The U.S. Federal Financing Bank, owned by the U.S. Treasury Department, is the Company's biggest lender. When they filed for Chapter 11, the Debtors pursued a two-pronged strategy to effectuate either a sale of their business to a "turnkey" buyer who may acquire substantially all of Solyndra's assets or, if the Debtors were unable to identify any potential buyers, an orderly liquidation of the assets for the benefit of their creditors. Solyndra did not receive acceptable offers to buy the business as a going concern. Two auctions late last year brought in a total of $8 million. A three-day auction in February generated another $3.8 million. SPECTRE PERFORMANCE: Taps Burr Pilger as Tax Accountant ------------------------------------------------------- Spectre Performance asks the U.S. Bankruptcy Court for the Central District of California for permission to employ Burr Pilger Mayer, Inc., as tax accountant and financial reorganization consultant. The firm will, among other things: -- prepare the Debtor's 2011 federal and state income tax returns; -- perform related bookkeeping services necessary for preparation of the tax returns as well; -- assist the Debtor in the preparation of 2011 year-end financial statements and review as necessary in the ordinary course of the Debtor's financial affairs and as necessary to complete tax returns; and -- if necessary, assist the Debtor in the analysis of the tax implications of various plan or administrative alternatives. In the administration of the case, the financial reorganization consultant services that the firm will be required to render are: -- advise and assist the Debtor in preparing the financial projections necessary for developing the Debtor's plan of reorganization and disclosure statement; -- advise and assist the Debtor in developing a business plan for payment of creditor claims and to assist the Debtor in negotiating with creditors as necessary to resolve disputes regarding the terms of payment or settlement of claims; and -- perform any and all other financial consultant services incident and necessary as the Debtor may require of the firm as its financial reorganization consultant in connection with the Chapter 11 case. The Debtor relates that none of the services to be performed by the firm will duplicate the services performed by other professionals in the case. The Debtor will be employing the professionals: * Shulman Hodges & Bastian LLP as Debtor's general counsel; * Mike Ido as the Debtor's financial consultant; * Hopkins-Carley ALC as special counsel for the K&N Action; * Stein & Lubin LLP as Debtor's special counsel for the Avery Action; and * Greins, Martin, Stein & Richland LLP as special counsel for the appeal of the K&N Judgment. The firm's hourly billing rates for the professionals who will work on the case are: Phillip L. Hutson, shareholder $440 Russell K. Burbank, shareholder $490 Jordan Kahn, manager $315 Mark Werling, manager $285 Gladys Tam, manager $275 Ruby Padilla, supervisor $215 During the one year period prior to the Petition Date, the firm received payments of fees and expense from the Debtor in the total amount of approximately $79,600. As of the Petition Date, the firm had approximately $21,029 in unbilled charges related to prepetition services performed consisting of the in-process corporate tax returns for the year ended Dec. 31, 2011, of $3,605 and consulting work of $17,424. 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 Spectre Performance Spectre Performance, formerly known as Spectre Industries, filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-21890) in Riverside, California, on May 14, 2012. The Company incurred significant legal costs in defending against lawsuits alleging false advertising in connection with the marketing and sale of the Company's performance automotive air filters and air intake systems. Ontario, California-based Spectre Performance disclosed $10.2 million in assets and $17.7 million in liabilities. Secured claims total $3.7 million. Amir Rosenbaum founded the company in 1983 by selling hose covering NylaBraid. Now the company is a manufacturer of performance racing autoparts. Spectre Performance -- http://www.spectreperformance.com/-- makes air and fuel accessories, including cold air intake systems to pack cool air to the engine, fuel lines and hoses for plumbing the engine, and chrome hardware and valve covers for dressing the bay. Judge Mark D. Houle presides over the case. Leonard M. Shulman, Esq., at Shulman Hodges & Bastian LLP, serves as the Debtor's counsel. The petition was signed by Amir Rosenbaum, president. According to court filings, the Debtor expects that funds will be available for distribution to unsecured creditors. Prepetition lender Comerica Bank is represented in the case by Reed Waddell, Esq., at Frandzel, Robins, Bloom & Csato LLC. SPECTRE PERFORMANCE: Hires Greines Martin to Appeal K&N Action -------------------------------------------------------------- Spectre Performance asks the U.S. Bankruptcy Court for the Central District of California for permission to employ Greines, Martin, Stein & Richland LLP as the Debtor's special counsel for the appeal of the K&N Judgment. The K&N Action involves K&N Engineering, Inc.'s claims for false advertising and unfair competition against the Debtor. The jury awarded K&N more than $7.3 million, on six different claims brought against the Debtor related to alleged false advertising in connection with the marketing and sale of its performance automotive air filters and air intake systems. The jury also returned a defense verdict in favor of K&N on the Debtor's counterclaims against K&N for false advertising. A Final Judgment and Permanent Injunction after jury verdict was entered by the District Court on Dec. 8, 2011, in the amount of $7,337,196. The K&N Judgment stated that the District Court would file an amended judgment if it were to award enhanced damages to K&N. On Dec. 20, 2011, K&N filed a motion for statutory enhancement of the K&N Judgment seeking to double the amount of judgment and for approximately $1.6 million in attorneys' fees and costs. The District Court awarded K&N an enhancement payment of $750,159 and attorneys' fees of $1,352,730 in its minute order granting motion for attorneys' fees, in part filed May 1, 2012. On May 7, 2012, K&N filed a Notice of Lodging of [Proposed] Amended Final Judgment and Permanent Injunction. The amended final K&N Judgment has not been entered. The firm will, among other things: -- conduct investigations, appear at court hearings and prepare the necessary documents and pleadings to assist the Debtor in prosecuting the appeal of the K&N Judgment; and -- perform any and all other legal services incident and necessary herein as the Debtor may require of the firm as special state court counsel in connection with the appeal of the K&N Judgment. The hourly rates of the firm's personnel are: Robert A. Olson $650 Kent J. Bullard $650 Senior Partners $850 Senior Counsel $550 Senior Associate $500 Associate $450 Law Clerks $100 The firm has not received a retainer or payment of any fees or costs from the Debtor during the one year period prior to the Petition Date. As of the Petition Date, the firm was not a creditor of the Debtor. To the best of the Debtor's knowledge, the firm does not represent or hold an adverse interest to the estate. About Spectre Performance Spectre Performance, formerly known as Spectre Industries, filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-21890) in Riverside, California, on May 14, 2012. The Company incurred significant legal costs in defending against lawsuits alleging false advertising in connection with the marketing and sale of the Company's performance automotive air filters and air intake systems. Ontario, California-based Spectre Performance disclosed $10.2 million in assets and $17.7 million in liabilities. Secured claims total $3.7 million. Amir Rosenbaum founded the company in 1983 by selling hose covering NylaBraid. Now the company is a manufacturer of performance racing autoparts. Spectre Performance -- http://www.spectreperformance.com/-- makes air and fuel accessories, including cold air intake systems to pack cool air to the engine, fuel lines and hoses for plumbing the engine, and chrome hardware and valve covers for dressing the bay. Judge Mark D. Houle presides over the case. Leonard M. Shulman, Esq., at Shulman Hodges & Bastian LLP, serves as the Debtor's counsel. The petition was signed by Amir Rosenbaum, president. According to court filings, the Debtor expects that funds will be available for distribution to unsecured creditors. Prepetition lender Comerica Bank is represented in the case by Reed Waddell, Esq., at Frandzel, Robins, Bloom & Csato LLC. SPECTRE PERFORMANCE: Taps Hopkins-Carley to Prosecute K&N Action ---------------------------------------------------------------- Spectre Performance asks the U.S. Bankruptcy Court for the Central District of California for permission to employ Hopkins-Carley ALC as the Debtor's special counsel for the prosecution of the K&N Action. The K&N Action involves K&N Engineering, Inc.'s claims for false advertising and unfair competition against the Debtor. The jury awarded K&N more than $7.3 million, on six different claims brought against the Debtor related to alleged false advertising in connection with the marketing and sale of its performance automotive air filters and air intake systems. The jury also returned a defense verdict in favor of K&N on the Debtor's counterclaims against K&N for false advertising. A Final Judgment and Permanent Injunction after jury verdict was entered by the District Court on Dec. 8, 2011, in the amount of $7,337,196. The K&N Judgment stated that the District Court would file an amended judgment if it were to award enhanced damages to K&N. On Dec. 20, 2011, K&N filed a motion for statutory enhancement of the K&N Judgment seeking to double the amount of judgment and for approximately $1.6 million in attorneys' fees and costs. The District Court awarded K&N an enhancement payment of $750,159 and attorneys' fees of $1,352,730 in its minute order granting motion for attorneys' fees, in part filed May 1, 2012. On May 7, 2012, K&N filed a Notice of Lodging of [Proposed] Amended Final Judgment and Permanent Injunction. The amended final K&N Judgment has not been entered. The firm will, among other things: -- conduct investigations, appear at court hearings and prepare the necessary documents and pleadings, to assist the Debtor in prosecuting the K&N Action, including the preparation and filing of a motion to modify the injunction; and -- perform any and all other legal services incident and necessary herein as the Debtor may require of the firm as special state court counsel in connection with the K&N Action. The hourly rates of the firm's personnel are: John V. Picone, III, Esq. $465 Jennifer S. Coleman, Esq. $370 Jedidiah L. Dooley, Esq. $325 Christopher Hohn, Esq. $270 Andrea Stewart, senior paralegal $210 Chrissie S. Cimbra Cruz, case Assistant $90 The firm was employed by the Debtor prior to the Petition Date for the prosecution of the K&N Action and, during the one year period prior to the Petition Date, received a total of $902,630 from the Debtor. As of the Petition Date, the firm was owed approximately $650,000 to $750,000 by the Debtor for services rendered prior to the Petition Date. Moreover, the firm intends to file a claim for its prepetition fees and costs, prosecute the claim and exercise its rights as a creditor. To the best of the Debtor's knowledge, the firm does not represent or hold an adverse interest to the estate. About Spectre Performance Spectre Performance, formerly known as Spectre Industries, filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-21890) in Riverside, California, on May 14, 2012. The Company incurred significant legal costs in defending against lawsuits alleging false advertising in connection with the marketing and sale of the Company's performance automotive air filters and air intake systems. Ontario, California-based Spectre Performance disclosed $10.2 million in assets and $17.7 million in liabilities. Secured claims total $3.7 million. Amir Rosenbaum founded the company in 1983 by selling hose covering NylaBraid. Now the company is a manufacturer of performance racing autoparts. Spectre Performance -- http://www.spectreperformance.com/-- makes air and fuel accessories, including cold air intake systems to pack cool air to the engine, fuel lines and hoses for plumbing the engine, and chrome hardware and valve covers for dressing the bay. Judge Mark D. Houle presides over the case. Leonard M. Shulman, Esq., at Shulman Hodges & Bastian LLP, serves as the Debtor's counsel. The petition was signed by Amir Rosenbaum, president. According to court filings, the Debtor expects that funds will be available for distribution to unsecured creditors. Prepetition lender Comerica Bank is represented in the case by Reed Waddell, Esq., at Frandzel, Robins, Bloom & Csato LLC. SPECTRE PERFORMANCE: Taps Shulman Hodges as General Counsel ----------------------------------------------------------- Spectre Performance asks the U.S. Bankruptcy Court for the Central District of California for permission to employ Shulman Hodges & Bastian LLP as general counsel. Prior to the Petition Date, the Debtor paid the firm retainers in the total amount of $258,937. Prior to the commencement of the bankruptcy case, the firm incurred fees and expenses in providing bankruptcy and other related services to the Debtor in the total amount of $258,937. Thus, the remaining balance of the firm's retainer as of the commencement of the bankruptcy case was $0. The hourly rates of the firm's personnel are: Partners $375 - $525 Of Counsel $425 - $525 Associates $250 - $375 Paralegals $125 - $195 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 Spectre Performance Spectre Performance, formerly known as Spectre Industries, filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-21890) in Riverside, California, on May 14, 2012. The Company incurred significant legal costs in defending against lawsuits alleging false advertising in connection with the marketing and sale of the Company's performance automotive air filters and air intake systems. Ontario, California-based Spectre Performance disclosed $10.2 million in assets and $17.7 million in liabilities. Secured claims total $3.7 million. Amir Rosenbaum founded the company in 1983 by selling hose covering NylaBraid. Now the company is a manufacturer of performance racing autoparts. Spectre Performance -- http://www.spectreperformance.com/-- makes air and fuel accessories, including cold air intake systems to pack cool air to the engine, fuel lines and hoses for plumbing the engine, and chrome hardware and valve covers for dressing the bay. Judge Mark D. Houle presides over the case. Leonard M. Shulman, Esq., at Shulman Hodges & Bastian LLP, serves as the Debtor's counsel. The petition was signed by Amir Rosenbaum, president. According to court filings, the Debtor expects that funds will be available for distribution to unsecured creditors. Prepetition lender Comerica Bank is represented in the case by Reed Waddell, Esq., at Frandzel, Robins, Bloom & Csato LLC. STOCKTON, CA: Moody's Says Debt Default Likely ---------------------------------------------- As the City of Stockton, California moves toward the June 26 conclusion of a mediation process with its creditors, there is a growing likelihood that the city will default on some of its debt obligations, says Moody's Investors Service in a new report. The city's ratings, even on secured obligations, could be subject to further downgrades in a bankruptcy. "A default is likely primarily because the city says that it will run out of cash on July 1 and that a bankruptcy filing will take place if negotiations with creditors fail to provide material concessions," said Moody's VP-Senior Analyst Gregory Lipitz, author of the report. "While Stockton has several classes of bonds, the city's pension and lease obligations have the greatest risk of default and loss while its water and sewer and special tax bonds are more insulated from default risk." Even if a bankruptcy filing is avoided through a settlement with labor unions and bondholders, Stockton is likely to default on obligations on its unsecured debt, including pension and lease obligations, according to the report, "Default Risk Rising as Stockton Inches Towards Bankruptcy." It examines the rating implications of bankruptcy, offers a review of the city's fiscal deterioration, and analyzes possible bankruptcy and default scenarios. "The untested mediation process is required under a state law, AB 506, which was enacted last year, and could result in Stockton and its creditors reaching a detailed agreement, a framework agreement, or a complete failure to come to terms," said Mr. Lipitz. "Since the mediation will conclude at the end of June, the parties involved will have very little time to ratify agreements before the city becomes insolvent." Moody's expects the city's enterprise debt and special tax bonds to be considered special revenue obligations, which enjoy protection from default and loss of principal in bankruptcy. Since the pension and lease bonds are unsecured obligations of the city's general fund, they do not enjoy any special protections in bankruptcy, subjecting them to a possible debt service default and loss of principal. "A negotiated settlement would likely also include concessions by bondholders, which we would treat as a distressed exchange and a default," said Mr. Lipitz. "However, there are no certain outcomes in light of the small number of precedents and the evolving state of municipal bankruptcy law." SUSQUEHANNA AREA: Fitch Affirms 'BB+' $23.3 Million Revenue Bonds ----------------------------------------------------------------- Fitch Ratings affirms the 'BBB-' rating on Susquehanna Area Regional Airport Authority's (SARAA) approximately $148.7 million senior lien airport revenue bonds and the 'BB+' on $23.8 million subordinate lien airport revenue bonds. The Rating Outlook on all bonds is Stable. Key Rating Drivers SMALL ENPLANEMENT BASE WITH SIGNIFICANT COMPETITION: Harrisburg International Airport (the airport) serves primarily as an origination and destination (O&D) airport in the state capital region. The traffic base of just 650 thousand has historically been stable and is supported by the state government, corporations, and universities. The airport also faces significant regional competition for air service, particularly from Baltimore-Washington International Airport and Philadelphia International Airport. HIGH COST STRUCTURE: The airport operates under a hybrid compensatory airline agreement which provides marginal cost recovery and pricing flexibility but is limited by a high cost per enplanement (CPE) of $14.66. The agreement expires on Dec. 31, 2012 with the option of two one-year extensions. The agreement is presently under negotiation for extension and Fitch will assess whether the renewed agreement will provide adequate cost recovery terms. ADEQUATE COVERAGE BUT HIGH LEVERAGE: Coverage per the indenture was 2.35x for senior lien bonds and 1.31x including subordinate lien debt in fiscal 2011. Fitch's coverage calculation for 2011 which considers PFC as revenues rather than an offset to debt service and excludes the coverage account is 1.76x and 1.14x, respectively. The authority has a high debt burden with debt per enplanement of $265 and leverage of 11.0x net debt to cash flow available for debt service (CFADS). The authority's unrestricted cash position increased to $720 thousand in 2011 from $209 thousand in 2010. Days cash on hand for 2011, including $2.4 million of O&M reserves, is 81. MODERN FACILITIES WITH LIMITED INFRASTRUCTURE NEEDS: Modern facilities allow the authority to maintain an internally funded capital plan absent of additional debt. The authority's capital program for 2012-2023 totals $82 million and is expected to be funded primarily by federal and state grants. WHAT COULD TRIGGER A RATING ACTION -- Inability to maintain adequate cash flow to cover total airport obligations including either rate adjustments to carriers or cost-containment strategies. -- Service reductions or further enplanement declines could impact the airport's competitive profile given an already high cost structure. SECURITY The senior lien bonds are secured by a pledge of airport system net revenues and an irrevocable commitment of PFC receipts. The subordinate lien bonds are secured by a subordinate pledge of airport system net revenues and receipts under a Federal Aviation Administration Airport Improvement Program (AIP) Letter of Intent (LOI) grant, all of which monies have been received. CREDIT UPDATE The airport experienced a 3.1% decrease in traffic in 2011 to 650 thousand enplanements. The reduction is attributable to higher fuel prices which lead to an increase in the average fare of approximately 24%. Year to date enplanements are showing a slight increase of 2.8%. Southwest recently announced that in August 2012 it will discontinue AirTran's service, which represents approximately 8% of enplanements at the airport. However, Frontier subsequently announced it will begin flights to Orlando operating four days a week. Management anticipates enplanements to decline by 1% to 2% in 2012 and does not expect any additional changes in airline service at this time. Operating revenues increased by 3.4% in 2011 as a result of increased landing fee income, terminal rental income, and vehicle rental income. The growth is due to increased rental car activity, the return of American Eagle and a phase-out of incentives for AirTran. Operating expense increased by 6% in 2011 due to higher personnel cost, legal fees, and supplies cost associated with bad weather. Expenses have been well managed in recent years and are consistent with levels seen in 2006. Operating expenses for year to date 2012 are below budget and 7.6% lower than 2011 which is partly attributable to a milder winter. Coverage of 2.35x for senior lien and 1.31x for total debt in 2011 is slightly lower than 2010. The airport's dual lien structure allows for debt service coverage to remain solid at the senior lien level but otherwise weak on total debt. Coverage on total debt is 1.14x when treating PFC as revenues rather than an offset to debt service and excluding the rolling coverage account. Low coverage levels along with low cash balance could lead to financial challenges should the airport experience a drop off in enplanements. The airport's cost profile remains relatively high for a small airport with a CPE of $14.66 in 2011. Under Fitch's base case scenario which assumes slight traffic declines with moderate expense growth, CPE is expected to range from $15 to $17 in the near term. Fitch's stress scenario which assumes enplanements to decline to historic lows along with moderate expense growth show CPE rising to $18 by 2015, a level which may impact air carrier service levels and the airport's competitive profile. TELVUE CORP: Four Directors Elected at Annual Meeting ----------------------------------------------------- TelVue Corporation held its annual meeting of stockholders on June 11, 2012. The stockholders elected H.F. Lenfest, Jesse Lerman, Joy Tartar and Robert Lawrence to serve as directors until the expiration of their term at the 2013 Annual Meeting of Stockholders and until their respective successor is duly elected and qualified. ParenteBeard LLC was ratified to serve as the Company's independent registered public accounting firm for the fiscal year ending Dec. 31, 2012. About TelVue Corporation Mt. Laurel, N.J.-based TelVue Corporation is a broadcast technology company that specializes in playback, automation and workflow solutions for public, education and government ("PEG") television stations; cable, telephone company ("Telco") and satellite television providers; K-12 and higher education institutions; and professional broadcasters. The Company reported a net loss of $3.49 million in 2011, compared with a net loss of $5.88 million in 2010. The Company's balance sheet at March 31, 2012, showed $5.31 million in total assets, $1.55 million in total liabilities, $5 million in redeemable convertible series A preferred stock, and a $1.24 million stockholders' deficit. TRIBUNE CO: Fails to Reach Deal With Henke on $100-Mil. Claim ------------------------------------------------------------- In a supplemental objection, Tribune Co. and its affiliates ask the U.S. Bankruptcy Court for the District of Delaware to disallow and expunge Claim No. 3697, as amended by Claim No. 7106, totaling $100,000,000, filed by Robert Henke. The Debtors and Mr. Henke have engaged in ongoing discussions regarding a process to resolve the Claim and the underlying defamation lawsuit before a Maryland state court. Those discussions have not resulted in consensus. Instead, Mr. Henke has prepared a proposed amended complaint regarding the Lawsuit. Upon review of the amended complaint, the Debtors maintain that the Claim is not an allowable claim against The Baltimore Sun Company because it is unenforceable against the Sun under applicable non-bankruptcy law. The Debtors insist that nothing in the amended complaint gives rise to a valid cause of action against the Sun because at no point does Mr. Henke satisfy the four factors necessary to sustain a defamation claim. Given that Mr. Henke has not even commenced a valid action in Maryland state court, and hence no action has been taken in the Maryland state court with respect to the Lawsuit, the Bankruptcy Court is well-situated to make a determination that the Lawsuit must be dismissed on this basis, the Debtors maintain. 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) TEXASBANC CAPITAL: Fitch Lowers 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 'BBB+' 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+'. TOWER OAKS: CWCapital Asks Court to Convert Case to Chapter 7 ------------------------------------------------------------- CWCapital Asset Management LLC asks the U.S. Bankruptcy Court for the District of Maryland to convert Tower Oaks Boulevard, LLC's Chapter 11 case to Chapter 7. CWCapital acts as special servicer for U.S. Bank National Association, as trustee, as successor-in-interest to Bank of America, N.A., as trustee for the Registered Holders of COBALT CMBS Commercial Mortgage Trust 2007-C2, Commercial Mortgage Pass- Through Certificates, Series 2007-C2. Brent W. Procida, Esq., at Venable LLP, the attorney for CWCapital, says that the Debtor has not filed a plan or disclosure statement. The Debtor failed to file operating reports for the first six months of the case. After a status conference in July 2011, the Court ordered the case to be converted if all operating statements had not been filed by Aug. 30, 2011. On Aug. 30, 2011, the Debtor filed reports for May through July 2011 and has not filed a single report since. The operating reports are now nine months in arrears. Mr. Procida notes that the Debtor is not currently represented by a Chapter 11 counsel. The Debtor's original counsel, Cohen, Baldinger & Greenfeld, LLC, had their appearance struck by court order dated Dec. 29, 2011. Although the firm of Bregman, Berbert, Schwartz & Gilday, LLC, still represents the Debtor as special counsel, their engagement was limited. According to Mr. Procida, despite failing to properly engage any other counsel, pleadings demonstrate that the Debtor is employing at least two additional law firms without court approval. Since January 2012, Hughes & Bentzen, PLLC, has filed documents on behalf of the Debtor in a related adversary proceeding. Gleason, Flynn, Emig & Fogelman appeared at foreclosure sale of behalf of the Debtor in November 2012 and has filed pleadings on behalf of the Debtor in the Circuit Court for Montgomery County. Neither firm has obtained court order authorizing employment. The Debtor is a single asset entity which owns an office building at 2701 Tower Oaks Boulevard, Rockville, Maryland. The building was sold to the SPE Noteholder, a subsidiary of the Trust, at a foreclosure auction on Nov. 28, 2011. Ratification of the sale is pending. The building is vacant, Mr. Procida says. The Debtor has not paid any taxes on the building despite its refusal to turnover possession to the noteholder. The Real Property Consolidated Tax Bill showing that the Trust has advanced $105,344.21 for 2011 property taxes. The Debtor's Statement of Financial Affairs lists a $7,000 payment to John D. Buckingham, its principal owner, for management fees on Dec. 31, 2010. However, his son, David T. Buckingham, was appointed guardian of John D. Buckingham on Oct. 25, 2010, due to the elder Buckingham's advanced dementia. The SOFA list numerous additional disbursements to the children of John D. Buckingham, including reimbursement of travel expenses, reimbursement of legal fees, and one payment brazenly labeled "cash withdrawal". The disclosed prepetition disbursements to insiders total over $22,000. The Debtor never obtained authority to use cash collateral, yet the few operating statements that have been filed show thousands of dollars of cash collateral being disbursed, including reimbursements for "travel expenses". The largest account receivable listed is from an affiliated company, Sun Control Systems, Inc, and appears to be the subject of a family dispute. The Debtor has also indicated that it has potential claims against Virginia Commerce Bank. According to Mr. Procida, the Debtor is holding cash. In connection with a summary ejectment action in the District Court of Maryland for Montgomery County, the Debtor's former tenant Ronald Cohen Investments, Inc., deposited $62,930.12 with the registry of the Rent Court. The Rent Court later sent the Rent Escrow by check to BBS&G, counsel to the Debtor in the ejectment action. According to Mr. Daniel Rigterink of BBS&G, these funds were deposited in the Debtor-in-Possession bank account at the direction of Philip McNutt of Hughes & Bentzen. The Debtor, Mr. Procida states, has no employees and nothing to reorganize. Its primary asset is a building which is the subject of a foreclosure action. The Debtor has resisted the secured creditor's attempts to install a professional property manager as receiver and instead allowed a potential Class A office building to sit vacant and overgrown. The few filed operating reports openly admit to the unauthorized use of cash collateral, says Mr. Procida. "Such use is plainly harmful to the SPE Noteholder since it has an undisputed security interest in all of the Debtor's cash income," Mr. Procida adds. "The Debtor's failure to pay taxes and inability to pay future taxes is clear cause for conversion. Lastly, additional non- enumerated cause exists based on the Debtor's failure to obtain new Chapter 11 counsel and its repeated use of unapproved law firms in open disregard of Section 327(a) of the Bankruptcy Code," Mr. Procida states. There are several recovery actions and questionable transactions which would best be investigated by an active Chapter 7 Trustee, Mr. Procida says. The SOFA lists over $22,000 of disbursements to insiders prior to the bankruptcy. The potential misappropriation resulting from leasing a large portion of the property to an affiliated company and failing to collect rent should be investigated, as well as potential actions against other former tenants. The source of the funds used to pay the two unauthorized law firms representing the Debtor should receive a vigorous review from an independent Trustee. These firms should be compelled to disgorge the payments they have received if the funds used were in any way property of the estate. The Debtor has several properly retained law firms with approved fees that currently stand to go unpaid. The Virginia Commerce Claims should also be investigated. The funds in the Debtor-in-Possession account, including the Rent Escrow, are subject to the SPE Noteholder's security interest and are at high risk for being disbursed beyond recovery in the absence of a Trustee. The attorneys for CWCapital can be reached at: Brent W. Procida, Esq. Laura Bouyea, Esq. VENABLE LLP 750 East Pratt Street ? Suite 900 Baltimore, Maryland 21202 Tel: (410) 244-7400 Fax: (410) 244-7700 E-mail: bwprocida@Venable.com lsbouyea@Venable.com About Tower Oaks Boulevard Raleigh, North Carolina-based Tower Oaks Boulevard, LLC, owns and operates the commercial property identified as 2701 Tower Oaks Boulevard. It filed for Chapter 11 bankruptcy protection on (Bankr. D. Md. Case No. 11-12413) Feb. 8, 2011. Bregman, Berbert, Schwartz & Gilday, LLC, serves as its special counsel. The Debtor estimated assets at $10 million to $50 million and debts at $1 million to $10 million. Affiliate Sun Control Systems, Inc., filed a separate Chapter 11 petition on December 13, 2010 (Bankr. D. Md. Case No. 10-37991). W. Clarkson McDow, Jr., the U.S. Trustee for Region 4, has not appointed an official committee of unsecured creditors in the Debtors' cases. TRIBUNE CO: Valuation Research May Face Litigation -------------------------------------------------- Valuation Research Corp. may face litigation relating to its issuance of a solvency opinion for Tribune Company, Chicago Tribune reported. Per Tribune's Plan, a litigation trust will be created to allow junior creditors to pursue claims against entities, including Sam Zell and current and former officers of Tribune relating to the 2007 leveraged buy-out, the report noted. Valuation Research may be among those targeted parties, the report added. Valuation Research gave Tribune a clean bill of financial health in late 2007, which allowed Mr. Zell to proceed with the deal, according to the report, citing a previous report by The Wall Street Journal. Tribune took on excessive debt and filed for bankruptcy protection less than a year later, the report added. 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) TW2 LLC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------ Debtor: TW2, LLC 2605 Jahn AVE NW Ste D-10 Gig Harbor, WA 98335 Bankruptcy Case No.: 12-44097 Chapter 11 Petition Date: June 12, 2012 Court: United States Bankruptcy Court Western District of Washington (Tacoma) Judge: Brian D. Lynch Debtor's Counsel: Norman K. Short, Esq. GSJONES LAW GROUP PS 1155 Bethel Ave Port Orchard, WA 98366 Tel: (360) 876-9221 E-mail: norm@gsjoneslaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/wawb12-44097.pdf The petition was signed by Mel Heide, manager. UNIGENE LABORATORIES: Hires Ashleigh Palmer as CEO -------------------------------------------------- Unigene Laboratories, Inc., entered into an employment agreement, effective June 8, 2012, with Ashleigh Palmer. The Agreement, pursuant to which Mr. Palmer will serve as the Company's Chief Executive Officer, provides for a two year term and establishes Mr. Palmer's annual salary as $400,000. Furthermore, pursuant to the Agreement, Mr. Palmer will receive a lump sum bonus of $250,000 if beginning during the Term the closing price of the Company's common stock on the Over-the- Counter Bulletin Board (or whatever market on which such stock is trading) is $2.00 per share or greater for 60 consecutive trading days. Mr. Palmer is also permitted to participate in the Company's regular bonus program and employee benefit plans. The Agreement provides that upon (a) termination of Mr. Palmer's employment by the Company for any reason other than cause, (b) Mr. Palmer's resignation upon 60 days advance written notice within 60 days of a change of control of the Company or (c) Mr. Palmer's resignation for good reason (which is defined to mean the Company's failure to employ Mr. Palmer in an executive position, a material diminution of Mr. Palmer's salary and benefits in the aggregate or a 75 mile or more relocation of Mr. Palmer's regular work location), (i) the Company will make a severance payment to Mr. Palmer equal to the greater of (x) the unpaid portion of his annual salary for the remainder of the Term or (y) four months of his then-current annual base salary, payable in accordance with the regular payroll cycle of the Company, and (ii) the Company will pay the applicable premiums for coverage of Mr. Palmer and his family under the Company's health plans for three months immediately following the date of his termination, provided he timely and properly elects continuation of such coverage under COBRA and remains eligible for that coverage. The Agreement also contains a non-disparagement clause, as well as non-competition and non-solicitation clauses that apply for one year following Mr. Palmer's termination of employment for any reason, and obligates Mr. Palmer to maintain the confidentiality of any business or scientific information that he receives during the course of his employment. About Unigene Unigene Laboratories, Inc. OTCBB: UGNE) -- http://www.unigene.com/ -- is a biopharmaceutical company focusing on the oral and nasal delivery of large-market peptide drugs. Unigene reported a net loss of $17.92 million in 2011, a net loss of $27.86 million in 2010, and a net loss of $13.38 million in 2009. The Company's balance sheet at March 31, 2012, showed $14.07 million in total assets, $74.83 million in total liabilities and a $60.75 million total stockholders' deficit. Grant Thornton LLP, in New York, expressed substantial doubt about the Company's ability to continue as a going concern following the 2011 financial results. The independent auditors noted that the Company has incurred a net loss of $17,900,000 during the year ended Dec. 31, 2011, and, as of that date, has an accumulated deficit of approximately $189,000,000 and the Company's total liabilities exceeded total assets by $55,138,000. UNIVISION COMMUNICATIONS: Fitch Affirms 'B' Issuer Default Rating ----------------------------------------------------------------- Fitch Ratings has affirmed the 'B' Issuer Default Rating (IDR) and all ratings of Univision Communications, Inc. The Rating Outlook is Stable. The ratings incorporate Fitch's positive view on the U.S. Hispanic broadcasting industry, given anticipated continued growth in number and spending power of the Hispanic demographic. Additionally, Univision benefits from a premier industry position, with duopoly television and radio stations in most of the top Hispanic markets, with a national overlay of broadcast and cable networks. The company's networks garner significant market share of Hispanic viewers and generate strong and stable ratings. This large and concentrated audience provides advertisers with an effective way to reach the growing U.S. Hispanic population. Ratings concerns center on the highly leveraged capital structure and the significant maturity wall in 2017, limited free cash flow generation relative to total debt, as well as the company's significant exposure to advertising revenue. Fitch expects Hispanic population growth to mitigate the impact of longer-term secular issues that are challenging the overall media & entertainment sector, namely, audience fragmentation and its impact on advertising revenue. While the Hispanic broadcast television audience is not immune to these pressures, Fitch expects that its growing total size will offset the impact of any audience fragmentation and drive ongoing ratings strength at Univision's television properties. This should result in mid- single-digit top-line growth at the television segment. Fitch expects moderate margin pressure over the next one to two years, driven by investments in new cable networks, and further weighed by the higher royalty payments under the PLA agreement, which will not be reduced going forward but which are manageable within the company's financial profile. However, Fitch believes positive operating leverage from top-line growth and growth in high-margin retransmission revenue will result in subsequent margin improvement. Recent new entrants in the Hispanic broadcast and cable network market will add to the competitive pressures facing Univision. However, Univision currently has incumbent advantage and dominant market presence, with over 70% market share of the Hispanic audience in the U.S. and all of the top 10 primetime network broadcasts, according to Nielsen. Fitch expects these factors, along with its pipeline of proven content from Televisa, to enable it to grow amid these increasing pressures. The radio segment has returned to moderate revenue and EBITDA growth in recent quarters. It remains to be seen whether this is sustainable and whether the resolution of the Arbitron ratings issues will drive longer-term stability. This business is also more sensitive to macroeconomic factors as there is no subscription-based revenue to offset advertising declines. Nonetheless, Fitch believes further operating pressures at radio can be accommodated at current ratings. The extension of the program license agreement (PLA) with Grupo Televisa (Televisa; rated 'BBB+', Stable Outlook by Fitch) and Televisa's purchase of an equity stake in Univision in 2010 removed the company's largest overhang and provided clarity that its business model would remain intact over the longer term. Equity ownership gives Televisa a large stake in Univision's success and profitability, a strong positive given Televisa's role as a supplier of popular audience and revenue-generating content. This cleared the way for the maturity extension and spate of refinancings over the past 18 months. These transactions resulted in a materially improved capital structure, and Fitch believes that Univision is solidly within the 'B' category. Univision refinanced nearly $600 million of the 2014 term loan ($1.1 billion previously outstanding) with proceeds of a secured 2019 notes issuance in February 2012. As a result, there is only $457 million of debt due in 2014, with no preceding maturities. Although Fitch expects free cash flow to be limited to $200 million-$250 million in 2012, Fitch expects moderate annual increases going forward, which should provide Univision with the ability to repay this organically if it chooses. The significant maturity wall has been pushed to 2017, when $5.6 billion of bank debt comes due. In addition to this large 2017 maturity, Univision is saddled with significant leverage from the 2007 LBO, with Fitch estimated total leverage (including the subordinated convertible preferred debentures due to Televisa) and secured leverage of 11.6 times (x) and 9.4x, respectively, at March 31, 2012. Fitch believes that material deleveraging will have to occur before the company can refinance its 2017 maturities. Given Fitch's free cash flow expectations, material debt reduction is not expected; rather deleveraging will come more from EBITDA growth. That said, Fitch currently believes there is a high probability that the company will be able to refinance the 2017 bank debt. Fitch believes that the private equity owners, Televisa, and the secured lenders remain motivated to facilitate Univision's long- term viability, as refinancing an improved operating and credit profile will provide more value than bankruptcy/debt restructuring. Underpinning this position is Fitch's view that the company will be able to delever to a range of 7x-9x total leverage, or 5x-7x on a secured basis by the 2017 maturity. Fitch believes that the secured lenders, which incurred 9x leverage through the senior debt at the LBO, would be willing to re-finance Univision's business at these levels, given Univision's strong positioning in a growing segment of the media industry. This extension provides the company with more than two additional years to accomplish this deleveraging. Fitch regards current liquidity as adequate, particularly in light of minimal near-term maturities. At March 31, 2012, liquidity consisted of approximately $57 million of cash, approximately $406 million available (net of letters of credit) under the $463 million RCF (of which $54 million expires in March 2014 and $409 million expires in March 2016, with $137 million having been termed out to March 2017), and $65 million available under the AR securitization facility. Interest expense will be easily covered by internal cash generation. At March 31, 2012, Univision had total debt of $10.4 billion, which consisted primarily of: -- $6.1 billion senior secured term loan facility, $457 million of which is due September 2014 and $5.6 billion which is due March 2017 (including $137 million of the RCF that was previously termed out to March 2017); -- $35 million outstanding under the RCF; -- $1.2 billion 6.875% senior secured notes due 2019; -- $750 million 7.875% senior secured notes due 2020; -- $815 million 8.5% senior unsecured notes due 2021; -- $235 million outstanding under the A/R securitization facility, due March 2016; -- $1.125 billion 1.5% subordinated convertible debentures issued to Televisa, due 2025. This note is a direct obligation of the parent HoldCo, Broadcasting Media Partners, Inc., but is serviced by dividends paid by Univision. Univision's Recovery Ratings reflect Fitch's expectation that the enterprise value of the company, and thus, recovery rates for its creditors, will be maximized in a restructuring scenario (going concern), rather than a liquidation. Fitch employs a 7x distressed enterprise value multiple reflecting the company's FCC licenses in top U.S. markets. Fitch assumes a sustainable post restructuring EBITDA of $755 million, a 15% reduction from March 31, 2012 LTM EBITDA, which is slightly below the low of the recent economic downturn but would still be enough to cover fixed charges. Fitch estimates the adjusted distressed enterprise valuation in restructuring to be approximately $4.8 billion. The 'B+' rating for the secured debt reflects Fitch's expectations for recovery in the 51%-70% range under a bankruptcy scenario. The 'CCC' rating on the $815 million senior unsecured notes reflects Fitch's expectations for minimal recovery prospects due to their position in the capital structure. Fitch affirms Univision as follows: -- Issuer Default Rating (IDR) at 'B'; -- Senior secured at 'B+/RR3'; -- Senior unsecured at 'CCC/RR6'. URBAN WEST: Asks for Dismissal of Chapter 11 Cases -------------------------------------------------- Urban West Rincon Developers II, LLC, and Rincon Developers Phase II, LLC, ask the Hon. Dennis Montali of the U.S. Bankruptcy Court for the Northern District of California to dismiss their bankruptcy cases. After hearing on July 26, 2011, the Court approved the amended motion to approve compromise of controversy under which the Debtors resolved various conflicts between themselves and SP4 Rincon II Lender, LP, and SP4 Rincon II Partner, LP. After entry of a court order dated July 29, 2011, approving a compromise allowing Debtors some 90 days to complete a sale of their interests in ORH II, the Debtors failed to deliver the agreed, confidential settlement payment owed to SP4 Rincon II Lender, LP, and SP4 Rincon II Partner, LP, by the stipulated, court-approved Oct. 6, 2011 deadline. The Debtors lost their respective interests in ORH II, the entity that owns the underlying real property on which the Phase II project is to be built in a duly-noticed public foreclosure sale of their limited partnership interests under the California Uniform Commercial Code, which was conducted on Oct. 17, 2011. The estates have no remaining assets. SP4 Partner became the Liquidating Partner of ORH II, the entity that owns the land over which these cases were filed. SP4 Lender is successor in interest to Urban West upon which the Phase II tower is to be built as part of a two-tower residential real estate development project in San Francisco, California, commonly known as One Rincon Hill. ORH II contracted to sell One Rincon Hill to 401 Harrison Investor, LLC, an entity related to the Principal Financial Group, for $30 million. Following the settlement of the lawsuit by American Property Consultants, Ltd., and implementation by all parties, the land sale closed. The One Rincon Hill project is scheduled to break ground on June 11, 2012. 401 Harrison Investor, LLC, engaged Urban Pacific Investors, LLC, as project manager to develop One Rincon Hill. Urban Pacific and One Harrison Investor, LLC, have contracted with Webcor Builders to act as the general contractor and negotiated a not-to-exceed price to build the project. 401 Harrison Investor LLC has received a letter of intent for construction financing from Pacific Life Insurance Company, and loan documents are being drawn. Internal committee approval for the loan was made on May 11, 2012. An April 10, 2012 Payment Request Package No. 1 - Draw #1, dated Feb. 29, 2012, specifies that "[i]mmediately after Owner [401 Harrison Investor, LLC] and lender have executed loan documents in respect of the construction loan for the project, Owner and Development Manager [Urban Pacific] shall enter into an Escrow Agreement. . ." Escrow Agreement requires Owner to deposit $720,000 contemporaneously with full execution of the Escrow Agreement. Under the Letter Agreement, Urban Pacific is to "issue a draw request to Owner for the payment of the $720,000 for purposes of paying Phase II Creditors." The essential terms of the Escrow Agreement that must be met are: (1) the Urban Pacific must make a request for draw and that funds be released from escrow, which request is to be made at the time this Motion has been filed; (2) an executed waiver of lien in the form attached to the Escrow Agreement must be executed by each Phase II Creditor in exchange for the release of payment to it; and (3) 401 Harrison Investor, LLC, will have 15 days to object to the release of funds; the Debtor are seeking to supply 401 Harrison Investor, LLC, with many lien waivers. The $720,000 is projected, with certain agreed reductions of unsecured claims, to result in a 55% dividend on unsecured creditor claims after payment of administrative priority expenses. Administrative claims of the estate incurred by counsel for the Debtors and for Official Unsecured Creditors' Committee, accrued U.S. Trustee's fees and a small priority tax claim total $391,896.58 at present. The remaining balance from the $720,000 will result in a 55% dividend to unsecured creditors. Objections to claim have reduced the claim of Jaidin Consulting Group. Gimbel, LLC, has not filed a claim. The architect, Solomon, Kordell, Buenz & Associates, Inc., a Creditors' Committee member, will execute and file an amended claim or consent to distribution reducing the amount of its claim from $108,876.92 to $35,235.13. As a condition of dismissal, any order approving the motion is predicated on (a) the funding of escrow with the full $720,000, and (b) payment of all accrued U.S. Trustee fees. The amounts owing in the two cases are $975 for case number 11-30924 and $1,300 for case number 11-30926. Assuming an earlier financing close and payout, $1,300 is set aside for U.S. Trustee fees. About Urban West Rincon Developers San Francisco, California-based Urban West Rincon Developers II, LLC, filed for Chapter 11 bankruptcy protection (Bankr. N.D. Calif. Case No. 11-30924) on March 9, 2011. Heinz Binder, Esq., and Roya Shakoori, Esq., at the Law Offices of Binder and Malter, serves as the Debtor's bankruptcy counsel. VERTIS INC: Moody's Withdraws 'Caa1' Corporate Family Rating ------------------------------------------------------------ Moody's Investors Service withdrew all ratings for Vertis Inc. A list of the rating actions are provided below: Issuer: Vertis, Inc. Corporate Family Rating, Withdrew Caa1 rating Probability of Default Rating, Withdrew Caa1 rating $425 million Sr. Secured 1st Lien Term Loan, Withdrew Caa1 (LGD-4, 56%) rating Outlook, Withdrew Ratings Under Review for Downgrade Ratings Rationale Moody's has withdrawn the ratings because it believes it has insufficient or otherwise inadequate information to support the maintenance of the ratings. The principal methodology used in rating Vertis, Inc. was the Global Publishing Industry Methodology published in December 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Vertis Inc., headquartered in Baltimore, MD, provides advertising, direct marketing and interactive products and services to clients across North America. VITRO SAB: US Ruling Effectively Precludes Mexican Plan ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Vitro SAB was effectively precluded from enforcing its Mexican reorganization plan in the U.S. Holders of 60% of $1.2 billion in defaulted bonds convinced U.S. Bankruptcy Judge Harlin "Cooter" Hale in Dallas June 13 that the Mexican reorganization was "manifestly contrary" to U.S. public policy because it bars the bondholders from holding Vitro operating subsidiaries liable to pay on their guarantees of the bonds. The subsidiaries weren't in bankruptcy in either Mexico or the U.S. According to the report, in the June 13 ruling, Judge Hale denied Vitro's request to enforce the reorganization in the U.S. Vitro's reorganization was approved by a court in Mexico earlier this year over bondholder objections. But bondholders objected to the Vitro plan on several grounds. The bondholders argued successfully that it was improper to use the Vitro parent's bankruptcy to extinguish the non-bankrupt subsidiaries' liability on guarantees. In addition, the bondholders contended it was improper for Vitro's shareholders to retain ownership when creditors were objecting and not fully paid. Bondholders also argued that the plan was approved in Mexico by using $1.9 billion of intercompany claims to vote down opposition from third-party creditors. The report continues that in his 29-page opinion, Judge Hale said the Mexican plan was defective because Vitro failed to show requisite "extraordinary circumstances" to justify using the parent's bankruptcy as a bar to enforcing claims against non- bankrupt operating subsidiaries. He said the plan didn't sufficiently protect interests of U.S. creditors and was "manifestly contrary" to U.S. public policy by extinguishing claims against subsidiaries. Judge Hale said there were other "strong objections" raised by bondholders that he didn't need to decide because he already found the reorganization plan defective. Judge Hale's opinion kept the door open for bondholders to raise the additional issues on appeal. Judge Hale, the report relates, said there was "evidence of at least suspect voting" because Vitro used insider votes to "swamp" noteholders' votes in opposition. He also said the Mexican plan was "demonstrably" different from what would occur in the U.S. because Vitro shareholders are retaining $500 million of value when bondholders aren't being fully paid. Bondholders, according to the report, already began obtaining judgments against Vitro subsidiaries on the defaulted bonds. Judge Hale had precluded bondholders from enforcing the judgments pending his decision. To give Vitro an opportunity to appeal, Judge Hale isn't allowing bondholders to enforce their judgments until June 29. Any stays after that must come from appellate courts, Judge Hale said. Judge Hale made several rulings in Vitro's favor. He didn't find that Mexican courts are corrupt. The judge said he couldn't conclude that enforcing the Mexican plan would adversely affect credit markets. "On the whole," Judge Hale couldn't say that the Mexican proceedings were unfair. Mr. Rochelle notes that Judge Hale evidently is allowing the Mexican plan to be enforced as to the Vitro parent. Given that the assets and revenue are in the subsidiaries, it isn't clear how useful the Mexican plan will be for the Vitro parent in terms of enforcement in the U.S. Vitro said in a statement it will take an "immediate appeal." The company said that Hale's decision was the first time in the 12-year history of the Mexican law that a U.S. court had refused to enforce a reorganization. Previously, Vitro described the bondholders as "vultures" who purchased the debt at discount. Memorandum Opinion "Generally, reorganization pursuant to the [Ley de Concursos Mercantiles] is found to be a fair process, worthy of respect. In other and subsequent cases this Court would expect that Concurso decisions would be enforced in this country. However, if approved for enforcement, the present order would create precedent without any seeming bounds. The Concurso plan presently before the Court discharges the unsecured debt of non-debtor subsidiaries. What is to prevent this type of plan from eventually giving non-consensual releases to discharge the liabilities of officers, directors, and any other person?" Judge Hale said. "Because of the importance of this case to the financial and legal community, the Court will stay its decision until June 29, 2012, at 5:00 p.m. Central Daylight Time, and will maintain the TRO for fourteen days to allow Vitro time to appeal and to seek a stay on appeal. Any further stay or extension of the TRO should be sought from the district court or court of appeals." A copy of Judge Hale's July 13 Memorandum Opinion is available at http://is.gd/5iKf4hfrom Leagle.com. Financial Restructuring to Be Enforced In its press release following the ruling, Vitro said the U.S. Bankruptcy Court in Dallas, Texas, has ruled that it will enforce in the U.S., in part, the terms of the financial restructuring of Vitro's Mexican Plan of Reorganization. Specifically, the Bankruptcy Court agreed to enforce in the U.S. the Company's Mexican Plan of Reorganization with respect to Vitro SAB, but did not enforce the release of Vitro's subsidiaries from liability on their guarantee obligations under Vitro's now-restructured notes. Vitro intends to immediately appeal the Bankruptcy Court's refusal to enforce the Vitro restructuring at the subsidiary level to the United States Court of Appeals for the Fifth Circuit. The ruling by Hon. Harlin D. Hale recognizes that the Mexican bankruptcy process affords all creditors fundamental fairness and due process, as required by Chapter 15 of the U.S. Bankruptcy Code in order to enforce a restructuring plan approved in a foreign proceeding. Although the Bankruptcy Court refused to enforce the release of Vitro's subsidiaries, which was also approved by the Mexican Court, Vitro does not anticipate this refusal will materially impact Vitro's ability to serve its U.S. customers, and notes that one of its key subsidiaries in the supply of products to U.S. customers is currently protected as a debtor in a separate and distinct Concurso proceeding in Mexico. "We are pleased that the Court has recognized the validity of the Concurso process generally, and enforced the Mexican Court's order approving the company's Plan of Reorganization with respect to Vitro SAB," said Claudio Del Valle, Vitro's Chief Restructuring Officer. Mr. Del Valle added: "Today's ruling is important for all of our stakeholders, including our 17,000 employees, and marks a significant milestone in our successful financial restructuring." Regarding its plan to appeal a portion of the ruling, Mr. Del Valle stated: "We will defend the enforcement of Vitro's restructuring at the subsidiary level in the U.S." Vitro's restructuring complied with applicable Mexican bankruptcy law which, since its enactment in 2000 by the Mexican legislature, has been recognized by U.S. courts in Chapter 15 proceedings without exception as providing fair, clear rules for the administration of multinational restructurings such as Vitro's. Notably, no U.S. bankruptcy court has ever denied a request to enforce a plan of reorganization approved under the Mexican bankruptcy law in its 12 year history. Despite one of the highest recoveries in the history of such processes in Mexico, the dissident funds have and continue to intentionally try to risk the destruction of Vitro's businesses for the mere prospect, not guarantee, of a higher return on their investment. The portion of the Bankruptcy Court's decision enforcing the company's Plan of Reorganization in the U.S. with respect to Vitro SAB represents another loss for the group of dissident bondholders that waged a strong opposition to enforcement of the Chapter 15 ruling. Vitro anticipates the dissident bondholder group will appeal this portion of the decision, also to the United States Court of Appeals for the Fifth Circuit. Public Policy Vitro SAB in late May filed an 84-page brief explaining why the reorganization plan approved this year by a court in Mexico isn't "manifestly contrary to the public policy of the U.S." and therefore must be enforced in the U.S. Vitro's brief rebuts bondholders' arguments that plan approval was improperly won by use of $1.9 billion in insider votes to overcome opposition from holders of 60% of the $1.2 billion in defaulted bonds. Bondholders also object to how the Mexican reorganization allows current owners to maintain control even though creditors aren't paid in full. Vitro points to other cases where U.S. judges concluded that Mexico affords due process and its orders should be enforced in the U.S. The glassmaker argues that the bondholders should be bound by rulings from the Mexican court because they appeared in Mexico and opposed, albeit unsuccessfully. About Vitro SAB Headquartered in Monterrey, Mexico, Vitro, S.A.B. de C.V. (BMV: VITROA; NYSE: VTO), through its two subsidiaries, Vitro Envases Norteamerica, SA de C.V. and Vimexico, S.A. de C.V., is a global glass producer, serving the construction and automotive glass markets and glass containers needs of the food, beverage, wine, liquor, cosmetics and pharmaceutical industries. Vitro is the largest manufacturer of glass containers and flat glass in Mexico, with consolidated net sales in 2009 of MXN23,991 million (US$1.837 billion). Vitro defaulted on its debt in 2009, and sought to restructure around US$1.5 billion in debt, including US$1.2 billion in notes. Vitro launched an offer to buy back or swap US$1.2 billion in debt from bondholders. The tender offer would be consummated with a bankruptcy filing in Mexico and Chapter 15 filing in the United States. Vitro said noteholders would recover as much as 73% by exchanging existing debt for cash, new debt or convertible bonds. Concurso Mercantil & Chapter 15 Proceedings Vitro SAB on Dec. 13, 2010, filed its voluntary petition for a pre-packaged Concurso Plan in the Federal District Court for Civil and Labor Matters for the State of Nuevo Leon, commencing its voluntary concurso mercantil proceedings -- the Mexican equivalent of a prepackaged Chapter 11 reorganization. Vitro SAB also commenced parallel proceedings under Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-16619) in Manhattan on Dec. 13, 2010, to seek U.S. recognition and deference to its bankruptcy proceedings in Mexico. Early in January 2011, the Mexican Court dismissed the Concurso Mercantil proceedings. But an appellate court in Mexico reinstated the reorganization in April 2011. Following the reinstatement, Vitro SAB on April 14, 2011, re-filed a petition for recognition of its Mexican reorganization in U.S. Bankruptcy Court in Manhattan (Bankr. S.D.N.Y. Case No. 11- 11754). The Vitro parent received sufficient acceptances of its reorganization by using the US$1.9 billion in debt owing to subsidiaries to vote down opposition by bondholders. The holders of US$1.2 billion in defaulted bonds opposed the Mexican reorganization plan because shareholders could retain ownership while bondholders aren't being paid in full. Vitro announced in March 2012 that it has implemented the reorganization plan approved by a judge in Monterrey, Mexico. In the present Chapter 15 case, the Debtor seeks to block any creditor suits in the U.S. pending the reorganization in Mexico. Chapter 11 Proceedings A group of noteholders opposed the exchange -- namely Knighthead Master Fund, L.P., Lord Abbett Bond-Debenture Fund, Inc., Davidson Kempner Distressed Opportunities Fund LP, and Brookville Horizons Fund, L.P. Together, they held US$75 million, or approximately 6% of the outstanding bond debt. The Noteholder group commenced involuntary bankruptcy cases under Chapter 11 of the U.S. Bankruptcy Code against Vitro Asset Corp. (Bankr. N.D. Tex. Case No. 10-47470) and 15 other affiliates on Nov. 17, 2010. Vitro engaged Susman Godfrey, L.L.P. as U.S. special litigation counsel to analyze the potential rights that Vitro may exercise in the United States against the ad hoc group of dissident bondholders and its advisors. A larger group of noteholders, known as the Ad Hoc Group of Vitro Noteholders -- comprised of holders, or investment advisors to holders, which represent approximately US$650 million of the Senior Notes due 2012, 2013 and 2017 issued by Vitro -- was not among the Chapter 11 petitioners, although the group has expressed concerns over the exchange offer. The group says the exchange offer exposes Noteholders who consent to potential adverse consequences that have not been disclosed by Vitro. The group is represented by John Cunningham, Esq., and Richard Kebrdle, Esq. at White & Case LLP. A bankruptcy judge in Fort Worth, Texas, denied involuntary Chapter 11 petitions filed against four U.S. subsidiaries. On April 6, 2011, Vitro SAB agreed to put Vitro units -- Vitro America LLC and three other U.S. subsidiaries -- that were subject to the involuntary petitions into voluntary Chapter 11. The Texas Court on April 21 denied involuntary petitions against the eight U.S. subsidiaries that didn't consent to being in Chapter 11. Kurtzman Carson Consultants is the claims and notice agent to Vitro America, et al. Alvarez & Marsal North America LLC, is the Debtors' operations and financial advisor. The official committee of unsecured creditors appointed in the Chapter 11 cases of Vitro America, et al., has selected Sarah Link Schultz, Esq., at Akin Gump Strauss Hauer & Feld LLP, in Dallas, Texas, and Michael S. Stamer, Esq., Abid Qureshi, Esq., and Alexis Freeman, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, as counsel. Blackstone Advisory Partners L.P. serves as financial advisor to the Committee. The U.S. Vitro companies sold their assets to American Glass Enterprises LLC, an affiliate of Sun Capital Partners Inc., for US$55 million. U.S. subsidiaries of Vitro SAB are having their cases converted to liquidations in Chapter 7, court records in January 2012 show. In December, the U.S. Trustee in Dallas filed a motion to convert the subsidiaries' cases to liquidations in Chapter 7. The Justice Department's bankruptcy watchdog said US$5.1 million in bills were run up in bankruptcy and hadn't been paid. WINLAND ELECTRONICS: Gets Extension to Regain Compliance With NYSE ------------------------------------------------------------------ Winland Electronics, Inc. disclosed that on April 11, 2012 it received notice from the NYSE Amex staff indicating that Winland is below certain of the NYSE Amex LLC's continued listing standards due to: stockholders' equity of less than $4,000,000 and losses from continuing operations and/or net losses in three of its four most recent fiscal years, as set forth in Section 1003(a)(ii) of the Exchange's Company Guide; and stockholders' equity of less than $6,000,000 and losses from continuing operations and/or net losses in its five most recent fiscal years ended Dec. 31, 2011, as set forth in Section 1003(a)(iii) of the Exchange's Company Guide. Winland was afforded the opportunity to submit a plan of compliance to the Exchange, and on May 11, 2012 Winland presented its plan to the Exchange. On June 11, 2012 the Exchange notified Winland that it accepted Winland's plan of compliance and granted Winland an extension until May 29, 2013 to regain compliance with the continued listing standards. Winland will be subject to periodic review by the Exchange staff during the extension period. Failure to make progress consistent with the plan or to regain compliance with the continued listing standards by the end of the extension period could result in Winland being delisted from the NYSE Amex Exchange. About Winland Electronics Winland Electronics, Inc. -- http://www.winland.com/-- is an industry leader of critical condition monitoring devices. Products including EnviroAlert, WaterBug, TempAlert, Vehicle Alert and more are designed in-house to monitor critical conditions for industries including health/medical, grocery/food service, commercial/industrial, as well as agriculture and residential. Proudly made in the USA, Winland products are compatible with any hard wire or wireless alarm system and are available through distribution worldwide. Headquartered in Mankato, MN, Winland trades on the NYSE Amex Exchange under the symbol WEX. WORLDSPACE INC: Case Converted to Chapter 7 Liquidation ------------------------------------------------------- WorldSpace Inc., which sold its assets in June 2010 via the Chapter 11 process, is now undergoing liquidation in Chapter 7. The bankruptcy judge entered the conversion order at the behest of the company. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that WorldSpace told the bankruptcy judge in Delaware that about $10,000 remains in the bank account. "Almost all" expenses of the Chapter 11 case have been paid, according to a court filing. BankruptcyData.com reported on May 16, 2012 on the Debtors' motion to convert the case. The Debtors explained that they do not believe that they will be able to propose or confirm a plan in these cases, and are incurring administrative expenses. About WorldSpace, Inc. WorldSpace, Inc., provided satellite-based radio and data broadcasting services to paying subscribers in 10 countries throughout Europe, India, the Middle East, and Africa. WorldSpace was founded in 1990 and is headquartered in Silver Spring, Maryland. The Debtor and two of its affiliates filed for Chapter 11 bankruptcy protection (Bankr. D. Del., Case Nos. 08-12412 through 08-12414) on Oct. 17, 2008. James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones, LLP, serve as the Debtors' bankruptcy counsel. Kurtzman Carson Consultants serves as claims and notice agent. Neil Raymond Lapinski, Esq., and Rafael Xavier Zahralddin-Aravena, Esq., at Elliot Greenleaf, represent the Official Committee of Unsecured Creditors. When the Debtors filed for bankruptcy, they listed total assets of $307,382,000 and total debts of $2,122,904,000. WorldSpace completed the sale of substantially all assets related to business effective June 23, 2010. The assets were sold to a company controlled by WorldSpace Chief Executive Officer Noah Samara under a $5.5 million contract. Samara had defaulted on a prior contract to purchase the assets for $28 million. The sale to Samara was arranged after WorldSpace couldn't agree on a sale to Liberty Satellite Radio LLC, which had been financing the Chapter 11 case. XTREME IRON: Heavy Equipment Rental Files for Chapter 11 in Dallas ------------------------------------------------------------------ Xtreme Iron Holdings, LLC, filed a bare-bones Chapter 11 petition (Bankr. N.D. Tex. Case No. 12-33832) in Dallas on June 13, 2012. Lake Dallas-based Xtreme Iron estimated assets and liabilities of $10 million to $50 million. The Debtor said that an estimated 90% of the business assets are located in North Texas counties. The Debtor is the holding company for Xtreme Iron, LLC -- http://www.xtreme-iron.com-- which claims to own one of the largest heavy equipment rental fleets in the state of Texas. Their fleet is comprised of late model, low hour Caterpillar and John Deere equipment. * Moody's Says Anemic Macroeconomic Recovery to Hit US Telcos ------------------------------------------------------------- Moody's Investors Service maintains a stable outlook on the US wireline sector, as sector consolidation, investments and acquisitions in growth services focused on IP and data, and ongoing cost cutting are driving stabilization of operating metrics and leading to slower declines in access lines, revenues, and EBITDA of sector companies. Major risks to the stable outlook include the prolonged anemic macroeconomic recovery and cable's competitive market expansion into business telecom services, according to the industry outlook "US Fixed-Line Telecommunications: Cost Cuts, Data Services Will Support Modest EBITDA Gains Through Mid-2013." "When looking at the business fundamentals of the entire wireline sector, revenue stabilization among residential customers is continuing as telecom operators, particularly AT&T and Verizon, have enhanced their broadband and video capabilities to match or exceed cable's offerings," said Dennis Saputo, a Moody's Senior Vice President. "Moreover, residential wireline voice revenues are becoming a much smaller component of the major telecommunications' companies revenue streams." Nevertheless, the downward secular trends of the wireline operators persist as customers continue to switch from old fashioned high-margin voice telephone service towards lower margin data services or wireless calls. Although in 2011, telcos' business and wholesale segments were aided by increased traffic volumes and increasing opportunities from surging demand for fiber connectivity and data center capacity, Moody's estimates that business revenue among telecom companies will be flat to lower in 2012 and 2013, owing to the link with US employment growth and to market-share gains by cable companies. "Even as business spending on telecommunications services eventually begins to recover with total US employment, incumbent telecom companies will see flat business-segment revenues at best in 2012-13, as cable companies take share," said Mark Stodden, a Moody's analyst. So far, the stable EBITDA and operating incomes are due to aggressive cut costs as improvements in operating support systems and network investment lead to efficiency gains. "But when the cost saving opportunities run out, telcos will have a difficult decision whether to continue their high dividend payments or network investments to enhance their competitive position," said Gerald Granovsky, a Moody's Vice President-Senior Credit Officer. In Moody's opinion, telcos will be hard pressed to pick up market share in broadband connections without greater network investments. Moody's expects wireline telecoms to defend the upper end of the business segment before the expected foray by larger cable operators into the broader commercial markets. Telcos still have a network and product advantage over cable in targeting larger multi-location business customers. Moody's believes that telcos have a 12 to 18 month window before they see material competition for the larger end of the business market from the cable operators, as cable's primary focus is still on gaining maximum penetration of residential and small business customers. In the meantime, Moody's expects telcos to hold their share of ever-growing Internet traffic and does not expect cable to materially impact the enterprise and wholesale business over the next 12 to 18 months, at least. The wireline carriers also benefit from the growth of wireless broadband as backhaul facilities from cell sites are upgraded to higher capacity wireline circuits and as the larger volumes of wireless network traffic are transported to their destinations primarily over wireline networks.. North American Wireline sector includes ILEC, CLEC and some issuers from the diversified telecom sub-sector. * Moody's Says Insurance Brokerage Sector Faces Integration Risk ---------------------------------------------------------------- The outlook for the global insurance brokerage sector remains stable, Moody's Investors Services says in its new "Global Insurance Brokerage Outlook," underpinned by expectations for a modest global economic recovery in 2012-13. The outlook reflects brokers' steady performance through shifting economic and market conditions. "Insurance brokers held up relatively well through the financial crisis," says Vice President and co-author of the report Bruce Ballentine, "and we expect that they will retain their overall health, despite the slow pace of economic growth." He adds, however, that the sector's credit strengths are tempered by integration risks associated with acquisitions, given that most Moody's-rated brokers are active consolidators, and by the approaching debt maturities of some of the more leveraged firms. Brokers are benefiting from a favorable pricing trend in the US commercial property & casualty (P&C) insurance market, which translates to higher commissions for the brokers. "Rate increases, along with the gradual economic recovery, should support single- digit organic revenue growth for brokers over the next couple of years," says Associate Analyst and co-author Ben Goldberg. Most large brokers distribute a combination of P&C insurance and employee benefits products and services, which helps stabilize their results through P&C pricing cycles. While healthcare reform in the US has raised uncertainty about the structure and regulation of that market, Moody's expects healthcare and related benefit programs to remain largely employer-based, especially for firms with 50 or more employees, so brokers will remain keenly involved in this business. The insurance brokerage sector remains ripe for further consolidation, particularly in the highly fragmented US market, where acquisition candidates include thousands of regional and local firms. Moody's expects the leading brokers to continue their strategy of acquiring smaller players to supplement organic growth. * Guggenheim Partners Launches Restructuring Advisory Business --------------------------------------------------------------- Guggenheim Partners, LLC, a global diversified financial services firm, has launched a restructuring practice within Guggenheim Securities, its investment banking and capital markets division. As part of the launch, Guggenheim has appointed Ronen A. Bojmel as Senior Managing Director and Head of Restructuring to lead the firm's expansion in this practice. Based in New York, Mr. Bojmel will start in his new role on October 1. Mr. Bojmel is a highly respected and seasoned restructuring veteran and most recently a Partner and Managing Director at Miller Buckfire & Co. While at Miller Buckfire and its predecessor firms, Dresdner Kleinwort Wasserstein and Wasserstein Perrella & Co., he led numerous high profile restructuring projects on behalf of companies, investors and creditors, as well as advised on M&A and capital raising activities in distress and non-distress situations in the U.S. and abroad. "Restructuring will be a key component of Guggenheim's growing investment banking and capital markets business and extends the value proposition the firm offers its clients. We are excited to build our practice with Ronen's leadership ? not only because of his deep industry and transaction experience, but also because of his track record of delivering ground-breaking solutions and uncompromising results to his clients," said Alan Schwartz, Executive Chairman of Guggenheim. "We look forward to supporting the restructuring team with our broad relationships and sector expertise and we expect to attract a highly talented group of bankers to help expand the business." Mr. Bojmel has been credited for setting the strategy of several marquee restructuring mandates including General Growth Properties' multi-staged emergence from Chapter 11 and Charter Communication's landmark credit facility reinstatement. Mr. Bojmel has also advised companies and constituents such as LNR, CW Capital, Neff Corp, Simmons Bedding, Standard Pacific, Grupo TMM and Foamex Corp on their restructuring efforts. "I have been waiting for the opportunity to build a world-class restructuring team on a superior investment banking platform. I look forward to working with Guggenheim's senior team and Alan Schwartz, who serves as a role model for so many bankers on Wall Street. Guggenheim Securities is a differentiated platform due to the firm's entrepreneurial culture and commitment to excellence in delivering innovative and intelligent solutions to its clients," said Mr. Bojmel. Mr. Bojmel has been recognized four times in the past seven years as the lead restructuring banker by the Turnaround Management Association for mandates such as Grupo TMM for Mid-size Company Transaction of the Year in 2005, Simmons Bedding Company for Large Size Company Transaction of the Year in 2009, General Growth Properties for Mega Size Company Transaction of the Year in 2010, and Neff Corp for Mid-size Company Transaction of the Year in 2010. Prior to joining Wasserstein Perella & Co., Mr. Bojmel served the Israeli military as a field officer as well as the Government of Israel under the Consul General in New York. Mr. Bojmel is on the Board of Circ MedTech, a medical device company committed to preventing the spread of AIDS in Africa. About Guggenheim Partners Guggenheim Partners, LLC is a privately held global financial services firm with more than $160 billion in assets under management. The firm provides asset management, investment banking and capital markets services, insurance, institutional finance and investment advisory solutions to institutions, governments and agencies, corporations, investment advisors, family offices and individuals. Guggenheim Partners is headquartered in New York and Chicago and serves clients around the world from more than 25 offices in nine countries. For more information about Guggenheim Partners, visit http://WWW.GUGGENHEIMPARTNERS.COM/ * McGlinchey Stafford Taps H. Weinzetl for Fort Lauderdale Office ----------------------------------------------------------------- McGlinchey Stafford PLLC disclosed that Heidi Weinzetl has joined the firm's Fort Lauderdale, Florida office. The addition of Ms. Weinzetl marks the fourth attorney to join the Fort Lauderdale office since its opening in June of last year. Ms. Weinzetl is Of Counsel in the commercial litigation section of the firm. She represents clients in consumer financial services litigation, including contested mortgage foreclosures, real estate litigation, bankruptcy and creditors' rights, and has extensive appellate experience. S he earned her Juris Doctor degree from the University of St. Thomas School of Law (Minnesota) and her Bachelor of Arts degree from the University of Minnesota Duluth. Ms. Weinzetl is admitted to practice in Florida and Minnesota. "McGlinchey Stafford is excited to continue to grow our presence in Florida to respond to the needs of our clients," said Anthony Rollo, head of the firm's commercial litigation group. "Heidi is an excellent fit for our team." McGlinchey Stafford now has eleven attorneys based in Florida, including seven in the firm's Jacksonville office, which opened in August of 2010. About McGlinchey Stafford McGlinchey Stafford PLLC -- http://www.mcglinchey.com/-- is a full-service law firm providing innovative legal counsel to business clients nationwide. Guiding clients wherever business and law intersect, McGlinchey Stafford attorneys are based in ten offices in Florida, Louisiana, Mississippi, New York, Ohio and Texas. * BOOK REVIEW: Learning Leadership ---------------------------------- Author: Abraham Zaleznik Publisher: Beard Books Hardcover: 548 pages Listprice: $34.95 Review by Henry Berry The lesson in Learning Leadership -- The Abuse of Power in Organizations is to "use power so that substance leads process." This is done, says the author, by keeping the "content of work at the center of communication." The premise of this intriguing book is that many managers, executives, and other business leaders allow "forms of communication [to become] the center of work." As a result, misguided and counterproductive leadership and management practices have settled into many organizations. A culprit is the popular "how-to" leadership manuals that offer simple, superficial principles that only skim the surface of leadership. Zaleznik argues that the primary way to get work done is to put aside personal agendas and deal directly with those who are involved in the work. With this emphasis on substance over process, the concept of leadership lies not in techniques, but personal qualities. The essential personal qualities of leadership are captured by the "three C's" of competence, character, and compassion. The author then delves more deeply into each of these C's. We learn, for example, that the three C's are not learned skills. Competence entails "building one's power base on talent." Character and compassion are the two other qualities of a leader that must be present before there is any talk about methods of operation, lines of communication, definition of goals, structure of a team, and the like. There is more to character that the common definition of the "quality of the person." Character also embraces, says the author, the "code of ethics that prevents the corruption of power." Compassion is defined as a "commitment to use power for the benefit of others, where greed has no place." This concept of a good leader is not idealized or unrealistic. It takes into account human nature and the troubling behavior of many leaders. Of course, any position of leadership brings with it temptations and the potential to abuse power. Effective leaders are those who "take responsibility for [their] own neurotic proclivities," says the author. They do this out of a sense of the true purpose of leadership, which is communal benefit. The power holder will "avoid the treacheries of an unreasonable sense of guilt, while recognizing the omnipresence of unconscious motivation." Zaleznik's definition of the essentials of leadership comes from his study of notable (and sometime notorious) leaders. Some tales are cautionary. The Fashion Shoe Company illustrates the problems that can occur when a leader allows action to overcome thought. The Brandon Corporation illustrates the opposite leadership failing -- allowing thought to inhibit action. Taken together, the two examples suggest that balance is needed for good leadership. Andrew Carnegie exemplifies the struggle between charisma and guilt that affects some leaders. Frederick Winslow Taylor is seen by the author as an obsessed leader. From his behavior in the Sicilian campaign in World War II, General Patton is characterized as a leader who violated the code binding leaders and those they lead. With his training in psychoanalysis and his experience in the business field, Zaleznik's leadership dissections and discussions are instructive. The reader will find Learning Leadership -- The Abuse of Power in Organizations to be an engaging text on the human qualities and frailties of leaders. Abraham Zaleznik is emeritus Konosuke Matsushita Professor of Leadership at the Harvard Business School. He is also a certified psychoanalyst. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers" public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed Chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors" Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine Tumanda, Howard C. Tolentino, Joseph Medel C. Martirez, Denise Marie Varquez, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Sheryl Joy P. Olano, Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2012. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***