/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/120710.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, July 10, 2012, Vol. 16, No. 190 Headlines 250 PACKERS: Voluntary Chapter 11 Case Summary A123 SYSTEMS: Had $125.0 Million Net Loss in First Quarter AFA FOODS: Names Stalking Horse for Pennsylvania Assets ALT HOTEL: Cash Collateral Hearing Continued Until Aug. 6 ALT HOTEL: Court Sets July 23 Plan Confirmation Hearing AMERICAN AIRLINES: AMR Reports June 2012 Traffic Results ASCENDIA BRANDS: Former Board Member Wants Case Dismissal Denied B-NGAE1 LLC: Voluntary Chapter 11 Case Summary BAYOU GROUP: Goldman Sachs Made $20.6 Million Arbitration Mistake BERNARD L. MADOFF: Solus Sues Perry for Filing to Sell Claim BERNARD L. MADOFF: Peter Madoff Pleads Guilty to Felony BOYD GAMING: S&P Assigns 'B' Issue-Level Rating to $350MM Notes CACTUS-SECRETARIAT: Case Summary & 6 Largest Unsecured Creditors CAPITOL BANCORP: Amends Terms of Standby Plan of Reorganization CE GENERATION: S&P Alters Outlook on $400MM Secured Notes to Neg. CENGAGE LEARNING: Moody's Lowers CFR to 'Caa1'; Outlook Negative CENGAGE LEARNING: S&P Rates $710MM Second Lien Notes at 'CCC' CENTRAL ENERGY: Incurred $447,000 Net Loss in First Quarter CENTURION PROPERTIES: Court Enters Final Decree Closing Case CHARLES BRELAND: Consent Order, Not Plan, Controls IRS Claim CHINA 3C: Had $4.7 Million Net Loss in First Quarter CHINA TEL GROUP: Unregistered Securities Sales Exceed Threshold CHINA YIDA: Fails to Comply With NASDAQ's $1 Bid Price Rule CLARE AT WATER: Hearing on Conditioning Cash Use Set for July 18 CLIFFS CLUB: Set Aug. 6 Plan Confirmation Hearing CLOUD PEAK: Coal Asset Acquisition Won't Affect Moody's Ratings COMPETITIVE TECHNOLOGIES: Extends Calmare Agreement Until 2021 CONNAUGHT GROUP: Ali Law Group Approved as Labor Counsel CONNAUGHT GROUP: Proposes to Tap CBIZ as Taxation Accountants CONSOL ENERGY: Mine Closure, Asset Sale Won't Affect Ratings CORDILLERA GOLF: Club Members Ask Judge to Move Case D.L. BERRY: Case Summary & 5 Largest Unsecured Creditors DECISION DIAGNOSTICS: Had $105,000 Net Loss in First Quarter DELTA OIL & GAS: Had $104,200 Net Loss in First Quarter DELTA PETROLEUM: Max Holdings Required to be Sold Down $0 DELTA PETROLEUM: Has Forbearance with DIP Lenders Until July 16 DESERT HAWK: Has Forbearance with DMRJ Group Until Sept. 30 DEWEY & LEBOEUF: Fifth Third Wants Relief from Automatic Stay DEWEY & LEBOEUF: Taps Thierhoff Muller as German Wind Down Counsel DEWITT REHABILITATION: Wins Confirmation of Reorganization Plan DR TATTOFF: Had $617,900 Net Loss in 1st Quarter DYNEGY INC: S&P Gives D Corp Credit Rating on Bankruptcy EDWARD STURT-PENROSE: Court Converts Case to Chapter 7 ENOVA SYSTEMS: Receives NYSE MKT Exchange Notice of De-Listing ENVIRONMENTAL SOLUTIONS: Had $426,100 Net Loss in 1st Quarter EQUINIX INC: Moody's Changes Outlook on 'Ba3' CFR to Positive FILENE'S BASEMENT: Judge Stalls Hearing on Plan Outline FILENE'S BASEMENT: Opposes Creditors' Bid to Delay Settlement FIRST AMERICANS: Agents Plead Guilty to $29MM Annuities Fraud FIRSTFED FINANCIAL: Making Second Stab at Plan Confirmation FIVE B'S INC: Case Summary & 20 Largest Unsecured Creditors FLETCHER INT'L: Fund Temporarily Halts Bermuda Bankruptcy FLOODCOOLING TECH: Case Summary & 5 Largest Unsecured Creditors FOUR OAKS: Had $552,000 Profit in First Quarter FRANKLIN CREDIT: Amends Prepackaged Plan to Change Record Date FREEDOM ENVIRONMENTAL: Significant Losses Cue Going Concern Doubt FRENCH QUARTER: Principal Slapped With $999,000 Judgment GENERAL MOTORS: Weil, Butzel, Kramer Pay $520K to End Fee Fight GEOMET INC: Had $52.9 Million Net Loss in First Quarter GETTY PETROLEUM: Unit Wins $5MM Judgment in Green Valley Rent Row GLOBAL ARENA: Had $231,800 Net Loss in First Quarter GLOBAL AVIATION: Creditors Committee Objects to Bonuses GOLF TOWN: S&P Assigns 'B' Long-Term Corporate Credit Rating HARRISBURG, PA: Prohibited From Municipal Bankruptcy Until Dec. 1 HAWKER BEECHCRAFT: To Pursue Combination With Superior HOSTESS BRANDS: Deadline to Sue Lenders on Aug. 29 HUSSEY COPPER: Seeks Fourth Extension of Plan Exclusivity INDIANAPOLIS DOWNS: Settles With Former Manager Cordish INTEGRATED ENVIRONMENTAL: Had $468,800 Net Loss in 1st Quarter INTERNATIONAL COMMERCIAL: Had $21,608 Net Loss in First Quarter INTERNATIONAL HOME: Wants First Bank to Turnover Property IZEA INC: Had $917,200 Net Loss in First Quarter JEFFERSON COUNTY: Asks Judge to Clarify His Sewer Ruling KANE & KANE: Former Partners Can't Intervene in Avoidance Suit LEHMAN BROTHERS: Has Stipulation Resolving 3 BNP Paribas Claims LEHMAN BROTHERS: Assigns Swap Agreement to 1271 Counterparty LEHMAN BROTHERS: Resolves Centerbridge Entities' Claims LEHMAN BROTHERS: Removal of Pate Lawsuit to District Court Sought LGC 231: Case Summary & 14 Largest Unsecured Creditors LIBERTY HARBOR: Hearing on Relief of Stay Adjourned to Aug. 7 LIBERTY HARBOR: Unsecured Creditors Committee Down to 3 Members LIGHTSQUARED INC: Falcone Prepares Defense in SEC Suit LIGHTSQUARED INC: Files Schedules of Assets and Liabilities LIGHTSQUARED INC: Hearing on DIP Loan Adjourned to July 17 MAMMOTH LAKES, CA: Chapter 9 Case Summary MAMMOTH LAKES: S&P Cuts Series 2000 COPs Rating to 'C' From 'BB' MARIANA RETIREMENT FUND: Retiree Asks Judge to Probe Legal Fees MARKETING WORLDWIDE: Levin Consulting Holds 9.3% Equity Stake MARTECH USA: Fee Guidelines Critical in Ch.11, Larger Ch.7 Cases MATTHEW JENKINS: Court Denies Bid to Dismiss Chapter 7 Case MATTRESS FOR YOU: Case Summary & 10 Largest Unsecured Creditors MERRIMACK PHARMACEUTICALS: Had $23.4 Million Q1 Net Loss MF GLOBAL: CME Settlement Put Off Until Aug. 8 MOLYCORP INC: S&P Assigns 'B' Corporate Credit Rating MUSCLEPHARM CORP: Gary Davis Joins as Chief Financial Officer NEPHROS INC: Incurred $557,000 Net Loss in First Quarter NEW VENTURES: Case Summary & 18 Largest Unsecured Creditors NORTHAMPTON GENERATING: Has Until Aug. 17 to Propose Ch. 11 Plan NORTHSTAR AEROSPACE: Has Final Approval on $29 Million in Loans NUSTAR ENERGY: S&P Lowers CCR to 'BB+' on Weak Performance NUTRACEA: Had $9.4 Million Net Loss in First Quarter PALM BEACH: Judge Takes Different Approach to Reference Withdrawal PATRIOT COAL: Files for Chapter 11 Reorganization PATRIOT COAL: Case Summary & 50 Largest Unsecured Creditors PAVILLION AUTO: Voluntary Chapter 11 Case Summary PEGASUS RURAL: Xanadoo Frequency Auction Scheduled for Aug. 20 PINNACLE AIRLINES: Says Business Plan a 'Work in Progress' RG STEEL: Has Morris Nichols as Delaware Bankruptcy Co-Counsel RG STEEL: Gets Final Approval to Obtain DIP Financing RG STEEL: Deadline to Submit Initial Bids on July 25 SCHLOTSKY'S INC: 5th Cir. Rules on Introducing Evidence SHENGDATECH INC: Sets Aug. 30 Plan Confirmation Hearing SOLAR MILLENNIUM: U.S. Court Recognizes German Proceeding SOLAR TRUST: NextEra, BrightSource Approved to Buy Projects SOLYNDRA LLC: Wants Until Aug. 31 to Propose Reorganization Plan SPECIALTY PRODUCTS: US Trustee Balks at More Asbestos Attorneys STELLAR GT: Sale Failed to Close, Wants Confirmation Order Amended STOCKTON, CA: Has More Leverage Than Companies Over Creditors SWIFT AIR: Lack of Funding Forced Chapter 11 T BANCSHARES: Incurred $528,000 Net Income in First Quarter TANNIN INC: SE Property Says Plan Fails Liquidation Test TEARLAB CORP: Had $9.1 Million Net Loss in First Quarter TSC GLOBAL: Chapter 7 Trustee Liquidating Assets TYCON REALTY: Case Summary & 3 Largest Unsecured Creditors ULURU INC: Had $843,400 Net Loss in First Quarter VELO HOLDINGS: Trulia Inc. Out as Committee Member VENOCO INC: S&P Keeps 'B' Corp. Credit Rating on Watch Negative VISTEON CORP: Moody's Affirms B1 Corp Family Rating; Outlook Neg VISTEON CORP: S&P Keeps 'B+' Corp. Credit Rating After Halla Deal VOLKSWAGEN-SPRINGFIELD: Taps Marcher as Financial Consultant VOLKSWAGEN-SPRINGFIELD: Opposes Relief of Stay for BB&T W.R. GRACE: Completes Chemical Admixture Acquisition WALTER ENERGY: S&P Alters Outlook to Negative; Keeps 'BB-' CCR WARNER SPRINGS: Amends Schedules of Assets and Liabilities WARNER SPRINGS: Pala Band Cries Mismanagement, Wants Chapter 7 WEST END: Defending Trustee Motion Is No Disqualification WIZZARD WORLD: Had $303,900 Net Loss in First Quarter WIZZARD SOFTWARE: Had $997,200 Net Loss in First Quarter WOUND MANAGEMENT: Had $287,500 Net Income in First Quarter WVSV HOLDINGS: Cooley, LLP OK'd to Handle Petition for Review WVSV HOLDINGS: OK'd to Employ Land Advisors to Sell Property * Automatic Stay No Protection for Trademark Violation * Tax on Late-Filed Return Isn't Dischargeable * Discharged Defendant Not Considered for Diversity * S&P 2012 Global Default Tally Still at 39 as of July 4 * Montgomery Bank Failure Raises Year's Total to 32 * Commercial Bankruptcy Filings Fewest in Four Years * Mortgage Casualties Fall as Fewer Financial Institutions Fail * Weintraub Genshlea Merges With Weissmann Wolff * Large Companies With Insolvent Balance Sheets ********* 250 PACKERS: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: 250 Packers Avenue, LLC 250 Packers Avenue National Stock Yards, IL 62071 Bankruptcy Case No.: 12-31268 Chapter 11 Petition Date: July 5, 2012 Court: United States Bankruptcy Court Southern District of Illinois (East St Louis) Judge: Laura K. Grandy Debtor's Counsel: Cherie K. Macdonald, Esq. GREENSFELDER HEMKER AND GALE 12 Wolf Creek Dr., Suite 100 Belleville, IL 62226 Tel: (618) 257-7308 E-mail: ckm@greensfelder.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. The petition was signed by David Macheca, manager. A123 SYSTEMS: Had $125.0 Million Net Loss in First Quarter ---------------------------------------------------------- A123 Systems, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $125.04 million on $10.89 million of revenue for the three months ended March 31, 2012, compared with a net loss of $53.67 million on $18.10 million of revenue for the same period last year. The Company's balance sheet at March 31, 2012, showed $513.66 million in total assets, $327.15 million in total liabilities, and stockholders' equity of $186.51 million. "The Company has incurred significant net losses and negative operating cash flows since inception," the Company said in the filing. "At March 31, 2012, the Company had an accumulated deficit of $774.0 million, including a $125.0 million net loss incurred for the quarter ended March 31, 2012. The Company had $113.1 million in cash and cash equivalents at March 31, 2012, down from $186.9 million at Dec. 31, 2011." "On March 26, 2012, the Company launched a field campaign to replace battery modules and packs that may contain defective prismatic cells produced at its Livonia, Michigan manufacturing facility. The cost of this field campaign is estimated at $51.6 million. In addition, the Company recorded an inventory charge of approximately $15.2 million related to inventory produced at its Michigan facilities that may be defective. As a result of this field campaign and the charge for existing prismatic cell inventory, the Company must begin to rebuild its inventory and manage its backlog for existing customer orders while simultaneously replacing the defective customer modules and packs. Therefore, the Company expects to continue to incur significant net losses and negative operating cash flows over the next several quarters." "On May 11, 2012, the Company amended its revolving credit facility with its lead bank. This amendment eliminates the borrowing facility and provides for up to $15.0 million as security for letters of credit. All outstanding letters of credit are required to be cash collateralized at 105% of their face amount." "The above circumstances raise substantial doubt on the Company's ability to continue as a going concern." A copy of the Form 10-Q is available for free at: http://is.gd/y64Ccl A123 Systems, Inc., was incorporated in Delaware on Oct. 19, 2001, and has its corporate offices in Waltham, Massachusetts. The Company designs, develops, manufactures and sells advanced rechargeable lithium-ion batteries and battery systems and provides research and development services to government agencies and commercial customers. AFA FOODS: Names Stalking Horse for Pennsylvania Assets ------------------------------------------------------- Stephanie Gleason at Dow Jones' DBR Small Cap reports that AFA Foods Inc. has named a subsidiary of CTI Foods, a privately held food manufacturer, as the stalking-horse bidder for its assets located in Pennsylvania. About AFA Foods King of Prussia, Pennsylvania-based AFA Foods Inc. is one of the largest processors of ground beef products in the United States. The Company has five processing facilities and two ancillary facilities across the country with annual processing capacity of 800 million pounds. AFA has seven facilities capable of producing 800 million pound of ground beef annually. Revenue in 2011 was $958 million. Yucaipa Cos. acquired the business in 2008 and currently owns 92% percent of the common stock and all of the preferred stock. AFA Foods, AFA Investment Inc. and other affiliates filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-11127) on April 2, 2012, after recent changes in the market for its ground beef products and the impact of negative media coverage related to boneless lean beef trimmings -- BLBT -- affected sales. Judge Mary Walrath presides over the case. Lawyers at Jones Day and Pachulski Stang Ziehl & Jones LLP serve as the Debtors' counsel. FTI Consulting Inc. serves as financial advisors and Imperial Capital LLC serves as marketing consultants. Kurtzman Carson Consultants LLC serves as noticing and claims agent. As of Feb. 29, 2012, on a consolidated basis, the Debtors' books and records reflected approximately $219 million in assets and $197 million in liabilities. McDonald Hopkins LLC and Potter Anderson & Corroon LLP represents the official committee of unsecured creditors. In June 2012, AFA Foods received authority from the bankruptcy judge to sell two plants for a combined $11.6 million. Tri West Investments LLC emerged the winning bidder after offering $4.4 million for the plant in Los Angeles. PL Food LLC came out on top with an offer of $7.2 million for the Georgia plant. ALT HOTEL: Cash Collateral Hearing Continued Until Aug. 6 --------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois, according to the ALT Hotel, LLC's case docket, continued until Aug. 6, 2012, at 10 a.m., the hearing to consider the Debtor's request for continued access to cash collateral. As reported in the Troubled Company Reporter on July 2, 2012, pursuant to a stipulation with the senior lender, DiamondRock Allerton Owner, LLC; -- the senior lender consents to the use of the cash collateral relating to the hotel's room revenues, meeting space revenues, food and beverage revenues and other operating department revenues, rentals and other income, and monies received or held in impound or trust accounts, to fund the payment of expenses of the hotel; -- with respect to the professional fees, Arcturus, other consultant and professional incidentals line items in the aggregate amount of $285,000, the Debtor will fund the payment of the budgeted professional fees to Neal Wolf & Associates, LLC, counsel to the Debtor; and -- the senior lender has agreed and the Debtor is directed that, among other things: (i) until the ninth interim expiry date, the Debtor will (a) continue to adhere to the terms of the cash management system set forth in the senior loan agreement, including without limitation, maintaining the lock-box concentration account system as set forth in the senior loan agreement; (ii) adhere to the ninth interim period budget subject to a 10% variance allowance per line item; (iii) make monthly payments to the senior lender. As reported in the TCR on April 19, 2012, as adequate protection to the diminution in the value of the lender's collateral, the Debtor will grant the senior lender, among other things: (i) replacement liens with the same validity and priority on all rents and all other property of the estate of the same kind and nature on which the senior lender had a duly perfected and valid lien and security interest on a prepetition basis; (ii) make payments to the senior lender equal to interest on the outstanding senior debt at the default rate set forth in the senior loan agreement; (iii) continue to maintain adequate insurance on all property on which the senior lender holds a duly perfected and valid lien and security interest on a prepetition basis. About ALT Hotel LLC ALT Hotel, LLC's sole asset is the Allerton Hotel located in the "Magnificent Mile" area of Chicago. The Hotel is managed by Kokua Hospitality, LLC, pursuant to a Hotel Management Agreement, dated Nov. 9, 2006. Kokua is the exclusive manager and operator of the Hotel, and receives management fees for its services, with the amount of such fees directly linked to the annual performance of the Hotel. Hotel Allerton Mezz, LLC, is the sole member of ALT Hotel. ALT Hotel filed for Chapter 11 bankruptcy (Bankr. N.D. Ill. Case No. 11-19401) on May 5, 2011. Judge A. Benjamin Goldgar presides over the case. Neal L. Wolf, Esq., Dean C. Gramlich, Esq., and Jordan M. Litwin, Esq., at Neal Wolf & Associates, LLC, in Chicago, Illinois, serve as bankruptcy counsel to the Debtor. In its petition, the Debtor estimated $100 million to $500 million in assets and $50 million to $100 million in debts. FTI Consulting serves as the Debtor's financial advisors. Affiliate PETRA Fund REIT Corp. sought Chapter 11 protection (Bankr. S.D.N.Y. Case No. 10-15500) on Oct. 20, 2010. ALT HOTEL: Court Sets July 23 Plan Confirmation Hearing ------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois, according to the ALT Hotel, LLC's case docket, will convene a hearing on July 23, 2012, at 10:30 a.m., to consider the confirmation of the Debtor's Plan of Reorganization. The Court also set this schedule in relation to the Plan confirmation: Final Discovery Cutoff: July 12 Written Objection to Exhibit: July 13 Objections to Plan: June 25 Response: July 9 Witness List: July 9 Exhibit List: July 9 As reported in the Troubled Company Reporter on April 2, 2012, according to the Disclosure Statement, as amended, the Debtor anticipates the receipt of revenue sufficient to meet its debt services obligations under the amended and restated loan agreement, amended and restated promissory note and related documents Under the Plan, the secured lender will, among other things, retain all of its liens and security interests in the property of the Debtor. Holders of other secured claims will have their claims reinstated. Each holder of general unsecured claims will receive 50% of the amount of such holder's allowed claim on the Effective Date and 50% of the balance of such holder's allowed claim, together with the interest computed at the rate of 5% per annum, 180 days after the Effective Date. As to the equity holder's deficiency claim, the claim will accrue interest at the rate of 7% per annum commencing upon the Effective Date. Each month after the Effective Date, the equity holder will receive a payment equal to the amount of Excess Cash Flow, if any, which will be applied first to accrued and unpaid interest and second to principal, until the claim and second to principal, until the claim together with all interest that has accrued thereon, has been paid in full. The interest of the equity holder is unimpaired under the Plan. A full-text copy of the Amended Disclosure Statement is available for free at http://bankrupt.com/misc/ALT_HOTEL_ds_amended.pdf About ALT Hotel LLC ALT Hotel, LLC's sole asset is the Allerton Hotel located in the "Magnificent Mile" area of Chicago. The Hotel is managed by Kokua Hospitality, LLC, pursuant to a Hotel Management Agreement, dated Nov. 9, 2006. Kokua is the exclusive manager and operator of the Hotel, and receives management fees for its services, with the amount of such fees directly linked to the annual performance of the Hotel. Hotel Allerton Mezz, LLC, is the sole member of ALT Hotel. ALT Hotel filed for Chapter 11 bankruptcy (Bankr. N.D. Ill. Case No. 11-19401) on May 5, 2011. Judge A. Benjamin Goldgar presides over the case. Neal L. Wolf, Esq., Dean C. Gramlich, Esq., and Jordan M. Litwin, Esq., at Neal Wolf & Associates, LLC, in Chicago, Illinois, serve as bankruptcy counsel to the Debtor. In its petition, the Debtor estimated $100 million to $500 million in assets and $50 million to $100 million in debts. FTI Consulting serves as the Debtor's financial advisors. Affiliate PETRA Fund REIT Corp. sought Chapter 11 protection (Bankr. S.D.N.Y. Case No. 10-15500) on Oct. 20, 2010. AMERICAN AIRLINES: AMR Reports June 2012 Traffic Results -------------------------------------------------------- AMR Corporation reported June 2012 consolidated revenue and traffic results for its principal subsidiary, American Airlines, Inc. and its wholly owned subsidiary, AMR Eagle Holding Corporation. June's consolidated passenger revenue per available seat mile (PRASM) increased an estimated 8.6 percent versus the same period last year, driven by improved yields and strong demand in domestic and international markets, resulting in higher PRASM across all entities. The Company reported a June consolidated load factor of 87.1 percent, an increase of 1.4 points versus the same period last year. Consolidated capacity and traffic were lower by 2.6 percent and 1.0 percent year-over-year, respectively. Domestic load factor increased 1.2 points to 88.6 percent, as capacity and traffic decreased by 3.5 and 2.2 percent year-over- year, respectively. International load factor was 86.4 percent, an increase of 1.7 points year-over-year, as all international entities experienced increases. The Pacific entity led the way with a load factor of 91.8 percent, an increase of 7.1 percent year-over-year. International traffic was consistent with last year on 2.0 percent less capacity. On a consolidated basis, the Company boarded 9.6 million passengers in June. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). ASCENDIA BRANDS: Former Board Member Wants Case Dismissal Denied ---------------------------------------------------------------- Marilyn Feuer, in her capacity as creditor and former director of Ascendia Brands, Inc., et al., asks the U.S. Bankruptcy Court for the District of Delaware to deny the Official Committee of Unsecured Creditors' motion to dismiss the Debtors' cases, to the extent that the proposed order made reference to her. Ms. Feuer has served a member of the board of directors. According to Ms. Feuer, she received her last payment on Sept. 1, 2008. Ms. Feuer explains that as of now, she is not aware of any claims pending or any potential legitimate claims against her and none have been threatened. As reported in the Troubled Company Reporter on June 7, 2012, BankruptcyData.com reported that the Committee filed with the U.S. Bankruptcy Court a motion for an order dismissing the case and mandating that the Debtors, ASK Financial and the DIP lenders transfer all interest of the general unsecured creditors to an agent appointed by the committee and authorizing the agent to distribute the funds to non-priority general unsecured creditors on a consolidated basis. According to the committee, $771,862 is currently available for distribution in accordance with the sharing provision in the Debtors' final DIP order. About Ascendia Brands Headquartered in Hamilton, New Jersey, Ascendia Brands, Inc. -- http://www.ascendiabrands.com/-- was, prior to the sale of substantially all of its assets during bankruptcy, a manufacturer and seller of branded and private labeled health and beauty care products in North America, including Baby Magic, Binaca, Mr. Bubble, Calgon, Ogilvie, the healing garden, Lander and Lander Essentials. Remaining assets consist almost entirely of accounts receivable. The Company and six of its affiliates filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 08-11787) on Aug. 5, 2008, disclosing $194.8 million in total assets and $279.0 million in total liabilities. Kenneth H. Eckstein, Esq., and Robert T. Schmidt, Esq., at Kramer Levin Naftalis & Frankel LLP, serve as bankruptcy counsel to the Debtors. M. Blake Cleary, Esq., Edward J. Kosmoswki, Esq., and Patrick A. Jackson, Esq., at Young, Conaway, Stargatt & Taylor, LLP, serve as the Debtors' Delaware counsel. Epiq Bankruptcy Solutions LLC is the notice, claims and balloting agent to the Debtors. B-NGAE1 LLC: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: B-NGAE1, LLC 3455 Cliff Shadows Pkwy, Suite 220 Las Vegas, NV 89129 Bankruptcy Case No.: 12-17954 Chapter 11 Petition Date: July 6, 2012 Court: United States Bankruptcy Court District of Nevada (Las Vegas) Judge: Linda B. Riegle Debtor's Counsel: Michael R. Hogue, Esq. BOGATZ & ASSOCIATES P.C. 3455 Cliff Shadows Pkwy, Ste 110 Las Vegas, NV 89129 Tel: (702) 776-7005 Fax: (702) 776-7900 E-mail: mhogue@isbnv.com Scheduled Assets: $7,401,500 Scheduled Liabilities: $5,119,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. The petition was signed by Thomas J. DeVore, chief operating officer of LEHM LLC, Debtor's manager. Affiliates that filed separate Chapter 11 petitions: Petition Debtor Case No. Date ------ -------- ---- A-SWDE1, LLC 09-34216 12/29/09 B-NGAE3, LLC 11-29000 12/12/11 B-PVL2, LLC 10-16648 04/16/10 B-PWR, LLC 12-13827 03/30/12 B-VV2, LLC 12-15648 05/10/12 C-FSG426, LLC 12-14831 04/25/12 C-FSG427, LLC 11-16568 04/29/11 C-FSG428, LLC 11-16571 04/29/11 C-NGA314, LLC 12-14834 04/25/12 C-NGA315, LLC 12-14836 04/25/12 C-PV323, LLC 11-21036 07/13/11 C-PV330, LLC 11-21038 07/13/11 C-PV332, LLC 11-21058 07/13/11 C-SWDE348, LLC 11-13942 03/21/11 C-SWDE393, LLC 11-21059 07/13/11 C-SWDE394, LLC 11-21063 07/13/11 BAYOU GROUP: Goldman Sachs Made $20.6 Million Arbitration Mistake ----------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the decision by Goldman Sachs Execution & Clearing LP to arbitrate rather than submit to a lawsuit in bankruptcy court may have been a $20.6 million mistake, unless the U.S. Supreme Court decides to hear an appeal from the unsigned decision handed down on July 3 by the U.S. Court of Appeals in Manhattan. The report recounts that in late 2010, U.S. District Judge Jed S. Rakoff upheld an arbitration award in favor of the creditors' committee for Bayou Group LLC, a hedge fund that turned out to be a Ponzi scheme. Before fraud was discovered, Bayou kept customer funds in accounts at Goldman. The broker invoked a provision in the account agreement and had the lawsuit sent to arbitration under the auspices of the Financial Industry Regulatory Authority. After arbitrators decided that Goldman should pay $20.6 million to the Bayou creditors, the broker sued in New York federal district court alleging that the award was invalid as the result of "manifest disregard" of controlling law. Judge Rakoff disagreed and upheld the award. The Court of Appeals reached the same conclusion, according to the report. Mr. Rochelle relates that the appeals court said that the "manifest disregard" standard is "by design exceedingly difficult to satisfy, and Goldman has not satisfied it in this case." Because Goldman "voluntarily" chose arbitration, Judge Rakoff said it must "suffer the consequences." The appeal is Goldman Sachs Execution & Clearing LP v. Official Unsecured Creditors' Committee of Bayou Group LP, 11-2446, U.S. Court of Appeals for the Second Circuit (Manhattan). The opinion by Rakoff is Goldman Sachs Execution & Clearing LP v. Official Unsecured Creditors' Committee of Bayou Group LP, 10-5622, U.S. District Court, Southern District of New York (Manhattan). About Bayou Group Based in Chicago, Illinois, Bayou Group LLC operated and managed hedge funds. The hedge fund that turned out to be a Ponzi scheme and a receiver was subsequently appointed. The Company and its affiliates were sent to Chapter 11 on May 30, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-22306) to pursue recoveries for the benefit of defrauded investors. Elise Scherr Frejka, Esq., at Dechert LLP, represents the Debtors in their restructuring efforts. Joseph A. Gershman, Esq., and Robert M. Novick, Esq., at Kasowitz, Benson, Torres & Friedman, LLP, represent the Official Committee of Unsecured Creditors. Kasowitz, Benson, Torres & Friedman LLP is counsel to the Unofficial Committee of the Bayou Onshore Funds. Sonnenschein Nath & Rosenthal LLP represents certain investors. Bayou Group estimated assets and debts of more than $100 million in the Chapter 11 petition. Bayou has filed lawsuits against former investors who allegedly received fictitious profits and an inequitably large return of their principal investments. Jeff J. Marwil, Esq., at Jenner & Block, was appointed on April 28, 2006, as the federal equity receiver. The receiver commenced adversary proceedings to recover certain fraudulent transfers made by Bayou Group to investors. The Bayou fraud resulted in three guilty pleas. Daniel Marino, the head of finance, was sentence to a 20-year prison term despite his cooperation with prosecutors. James Marquez, a Bayou co-founder, was sentenced to four years and three months in prison and told to pay $6.2 million in restitution. Another founder, Samuel Israel III, was sentenced to 20 years following his guilty plea in September 2005. BERNARD L. MADOFF: Solus Sues Perry for Filing to Sell Claim ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Solus Alternative Asset Management LP sued Perry Capital LLC for breaching a contract to sell part of a $195 million claim against Bernard L. Madoff Investment Securities Inc. Solus contends the case is one of "seller's remorse." According to the complaint, the market for Madoff claims rose after the trade was agreed, leading Perry to refuse to complete the transfer of the claim. The lawsuit is Solus v. Perry Corp., 652341/2012, Supreme Court of New York (Manhattan.) About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. The District Court's Protective Order (i) appointed Irving H. Picard, Esq., as trustee for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and (iii) removed the SIPA Liquidation proceeding to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789) (Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims agent. On April 13, 2009, former BLMIS clients filed an involuntary Chapter 7 bankruptcy petition against Bernard Madoff (Bankr. S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The petitioning creditors -- Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert US$64 million in claims against Mr. Madoff based on the balances contained in the last statements they got from BLMIS. On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff Securities International Limited in London under bankruptcy protection pursuant to Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. 09-16751). The Chapter 15 case was later transferred to Manhattan. In June 2009, Judge Lifland approved the consolidation of the Madoff SIPA proceedings and the bankruptcy case. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors in United States v. Madoff, No. 09-CR-213 (S.D.N.Y.) The SIPA Trustee has said that as of March 31, 2012, through prepetition litigation and other settlements, he has successfully recovered, or reached agreements to recover, more than $9 billion -- over 50% of the principal lost in the Ponzi scheme by those who filed claims -- for the benefit of all customers of BLMIS. The liquidation has so far has cost the Securities Investor Protection Corp. $1.3 billion, including $791 million to pay a portion of customers' claims. Mr. Picard has so far made only one distribution in October of $325 million for 1,232 customer accounts. Uncertainty created by the appeals has limited Mr. Picard's ability to distribute recovered funds. Outstanding appeals include the $5 billion Picower settlement and the $1.025 billion settlement. BERNARD L. MADOFF: Peter Madoff Pleads Guilty to Felony ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Peter Madoff, brother of Bernard Madoff, pleaded guilty on June 29 to two felony counts and agreed to ask the federal judge for a prison sentence of no less than 10 years. His plea came exactly three years after his brother was sentence to 150 years. Peter was the chief compliance officer for Bernard L. Madoff Investment Securities Inc. Although he said he was unaware the firm was a Ponzi scheme, he admitted to falsifying documents. Peter's criminal case is U.S. v. Madoff, 10-cr-00228, U.S. District Court, Southern District of New York (Manhattan). About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. The District Court's Protective Order (i) appointed Irving H. Picard, Esq., as trustee for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and (iii) removed the SIPA Liquidation proceeding to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789) (Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims agent. On April 13, 2009, former BLMIS clients filed an involuntary Chapter 7 bankruptcy petition against Bernard Madoff (Bankr. S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The petitioning creditors -- Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert US$64 million in claims against Mr. Madoff based on the balances contained in the last statements they got from BLMIS. On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff Securities International Limited in London under bankruptcy protection pursuant to Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. 09-16751). The Chapter 15 case was later transferred to Manhattan. In June 2009, Judge Lifland approved the consolidation of the Madoff SIPA proceedings and the bankruptcy case. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors in United States v. Madoff, No. 09-CR-213 (S.D.N.Y.) 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. BOYD GAMING: S&P Assigns 'B' Issue-Level Rating to $350MM Notes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' issue-level rating to Las Vegas-based Boyd Gaming Corp.'s $350 million 9% senior unsecured notes due 2020. "The '4' recovery rating reflects our expectation for average (30% to 50%) recovery for lenders in the event of a payment default. Boyd used the proceeds to repay outstanding borrowings under its revolving credit facility, which were partly drawn to finance a portion of the purchase price for its acquisition of Peninsula Gaming LLC. We affirmed our 'B' issue-level rating on Boyd's $500 million 9.125% senior notes due 2018 and removed the rating from CreditWatch, where it was placed with negative implications on May 17, 2012. The recovery rating remains '4'," S&P said. The affirmation follows Boyd's permanent reduction in the size of its revolver by $150 million following the close of its notes issuance. The amount of the permanent reduction represents the amount of increased revolving commitments that became effective and were funded May 30, 2012. "Our corporate credit rating on Boyd is 'B'; the rating outlook is stable. Our 'B' corporate credit rating on Boyd reflects our assessment of its financial risk profile as "highly leveraged" and our assessment of its business risk profile as "fair," according to our criteria. We believe Boyd's proposed acquisition of Peninsula will strengthen its business risk profile, because Peninsula's assets face limited competition, have high EBITDA margins compared with other commercial gaming operators, and are relatively good quality assets. Additionally, the transaction improves Boyd's geographic diversity and further lessens its reliance on the Las Vegas locals market, which has been more challenged than other markets in recent years" S&P said. "However, based on the terms of the transaction and incorporating our expectations for Boyd's and Peninsula's operating performance, we expect the consolidated Boyd and Peninsula entity will remain highly leveraged at more than 7.5x over the intermediate term. We view this level of leverage as aligned with a 'B' corporate credit rating, notwithstanding the improvement to Boyd's business risk profile" S&P said. "In 2012, we expect Boyd's consolidated EBITDA (excluding the Peninsula assets) to grow by about 15%, incorporating the addition of recently acquired Biloxi, Miss.-based casino IP to its portfolio, modest growth at its Las Vegas locals and Midwest and South segments, and low- to mid-single-digit growth fo Downtown Las Vegas. In 2012, we expect Peninsula will experience substantial revenue and EBITDA growth, approximately 50% and 75%, respectively, benefiting from the recent opening of its Kansas Star property" S&P said. "We continue to expect Boyd will maintain modest covenant cushion over the next few quarters; although, we expect covenant cushion will be thin as both the senior secured and total leverage covenants tighten further in the fourth quarter of 2012 and in 2013. However, we believe Boyd would be successful in securing an amendment, if necessary, or in executing additional capital markets transactions that would alleviate covenant pressure," S&P said. RATING LIST Boyd Gaming Corp. Corporate credit rating B/Stable/-- Rating Assigned $350 mil. 9% sr unsec notes due 2020 B Recovery rating 4 Rating Affirmed, Removed From CreditWatch To From $500 mil. 9.125% sr notes due 2018 B B/WatchNeg Recovery rating 4 4 CACTUS-SECRETARIAT: Case Summary & 6 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Cactus-Secretariat General Partnership 341 W. Secretariat Dr Tempe, AZ 85284 Bankruptcy Case No.: 12-15000 Chapter 11 Petition Date: July 5, 2012 Court: United States Bankruptcy Court District of Arizona (Phoenix) Judge: George B. Nielsen Jr. Debtor's Counsel: Blake D. Gunn, Esq. LAW OFFICE OF BLAKE D. GUNN P.O. Box 22146 Mesa, AZ 85277-2146 Tel: (480) 270-5073 E-mail: blake.gunn@gunnbankruptcyfirm.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 six largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/azb12-15000.pdf The petition was signed by John D. Wright, general partner. CAPITOL BANCORP: Amends Terms of Standby Plan of Reorganization --------------------------------------------------------------- orm8k.htm Capitol Bancorp Ltd. amended the terms of the concurrent solicitation of votes on an in-court standby prepackaged joint plan of reorganization. The initiative is designed to facilitate Capitol's objective of converting existing debt to equity, and includes the opportunity to preserve Capitol's substantial deferred tax assets. Capitol Bancorp on June 22 disclosed that it has commenced a voluntary restructuring plan. The financial restructuring plan is being pursued on two simultaneous tracks: (1) an out-of-court restructuring and capital raise consisting of an exchange of its outstanding trust preferred securities, unsecured capital notes and Series A preferred stock, with the simultaneous infusion of new equity from outside investors; or alternatively (2) an in- court financial restructuring and simultaneous capital raise from outside investors, referred to in applicable documents as the "Standby Plan." The amendment contains updated information regarding, among other things: -- the terms of the New Capitol Bancorp Class C Redeemable Common Stock (also known as the HoldCaps Common); -- trusts formed to hold the HoldCaps Common for the benefit of each individual holder of the Private Trust Preferred Securities; -- the terms of the Class A Common Stock; -- the terms of the Series A Preferred; and -- the terms of the Standby Plan. In addition, the Supplement contains new information with respect to additional developments following the date of the Offering Memorandum and Disclosure Statement. A copy of Supplement No.1 (Class 2 - Trust Preferred Securities) to Out-of-Court Exchange Offering Memorandum is available for free at http://is.gd/UEbtvM A copy of Supplement No.1 (all impaired classes other than Class 2) to Out-of-Court Exchange Offering Memorandum is available for free at http://is.gd/CtYGZ0 This Supplement No. 1 contains updated information regarding, among other things: -- the terms of the New Capitol Bancorp Class C Redeemable Common Stock (also known as the HoldCaps Common); -- the terms of the Class A Common Stock; and -- the terms of the Series A Preferred. About Capitol Bancorp Limited Capitol Bancorp Limited (NYSE: CBC) -- http://www.capitolbancorp.com/-- is a $5.1 billion national community banking company, with a network of bank operations in 16 states. Founded in 1988, Capitol Bancorp Limited has executive offices in Lansing, Michigan and Phoenix, Arizona. In September 2009, Capitol and its second-tier bank holding companies entered into a written agreement with the Federal Reserve Bank of Chicago under which Capitol has agreed, among other things, to submit to the Reserve Bank a written plan to maintain sufficient capital at Capitol on a consolidated basis and at Michigan Commerce Bank (as a separate legal entity on a stand- alone basis); and a written plan to enhance the consolidated organization's risk management practices, a strategic plan to improve the consolidated organization's operating results and overall condition and a cash flow projection. Certain of Capitol's bank subsidiaries have entered into formal agreements with their applicable regulatory agencies. Those agreements provide for certain restrictions and other guidelines and/or limitations to be followed by the banks. In 2009, Capitol commenced the deferral of interest payments on its various trust-preferred securities, as is permitted under the terms of the securities, to conserve cash and capital resources. The payment of interest may be deferred for periods up to five years. During such deferral periods, Capitol is prohibited from paying dividends on its common stock (subject to certain exceptions) and is further restricted by Capitol's written agreement with the Federal Reserve Bank of Chicago. Accrued interest payable on such securities approximated $18.1 million at June 30, 2010. The Company reported a net loss of $51.92 million in 2011, a net loss of $254.36 million in 2010, and a net loss of $264.54 million in 2009. The Company's balance sheet at March 31, 2012, showed $2.05 billion in total assets, $2.17 billion in total liabilities, and a $121.25 million total deficit. As of March 31, 2012, there are several significant adverse aspects of Capitol's consolidated financial position and results of operations which include, but are not limited to: * An equity deficit approximating $121.3 million; * Regulatory capital classification on a consolidated basis as less than "adequately-capitalized" and related negative amounts and ratios; * Numerous banking subsidiaries with regulatory capital classification as "undercapitalized" or "significantly- undercapitalized"; * Certain banking subsidiaries which are generally subject to formal regulatory agreements have received "prompt corrective action" notifications or directives from the FDIC, which require timely action by bank management and the respective boards of directors to resolve regulatory capital ratios which result in classification as less than "adequately- capitalized" (the basis of a PCAN) or to submit an acceptable capital restoration plan to the FDIC (the basis of a PCAD), and it is likely additional PCANs or PCADs may be issued in the future or the banking subsidiaries may be unable to satisfactorily resolve those notices or directives; * Capitol has sold several of its banking subsidiaries during the past few years and has other divestiture transactions p pending. The proceeds from those divestitures have been redeployed at certain remaining banking subsidiaries which have experienced a significant erosion of capital due to operating losses. While those proceeds have been a significant source of funds for redeployment, the Corporation will need to raise significant other sources of new capital in the future; * The Corporation and substantially all of its banking subsidiaries are operating under various regulatory agreements which place a number of restrictions on them and impose other requirements limiting activities and requiring preservation of capital, improvement in regulatory capital measures, reduction of nonperforming assets and other matters for which the entities have not achieved full compliance. * Elevated levels of nonperforming loans and other nonperforming assets as a percentage of consolidated loans and total assets, respectively; and * Significant losses from continuing operations, resulting primarily from elevated provisions for loan losses and costs associated with foreclosed properties and other real estate owned. Capitol said these considerations raise some level of doubt (potentially substantial doubt) as to its ability to continue as a going concern. CE GENERATION: S&P Alters Outlook on $400MM Secured Notes to Neg. ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook to negative from stable on CE Generation LLC's $400 million senior secured notes due 2018 to reflect its anticipation that variable-rate short-run avoided cost (SRAC) pricing exposure at Salton Sea Funding Corp. (SSFC; BBB-/Stable) and lower-than-anticipated gas prices may weaken dividends to CE Gen and result in weaker credit metrics. Standard & Poor's also affirmed its 'BB+' rating on the notes. "The recovery rating is unchanged at '1', indicating our anticipation of very high (90% to 100%) recovery of principal in the event of a default," S&P said. "The rating on CE Gen reflects our view of uncertain cash distributions from SSFC, which we anticipate will account for more than 76% of CE Gen's future cash flow," said Standard & Poor's credit analyst Tony Bettinelli. The rating on the senior secured bonds further reflects our view of the following: CE Gen is highly concentrated, relying predominantly on SSFC; Dividends from SSFC to CE Gen are subject to a 1.5x DSC test (however, we anticipate that SSFC will continue to exceed this threshold); and Assets other than SSFC, which include the Saranac, Power Resources, and Yuma natural gas projects, have varying degrees of market exposure. CENGAGE LEARNING: Moody's Lowers CFR to 'Caa1'; Outlook Negative ---------------------------------------------------------------- Moody's Investors Service downgraded Cengage Learning Acquisitions, Inc.'s Corporate Family Rating (CFR) to Caa1 from B3, its Probability of Default Rating (PDR) to Caa2 from B3, and adjusted instrument ratings as detailed in the debt list below. Moody's also assigned a Caa3 rating to Cengage's new $710 million second lien senior secured notes due 2019 issued in exchange for $710 million of 10.5% senior unsecured notes due 2015. The downgrade reflects heightened concern that Cengage will engage in discounted debt repurchases or other transactions that could be considered distressed exchanges as it continues to address its significant $2.8 billion of remaining 2014/2015 maturities. The one notch difference between the CFR and PDR reflects a shift to an above average family recovery rate assumption. Loss given default assessments were updated to reflect the revised debt mix. The rating outlook is negative. The exchange offer favorably extends the maturity of $710 million of notes by four years at an approximate $11 million annual increase in cash interest cost that is manageable within Cengage's free cash flow. Moody's is nevertheless downgrading the CFR based on heightened risk of distressed exchange transactions including on the remaining approximate $500 million of senior unsecured notes that are effectively subordinated to the new second lien notes. Moody's believes the incremental cash interest costs necessary to address the remaining maturities could exceed Cengage's free cash flow despite Moody's projection for low single digit revenue and EBITDA growth in FY 2013 and FY 2014. Cengage previously repurchased debt at a discount and Moody's believes the company's private equity owners, Apax Partners and OMERS Capital Partners, are motivated to complete transactions that preserve their equity ownership while minimizing the incremental cash interest cost of extending maturities. Cengage also has roughly $200 million of excess proceeds from its April 2012 bond offering that it will likely deploy to address maturities. In Moody's opinion, these factors along with the limited prospects for refinancing at current yields its $880 million of remaining unsecured notes due in 2015 increase the likelihood of distressed exchange transactions. Downgrades: Issuer: Cengage Learning Acquisitions, Inc. Corporate Family Rating, Downgraded to Caa1 from B3 Probability of Default Rating, Downgraded to Caa2 from B3 Senior Unsecured Regular Bond/Debenture, Downgraded to Caa3, LGD5 - 78% from Caa2, LGD5 - 87% Senior Subordinated Regular Bond/Debenture, Downgraded to Ca, LGD5 - 85% from Caa2, LGD6 - 95% LGD Updates: Issuer: Cengage Learning Acquisitions, Inc. Senior Secured Bank Credit Facility, Changed to LGD2 - 21% from LGD3 - 36% (no change to B2 rating) Senior Secured Regular Bond/Debenture (First Lien notes), Changed to LGD2 - 21% from LGD3 - 36% (no change to B2 rating) Assignments: Issuer: Cengage Learning Acquisitions, Inc. Senior Secured Regular Bond/Debenture (Second Lien notes due 2019), Assigned Caa3, LGD4 - 65% Ratings Rationale Cengage's Caa1 CFR reflects its very high debt-to-EBITDA leverage (8.7x LTM 3/31/12 incorporating Moody's standard adjustments and cash pre-publication costs as an expense), modest free cash flow generation and elevated risk of a distressed exchange or other default due to the significant refinancing risk associated with its 2014/2015 maturities. Cengage has a good market position and broad range of product offerings in higher education publishing. Moody's believe the company has moderate growth prospects over the intermediate term and is reasonably positioned to transition its revenue as higher education publishing continues to shift to digital from print formats. Cengage nevertheless faces several near-term operating headwinds from continued inroads of rental models in the used book market and ongoing pressure in for-profit school channels. Moody's believes Cengage's high leverage and modest free cash flow generation, incorporating the significant increase in cash interest costs associated with its April 2012 refinancing, reduces flexibility to address the sizable $2.8 billion of remaining 2014/2015 maturities, creating elevated default risk. Cengage's SGL-3 speculative-grade liquidity rating reflects the company's adequate liquidity position. Moody's believes cash (approximately $200 million as of 3/31/12 pro forma for the April 2012 financing transactions), modest projected free cash flow, and the $300 million April 2017 revolver commitment provide adequate coverage of the $72 million of AHYDO redemption in July 2012 and the approximate $36 million of required annual term loan amortization. Moody's also expects Cengage to maintain a sizable cushion (exceeding 20%) under its 7.75x maximum senior secured leverage ratio incorporating the new second lien notes. The negative rating outlook reflects that the risk of a distressed exchange within six to twelve months could increase further, or that adverse market conditions or unexpectedly weak operating performance could reduce refinancing or recovery prospects. The ratings are highly sensitive to credit market conditions and the expected cost of refinancing actions. Cengage's ratings could be downgraded if the company is unable to make de-leveraging progress or generate and sustain comfortably positive free cash flow. A weakening of liquidity would also pressure Cengage's ratings including through such factors as significant revolver usage, weaker or negative free cash flow, erosion of the covenant cushion, or changes in the likely cost of refinancing. Heightened near-term risk of a discounted debt repurchase or other distressed exchange could also lead do downward pressure on the CFR, instrument ratings and/or the PDR rating. An upgrade or a shift to a stable rating outlook is unlikely unless the company is able to address its significant 2014/2015 maturities at a manageable cost. If that were to occur, good operating execution that leads to revenue and earnings growth, consistent free cash flow generation and debt reduction, or debt repayment from asset sales or an equity offering could lead to an upgrade if leverage is reduced. The principal methodology used in rating Cengage 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. Cengage, headquartered in Stamford, CT, is a provider of learning solutions to colleges, universities, professors, students, libraries, reference centers, government agencies, corporations and professionals. Cengage publishes college textbooks and reference materials, and supplements its print publications with digital solutions. The company was acquired by funds managed by Apax Partners and OMERS Capital Partners in a $7.3 billion leveraged buy-out from Thomson Reuters Corporation in July 2007. Revenue for the LTM ended March 31, 2012 was approximately $1.96 billion. CENGAGE LEARNING: S&P Rates $710MM Second Lien Notes at 'CCC' ------------------------------------------------------------- Standard & Poor's Ratings Services assigned Stamford, Conn.-based Cengage Learning Acquisitions Inc.'s $710 million of 12% senior secured second-lien notes due 2019 its issue-level rating of 'CCC'. "We assigned the notes a recovery rating of '6', indicating our expectation of negligible (0% to 10%) recovery for noteholders in the event of a payment default," S&P said. "We also affirmed all existing ratings, including the 'B-' corporate credit rating on Cengage Learning Holdings II L.P. The rating outlook is negative. Pro forma debt outstanding was $5.7 billion as of March 31, 2012," S&P said. "The 'B-' corporate credit rating on Cengage reflects our expectation that debt to EBITDA (after amortization of prepublication costs) will remain high, at more than 8x over the near term," said Standard & Poor's credit analyst Hal Diamond, "and maturity pressures remain, even with this refinancing. In addition, prospects for meaningful revenue and EBIITDA growth are somewhat uncertain." "We consider the company's business risk profile as "fair" (according to our criteria), based on its strong business position in U.S. higher education and professional training publishing. We assess Cengage's financial risk profile as "highly leveraged," reflecting high debt to EBITDA, thin pro forma interest coverage, and low discretionary cash flow compared to its debt burden," S&P said. Cengage is the second largest U.S. college textbook publisher and is slightly smaller than the higher education division of Pearson PLC, the market leader. Cengage has a good market position in the new textbook market. It has long-term contracts with leading textbook authors, and a heavy weighting of the sales mix toward higher margin backlist sales. Like its competitors, the company has been adversely affected by the growth of the rental textbook market, which has increased the availability of discounted used books. Cengage's sales to for-profit educational institutions are declining, because these buyers are experiencing enrollment pressures as a result of regulation that significantly tightens their marketing practices. In addition, lower funding from state and local governments is hurting the company's library reference business, though this is a small contributor to revenue. The negative outlook reflects the company's high debt leverage and low interest coverage metrics, which we believe will have to improve for the company to be able to refinance debt maturities. "We could lower the rating to 'CCC+' if revenue and EBITDA again decline, and especially if discretionary cash flow swings negative. This could occur if enrollments decline or pressure increases from textbook rentals, and weakness in the library reference business continues," S&P said. Specifically, an EBITDA decline of 10% over the next year would reduce pro forma EBITDA coverage of total interest (after prepublication costs) to only 1.1x. "We will also continue to monitor low trading levels of the company's unsecured debt, which might suggest that a subpar exchange offer would be among alternatives that management could consider. We would most likely view such a transaction as a selective default. We could revise the outlook to stable if the company continues to make progress in addressing its debt burden and if operating performance remains stable," S&P said. "More specifically, we believe that if operating performance continues to improve so that pro forma interest coverage approaches the 1.4x area, the company could have somewhat better prospects of refinancing unsecured debt maturities, depending on the state of the credit markets," S&P said. CENTRAL ENERGY: Incurred $447,000 Net Loss in First Quarter ----------------------------------------------------------- Central Energy Partners LP filed its quarterly report on Form 10-Q, reporting a net loss of $447,000 on $1.30 million of revenues for the three months ended March 31 2012, compared with a net loss of $246,000 on $1.77 million of revenues for the comparable period last year. The Company's balance sheet at March 31, 2012, showed $9.01 million in total assets, $8.54 million in total liabilities, and partners' capital of $474,000. As reported in the TCR on April 5, 2012, Burton McCumber & Cortez, L.L.P., in Brownsville, Texas, expressed substantial doubt about Central Energy's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has insufficient cash flow to pay its current debt obligations and contingencies as they become due. A copy of the Form 10-Q is available for free at: http://is.gd/dBmPDm Dallas, Tex.-based Central Energy Partners LP is a publicly-traded Delaware limited partnership. It currently provides liquid bulk storage, trans-loading and transportation services for hazardous chemicals and petroleum products through its wholly-owned subsidiary, Regional Enterprises, Inc. ("Regional"). CENTURION PROPERTIES: Court Enters Final Decree Closing Case ------------------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of Washington, in a minute entry, entered a final decree and closed the Chapter 11 case of Centurion Properties III, LLC. On June 27, 2012, the Debtor advised the Court that it has fully consummated its Plan of Reorganization, filed its final report and accounting, and moved the Court for the entry of an order granting entry of final decree and close the bankruptcy case. About Centurion Properties Kennewick, Washington-based Centurion Properties III, LLC, was established in 2006 for the sole purpose of acquiring real estate project Battelle Leaseholds located in Richland, Washington. Its sole asset is its leasehold interests in the Battelle Memorial Institute Campus and improvements, valued in excess of $90 million. CPIII filed for Chapter 11 bankruptcy protection (Bankr. E.D. Wash. Case No. 10-04024) on July 9, 2010. John D. Munding, Esq., at Crumb & Munding, served as counsel to the Company. Dan. E. Gorczycki of Savills LLC serves as its finance advisor. The Company disclosed $98.9 million in assets and $115.3 million in liabilities. The Debtor has filed a Chapter 11 plan that is premised upon CPIII's ability to obtain replacement financing for its secured debt obligations within a fixed period of time. General unsecured claims will be paid in full, with interest at 5% from the Effective Date, within 26 months of the Initial Distribution Date and after all secured claims paid in full. The United States Trustee was unable to appoint a creditors' committee in the case. CHARLES BRELAND: Consent Order, Not Plan, Controls IRS Claim ------------------------------------------------------------ The Internal Revenue Service, for a second time, was denied authority by the Bankruptcy Court in Mobile, Alabama, to amend its proof of claim against Charles K. Breland, Jr. The previous ruling was appealed by the IRS to the U.S. District Court for the Southern District of Alabama, which remanded. On remand, Bankruptcy Judge Margaret A. Mahoney reviewed the decision in In re Gurwitch, 794 F.2d 584 (11th Cir. 1986), and weighed whether a consent order settling the tax dispute between the Debtor and the IRS, or the confirmed plan is controlling. If the Debtor's confirmed plan controls, Gurwitch applies and the IRS may amend its priority claim. If the Consent Order is controlling, Gurwitch does not apply and the IRS may not amend its priority claim. The IRS filed a claim for unpaid income taxes and penalties in the Debtor's case. The claim was amended multiple times. The IRS and the Debtor negotiated and submitted a Consent Order to the Bankruptcy Court, which provided that: -- The IRS claim totals $2,020,697.01 and consists of unsecured priority tax claims totaling $671,318.55, and unsecured general claims totaling $1,349,378.46; -- The IRS priority tax claims of $671,318.55 will be allowed in full and paid in accordance with the terms of Sections 2.2 and 5.2 of the Confirmed Ohana Cabo LLC's Chapter 11 Plan of Reorganization As Amended; and -- The Debtor will preserve his existing objection to the IRS unsecured general claims pursuant to Sec. 6.1 of the Debtor's bankruptcy plan, and the claims will be deemed disputed within the meaning of Sec. 3.2.2 of the Plan until resolution of such disputed claims through either settlement or adjudication to a Final Order. To the extent that such disputed claims become Allowed, payment of the Allowed claims shall be made in accordance with Sections 3.2.2 and 6.2 of the Plan. The Bankruptcy Court approved the Consent Order on Dec. 17, 2010. The Debtor's plan of reorganization was also confirmed on Dec. 10, 2010 and substantially consummated on Dec. 27, 2010. The Debtor paid the IRS' agreed priority tax claim in full. The Debtor also escrowed the funds necessary to satisfy the unsecured portion of the IRS claim as it remained subject to the Debtor's pending objection. Prior to the hearing on the unsecured tax claim, the IRS filed a motion for leave to amend its tax claim along with a motion to compel discovery of information necessary to support the new amendments. The IRS alleged that an amendment was necessary because the Debtor failed to report a substantial amount of income prior to the IRS entering into the Consent Order and the confirmation of the Debtor's plan. On Dec. 20, 2011, the Bankruptcy Court held, in part, that the IRS could not amend its priority tax claim in the Debtor's bankruptcy case based on res judicata. The IRS appealed. In Gurwitch, the Eleventh Circuit held that the confirmation of a Chapter 11 plan does not fix a debtor's tax liabilities such that res judicata bars the IRS' assertion of additional claims for nondischargeable taxes against the debtor. The debtor in Gurwitch was a primary shareholder in two recently defunct companies. In his bankruptcy filings, he acknowledged potential tax claims against those companies. The IRS filed a proof of claim for $7,756.41. The debtor proposed a plan that allowed for payment of 100% of the IRS claim and the bankruptcy court confirmed the plan. After confirmation, but before the case was closed, the IRS began collection efforts for taxes owed by the defunct companies and attempted to collect those taxes against the debtor. The debtor petitioned the bankruptcy court to stop the collection efforts arguing that res judicata barred reconsideration of the extent of his tax liability. The bankruptcy court refused to allow the new tax claims because, in its view, the debtor's tax liability had been determined at confirmation. The District Court reversed the bankruptcy court's decision explaining that the tax debt was nondishchargeable. The Eleventh Circuit affirmed the District Court, holding that the Bankruptcy Code makes clear under Sec. 1141(d)(2) that confirmation of a plan of reorganization does not fix tax liabilities made nondischargeable under Sec. 523. Moreover, the Code states that these taxes are nondischargeable "whether or not a claim for such tax was filed or allowed." According to Judge Mahoney, the Consent Order, and not the confirmed plan, is the controlling document as to the extent of the Debtor's tax obligation to the IRS. She explained that the Gurwitch decision concerned the treatment of the IRS' tax claim within the debtor's plan and whether the confirmation of that plan barred the IRS' assertion of additional nondischargeable tax claims. She said the dispute in the Breland case is different as the parties executed a Consent Order that detailed the extent of the taxes owed by the Debtor, a fact not present in Gurwitch. According to the judge, the Consent Order contains a clear statement of the total IRS claim amount and divides that amount into priority and general unsecured values. Its terms were negotiated by the Debtor and the IRS and approved by the Bankruptcy Court. The Consent Order settled a confirmation dispute and the IRS had notice. Moreover, by its terms, the Consent Order appears binding and complete. No specific limitation on the Consent Order's effect is indicated in its terms. The IRS did not reserve the right to assert additional claims. Indeed, the Consent Order did not reserve any rights to the IRS, only to the Debtor. The purpose of the Consent Order is unclear if it was not meant to bind the IRS to its terms. A copy of Judge Mahoney's July 5, 2012 Order is available at http://is.gd/buQXPOfrom Leagle.com. Judge Mahoney also denied the IRS's request to compel discovery. Charles Breland filed a chapter 11 bankruptcy case (Bankr. S.D. Ala. Case No. 09-11139) on March 11, 2009. He is represented by Robin B. Cheatham, Esq., at Adams and Reese. Mr. Breland confirmed a plan on Dec. 10, 2010. The plan was substantially consummated on Dec. 27, 2010. CHINA 3C: Had $4.7 Million Net Loss in First Quarter ---------------------------------------------------- China 3C Group filed its quarterly report on Form 10-Q, reporting a net loss of $4.68 million on $7.71 million of sales for the three months ended March 31, 2012, compared with a net loss of $4.21 million on $18.03 million of sales for the same period of 2011. The Company's balance sheet at March 31, 2012, showed $11.83 million in total assets, $3.01 million in total liabilities, and stockholders' equity of $8.82 million. As reported in the TCR on April 20, 2012, Goldman Kurland and Mohidin LLP, in Encino, California, expressed substantial doubt about China 3C Group's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has incurred significant losses from operations for the past three years. "In addition, the Company's cash position substantially deteriorated from 2010." A copy of the Form 10-Q is available for free at: http://is.gd/CYC0Uq Located in HangZhou City, Zhejiang Province, China, China 3C Group operated in five reportable segments. Yiwu Yong Xin Telecommunication Company, Limited, or "Yiwu," focuses on the selling, circulation and modern logistics of fax machines and cord phone products. Hangzhou Wang Da Electronics Company, Limited, or "Wang Da," focuses on the selling, circulation and modern logistics of cell phones, cell phones products, and digital products, including digital cameras, digital camcorders, PDAs, flash disks, and removable hard disks. Hangzhou Sanhe Electronic Technology Limited, or "Sanhe," focused on the selling, circulation and modern logistics of home electronics, including DVD players, audio systems, speakers, televisions and air conditioners. This entity ceased operation as of Dec. 31, 2011. Shanghai Joy & Harmony Electronics Company Limited, or "Joy & Harmony," focused on the selling, circulation and modern logistics of consumer electronics, including MP3 players, MP4 players, iPods, electronic dictionaries and radios. This entity ceased operation as of Dec. 31, 2011. Jinhua Baofa Logistic Company Limited, or "Jinhua," provides transportation logistics services to businesses. Jinhua operates primarily in Eastern China and covers many of the most developed cities in the Eastern China such as Shanghai, Hangzhou and Nanjing. CHINA TEL GROUP: Unregistered Securities Sales Exceed Threshold --------------------------------------------------------------- VelaTel Global Communications, Inc., formerly known as China Tel Group Inc., has made sales of unregistered securities, namely shares of the Company's Series A common stock. The aggregate number of Shares sold exceeds 5% of the total number of Shares issued and outstanding as of June 15, 2012. On June 28, 2012, the Company issued 14,952,867 Shares to Domenico Di Gianvito Butler in reduction of $171,957.98 of accounts payable for construction services rendered to the Company's Peru subsidiary for deployment of its Peru wireless broadband network. On June 29, 2012, the Company issued 3,478,261 Shares to Kimberly Brown dba Core Insights 360 in reduction of $40,000 of accounts payable for public relations and investor relations services provided to the Company. On July 5, 2012, the Company issued 117,000,000 Shares to Ironridge Global IV, Ltd. The Initial Issuance was pursuant to an Order for Approval of Stipulation for Settlement of Claims between the Company and Ironridge, in settlement of $1,367,693 of accounts payable of the Company which Ironridge had purchased from certain creditors of the Company, in an amount equal to the Assigned Accounts, plus fees and costs. The Assigned Accounts relate to: (1) the remaining down payment for infrastructure equipment and software purchased from ZTE Corporation for the Company's subsidiaries in Cyprus, Croatia and Montenegro for expansion of its Croatia wireless broadband network and deployment of its Montenegro wireless broadband network; (2) the cost of shipping, insurance and other transport logistics services to deliver the equipment and software from its place of manufacture in China to its ultimate destinations; (3) the proof of funds deposit required as registered capital for formation of a PRC operating company pursuant to the exclusive services contract between the Company and New Generation Special Network Communication Technology Co; and (4) amounts previously financed for consumer terminals delivered to the Company's Peru subsidiary as inventory for resale to customers. In addition, the Company issued 49,908,203 registered Shares pursuant to a Form S-8 Registration Statement filed on June 29, 2012. As of July 6, 2012, the Company has 1,172,270,160 shares of its Series A common stock outstanding, with a par value of $0.001, and 133,818,177 shares of its Series B common stock outstanding, with a par value of $0.001. A copy of the Form 8-K is available for free at: http://is.gd/aFIgF8 About China Tel Based in San Diego, California, and Shenzhen, China, China Tel Group, Inc. (OTC BB: CHTL) -- http://www.ChinaTelGroup.com/-- provides high speed wireless broadband and telecommunications infrastructure engineering and construction services. Through its controlled subsidiaries, the Company provides fixed telephony, conventional long distance, high-speed wireless broadband and telecommunications infrastructure engineering and construction services. ChinaTel is presently building, operating and deploying networks in Asia and South America: a 3.5GHz wireless broadband system in 29 cities across the People's Republic of China with and for CECT-Chinacomm Communications Co., Ltd., a PRC company that holds a license to build the high speed wireless broadband system; and a 2.5GHz wireless broadband system in cities across Peru with and for Perusat, S.A., a Peruvian company that holds a license to build high speed wireless broadband systems. After auditing the 2011 results, Kabani & Company, Inc., in Los Angeles, California, expressed substantial doubt as to the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred a net loss for the year ended Dec. 31, 2011, cumulative losses of $254 million since inception, a negative working capital of $16.4 million and a stockholders' deficiency of $9.93 million. The Company reported a net loss of $21.79 million in 2011, compared with a net loss of $66.62 million in 2010. The Company's balance sheet at March 31, 2012, showed $13.57 million in total assets, $19.53 million in total liabilities and a $5.95 million total stockholders' deficiency. CHINA YIDA: Fails to Comply With NASDAQ's $1 Bid Price Rule ----------------------------------------------------------- China Yida Holding Company has received a letter from The NASDAQ Stock Market LLC informing the Company that its common stock has not met the $1.00 minimum bid price requirement for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2). The Company did not meet Nasdaq's minimum bid price requirement because the closing bid price for its common stock for each trading day in the 30-business day period from May 17, 2012 to June 28, 2012 was less than $1.00 per share. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), China Yida has a grace period of 180 calendar days, or until Dec. 31, 2012, to regain compliance with the minimum bid price requirement. To regain compliance, the closing bid price of the Company's common stock must meet or exceed $1.00 per share for at least ten consecutive business days during this 180-day grace period. If the Company chooses to implement a reverse stock split, it must complete the split no later than ten business days prior to the expiration date of the grace period in order to regain compliance. If the Company does not regain compliance within this period, it may be eligible for additional time. To qualify, the Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and will need to provide written notice of its intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary. If the Company fails to regain compliance within the grace period permitted by Nasdaq, the Company's common stock will be subject to delisting by Nasdaq. The Company will consider available options to resolve the noncompliance with the minimum bid price requirement. The notification letter has no immediate effect on the listing of the Company's common stock on The Nasdaq Capital Market. China Yida's common stock will continue to trade on The Nasdaq Capital Market under the symbol "CNYD." About China Yida China Yida -- http://www.yidacn.net/-- is a leading tourism and media enterprise focused on China's fast-growing leisure industry and headquartered in Fuzhou City, Fujian province of China. The Company provides tourism management services and specializes in the development, management and operation of natural, cultural and historic scenic sites. CLARE AT WATER: Hearing on Conditioning Cash Use Set for July 18 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois continued until July 18, 2012, at 2 p.m., the hearing to consider the motion to prohibit or condition The Clare at Water Tower's use of cash collateral. About The Clare at Water Tower The Clare at Water Tower is an upscale 334-unit high-rise continuing-care retirement community in Chicago, Illinois. The project is only 42% occupied because the target population either hasn't been able to sell homes or lacks sufficient cash to make required deposits as the result declining investments following the recession. The facility is a 53-story building on land rented from Loyola University of Chicago. The facility is managed and developed by a unit of the Franciscan Sisters of Chicago, who invested more than $14 million. The project opened in December 2008. Residents must make partially refundable deposits ranging from $263,000 to $1.2 million. Monthly fees are an additional $2,700 to $5,500. The Clare filed for Chapter 11 protection (Bankr. N.D. Ill. Case No. 11-46151) on Nov. 14, 2011, after defaulting on $229 million in tax-exempt bond financing used to build the project. Judge Susan Pierson Sonderby presides over the case. Matthew M. Murphy, Esq., at DLA Piper LLP, serves as the Debtor's counsel. Houlihan Lokey Capital, Inc., as its investment banker and financial advisor. Deloitte Financial Advisory Services LLP serves as restructuring advisor. Epiq Bankruptcy Solutions serves as claims and noticing agent. The Debtor, in its amended schedules, disclosed $56.8 million in assets and $321.7 million in liabilities. The petition was signed by Judy Amiano, president. The Official Committee of Unsecured Creditors proposed to retain SNR Denton US LLP as counsel. The Committee also tapped FTI Consulting, Inc., as its financial advisor. CLIFFS CLUB: Set Aug. 6 Plan Confirmation Hearing ------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Cliffs Club & Hospitality Group Inc. received approval of a disclosure statement allowing creditors to begin voting on its reorganization plan. The confirmation hearing for approval of the Chapter 11 plan is set for Aug. 6. The report recounts that competing bidders dropped out before the auction where Carlile Development Group was already under contract to buy the projects through confirmation of a plan. Carlile will be joined in buying the projects by a group including SunTx Urbana GP I LLP and Arendale Holdings Corp. The report relates that in payment of $73.5 million in secured notes, the plan will give the lenders $64 million, spread over 20 years without interest. The lenders will receive the greater of $1 million a year or half of cash flow. The outstanding balance will be paid at maturity. Unsecured creditors with an estimated $3.9 million in claims are predicted to have a 75% recovery. Mechanics lienholders with $1.5 million in claims will be paid in full without interest. Members will be invited to join the newly reorganized club. Those who accept the offer are told in the disclosure statement that their recovery is between 35% and 75%. Members who don't take the offer are to see a predicted recovery of 4% to 10%. About Cliffs Club Units of The Cliffs Communities, led by The Cliffs Club & Hospitality Group, Inc., doing business as The Cliffs Golf & Country Club, along with 10 affiliates, sought Chapter 11 protection (Bankr. D. S.C. Lead Case No. 12-01220) on Feb. 28, 2012. The Cliffs has eight premier, private master-planned residential communities, each to have its own world-class golf course. Approximately 3,734 lots have been sold. There are currently 1,385 finished homes, with 63 under construction. The properties for sale are owned by non-debtor DevCo entities. The Feb. 28 Debtors operate the exclusive membership clubs for golf, tennis, wellness and social activities at The Cliffs' communities in North and South Carolina. The clubs have 2,280 members, and there are 766 resigned members with refundable deposits totaling $37 million. The Debtors do not own the golf courses -- they only own or lease all the "core amenities" for the operation of the golf courses. Another affiliate, Keowee Falls Investment Group, LLC, filed a Chapter 11 petition (Bankr. D. S.C. Case No. 12-01399) in Spartanburg, South Carolina, on March 2, 2012. Travelers Rest- based Keowee Falls estimated at least $100 million in assets and liabilities of up to $50 million. Judge John E. Waites presides over the Debtors' cases. Lawyers at McKenna Long & Aldridge LLP serve as the Debtors' lead counsel. Dana Elizabeth Wilkinson, Esq., serves as local counsel. Grisanti Galef & Goldress serves as restructuring advisors and Katie S. Goodman of GGG serves as CRO. BMC Group Inc. serves as the Debtors' claims and noticing agent. According to papers filed in Court, the Debtors' total assets had a $175 million book value at Dec. 31, 2011. The Debtors' total liabilities had a $333 million book value at Dec. 31, 2011. The petition was signed by Timothy P. Cherry, authorized officer. Wells Fargo, as Indenture Trustee, is represented in the case by Daniel S. Bleck, Esq., at Mintz Levin Cohn Ferris Glovsky and Popeo P.C.; and Elizabeth J. Philp, Esq., and Michael Beal, Esq., at McNair Law Firm P.A. The Official Committee of Unsecured Creditors is represented in the case by John B. Butler, III, P.A., and Jonathan B. Alter, Esq., at Bingham McCutchen LLP. CLOUD PEAK: Coal Asset Acquisition Won't Affect Moody's Ratings --------------------------------------------------------------- Moody's Investors Service stated that the ratings of Cloud Peak Energy are not immediately affected by the company's recent announcement that it has acquired Youngs Creek, CX Ranch and associated assets in Montana and Wyoming from Chevron USA and CONSOL Energy for $300 million in cash. As reported by the Troubled Company Reporter on Nov. 11, 2009, Moody's Investors Service assigned a B1 rating to Cloud Peak Energy Resources LLC's proposed $600 million senior unsecured notes and a Baa3 rating to its $400 million senior secured revolving credit facility. Moody's also assigned a Ba3 Corporate Family Rating and Ba3 Probability of Default rating to Cloud Peak Energy LLC, and an SGL-2 Speculative Grade Liquidity rating, reflecting good liquidity. The rating outlook was stable. COMPETITIVE TECHNOLOGIES: Extends Calmare Agreement Until 2021 -------------------------------------------------------------- Competitive Technologies, Inc., has negotiated a five-year extension to its agreement for the Calmare pain therapy device utilizing "Scrambler Therapy" technology. The agreement with Professor Giuseppe Marineo and Delta Research & Development, dated April 1, 2011, provided a five-year term expiring March 30, 2016, which has now been extended to March 30, 2021. In a related decision, CTTC has chosen to concentrate its sales and marketing programs for the Calmare device primarily in the Western Hemisphere including the USA, Canada, Mexico and the countries of Central and South America, as well as Australia and New Zealand. As opportunities arise for Calmare-related sales or distributorships activities in countries outside the focus region, CTTC will coordinate with Professor Marineo who will be managing such activities for the mutual benefit of the partners. "This contract extension resolves our concern regarding the term length of the general contract. Concentrating our resources on sales in the US, the largest medical device market in the world, keeps us from being too widely spread for our capability. Professor Marineo will assume management responsibility for existing distribution agreements for countries outside our focus area and CTTC will retain a financial interest in those relationships," said Johnnie D. Johnson, CEO for Competitive Technologies, Inc. "Obtaining insurance reimbursement from private insurers and from Medicare continues to be our operations goal so that patients can receive insurance coverage for the use of Calmare therapy and to allow patients to avoid the use of opioids or habit forming medication for pain therapy," Mr. Johnson continued. "Progress is being made on both fronts as we demonstrate the cost-benefit analysis for the Calmare device versus alternative pain treatments. "The additional funding process is slower than expected," Mr. Johnson acknowledged. "However, progress is being made and more announcements will be made as financing arrangements are fully complete." About Competitive Technologies Fairfield, Conn.-based Competitive Technologies, Inc. (OTC QX: CTTC) -- http://www.competitivetech.net/-- was established in 1968. The Company provides distribution, patent and technology transfer, sales and licensing services focused on the needs of its customers and matching those requirements with commercially viable product or technology solutions. Sales of the Company's Calmare(R) pain therapy medical device continue to be the major source of revenue for the Company. After auditing the 2011 results, Mayer Hoffman McCann CPAs, 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 incurred operating losses since fiscal year 2006. The Company reported a net loss of $3.59 million in 2011. The Company reported a net loss of $2.40 million on $163,993 of product sales for the five months ended Dec. 31, 2010. The Company's balance sheet at March 31, 2012, showed $4.66 million in total assets, $6.82 million in total liabilities, all current, and a $2.15 million total shareholders' deficit. CONNAUGHT GROUP: Ali Law Group Approved as Labor Counsel -------------------------------------------------------- The Connaught Group, Ltd., et al., last month obtained approval to hire Ali Law Group, PC., as special labor and employment counsel counsel nunc pro tunc to the Petition Date. Since June 2011, ALG has represented the Debtors as labor and employment counsel. ALG represented Connaught Group in a lawsuit commenced on Dec. 8, 2011 in the District Court for the Southern District of New York by Caroline Desjardins, a former company employee until the case's dismissal on March 8, 2012. As of the Petition Date, the Debtors owed approximately $17,000 in the aggregate to ALG on account of pre-petition services rendered and expenses incurred on behalf of the Debtors. In connection with the hiring, the bankruptcy judge modified the automatic stay to permit Axis Surplus Insurance Company to advance defense costs to, or on behalf of, certain insured persons covered by an employment practices liability insurance policy, Policy No. ENN590159, issued by Axis. According to the order, ALG will have an allowed prepetition claim in the amount of $7,000 in connection with its work performed prior to the Petition Date. ALG will be paid no more than $5,000 in connection with its work performed after the Petition Date in full and final satisfaction of ALG's postpetition claims against the estates, provided, however, that ALG is not precluded from seeking payment against Axis. Professionals Hired in the Case In March, the Debtors obtained approval to hire (i) the law firm of Fulbright & Jaworski L.L.P. as counsel, (ii) Consensus Advisory Services and Consensus Securities LLC as financial advisors nunc pro tunc to the Petition Date, (iii) Richter Consulting LLC as financial advisor, to, among others, provide advice on identification of business assets and the disposition of assets, (iv) Zygote Associates LLC to provide Maury Satin as chief restructuring officer, and (v) Kurtzman Carson Consultants LLC as administrative agent, and claims and noticing agent. An amended engagement agreement with Consensus provides that the firm will be responsible for exploring the possibility of a restructuring, the firm will receive a monthly retainer of $100,000 and will receive a one-time restructuring success fee of $250,000 in the event the Company confirms a reorganization plan. The Official Committee of Unsecured Creditors in April obtained approval to retain Lowenstein Sandler PC as counsel nunc pro tunc to Feb. 15, 2012. Members of the firm are charging $435 to $895 per hour. The Creditors Committee also obtained approval to retain BDO Consulting as financial advisor and BDO Capital Advisors LLC as investment banker. Partners and managing directors at BDO Consulting are charging $475 to $795 per hour, and have agreed that the monthly charge for professional services won't exceed $35,000. About Connaught Group The Connaught Group, Ltd. and four of its affiliates, Limited Editions for Her of Nevada LLC; Limited Editions for Her of Branson LLC; Limited Editions for Her LLC; and WDR Retail Corp. filed separate Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-10512) on Feb. 9, 2012. New York-based Connaught Group designs and has manufactured high- end women's wear and then sells the finished clothing through an innovative sales system outside the normal retail chain originally created in 1981 by the Debtors' founder and iconic designer, William D. Rondina. The Company's sales are made primarily through independent contractors who sell the clothing to their own clients in private showings. Through the Wardrobe Consultants, the Debtors are able to offer the personalized service and attention to detail absent from the conventional shopping experience. As of the Petition Date, the Debtors are affiliated with more than 1,300 Wardrobe Consultants. The Debtors also operate 10 outlet stores throughout the country, but the Debtors primarily only sell last season's clothing and other merchandise to be liquidated at these stores. A non-debtor Canadian subsidiary, The Connaught Group ULC, sells the Debtors' clothing in eight outlet stores in Canada. Three of the Canadian stores are leased by The Connaught Group, Ltd. Judge Stuart M. Bernstein presides over the case. JPMorgan Chase is represented in the case by Andrew C. Gold, Esq., at Herrick, Feinstein LL. Citibank is represented by Boris I. Mankovetskiy, Esq., at Sills Cummis & Gross P.C. In April 2012, the Debtors obtained approval to sell the business to a joint venture between Royal Spirit Group and Tom James Co. for $20 million cash. The buyers also took over the lease for the headquarters on West 55th Street in Manhattan. Royal Spirit, a non-insider with the largest claim, waived a $5.4 million claim. Secured claims were paid from the sale. The court has signed interim orders granting the Debtors access to cash collateral. The second interim order provided for a budget that allocated $1.833 million for trade vendors and $1.2 million to pay professionals from the week ending Feb. 17 to the week ending March 30, 2012. CONNAUGHT GROUP: Proposes to Tap CBIZ as Taxation Accountants ------------------------------------------------------------- The Connaught Group, Ltd., et al., are seeking approval to hire CBIZ MHM, LLC as special taxation accountants to perform all accounting services on behalf of the Debtors in connection with the preparation and filing of federal and state tax returns for the year ended Dec. 31, 2011. During the year prior to the Petition Date, in accordance with its usual billing and receipt practices relative to the Debtors, CBIZ received a total of $251,293 in the aggregate from the Debtors in relation to such services. Subject to the Court's approval under section 330(a) of the Bankruptcy Code, the Debtors propose that CBIZ's compensation postpetition be based on the hourly rate for each accounting professional or paraprofessional who performs services for or on behalf of the Debtors as then established and in effect for such professional at CBIZ. The hourly billing rates at CBIZ are $600-$650 for shareholders, $350-$480 for managers, and $180-$250 for staff. CBIZ will also seek reimbursement for administrative and processing charges incurred in connection with the representation. The Debtors believe that neither CBIZ nor any CBIZ professional holds or represents an interest adverse to the Debtors in the matters upon which CBIZ is to be employed. A hearing is scheduled July 17, 2012 at 10:00 a.m. (EDT). Objections are due July 10. Professionals Hired in the Case In March, the Debtors obtained approval to hire (i) the law firm of Fulbright & Jaworski L.L.P. as counsel, (ii) Consensus Advisory Services and Consensus Securities LLC as financial advisors nunc pro tunc to the Petition Date, (iii) Richter Consulting LLC as financial advisor, to, among others, provide advice on identification of business assets and the disposition of assets, (iv) Zygote Associates LLC to provide Maury Satin as chief restructuring officer, and (v) Kurtzman Carson Consultants LLC as administrative agent, and claims and noticing agent. An amended engagement agreement with Consensus provides that the firm will be responsible for exploring the possibility of a restructuring, the firm will receive a monthly retainer of $100,000 and will receive a one-time restructuring success fee of $250,000 in the event the Company confirms a reorganization plan. The Official Committee of Unsecured Creditors in April obtained approval to retain Lowenstein Sandler PC as counsel nunc pro tunc to Feb. 15, 2012. Members of the firm are charging $435 to $895 per hour. The Creditors Committee also obtained approval to retain BDO Consulting as financial advisor and BDO Capital Advisors LLC as investment banker. Partners and managing directors at BDO Consulting are charging $475 to $795 per hour, and have agreed that the monthly charge for professional services won't exceed $35,000. About Connaught Group The Connaught Group, Ltd. and four of its affiliates, Limited Editions for Her of Nevada LLC; Limited Editions for Her of Branson LLC; Limited Editions for Her LLC; and WDR Retail Corp. filed separate Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-10512) on Feb. 9, 2012. New York-based Connaught Group designs and has manufactured high- end women's wear and then sells the finished clothing through an innovative sales system outside the normal retail chain originally created in 1981 by the Debtors' founder and iconic designer, William D. Rondina. The Company's sales are made primarily through independent contractors who sell the clothing to their own clients in private showings. Through the Wardrobe Consultants, the Debtors are able to offer the personalized service and attention to detail absent from the conventional shopping experience. As of the Petition Date, the Debtors are affiliated with more than 1,300 Wardrobe Consultants. The Debtors also operate 10 outlet stores throughout the country, but the Debtors primarily only sell last season's clothing and other merchandise to be liquidated at these stores. A non-debtor Canadian subsidiary, The Connaught Group ULC, sells the Debtors' clothing in eight outlet stores in Canada. Three of the Canadian stores are leased by The Connaught Group, Ltd. Judge Stuart M. Bernstein presides over the case. JPMorgan Chase is represented in the case by Andrew C. Gold, Esq., at Herrick, Feinstein LL. Citibank is represented by Boris I. Mankovetskiy, Esq., at Sills Cummis & Gross P.C. In April 2012, the Debtors obtained approval to sell the business to a joint venture between Royal Spirit Group and Tom James Co. for $20 million cash. The buyers also took over the lease for the headquarters on West 55th Street in Manhattan. Royal Spirit, a non-insider with the largest claim, waived a $5.4 million claim. Secured claims were paid from the sale. The court has signed interim orders granting the Debtors access to cash collateral. The second interim order provided for a budget that allocated $1.833 million for trade vendors and $1.2 million to pay professionals from the week ending Feb. 17 to the week ending March 30, 2012. CONSOL ENERGY: Mine Closure, Asset Sale Won't Affect Ratings ------------------------------------------------------------ Moody's Investors Service stated that the ratings of CONSOL Energy Inc. are not immediately affected by the company's recent announcements that it has sold its non-producing assets in Northern Powder River Basin for $170 million in cash, and that it will idle its Fola mining operations in Central Appalachia, which will reduce 2012 coal production by approximately 800,000 tons. As reported by the Troubled Company Reporter on Dec. 12, 2011, Moody's confirmed the Corporate Family Ratings (CFR) of Consol Energy Inc. at Ba3 and the ratings of Consol's senior unsecured debt at B1. The outlook was stable. CORDILLERA GOLF: Club Members Ask Judge to Move Case ---------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that members of the four-course golf club at the Cordillera resort community in Edwards, Colorado filed papers on July 3 asking the bankruptcy judge to move the Chapter 11 reorganization from Delaware to Colorado. In other disputes in the reorganization that began June 26, the owner is on both the offensive and defensive. According to the report, the club members allege in their July 3 court filing that the "transparent purpose" of seeking Chapter 11 protection in Delaware was to make participation by club members difficult and expensive. They want the judge to hold an before July 19 on the so-called motion to transfer venue. The members contend the owner failed to list them as creditors with the largest claims. The club, they say, is obligated eventually to return their $62.9 million in deposits, making members holders of 19 of the 20 largest claims. The members say the club has no connection with Delaware aside from being incorporated under Delaware law. The convenience of the parties and the interests of justice counsel moving the case to Colorado, the papers state. The members want the case moved before a July 19 hearing where the club will seek approval of financing to come ahead of the existing bank lender. Mr. Rochelle notes that at a hearing last week, the club was on the defensive when it failed to persuade the Delaware bankruptcy judge to halt a lawsuit in Colorado where class-action plaintiffs are seeking to hold the club's owner in contempt. About Cordillera Golf Cordillera Golf Club, LLC filed for protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case No. 12-11893) amid lower membership rates and tensions with current members. The Debtor owns an exclusive 730-acre four-course golf club at the Cordillera resort community in Edwards, Colorado. The club is located at the 7,000-acre Cordillera development, which has 1,087 residential lots. Non-equity club membership is open to community residents. The club has three golf courses, a Dave Pelz designed short course, five swimming pools, and tennis courts. The membership plan provides that there will be no more than 1,085 golf memberships and up to 100 social memberships. Half of all property owners within Cordillera are club members. David Wilhelm acquired 100% interest in the Debtor in 2009 following an arbitration that stemmed from revelations that the then owners of the 70% interests had diverted funds away from the Debtor's operations. D.L. BERRY: Case Summary & 5 Largest Unsecured Creditors -------------------------------------------------------- Debtor: D.L. Berry Enterprises LTD. 5733 Selwyn Court South Bend, IN 46614-6043 Bankruptcy Case No.: 12-32433 Chapter 11 Petition Date: July 6, 2012 Court: United States Bankruptcy Court Northern District of Indiana (South Bend Division) Judge: Harry C. Dees, Jr. Debtor's Counsel: R. William Jonas, Jr., Esq. HAMMERSCHMIDT, AMARAL & JONAS 137 N. Michigan Street South Bend, IN 46601 Tel: (574) 282-1231 Fax: (574) 282-1234 E-mail: rwj.haj@sbcglobal.net Scheduled Assets: $2,751,952 Scheduled Liabilities: $3,369,444 A copy of the Company's list of its five largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/innb12-32433.pdf The petition was signed by David C. Berry, president. DECISION DIAGNOSTICS: Had $105,000 Net Loss in First Quarter ------------------------------------------------------------ Decision Diagnostics Corp., formerly instaCare Corp, filed its quarterly report on Form 10-Q, reporting a net loss of $105,344 on $2.51 million of revenue for the three months ended March 31, 2012, compared with a net loss of $340,781 on $3.12 million of revenue for the same period last year. The Company's balance sheet at March 31, 2012, showed $4.71 million in total assets, $2.55 million in total current liabilities, contingencies of $200,500, and stockholders' equity of $1.96 million. Weaver Martin & Samyn LLC, in Kansas City, Missouri, expressed substantial doubt about Decision Diagnostics' ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has suffered recurring losses from operations. A copy of the Form 10-Q is available for free at: http://is.gd/a67QDY Westlake Village California-based Decision Diagnostics Corp. is a nationwide prescription and non-prescription diagnostics and home testing products distributor. DELTA OIL & GAS: Had $104,200 Net Loss in First Quarter ------------------------------------------------------- Delta Oil & Gas, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of US$104,253 on US$126,718 of revenue for the three months ended March 31, 2012, compared with a net loss of US$61,559 on US$410,524 of revenue for the same period of 2011. The Company's balance sheet at March 31, 2012, showed US$1.98 million in total assets, US$63,040 in total liabilities, and stockholders' equity of US$1.92 million. As reported in the TCR on April 5, 2012, Mark Bailey & Company, Ltd., in Reno, Nevada, expressed substantial doubt about Delta Oil's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has incurred recurring losses from operations. A copy of the Form 10-Q is available for free at: http://is.gd/GHI8VT Vancouver, Canada-based Delta Oil & Gas, Inc., is engaged in the acquisition, development and production of oil and natural gas properties in North America. DELTA PETROLEUM: Max Holdings Required to be Sold Down $0 --------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware, on March 7, 2012, entered an order establishing notice and sell- down procedures for trading in claims against Delta Petroleum Corporation's estates. Pursuant to the Trading Order, prior to the end of the hearing on which a disclosure statement relating to a plan of reorganization for the Debtors under Chapter 11 that provides for or contemplates the use of net operating loss carryforwards and other tax attributes under Internal Revenue Code section 382(l)(5) and that is supported by a majority in amount of unsecured claims held by unsecured claimholders pursuant to a plan support agreement, the Debtors are required disclose (i) the aggregate amount of initial holdings and (ii) the estimated maximum amount and percentage of holdings in each class that may be required to be sold down pursuant to the Trading Order. Accordingly, pursuant to the Trading Order, the Debtors disclose that: (i) the total unsecured claims are approximately $270.65 million; and (ii) based on current information regarding holdings of claims, the estimated maximum amount and percentage of holdings in each class that may be required to be sold down pursuant to the Trading Order is $0 and 0%. About Delta Petroleum Delta Petroleum Corporation (NASDAQ: DPTR) is an independent oil and gas company engaged primarily in the exploration for, and the acquisition, development, production, and sale of, natural gas and crude oil. Natural gas comprises over 90% of Delta's production services. The core area of its operations is the Rocky Mountain Region of the United States, where the majority of the proved reserves, production and long-term growth prospects are located. Delta and seven of its subsidiaries sought Chapter 11 bankruptcy protection (Bankr. D. Del. Case Nos. 11-14006 to 11-14013, inclusive) on Dec. 16, 2011, roughly six weeks before the Jan. 31, 2012 scheduled maturity of its $38.5 million secured credit facility with Macquarie Bank Limited and after several months of unsuccessful attempts to sell the business. Delta disclosed $375,498,248 in assets and $310,679,157 in liabilities, which also include $152,187,500 in outstanding obligations on account of the 7% senior unsecured notes issued in March 2005 with US Bank National Association indenture trustee; and $115,527,083 in outstanding obligations on account of 3-3/4% Senior Convertible Notes due 2037 issued in April 2007. In its amended schedules, the Delta Petroleum disclosed $373,836,358 in assets and $312,864,788 in liabilities. W. Peter Beardsley, Esq., Christopher Gartman, Esq., Kathryn A. Coleman, Esq., and Ashley J. Laurie, Esq., at Hughes Hubbard & Reed LLP, in New York, N.Y., represent the Debtors as counsel. Derek C. Abbott, Esq., Ann C. Cordo, Esq., and Chad A. Fights, Esq., at Morris, Nichols, Arsht & Tunnel LLP, in Wilmington, Del., represent the Debtors as co-counsel. Conway Mackenzie is the Debtors' restructuring advisor. Evercore Group L.L.C. is the financial advisor and investment banker. The Debtors selected Epiq Bankruptcy Solutions, LLC as claims and noticing agent. The petition was signed by Carl E. Lakey, chief executive officer and president. Laramie Energy II LLC has been approved by the Court to serve as the sponsor for Delta's reorganization plan. As reported by the TCR on July 9, 2012, Delta Petroleum won approval for its disclosure statement explaining the Chapter 11 reorganization plan. DELTA PETROLEUM: Has Forbearance with DIP Lenders Until July 16 --------------------------------------------------------------- Delta Petroleum Corporation entered into a forbearance agreement relating to its first lien superpriority priming multi-draw term loan credit facility entered into in December 2011 and subsequently amended. The DIP Credit Facility matured pursuant to its terms on June 30, 2012, and the outstanding commitments of the lenders under the facility terminated on the same date. However, pursuant to the Forbearance Agreement, the DIP Lenders agreed, subject to the satisfaction of certain conditions, and provided there are no additional defaults, to forbear from exercising their rights and remedies under the DIP Credit Facility until July 16, 2012, or such later date as may be agreed upon between the DIP Lenders and the Company. In addition, the Forbearance Agreement provides that further advances may be made to the Company by any of the DIP Lenders in the lender's sole discretion. Any such advances would be made pursuant to the DIP Credit Facility as modified by the Forbearance Agreement. BankruptcyData.com reports that the bankruptcy court has approved the motion to enter into a forbearance agreement with respect to its aemdned DIP credit agreement. About Delta Petroleum Delta Petroleum Corporation (NASDAQ: DPTR) is an independent oil and gas company engaged primarily in the exploration for, and the acquisition, development, production, and sale of, natural gas and crude oil. Natural gas comprises over 90% of Delta's production services. The core area of its operations is the Rocky Mountain Region of the United States, where the majority of the proved reserves, production and long-term growth prospects are located. Delta and seven of its subsidiaries sought Chapter 11 bankruptcy protection (Bankr. D. Del. Case Nos. 11-14006 to 11-14013, inclusive) on Dec. 16, 2011, roughly six weeks before the Jan. 31, 2012 scheduled maturity of its $38.5 million secured credit facility with Macquarie Bank Limited and after several months of unsuccessful attempts to sell the business. Delta disclosed $375,498,248 in assets and $310,679,157 in liabilities, which also include $152,187,500 in outstanding obligations on account of the 7% senior unsecured notes issued in March 2005 with US Bank National Association indenture trustee; and $115,527,083 in outstanding obligations on account of 3-3/4% Senior Convertible Notes due 2037 issued in April 2007. In its amended schedules, the Delta Petroleum disclosed $373,836,358 in assets and $312,864,788 in liabilities. W. Peter Beardsley, Esq., Christopher Gartman, Esq., Kathryn A. Coleman, Esq., and Ashley J. Laurie, Esq., at Hughes Hubbard & Reed LLP, in New York, N.Y., represent the Debtors as counsel. Derek C. Abbott, Esq., Ann C. Cordo, Esq., and Chad A. Fights, Esq., at Morris, Nichols, Arsht & Tunnel LLP, in Wilmington, Del., represent the Debtors as co-counsel. Conway Mackenzie is the Debtors' restructuring advisor. Evercore Group L.L.C. is the financial advisor and investment banker. The Debtors selected Epiq Bankruptcy Solutions, LLC as claims and noticing agent. The petition was signed by Carl E. Lakey, chief executive officer and president. Laramie Energy II LLC has been approved by the Court to serve as the sponsor for Delta's reorganization plan. As reported by the TCR on July 9, 2012, Delta Petroleum won approval for its disclosure statement explaining the Chapter 11 reorganization plan. DESERT HAWK: Has Forbearance with DMRJ Group Until Sept. 30 ----------------------------------------------------------- Desert Hawk Gold Corp. entered into a forbearance agreement with DMRJ Group pursuant to which DMRJ Group granted a limited forbearance period on the payment of the first mandatory prepayment of $1,550,000 under the Investment Agreement dated July 14, 2010, as amended, between the parties. Pursuant to the Forbearance Agreement the payment due and payable on June 30, 2012, is extended to Sept. 30, 2012, provided that the Company consummates an equity financing transaction or transactions resulting in aggregate cash proceeds to the Company of $100,000 by July 5, 2012, and another $100,000 by July 31, 2012. Subject to these terms, DMRJ Group has agreed to forbear from exercising its rights and remedies with respect to an event of default by virtue of the Company's failure to make the first mandatory prepayment as required under the Investment Agreement. On June 30, 2012, the Company entered into an arrangement with Clifton Mining Company and The Woodman Mining Company to delay certain payments required pursuant to the terms of the Amended and Restated Lease and Sublease Agreement dated July 24, 2009, between the Company and these parties, and to extend the declaration date for claims to be voluntarily released under the agreement. Section 7.1 of the agreement requires the payment of $50,000 for each of the three properties covered by the agreement to be paid on or before July 24, 2012, if the properties have not been placed into production. The parties have agreed that on or before July 24, 2012, the Company will pay $50,000 for the annual holding fee for the Kiewit Property, that the Company will pay $50,000 on or before Oct. 24, 2012, for the annual holding fee for the Clifton Shears-Smelter Tunnel Property; and that we will pay $50,000 on or before Dec. 24, 2012, for the annual holder fee for the Cane Springs Property. The Company also agreed to extend to July 15, 2012, the date by which the Company must give notice of the claims the Company no longer wish to maintain under the agreement and by Aug. 20, 2012, reimburse the lessors for payments made to the BLM and Toole County for the claims to be retained by the Company. On June 29, 2012, the Company issued 80,000 shares of the Company's Series A-2 Preferred Stock to DMRJ Group under the terms of the Forbearance Agreement. These preferred shares are convertible into shares of the Company's common stock. They were issued without registration under the Securities Act by reason of the exemption from registration afforded by the provisions of Section 4(a)(5) or Section 4(a)(2) thereof, and Rule 506 promulgated thereunder, as a transaction by an issuer not involving any public offering. DMRJ Group was an accredited investor as defined in Regulation D at the time of the transaction. No underwriting discounts or commissions were paid in connection with the preferred stock transaction. About Desert Hawk Desert Hawk Gold Corp., an exploration stage company, engages in the acquisition and exploration of mineral properties. The company has interests in 334 unpatented claims, including the unpatented mill site claim, 42 patented claims, and 5 Utah state mineral leases located on state trust lands covering approximately 33 square miles in the Gold Hill Mining District in Tooele County, Utah. It also holds eight unpatented mining claims in Yavapai County, Arizona. The company was formerly known as Lucky Joe Mining Company and changed its name to Desert Hawk Gold Corp. in April 2009. Desert Hawk Gold Corp. was incorporated in 1957 and is based in Spokane, Washington. DEWEY & LEBOEUF: Fifth Third Wants Relief from Automatic Stay ------------------------------------------------------------- Fifth Third Bank asks the U.S. Bankruptcy Court for the Southern District of New York for relief from the automatic stay in the Chapter 11 case of Dewey & LeBoeuf LLP. The Debtor entered into lease schedule, as amended with Fidelity National Capital, Inc. doing business as Winthrop Capital. Winthrop assigned or otherwise conveyed certain of its rights and interests to Firth Third pursuant to certain assignment and servicing agreements. Prior to the Petition Date, the Debtor defaulted under the agreement by failing to make certain payments due thereunder. As of the Petition Date, the outstanding amount due under the agreement was: i) schedule 008 -- $4,230,527 ii) schedule 011 -- $5,883,977 iii) schedule G01 -- $818,282 Fifth Third notes that the Debtor has been using a portion of the property, but has not made any adequate protection payment for the same. According to Fifth Third, among other things: -- the value of the property is less than the amount that is owed by the Debtor to Fifth Third; -- to date, no Chapter 11 Plan has been filed; and -- the Debtor stated that it is in the process of winding down its operations and is liquidating. A hearing on July 25, 2012, at 2 p.m., has been set. Objections, if any, are due July 18, at 4 p.m. 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. DEWEY & LEBOEUF: Taps Thierhoff Muller as German Wind Down Counsel ------------------------------------------------------------------ Dewey & LeBoeuf LLP asks the U.S. Bankruptcy Court for the Southern District of New York for permission to employ Thierhoff Muller & Partner as German wind down counsel and consultants to the Debtor, to wind down the Debtor's Frankfurt, Germany office. Prior to the Petition Date, the Debtor operated a branch office in Frankfurt, Germany. The Debtor seeks to wind down its affairs relating to those offices. Specifically, with respect to the Frankfurt Office, the Debtor seeks, inter alia, to collect and preserve assets related to the office for the benefit of its estate and to address certain claims or causes of action that may arise under German insolvency law, including resolving certain insolvency actions filed in Frankfurt against the Debtor. Renate Muller, a partner of Thierhoff, tells the Court that the firm will coordinate with the Debtor's proposed bankruptcy counsel, Togut, Segal and Segal LLP, and other professionals engaged by the Debtor to avoid any unnecessary duplication of effort. Thierhoff's billing rates for the professionals to be engaged on the matter range from EUR500 to EUR320 per hour. 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 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. DEWITT REHABILITATION: Wins Confirmation of Reorganization Plan --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that DeWitt Rehabilitation & Nursing Center Inc. has permission from the bankruptcy judge to exit Chapter 11 under a confirmed reorganization plan. The bankruptcy judge in Manhattan signed the confirmation order approving the plan on June 28. According to a previous report by the Troubled Company Reporter, the Debtor filed a proposed reorganization plan in December 2011 promising to pay unsecured creditors at least 30% on their $18.6 million in claims. The Bloomberg News report says unsecured creditors with more than $16 million in filed claims are to receive $4.6 million, with $1.75 million paid when the plan becomes effective. The remainder, about $2.9 million, will be paid in installments over five years. The $5.5 million owing to the Internal Revenue Service will be paid in installments over five years. The installments on unsecured debt will be secured by a subordinate lien on accounts receivable. The class will receive 70% of collections from preference suits. In addition, they will receive 20% of their claims if the facility is sold. The $2.6 million claim of Marilyn Lichtman, who owns the facility, won't be paid until unsecured creditors and the union are fully paid. About Dewitt Rehabilitation New York-based DeWitt Rehabilitation and Nursing Center runs a 499-bed nursing home on East 79th Street in Manhattan. The nursing home is owned by Marilyn Lichtman, who has been the operator since the facility opened in 1967. DeWitt Rehabilitation filed for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No. 11-10253) on Jan. 25, 2011. Marc A. Pergament, Esq., at Weinberg, Gross & Pergament, LLP, serves as the Debtor's bankruptcy counsel. The Debtor estimated its assets at up to $50,000 and debts at $10 million to $50 million. DR TATTOFF: Had $617,900 Net Loss in 1st Quarter ------------------------------------------------ Dr. Tattoff, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $617,917 on $764,504 of revenues for the three months ended March 31, 2012, compared with a net loss of $583,292 on $637,800 of revenues for the corresponding period last year. The Company's balance sheet at March 31, 2012, showed $1.49 million in total assets, $1.90 million in total liabilities, and a stockholders' deficit of $409,334. As reported in the TCR on April 9, 2012, SingerLewak LLP, in Los Angeles, Calif., expressed substantial doubt about Dr. Tattoff's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has suffered recurring losses and negative cash flows from operations, and has an accumulated deficit of approximately $4,568,000 at Dec. 31, 2011. A copy of the Form 10-Q is available for free at: http://is.gd/x1RCEe Beverly Hills, Calif.-based Dr. Tattoff, Inc., currently operates or provides management services to five laser tattoo and hair removal clinics located in Texas and California, all of which operate under the Company's registered trademark "Dr. Tattoff." DYNEGY INC: S&P Gives D Corp Credit Rating on Bankruptcy -------------------------------------------------------- Standard & Poor's Ratings Services lowered Dynegy Inc.'s corporate credit rating to 'D' following its bankruptcy filing. "We affirmed our 'CCC+' corporate rating on Dynegy Power LLC, which is ring-fenced from Dynegy Holdings LLC. We expected Dynegy Inc. to file for bankruptcy protection based on the bankruptcy process of Dynegy Holdings," S&P said. Dynegy Inc. and Dynegy Holdings will emerge from bankruptcy into a single unit under the proposed plan. The companies plan to emerge in the late third quarter of 2012. Dynegy Power LLC is a subsidiary of Dynegy Holdings. "We rate it at 'CCC+', above the Dynegy Holdings and Dynegy ratings based on ring-fencing provisions that make Dynegy Power bankruptcy-remote from its parents, but not bankruptcy-proof," S&P said. Despite Dynegy Holdings' bankruptcy filing in November 2011, creditors have not tried to pull Dynegy Power into the bankruptcy proceedings. Dynegy Power has issued $1.1 billion in credit facilities due 2017, and credit facility lenders are secured by all the assets of Dynegy Power, which provides a disincentive for Dynegy Holdings' creditors to force a filing. Dynegy Holdings' creditors will gain Dynegy Power anyway under the proposed plan. The negative outlook on Dynegy Power reflects exposure to the Dynegy Holdings and Dynegy Inc. bankruptcy process. It does not appear that Dynegy Holdings' creditors seek to bring Dynegy Power into the bankruptcy proceeding. "We would lower the rating if we think there is a greater chance that Dynegy Power could be pulled into the bankruptcy proceedings," S&P said. EDWARD STURT-PENROSE: Court Converts Case to Chapter 7 ------------------------------------------------------ At the behest of the U.S. Trustee, Bankruptcy Judge Thomas E. Carlson converted the Chapter 11 case of Edward P. Sturt-Penrose and Heather L. Gibbons to a liquidation under Chapter 7 of the Bankruptcy Code. The Debtors support the Chapter 7 conversion. Creditors Crystal Delligatti, Steven Moss and Debbie Findling argued for retaining the case in chapter 11 to solicit votes on their bankruptcy plan for the Debtors. According to Judge Carlson, the Motion to Convert should be granted, because the Debtors have the right to convert the case to chapter 7, because the property to be liquidated is not unique and does not require specialized expertise to sell, and because this is the type of liquidation that a chapter 7 trustee regularly performs. The judge added that a chapter 7 trustee may pursue the potential fraudulent transfer action against Mara Sturt-Penrose under 11 U.S.C. Sec. 548; the deadline to object to the Debtors' exemptions in this case resets upon conversion to chapter 7; any party-in-interest may bring an action to equitably subordinate a claim of the Debtors under 11 U.S.C. Sec. 510; and the Creditors may attempt to elect the chapter 7 trustee under 11 U.S.C. Sec. 702. A copy of the Court's July 5, 2012 Memorandum is available at http://is.gd/YA9WXSfrom Leagle.com. Edward Sturt-Penrose and Heather L. Gibbons filed a Chapter 11 petition (Bankr. N.D. Calif. Case No. 11-32059) last year. ENOVA SYSTEMS: Receives NYSE MKT Exchange Notice of De-Listing -------------------------------------------------------------- Enova Systems Inc. received notice from the NYSE MKT indicating that the Company no longer complies with the Exchange's continued listing standards as set forth in Section 1003 of the NYSE MKT Company Guide, and that its securities are, therefore, subject to being delisted from the Exchange. By a series of letters, the Exchange previously notified the Company that it was not in compliance with the following sections of the Company Guide: (a) Section 1003(a)(iii) insofar as the Company reported stockholders' equity of less than $6,000,000 and has incurred losses from continuing operations and/or net losses in five consecutive fiscal years; (b) Section 1003(a)(ii) insofar as the Company reported stockholders' equity of less than $4,000,000 and has incurred losses from continuing operations and/or net losses in three out of its four most recent fiscal years; and (c) Section 1003(f)(v) insofar as its Common Stock has been trading at a low price per share for a significant period of time. On May 17, 2012, pursuant to Section 1009 of the Company Guide, the Company submitted a plan of compliance advising the Exchange of actions the Company would take to regain compliance with Section 1003(a)(iii) and 1003(a)(ii) of the Company Guide by Oct. 15, 2013. The July Notice stated that the financial projections provided in connection with the Plan did not demonstrate an ability to regain compliance with the minimum requirements by Oct. 15, 2013. The July Notice further stated that, on June 25, 2012, the Company notified the Exchange that the financial projections provided with the Plan were no longer accurate and did not provide the staff of the Exchange with updated projections. On June 25, 2012, the Company filed a Form 8-K disclosing the resignation of Chief Executive Officer and Director Michael Staran, Chief Operating Officer John Mullins and Director Rich Davies, reinforcing the Staff's conclusion that the Company will be unable to regain compliance by October 15, 2013. Following a review of the above-described facts, the Staff advised the Company that the Exchange did not accept the proposed Plan and that the Company is therefore subject to delisting pursuant to Section 1009 of the Company Guide. In accordance with Sections 1203 and 1009(d) of the Company Guide, the Company has a limited right to appeal the determination of the Staff by requesting, on or before July 12, 2012, a hearing with the Listing Qualifications Panel. The Company intends to exercise its right of appeal. There can be no assurance that the Company's request for continued listing will be granted. About Enova Systems Enova Systems -- http://www.enovasystems.com/-- is a leading supplier of efficient, environmentally friendly digital power components and systems products. The Company's core competencies are focused on the development and commercialization of power management and conversion systems for mobile applications. ENVIRONMENTAL SOLUTIONS: Had $426,100 Net Loss in 1st Quarter ------------------------------------------------------------- Environmental Solutions Worldwide, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $426,071 on $2.53 million of revenue for the three months ended March 31, 2012, compared with a net loss of $3.13 million on $2.05 million of revenue for the same period of 2011. The Company's balance sheet at March 31, 2012, showed $5.61 million in total assets, $1.94 million in total current liabilities, and stockholders' equity of $3.67 million. As reported in the TCR on April 5, 2012, MSCM LLP, in Toronto, Canada, expressed substantial doubt about Environmental Solutions' ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that of the Company's experience of negative cash flows from operations and its dependency upon future financing. A copy of the Form 10-Q is available for free at: http://is.gd/7KYn03 Concord, Ontario, Canada-based Environmental Solutions Worldwide, Inc., is a publicly traded Florida corporation formed in 1987 in the State of Florida. ESW is currently focused on the medium duty and heavy duty diesel engine market for on-road and off-road vehicles as well as the utility engine, mining, marine, locomotive and military industries. ESW offers engine and after treatment emissions verification testing and certification services. ESW's common stock is currently quoted on the OTCQB, which is part of the OTC Market Group's quotation system under the symbol (ESWW). ESW's common stock is also quoted on the Frankfurt Stock Exchange (FWB), under the symbol (EOW). EQUINIX INC: Moody's Changes Outlook on 'Ba3' CFR to Positive ------------------------------------------------------------- Moody's Investors Service has changed its rating outlook for Equinix, Inc. to positive from stable based on the company's strong financial performance and improving credit metrics. As part of the rating action, Moody's also affirms all other existing ratings, including Equinix's Ba3 corporate family rating (CFR). The positive outlook reflects Equinix's consistent revenue and EBITDA growth, which has allowed the company to delever and move closer towards its target of generating positive free cash flow in 2013. Moody's anticipates that Debt/EBITDA leverage will be at approximately 3.9x (Moody's adjusted) by year-end 2012 and 3.3x by the end of 2013. In addition, Moody's expects that the company will generate modest positive free cash flow at year end 2013 before improving to over $100 million in 2014. In Moody's opinion, Equinix is close to reaching the inflection point where its growth can effectively be self-financed and if it continues to execute its announced business strategy it should be in a position to meet Moody's upward ratings triggers by the end of 2013. However, the company's strong quantitative metrics are offset by the risk for continual needs to build out new space and reinvest in the business, such that positive free cash flow could be delayed. There is also the risk of large debt-funded acquisitions or shareholder friendly activities would delay the expected improvement in credit metrics. Moody's has taken the following rating actions: Issuer: Equinix, Inc. Outlook, Changed to Positive from Stable RATINGS RATIONALE Equinix's Ba3 Corporate Family Rating ("CFR") reflects the company's position as the leading global independent data center operator offering carrier-neutral data center and interconnection services to large enterprises, content distributors and global Internet companies. Moody's notes that the telecommunications carriers that terminate in Equinix's data centers represent about 90% of global Internet routes. The rating also recognizes the favorable near-term growth trends for data center services across the world, driven by rapidly growing internet usage and the ongoing migration of corporate information technology to IP standards. At the same time, the ratings are tempered by significant industry risks, intensifying competition, high capital intensity inherent in the company's business plans, and the company's ongoing expansion which could continue to consume cash resources over the next two to three years. In addition, the rating incorporates the probability that if the company undertakes additional expansion projects, the expected deleveraging may be delayed. Equinix has an extensive global foot print that is unmatched in scale by other independent data center providers. The company has built a diverse ecosystem which allows it to strengthen its interconnection platform. The Company's Internet exchange facilities allow for those connections to be made to multiple carriers in a single building instead of carriers needing to provision individual connections to each other. Currently, the interconnect business generates approximately 15%-20% of total revenues but it is the driver for the colocation business as customers are more likely to be in an Equinix datacenter than its competitors' datacenters due to its more extensive interconnect network. Given the interconnect business, customers are also less likely to leave Equinix data centers to move to other competitiors due to the added costs of decommissioning and setting up new connections with other providers. Moody's expects demand for IT infrastructure outsourcing to remain robust as companies look to reduce their IT infrastructure costs. In addition, demand for data center space will be fueled by the demand for server space and IP traffic growth . Moody's expects Equinix to have very good liquidity over the next twelve months. The company had approximately $917 million in cash or equivalents at March 31, 2012 and an undrawn $550 million revolving credit facility. The company is expected to generate modest free cash flow in 2013 and over $100 million of free cash flow in 2014 which will help the company fund its capital expenditures and operating needs. Moody's expects the company to have ample liquidity after the close of the Asia Pacific and ancotel acquisitions in Q3 of this year. The ratings for Equinix's debt instruments comprise the overall probability of default of the company, to which Moody's assigns a probability of default rating of Ba3, the average family loss given default assessment and the composition of the debt instruments in the capital structure. Moody's notes that the recently announced $750 million senior secured credit facility, although unrated, puts downward pressure on the ratings of the senior unsecured notes.The company's senior unsecured notes are rated Ba2 with a loss given default assessment of LGD3-41%, which is one notch higher than the LGD methodology-implied ratings for these instruments due to Moody's adjustments to the LGD framework in order to reflect the perceived collateral coverage. Moreover, as Moody's expects that the preponderance of future debt issuances will be done on a senior unsecured basis, there is further downward pressure on the senior unsecured notes. As more senior unsecured debt is raised, the ratings on this debt class will likely converge with the CFR over time. Positive rating migration could occur if Equinix successfully carries out the staged buildout of its planned expansion and successfully leases up the capacity in its data centers, such that adjusted Debt/EBITDA leverage trends to below 4.0x on a sustainable basis, and the company consistently generates positive free cash flow. Given the high project finance nature of the company's expansion plans, debt financed buildouts in addition to the current schedule may pressure the ratings. Ratings may also come under downward pressure, if industry pricing exhibits overcapacity trends spurring a new period of hypercompetition. The above factors may be evidenced in Equinix's performance, such that it is unable to grow operating cash flow from the new capacity it brings online, the company continues to burn cash and its adjusted leverage remains above 5.0x. The principal methodology used in rating Equinix, Inc. was the Global Communications Infrastructure Industry Methodology published in June 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Redwood City, CA, Equinix is a data center company which operates 99 domestic and international data centers across 38 markets, totaling over 6 million square feet of gross data center space. The company is the largest publicly traded carrier-neutral data center hosting provider in the world, and generated approximately $1.7 billion in revenues for twelve months ending March 31, 2012. FILENE'S BASEMENT: Judge Stalls Hearing on Plan Outline ------------------------------------------------------- Rachel Feintzeig at Dow Jones' DBR Small Cap reports that with more drama over Syms Corp.'s plan process erupting, Judge Kevin J. Carey put off a disclosure statement hearing but urged the parties to make good on the resolution that had seemed to emerge last week in the case. BankruptcyData.com reports that Filene's Basement's official committee of unsecured creditors filed with the U.S. Bankruptcy Court a motion to adjourn until July 13 the previously-scheduled July 9 hearing on the Disclosure Statement related to the Chapter 11 Plan. The adjournment is sought "to allow the parties adequate time to finalize the necessary documents regarding the global resolution and fully consensual plan of reorganization, without having to simultaneously prepare for a fully contested hearing involving the same issues." The official committee of Syms Corp. equity security holders filed with the Court an objection to this motion, explaining, "While the Creditors' Committee has asked for what appears to be a benign adjournment, it is actually a request that could well affect the very consummation of the current agreement as negotiated. The Creditors' Committee is a significant beneficiary of that agreement and so the parties need simply to redouble their efforts to complete the arrangements that were negotiated two weeks ago. There is no legitimate basis for further delay and further erosion of equity recovery." Majority shareholder, Marcy Syms, also objected, stating, "While the creditors' committee states that the parties will benefit from more time for continued negotiations, the history of this case has demonstrated that imminent deadlines and hearing dates have been a strong factor in motivating the parties to reach consensus. Further, the parties have agreed to certain deadlines which might be jeopardized by delay. In addition; the terms of the current plan of reorganization are time sensitive, and delays increase the costs of administrating the Debtors' estates." About Filene's Basement & Syms Corp. Massachusetts-based Filene's Basement, also called The Basement, is the oldest off-price retailer in the United States. The Basement focuses on high-end goods and is known for its distinctive, low-technology automatic markdown system. Filene's Basement first filed for Chapter 11 bankruptcy protection in August 1999. Filene's Basement was bought by a predecessor of Retail Ventures, Inc., the following year. Retail Ventures in April 2009 transferred the unit to Buxbaum. Filene's Basement, Inc. and its affiliates filed for Chapter 22 (Bankr. D. Del. Case No. 09-11525) on May 4, 2009, represented by lawyers at Pachulski Stang Ziehl & Jones LLP. Epiq Bankruptcy Solutions serves as claims and notice agent. The Debtors disclosed assets of $236 million, including real estate of $97.7 million, and liabilities of $94 million, including $31.1 million owing on a revolving credit with Bank of America NA as agent. In addition, there were $11.1 million in letters of credit outstanding on the revolver. The 2009 Debtor was formally renamed FB Liquidating Estate, following the sale of all of its assets to Syms Corp. in June 2009. Pursuant to the Liquidating Plan confirmed in January 2010, secured creditors in the Chapter 11 case have been paid in full, and holders of priority, administrative and convenience class claims have received 100% of their allowed claims. As reported by the Troubled Company Reporter on Dec. 20, 2010, Alan Cohen, Chairman of Abacus Advisors LLC and Chief Restructuring Officer for FB Liquidating Estate disclosed that a second distribution of dividend checks to Filene's unsecured creditors amounting to 12.5% of approved claims has been made, bringing the cumulative distributions on unsecured claims to 62.5%. On Nov. 2, 2011, Syms Corp. placed itself, Filene's Basement and two other units in Chapter 11 bankruptcy (Bankr. D. Del. Case Nos. 11-13511 to 11-13514) after a failed bid to sell the business. The two units are Syms Clothing Inc. and Syms Advertising Inc. Judge Kevin J. Carey presides over the case. Lawyers at Skadden Arps Slate Meagher & Flom LLP serve as the Debtors' counsel. The Debtors tapped Rothschild Inc. as investment banker and Cushman and Wakefield Securities, Inc., as real estate financial advisors. Syms shuttered its namesake and Filene's Basement outlets upon the bankruptcy filing and tapped a joint venture of Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC to run the going-out-of-business sales. The sale may continue until Jan. 31, 2012. Filene's Basement estimated $1 million to $10 million in assets and $50 million to $100 million in debts. The petitions were signed by Gary Binkoski, authorized representative of Filene's Basement. The official committee of unsecured creditors appointed in the 2011 case has retained Hahn & Hessen LLP as legal counsel. Holders of equity in Syms Corp. pushed for an official shareholders' committee and separation of the Syms and Filene's Basement bankruptcy estates. Gordon Brothers and Hilco are represented by Goulston & Storrs, P.C. and Ashby & Geddes, P.A. FILENE'S BASEMENT: Opposes Creditors' Bid to Delay Settlement ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Syms Corp. and the discount retailer's official shareholders' committee are opposing a request by the official creditors' committee to delay a hearing related to the global settlement announced last week. The creditors' representative said the parties haven't "even exchanged drafts of a revised plan and disclosure statement since the term sheet has not yet been finalized." A conference was scheduled July 6 with the bankruptcy judge in Delaware, who will decide whether to push back the hearing to July 13 from July 9. According to the report, in a filing with the bankruptcy court on July 3, the creditors' committee said there as yet is only a "handshake deal on the material terms" of a consensual Chapter 11 plan. Although there has been "significant progress," there are "a few open issues" on the documentation necessary to implement the settlement, the committee said. The report relates that the official equity committee, together with Syms and subsidiary Filene's Basement LLC, are opposing any delay in the July 9 hearing, where the bankruptcy court theoretically would consider approval of disclosure material explaining a prior version of the plan that is being superseded by the settlement. The July 9 hearing is also designed to put procedures into motion for approving the settlement and an accompanying rights offering to raise about $25 million. Mr. Rochelle relates that in general terms, the settlement provides for paying unsecured claims against Syms in full within "agreed upon time frames." Trade and supplier claims against Filene's will also be paid in full. Claims arising from terminated leases not guaranteed by Syms will receive 75% payment, also within specified time frames. In opposing delay, the shareholders' committee said that an adjournment "will remove the pressure of a looming deadline when one is needed most." About Filene's Basement & Syms Corp. Massachusetts-based Filene's Basement, also called The Basement, is the oldest off-price retailer in the United States. The Basement focuses on high-end goods and is known for its distinctive, low-technology automatic markdown system. Filene's Basement first filed for Chapter 11 bankruptcy protection in August 1999. Filene's Basement was bought by a predecessor of Retail Ventures, Inc., the following year. Retail Ventures in April 2009 transferred the unit to Buxbaum. Filene's Basement, Inc. and its affiliates filed for Chapter 22 (Bankr. D. Del. Case No. 09-11525) on May 4, 2009, represented by lawyers at Pachulski Stang Ziehl & Jones LLP. Epiq Bankruptcy Solutions serves as claims and notice agent. The Debtors disclosed assets of $236 million, including real estate of $97.7 million, and liabilities of $94 million, including $31.1 million owing on a revolving credit with Bank of America NA as agent. In addition, there were $11.1 million in letters of credit outstanding on the revolver. The 2009 Debtor was formally renamed FB Liquidating Estate, following the sale of all of its assets to Syms Corp. in June 2009. Pursuant to the Liquidating Plan confirmed in January 2010, secured creditors in the Chapter 11 case have been paid in full, and holders of priority, administrative and convenience class claims have received 100% of their allowed claims. As reported by the Troubled Company Reporter on Dec. 20, 2010, Alan Cohen, Chairman of Abacus Advisors LLC and Chief Restructuring Officer for FB Liquidating Estate disclosed that a second distribution of dividend checks to Filene's unsecured creditors amounting to 12.5% of approved claims has been made, bringing the cumulative distributions on unsecured claims to 62.5%. On Nov. 2, 2011, Syms Corp. placed itself, Filene's Basement and two other units in Chapter 11 bankruptcy (Bankr. D. Del. Case Nos. 11-13511 to 11-13514) after a failed bid to sell the business. The two units are Syms Clothing Inc. and Syms Advertising Inc. Judge Kevin J. Carey presides over the case. Lawyers at Skadden Arps Slate Meagher & Flom LLP serve as the Debtors' counsel. The Debtors tapped Rothschild Inc. as investment banker and Cushman and Wakefield Securities, Inc., as real estate financial advisors. Syms shuttered its namesake and Filene's Basement outlets upon the bankruptcy filing and tapped a joint venture of Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC to run the going-out-of-business sales. The sale may continue until Jan. 31, 2012. Filene's Basement estimated $1 million to $10 million in assets and $50 million to $100 million in debts. The petitions were signed by Gary Binkoski, authorized representative of Filene's Basement. The official committee of unsecured creditors appointed in the 2011 case has retained Hahn & Hessen LLP as legal counsel. Holders of equity in Syms Corp. pushed for an official shareholders' committee and separation of the Syms and Filene's Basement bankruptcy estates. Gordon Brothers and Hilco are represented by Goulston & Storrs, P.C. and Ashby & Geddes, P.A. FIRST AMERICANS: Agents Plead Guilty to $29MM Annuities Fraud ------------------------------------------------------------- Amanda Bransford at Bankruptcy Law360 reports that two principals of First Americans Insurance Services Inc. pled guilty Thursday to duping investors with a $29 million Ponzi-like annuities investment scheme run through their Nebraska insurance business. Bankruptcy Law360 relates that Stella M. Levea, 55, and James P. Masat, 67, pled guilty to one count of mail fraud each and could face up to 20 years in prison, a $250,000 fine each and an order to pay restitution of between $2.5 million and $20 million, according to their pleas. Sentencing is scheduled for Sept. 6. Grand Island, Nebraska-based First Americans Insurance Service Inc. -- http://www.fais.com/-- operates an insurance company. First Americans filed for Chapter 11 bankruptcy protection (Bankr. D. Neb. Case No. 09-40067) on Jan. 12, 2009. Robert F. Craig, Esq., at Robert F. Craig, P.C., served as the Debtor's counsel. The company estimated $1 million to $10 million in assets and $100 million to $500 million in liabilities. FIRSTFED FINANCIAL: Making Second Stab at Plan Confirmation ----------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that creditors of FirstFed Financial Corp. for a second time are voting on a proposed Chapter 11 plan. They rejected the first plan after the explanatory disclosure statement was approved early last year by the U.S. Bankruptcy Court in Los Angeles. The report relates that FirstFed, a holding company for a savings and loan taken over by regulators, says its largest asset is a claim for a $30 million income tax refund. The Federal Deposit Insurance Corp., as receiver for the failed bank, claims that it's entitled to the tax refund. In addition to disputed claims from the FDIC, there are few aside from the $157.8 million owing on unsecured debentures. The plan puts the FDIC in separate classes from the debenture holders. According to the report, the new plan is jointly proposed by FirstFed and by Vik Ghei and Misah Zaitzeff, who own about $20 million of the debentures through a company named Holdco Advisors LP. The explanatory disclosure statement tells debenture holders they will have a maximum 24% recovery if the court rules that the tax refund belongs to FirstFed. The FDIC, in its separate class, will have a similar recovery if its unsecured claim is found valid. The plan, the report adds, will give ownership of the company to debenture holders and the few other unsecured creditors. In lieu of stock, debenture holders can receive cash for a predicted 16.7% recovery should the tax refund be ruled an asset of FirstFed. The disclosure statement accompanying last year's plan told debenture holders to expect a 1.3% recovery, without regard for whatever might be collected from tax refunds or lawsuits. The disclosure statement was approved last week by the bankruptcy court, court records indicate. About FirstFed Financial Irvine, Calif.-based FirstFed Financial Corp. is the bank holding company for First Federal Bank of California and its subsidiaries. The Bank was closed by federal regulators on Dec. 18, 2009. FirstFed Financial Corp. filed for Chapter 11 protection (Bankr. C.D. Calif. Case No. 10-10150) on Jan. 6, 2010. Jon L. Dalberg, Esq., at Landau Gottfried & Berger LLP, represents the Debtor in its restructuring effort. Garden City Group is the claims and notice agent. The Debtor disclosed assets at $1 million and $10 million, and debts at $100 million and $500 million. The Debtor's exclusive period to propose a plan expired in January 2011. The Debtor has proposed a Plan of Liquidation, which proposes an orderly liquidation of the Debtor's estate. Holdco Advisors L.P., submitted a competing plan of reorganization. FIVE B'S INC: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Five B's, Inc. P.O. Box 480 Seabrook, TX 77586-0480 Bankruptcy Case No.: 12-12015 Chapter 11 Petition Date: July 6, 2012 Court: United States Bankruptcy Court Eastern District of Louisiana (New Orleans) Judge: Jerry A. Brown Debtor's Counsel: Albert J. Derbes, IV, Esq. THE DERBES LAW FIRM, LLC 3027 Ridgelake Drive Metairie, LA 70002 Tel: (504) 837-1230 Fax: (504) 832-0322 E-mail: ajdiv@derbeslaw.com Scheduled Assets: $3,294,150 Scheduled Liabilities: $3,595,004 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/laeb12-12015.pdf The petition was signed by Floyd E. Barrois, president. FLETCHER INT'L: Fund Temporarily Halts Bermuda Bankruptcy --------------------------------------------------------- U.S. Bankruptcy Judge Robert E. Gerber on Thursday granted Fletcher International Ltd. a temporary restraining order barring Cayman Islands court-appointed liquidators from taking action against the hedge fund and dismantling its assets, for now. Bankruptcy Law360 relates that Judge Gerber granted Fletcher's motion for a temporary restraining order and preliminary injunctive relief confirming the applicability of the automatic bankruptcy stay to the proceedings. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the injunction temporarily prevents investors in a feeder fund from having the master fund thrown into an involuntary liquidation in Bermuda, where the master fund is incorporated. Fletcher International after its Chapter 11 filing immediately started a lawsuit to stop the involuntary bankruptcy in Bermuda. U.S. Bankruptcy Judge Robert E. Gerber signed a temporary injunction on July 5 stopping liquidators appointed in the Cayman Islands from proceeding with proceedings in Bermuda. According to the Bloomberg report, there will be another hearing on July 16 in New York where Judge Gerber will consider signing a preliminary injunction extending the freeze on proceedings in Bermuda. Judge Gerber also enjoined attempts at holding a shareholders' meeting to oust current management at Fletcher International. The lawsuit to halt the Bermuda liquidation is Fletcher International Ltd. v. Fletcher Income Arbitrage Fund, 12-01740, U.S. Bankruptcy Court, Southern District of New York (Manhattan). About Fletcher International Fletcher International, Ltd., filed a bare-bones Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-12796) on June 29, 2012, in Manhattan. The Bermuda exempted company estimated assets and debts of $10 million to $50 million. The bankruptcy documents were signed by its president and director, Floyd Saunders. David R. Hurst, Esq., at Young Conaway Stargatt & Taylor, LLP, in New York, serves as counsel. Fletcher International Ltd. is managed by the investment firm of Alphonse "Buddy" Fletcher Jr. Fletcher Asset Management was founded in 1991. During its initial four years, FAM operated as a broker dealer trading various debt and equity securities and making long-term equity investments. Then, in 1995, FAM began creating and managing a family of private investment funds. The Debtor is a master fund in the Fletcher Fund structure. As a master fund, it engages in proprietary trading of various financial instruments, including complex, long-term, illiquid investments. The Debtor is directly owned by Fletcher Income Arbitrage Fund and Fletcher International Inc., which own roughly 83% and 17% of the Debtor's common shares, respectively. Arbitrage's direct parent entities are Fletcher Fixed Income Alpha Fund and FIA Leveraged Fund, both of which are incorporated in the Cayman Islands and are subject to liquidation proceedings in that jurisdiction, and which own roughly 76% and 22% of Arbitrage's common stock, respectively. The Debtor currently has a single subsidiary, The Aesop Fund Ltd. FLOODCOOLING TECH: Case Summary & 5 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Floodcooling Technologies, LLC 1107 Naughton Road Troy, MI 48083 Bankruptcy Case No.: 12-55968 Chapter 11 Petition Date: July 5, 2012 Court: United States Bankruptcy Court Eastern District of Michigan (Detroit) Judge: Phillip J. Shefferly Debtor's Counsel: Michael P. DiLaura, Esq. MIKE DILAURA & ASSOCIATES, PC 105 Cass Ave. Mt. Clemens, MI 48043 Tel: (586) 468-5600 Fax: (586) 465-9113 E-mail: miked@mikedlaw.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 ots five largest unsecured creditors is available for free at http://bankrupt.com/misc/mieb12-55968.pdf The petition was signed by J. Thomas Clark, managing member. FOUR OAKS: Had $552,000 Profit in First Quarter ----------------------------------------------- Four Oaks Fincorp, Inc., filed its quarterly report on Form 10-Q, reporting net income of $552,000 on $5.94 million of net interest income (before provision for loan losses) for the three months ended March 31, 2012, compared with a net loss of $1.13 million on $6.99 million of net interest income (before provision for loan losses) for the same period last year. The Company's balance sheet at March 31, 2012, showed $934.53 million in total assets, $904.03 million in total liabilities, and stockholders' equity of $30.50 million. Going Concern Considerations The Company said, "The Company and the Bank entered into a formal written agreement (the "Written Agreement") with the Federal Reserve Bank of Richmond ("FRB") and the North Carolina Office of the Commissioner of Banks ("NCCOB") that imposes certain restrictions on the Company and the Bank, as described in Notes I and J. A material failure to comply with the Written Agreement's terms could subject the Company to additional regulatory actions and further restrictions on its business, which may have a material adverse effect on the Company's future results of operations and financial condition." "In order for the Company and the Bank to be well capitalized under federal banking agencies' guidelines, management believes that the Company will need to raise additional capital to absorb the potential future credit losses associated with the disposition of its nonperforming assets. Management is in the process of evaluating various alternatives to increase tangible common equity and regulatory capital through the issuance of additional equity. The Company is also working to reduce its balance sheet to improve capital ratios and actively evaluating a number of capital sources, asset reductions and other balance sheet management strategies to ensure that the projected level of regulatory capital can support its balance sheet long-term. There can be no assurance as to whether these efforts will be successful, either on a short-term or long-term basis. Should these efforts be unsuccessful, the Company may be unable to discharge its liabilities in the normal course of business. There can be no assurance that the Company will be successful in any efforts to raise additional capital during 2012." "Cash and cash equivalents at March 31, 2012, were approximately $180.4 million, of which approximately $20.8 million has been earmarked for scheduled broker deposit maturities during 2012. Based on our liquidity analysis, management does not anticipate that the Company will be unable to meet its obligations as they become due. If unanticipated market factors emerge, or if the Company is not successful in its efforts to comply with the requirements set forth in the Written Agreement, the FRB and/or the NCCOB may take further enforcement or other actions. These actions might include greater restrictions on the Company's operations, a revocation of its charter and the placement of the Bank into receivership if the situation materially deteriorates. The Company is in substantial compliance with the provisions of the Written Agreement." A copy of the Form 10-Q is available for free at: http://is.gd/wGVbgw Based in Four Oaks, North Carolina, Four Oaks Fincorp, Inc., is the bank holding company for Four Oaks Bank & Trust Company. The Company has no significant assets other than cash, the capital stock of the bank and its membership interest in Four Oaks Mortgage Services, L.L.C., as well as $1,241,000 in securities available for sale as of Dec. 31, 2011. FRANKLIN CREDIT: Amends Prepackaged Plan to Change Record Date -------------------------------------------------------------- Franklin Credit Holding Corporation filed with the Bankruptcy Court a First Amended Prepackaged Plan of Reorganization that proposes to change, among other things, the proposed record date to identify stockholders for a proposed distribution of a pro rata share of the Company's 80% interest in its mortgage servicing subsidiary, Franklin Credit Management Corporation. The Debtor now proposes the record date to be a date after a confirmation order has been entered by the Bankruptcy Court. The Debtor also proposes to exclude liability to the Securities and Exchange Commission from the releases proposed to be granted in favor of non-debtors. The Debtor asks the Court to approve those modifications as non-material without the need for further solicitation of votes to accept or reject the Prepackaged Plan. Although counsel to administrative agents for the Company's secured creditors have reviewed the modifications to the Prepackaged Plan and have indicated that they have no objection to the relief sought in the Motion, there can be no assurance that the Court will grant the Motion and not require a further solicitation of votes with respect to the Prepackaged Plan. Franklin Credit previously reported that it had given notice to the Financial Industry Regulatory Authority of a proposed record date of July 6, 2012, to identify stockholders for a proposed distribution of a pro rata share of the Company's 80% interest in its mortgage servicing subsidiary, FCMC (which is not proposing or planning to file for bankruptcy). On June 29, 2012, Franklin Credit amended the Notice to indicate that the proposed record date would instead be set to a date after entry of an order confirming a Chapter 11 plan. The confirmation hearing for the bankruptcy case is currently scheduled for July 18, 2012. A copy of the First Amended Prepackaged Plan is available at: http://is.gd/oGeHbB About Franklin Credit Holding Franklin Credit Holding Corporation (OTC BB: FCMC) -- http://www.franklincredit.com/-- is a specialty consumer finance company primarily engaged in the servicing and resolution of performing, re-performing and nonperforming residential mortgage loans, including specialized loan recovery servicing, and in the analysis, pricing, due diligence and acquisition of residential mortgage portfolios for third parties. The Company's executive, administrative and operations offices are located in Jersey City, N.J. Franklin Credit Holding Corporation filed a Chapter 11 bankruptcy petition (Bankr. D. N.J. Case No. 12-24411) in Newark, New Jersey, on June 4, 2012. Franklin Credit also filed a prepackaged plan. The Debtor is seeking a combined hearing on the plan and the explanatory disclosure statement. Judge Donald H. Steckroth presides over the case. Lawyers at McCarter & English, LLP, serves as the Debtor's counsel. In its petition, the Debtor estimated $1 million to $10 million in assets and $500 million to $1 billion in debts. In a recent regulatory filing with the U.S. Securities and Exchange Commission, Franklin Credit Holding's balance sheet at March 31, 2012, showed $29.02 million in total assets, $874.02 million in total liabilities, and a $845 million total stockholders' deficit. The petition was signed by Paul Colasono, executive vice president and chief financial officer. The Plan provides for the liquidation of its assets -- the ownership of 80% of the stock in non-debtor Franklin Credit Mortgage Corp. -- with the proceeds or the fair market value of the assets being distributed in accordance with the Bankruptcy Code. The fair market value of FCMC will be distributed through the payment of $250,000 in cash on the effective date of the Plan and an aggregate $1.11 million over a period of five years, evidenced by a promissory note guaranteed by Thomas J. Axon, the chairman and president of the Debtor and FCMC, and the owner of 20% of the common shares of FCMC, and 45.2% of the common shares of the Debtor. The payments will be made by FCMC, and will be the primary source of cash for distributions contemplated by the Plan. IN exchange for the payment by FCMC, the Debtor's interests in the stock of FCMC will be distributed, pro-rata, to holders of allowed interests. The Plan provides for payment in full of allowed priority non-tax claims. The secured claims of the legacy lenders totaling $820.6 million will be unaltered by the Plan. Huntington National Bank and Huntington Finance LLC will release the Debtor from any obligations in connection with their secured claims of $4.7 million. Holders of general unsecured claims estimated to total $1.9 million will receive their pro rata share of the proceeds of the liquidation of the remaining assets. The Court has established July 18, 2012, as the hearing on the adequacy of the Disclosure Statement. FREEDOM ENVIRONMENTAL: Significant Losses Cue Going Concern Doubt ----------------------------------------------------------------- Freedom Environmental Services, Inc., filed on May 16, 2012, its annual report for the fiscal year ended Dec. 31, 2011. Tarvaran Askelson & Company, LLP, in Laguna Niguel, California, expressed substantial doubt about Freedom Environmental's ability to continue as a going concern. The independent auditors noted that the Company has incurred significant losses. "The Company's viability is dependent upon its ability to obtain future financing and the success of its future operations." The Company reported a net loss of $1.85 million on $5.67 million of revenues for 2011, compared with a net loss of $2.54 million on $2.19 million of revenues for 2010. The Company's balance sheet at Dec. 31, 2011, showed $2.37 million in total assets, $2.35 million in total liabilities, and stockholders' equity of $16,515. A copy of the Form 10-K is available for free at: http://is.gd/340TNn Orlando, Fla.-based Freedom Environmental Services, Inc., provides wastewater management and recycling services to its customers through its different divisions. FRENCH QUARTER: Principal Slapped With $999,000 Judgment -------------------------------------------------------- Nevada District Judge Edward C. Reed granted a Motion for Judgment on the Pleadings in the lawsuit filed by Oscar Renteria and Denise Renteria, individually and in their capacities as Co-Trustees of the Renteria Family Trust, against Eugene Cleveland Canepa, the principal of French Quarter, Inc. Between Sept. 20, 2006, and Dec. 29, 2006, the Renterias, residents of Napa, California, issued a series of loans, evidenced by demand promissory notes, to French Quarter and its principal. Both parties agree that the aggregate principal amount on the loans was $845,000. In April 2007, the Renterias demanded that Ms. Canepa pay the notes. The Renterias allege that the Defendant failed to pay the notes, amounting to a default under the notes' contracts and triggering a total of $44,250.00 in late fees. The Defendant denies these allegations. French Quarter Inc. operates a bar, Men's Club -- http://www.mensclublv.com/-- in Las Vegas. It filed for Chapter 11 bankruptcy (Bankr. D. Nev. Case No. 07-14813) on Aug. 3, 2007, estimating $1 million to $100 million in both assets and debts. Bankruptcy Judge Linda B. Riegle oversees the case. Jeffrey R. Sylvester, Esq., at Sylvester & Polednak, Ltd., served as the Debtor's counsel. In August 2007, the Plaintiffs, the Defendant, French Quarter, and others executed a settlement agreement resolving disputes between French Quarter, its creditors, and other parties. The settlement agreement gives the Plaintiffs "an allowed unsecured claim against [French Quarter's estate] in the amount of $887,000 . . . without prejudice to [Plaintiffs] claiming any pre- or postpetition Interest and attorneys fees as allowed by the Bankruptcy Code." The agreement further explains that "[t]he parties hereto agree, and [Defendant] further warrants and represents, that [Defendant] was a co-maker on [Plaintiffs' notes] in the amount of $845,000 and that these loans are valid and binding." Finally, the agreement provides that "[Plaintiffs] expressly reserve[] all rights and claims against [Defendant] for the full balance of [Plaintiffs' notes] including without limitation, unpaid principal, interest and attorneys fees." The settlement was approved by the United States Bankruptcy Court for the District of Nevada on Sept. 8, 2008. On Nov. 30, 2008, the Plaintiffs filed a post-settlement claim against French Quarter, seeking a total of $1,158,216.48 in principal charges, interest accrued through August 3, 2007, late charges up to that date, and attorneys' fees. On Sept. 30, 2009, the Defendant objected to the amount of the attorneys' fees as well as the accrual of postpetition interest. In May 2010, the bankruptcy estate of French Quarter distributed $354,800 to the Renterias. The Plaintiffs allege they applied this amount to the notes, covering the accrued interest up to May 2010 as well as $4,146.85 of the late fees, leaving approximately $38,103.15 in late fees. The interest accrued on the notes from May 2010 through July 2011 is $115,767.12. The Renterias allege the Defendant owes them $1,003,017.70, reflecting the principal, $845,000, the interest accrued from May 2010 through July 2011, $115,767.12, remaining late fees, $38,103.15, and attorneys' fees, $4,147.43. According to Judge Reed, even construed in the light most favorable to Defendant, there remain no genuine issues of material fact in the case. Judge Reed said the Defendant is liable for damages for breach of contract on five promissory notes owed to the Plaintiffs in the amount of $998,870.27, reflecting the principal, $845,000, the interest accrued from May 2010 through July 2011, $115,767.12, remaining late fees, $38,103.15, without the requested attorneys' fees, $4,147.43. As the Plaintiffs have obtained the full relief they are entitled to under a breach of contract theory, the Plaintiffs are not entitled to further relief under theories of unjust enrichment, money lent, or money had and received. The lawsuit is, OSCAR RENTERIA and DENISE RENTERIA, individually and in their capacities as Co-Trustees of the RENTERIA FAMILY TRUST, Plaintiffs, v. EUGENE CLEVELAND CANEPA, an individual, Defendant, No. 3:11-cv-00534-ECR-CWH (D. Nev.). A copy of the District Court's July 3, 2012 Order is available at http://is.gd/48H8fDfrom Leagle.com. GENERAL MOTORS: Weil, Butzel, Kramer Pay $520K to End Fee Fight --------------------------------------------------------------- Lana Birbrair at Bankruptcy Law360 reports that Weil Gotshal & Manges LLP, Butzel Long PC and Kramer Levin Naftalis & Frankel LLP -- counsel involved in General Motors Corp.'s bankruptcy proceedings -- agreed Friday to pay nearly $520,000 in total to resolve a dispute with the fee examiner in the Chapter 11 case. Weil Gotshal, Butzel Long and Kramer Levin agreed to pay approximately $425,000, $73,000 and $20,000, respectively, after Godfrey & Kahn SC's Brady C. Williamson, the fee examiner in GM's bankruptcy, disputed approximately $3 million in fee claims, according to Bankruptcy Law360. About General Motors With its global headquarters in Detroit, Michigan, General Motors Company (NYSE:GM, TSX: GMM) -- http://www.gm.com/-- is one of the world's largest automakers, traces its roots back to 1908. GM employs 208,000 people in every major region of the world and does business in more than 120 countries. GM and its strategic partners produce cars and trucks in 30 countries, and sell and service these vehicles through the following brands: Baojun, Buick, Cadillac, Chevrolet, GMC, Daewoo, Holden, Isuzu, Jiefang, Opel, Vauxhall, and Wuling. GM's largest national market is China, followed by the United States, Brazil, the United Kingdom, Germany, Canada, and Italy. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. General Motors Co. was formed to acquire the operations of General Motors Corp. through a sale under 11 U.S.C. Sec. 363 following Old GM's bankruptcy filing. The U.S. government once owned as much as 60.8% stake in New GM on account of the financing it provided to the bankrupt entity. The deal was closed July 10, 2009, and Old GM changed its name to Motors Liquidation Co. On Nov. 1, 2011, Moody's Investors Service raised New GM's Corporate Family Rating and Probability of Default Rating to Ba1 from Ba2, and its secured credit facility rating to Baa2 from Baa3. Moody's also raised the Corporate Family Rating of GM's financial services subsidiary -- GM Financial -- to Ba3 from B1. On Oct. 7, 2011, Fitch Ratings upgraded the Issuer Default Ratings of New GM, General Motors Holdings LLC, and General Motors Financial Company Inc., to 'BB' from 'BB-'. On Oct. 3, 2011, Standard & Poor's Ratings Services raised its corporate credit rating on New GM to 'BB+' from 'BB-'; and revised the rating outlook to stable from positive. "We also raised our issue-level rating on GM's debt to 'BBB' from 'BB+'; the recovery rating remains at '1'," S&P said. About Motors Liquidation General Motors Corporation and three of its affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 09-50026) on June 1, 2009. The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq.,and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, serves as the Chief Executive Officer for Motors Liquidation Company. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. Garden City Group is the claims and notice agent of the Debtors. The U.S. Trustee appointed an Official Committee of Unsecured Creditors and a separate Official Committee of Unsecured Creditors Holding Asbestos-Related Claims. Lawyers at Kramer Levin Naftalis & Frankel LLP served as bankruptcy counsel to the Creditors Committee. Attorneys at Butzel Long served as counsel on supplier contract matters. FTI Consulting Inc. served as financial advisors to the Creditors Committee. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represented the Asbestos Committee. Legal Analysis Systems, Inc., served as asbestos valuation analyst. The Bankruptcy Court entered an order confirming the Debtors' Second Amended Joint Chapter 11 Plan on March 29, 2011. The Plan was declared effect on March 31, 2011. GEOMET INC: Had $52.9 Million Net Loss in First Quarter ------------------------------------------------------- GeoMet, Inc., filed an amended quarterly report on Form 10-Q/A, reporting a net loss of $52.95 million on $10.22 million of revenues for the three months ended March 31, 2012, compared with net income of $451,079 on $7.92 million of revenues for the same period of 2011. The Company's balance sheet at March 31, 2012, showed $199.21 million in total assets, $176.64 million in total liabilities, $30.47 million of Series A convertible redeemable preferred stock, and a stockholders' deficit of $7.90 million. "As of May 11, 2012, we had $148.6 million outstanding under our Fifth Amended and Restated Credit Agreement," the Company said in the filing. "As of March 31, 2012, we were in compliance with all of the covenants in our Credit Agreement. The Credit Agreement provides, however, that if the amount outstanding at any time exceeds the "borrowing base", we must provide additional collateral to the lenders or repay the excess as provided in the Credit Agreement. The borrowing base is set in the sole discretion of our lenders in June and December of each year based, in part, on the value of our estimated reserves as determined by the lenders using natural gas prices forecasted by the lenders." "Due to the decline in the bank group's price projections, we expect our outstanding loan balance at the June determination date will exceed the new borrowing base, resulting in a borrowing base deficiency. We do not have additional collateral to provide to the lenders and we expect that our operating cash flows would be insufficient to repay the expected borrowing base deficiency, as required under the Credit Agreement. As such, unless we amend the Credit Agreement, we may be in default under the agreement when the borrowing base is determined in June 2012. In addition, the elimination of the unused availability under the borrowing base, which is a factor in our working capital covenant, may result in a future default of that covenant under the Credit Agreement. We have begun discussions with our bank group; however, until the borrowing base for June 2012 has been determined, we will not know the amount of the deficiency. As of March 31, 2012, the debt is classified as long-term as we are not in violation of any debt covenants. Should we be in violation of any covenants which have not been waived or have a borrowing base deficiency as of June 30, 2012, some or all of the debt will be reclassified to current. There are no assurances that we will be able to amend our Credit Agreement or obtain a waiver. If we do obtain a waiver or an amendment, there can be no assurance as to the cost or terms of such an amendment." "These conditions raise substantial doubt about our ability to continue as a going concern for the next twelve months." A copy of the Form 10-Q/A is available for free at: http://is.gd/M4jYYp Houston, Texas-based GeoMet, Inc., is an independent energy company primarily engaged in the exploration for and development and production of natural gas from coal seams ("coalbed methane" or "CBM") and non-conventional shallow gas. It was originally founded as a consulting company to the coalbed methane industry in 1985 and has been active as an operator, developer and producer of coalbed methane properties since 1993. Its principal operations and producing properties are located in the Cahaba and Black Warrior Basins in Alabama and the central Appalachian Basin in Virginia and West Virginia. It also owns additional coalbed methane and oil and gas development rights, principally in Alabama, Virginia, West Virginia, and British Columbia. As of March 31, 2012, it owns a total of approximately 192,000 net acres of coalbed methane and oil and gas development rights. GETTY PETROLEUM: Unit Wins $5MM Judgment in Green Valley Rent Row ----------------------------------------------------------------- Lisa Uhlman at Bankruptcy Law360 reports that U.S. Bankruptcy Judge Shelley C. Chapman on Friday ruled that Getty Petroleum Marketing Inc. can recover $5.2 million from Green Valley Oil LLC in a breach of contract dispute over Green Valley's failure to pay rent to the bankrupt oil company. Bankruptcy Law360 relates that Judge Chapman granted summary judgment to Getty on three counts, for breach of contract, declaratory relief and turnover, while denying it with regard to an allegation that Green Valley's failure to pay rent is a violation of the automatic bankruptcy stay. Meanwhile, Peg Brickley Dow Jones' DBR Small Cap reports that ConocoPhillips is maneuvering for a blocking position in the Chapter 11 case of Getty Petroleum Marketing Inc., seeking to cast a ballot that it says is worth $96.6 million. About Getty Petroleum A remnant of J. Paul Getty's oil empire, Getty Petroleum Marketing markets gasolines, hydraulic fluids, and lubricating oils through a network of gas stations owned and operated by franchise holders. A former subsidiary of Russian oil giant LUKOIL, the company operates in the Mid-Atlantic and Northeastern US states. Getty Petroleum Marketing's primary asset is the more than 800 gas stations in the Mid-Atlantic states which are located on properties owned by Getty Realty. After scaling back the company's operations to cut debt, in 2011 LUKOIL sold Getty Petroleum Marketing to investment firm Cambridge Petroleum Holding for an undisclosed price. Getty Petroleum and three affiliates filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case Nos. 11-15606 to 11-15609) on Dec. 5, 2011. Judge Shelley C. Chapman presides over the case. Loring I. Fenton, Esq., John H. Bae, Esq., Kaitlin R. Walsh, Esq., and Michael J. Schrader, Esq., at Greenberg Traurig, LLP, in New York, N.Y., serve as Debtors' counsel. Ross, Rosenthal & Company, LLP, serves as accountants for the Debtors. Getty Petroleum Marketing, Inc., disclosed $46.6 million in assets and $316.8 million in liabilities as of the Petition Date. The petition was signed by Bjorn Q. Aaserod, chief executive officer and chairman of the board. The Official Committee of Unsecured Creditors is represented by Wilmer Cutler Pickering Hale and Dorr LLP. Alvarez & Marsal North America, LLC, serves as the Committee's financial advisors. The Court set April 10, 2012 at 5:00 p.m. (Eastern Time) as the deadline for any individual or entity to file proofs of claim against the Debtors. The Court has also fixed Sept. 5, 2012, as the bar date for governmental entities. GLOBAL ARENA: Had $231,800 Net Loss in First Quarter ---------------------------------------------------- Global Arena Holding, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $231,799 on $202,629 of revenues for the three months ended March 31, 2012, compared with a net loss of $414,581 on $226,606 of revenues for the same period last year. The Company's balance sheet at March 31, 2012, showed $1.11 million in total assets, $1.29 million in total current liabilities, and a stockholders' deficit of $184,014. Wei, Wei & Co., LLP, in New York, N.Y., expressed substantial doubt about Global Arena's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has suffered recurring losses since inception, experiences a deficiency of cash flow from operations and has a stockholders deficiency. A copy of the Form 10-Q is available for free at: http://is.gd/oemIEI New York, N.Y.-based Global Arena Holding, Inc., formerly Global Arena Holding Subsidiary Corp., was formed in February 2009, in the state of Delaware. The Company is a financial services firm that services the financial community through its subsidiaries as follows: Global Arena Investment Management LLC provides investment advisory services to its clients. GAIM is registered with the Securities and Exchange Commission as an investment advisor and clears all of its business through Fidelity Advisors, its correspondent broker. Global Arena Commodities Corp. provides commodities brokerage services and earns commissions. Global Arena Trading Advisors, LLC provides futures advisory services and earns fees. GATA is registered with the National Futures Association (NFA) as a commodities trading advisor. Lillybell Entertainment, LLC provides finance services to the entertainment industry. GLOBAL AVIATION: Creditors Committee Objects to Bonuses ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the Global Aviation Holdings Inc. creditors' committee and the U.S. Trustee are both opposing a $137,000 retention bonus program for five executives who aren't among the company's top officers. According to the company, the intended recipients are responsible for creating "safety, maintenance and flight operation manuals and overseeing the compliance of the standards." The creditors' committee argued that the mere description of their responsibilities places them within the top echelon of management, so they must be considered "insiders" for whom Congress prohibits retention bonuses. The U.S. Trustee similarly argues that the five managers haven't been shown not to be insiders. The bankruptcy judge will rule on the propriety of the bonuses at a July 11 hearing in Brooklyn, New York. About Global Aviation Holdings Global Aviation Holdings Inc., based in Peachtree City, Ga., is the parent company of North American Airlines and World Airways. Global is the largest commercial provider of charter air transportation for the U.S. military, and a major provider of worldwide commercial global passenger and cargo air transportation services. North American Airlines, founded in 1989 and based in Jamaica, N.Y., operates passenger charter flights using B757-200ER and B767-300ER aircraft. World Airways, founded in 1948 and based in Peachtree City, Ga., operates cargo and passenger charter flights using B747-400 and MD-11 aircraft. Global Aviation, along with affiliates, filed Chapter 11 petitions (Bankr. E.D.N.Y. Case No. 12-40783) on Feb. 5, 2012. Global's lead counsel in connection with the restructuring is Kirkland & Ellis LLP and its financial advisor is Rothschild. Kurtzman Carson Consultants LLC is the claims agent. The Debtors disclosed $589.8 million in assets and $493.2 million in liabilities as of Dec. 31, 2011. Liabilities include $146.5 million on 14% first-lien secured notes and $98.1 million on a second-lien term loan. Wells Fargo Bank NA is agent for both. Global said it will use Chapter 11 to shed 16 of 30 aircraft. In addition, Global said it will use Chapter 11 to negotiate new collective bargaining agreements with its unions and deal with liabilities on multi-employer pension plans. On Feb. 13, 2012, the U.S. Trustee for Region 2 appointed a seven member official committee of unsecured creditors in the case. The Committee tapped Lowenstein Sandler PC as its counsel, and Imperial Capital, LLC as its financial advisor. GOLF TOWN: S&P Assigns 'B' Long-Term Corporate Credit Rating ------------------------------------------------------------ Standard & Poor's Ratings Services it assigned its 'B' long-term corporate credit rating and stable outlook to golf specialty retailer Golf Town Canada Inc. and Major Merger Sub Inc. (collectively, Golf Town). At the same time, Standard & Poor's assigned its 'B' issue-level rating and '4' recovery rating to the company's proposed C$150 million senior secured second-lien notes. "We expect that Golfsmith International Holdings Inc. will succeed Major Merger Sub as issuer upon completion of its proposed acquisition by Golf Town. Golf Town's subsidiary, Golf Town USA Holdings Inc., has agreed to acquire NASDAQ-traded Golfsmith for about US$109 million in cash plus assumed liabilities in a transaction the companies expect to close in July 2012," S&P said. Subsequent to the acquisition, Golf Town and Golfsmith will be indirectly majority-owned by OMERS Administration Corp. (AAA/Stable/A-1+), the pension system for Ontario's municipal employees, with the remainder held by current and former members of management. "The ratings on the entity comprising the combined Golf Town and Golfsmith reflect what we consider its weak business risk profile, characterized by its exposure to the fragmented and discretionary golf specialty retail market, historically thin EBITDA margins and low returns on capital, and an aggressive financial risk profile with high debt leverage," said Standard & Poor's credit analyst Donald Marleau. "These weaknesses are offset somewhat, we believe, by the company's solid share of the golf retail segment in Canada, which we expect will contribute steady cash flow to support its higher debt-service requirements and growth plans in the U.S.," Mr. Marleau added. The combined entity will be the largest specialty golf retailer in North America, with about 143 stores spread across 25 U.S. states and seven Canadian provinces, in addition to a growing e-commerce channel. The stable outlook incorporates our expectation of modest earnings improvements in the next several years that fund a significant portion of the company's growth. "Assuming a stable capital structure, we estimate that fully adjusted debt leverage of below 7.0x and EBITDA interest coverage of more than 1.5x should enable the company to generate enough cash to fund its growth plans in the next few years," S&P said. "We could lower the rating by one notch if these thresholds are breached, which we estimate could occur if reported EBITDA margins declined below 5.5% beyond 2013 assuming 5%-10% revenue growth amid higher lease-adjusted debt and increased cash requirements for new-store working capital," S&P said. That said, the company has significant flexibility in its growth plans, which could enable it to slow the pace of credit deterioration in a scenario of weaker profitability. The prospects for a higher rating in the next few years are limited because of constrained free cash flow and the likelihood of shareholder returns in the event of outperformance, although we could raise the rating if the combined Golf Town improved earnings such that it reduced fully adjusted leverage to below 5x on a sustainable basis. HARRISBURG, PA: Prohibited From Municipal Bankruptcy Until Dec. 1 ----------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports the Pennsylvania legislature and governor are approving legislation that will prohibit Harrisburg, the state's capital, from filing for Chapter 9 municipal bankruptcy until Dec. 1. The deadline had been July 1. The report relates that a majority of the city council authorized a filing last year that the bankruptcy court dismissed as being in violation of the state law prohibiting the use of Chapter 9 until July 1. Dismissal was upheld in May by the U.S. Court of Appeals in Philadelphia. About Harrisburg, Pennsylvania The city of Harrisburg, in Pennsylvania, is coping with debt related to a failed revamp of an incinerator. The city is $65 million in default on $242 million owing on bonds sold to finance an incinerator that converts trash to energy. The Harrisburg city council voted 4-3 on Oct. 11, 2011, to authorize the filing of a Chapter 9 municipal bankruptcy (Bankr. M.D. Pa. Case No. 11-06938). The city claims to be insolvent, unable to pay its debt and in imminent danger of having tax revenue seized by holders of defaulted bonds. Judge Mary D. France presided over the Chapter 9 case. Mark D. Schwartz, Esq. and David A. Gradwohl, Esq., served as Harrisburg's counsel. The petition estimated $100 million to $500 million in assets and debts. Susan Wilson, the city's chairperson on Budget and Finance, signed the petition. Harrisburg said in court papers it is in imminent jeopardy through six pending legal actions by creditors with respect to a number of outstanding bond issues relating to the Harrisburg Materials, Energy, Recycling and Recovery Facilities, which processes waste into steam and electrical energy. The owner and operator of the incinerator is The Harrisburg Authority, which is unable to pay the bond issues. The city is the primary guarantor under each bond issue. The lawsuits were filed by Dauphin County, where Harrisburg is located, Joseph and Jacalyn Lahr, TD Bank N.A., and Covanta Harrisburg Inc. The Commonwealth of Pennsylvania, the County of Dauphin, and Harrisburg city mayor Linda D. Thompson and other creditors and interested parties objected to the Chapter 9 petition. The state later adopted a new law allowing the governor to appoint a receiver. Kenneth W. Lee, Esq., Christopher E. Fisher, Esq., Beverly Weiss Manne, Esq., and Michael A. Shiner, Esq., at Tucker Arensberg, P.C., represented Mayor Thompson in the Chapter 9 case. Counsel to the Commonwealth of Pennsylvania was Neal D. Colton, Esq., Jeffrey G. Weil, Esq., Eric L. Scherling, Esq., at Cozen O'Connor. In November 2011, the Bankruptcy Judge dismissed the Chapter 9 case because (1) the City Council did not have the authority under the Optional Third Class City Charter Law and the Third Class City Code to commence a bankruptcy case on behalf of Harrisburg and (2) the City was not specifically authorized under state law to be a debtor under Chapter 9 as required by 11 U.S.C. Sec. 109(c)(2). Dismissal of the Chapter 9 petition was upheld in a U.S. District Court. That same month, the state governor appointed David Unkovic as receiver for Harrisburg. Mr. Unkovic is represented by the Municipal Recovery & Restructuring group of McKenna Long & Aldridge LLP, led by Keith Mason, Esq., co-chair of the group. Mr. Unkovic resigned as receiver March 30, 2012. HAWKER BEECHCRAFT: To Pursue Combination With Superior ------------------------------------------------------ Hawker Beechcraft, Inc. has executed an exclusivity agreement with Superior Aviation Beijing Co., Ltd. (Superior), a Beijing-based aerospace manufacturer, regarding a strategic combination. Should the transaction be completed, Superior intends to maintain Hawker Beechcraft's existing operations while also investing substantial capital in the company and its business and general aviation product line, saving thousands of American jobs, including in Wichita, Kan. and Little Rock, Ark. Hawker Beechcraft entered into this agreement as part of its ongoing review of strategic options, which included continuing to operate as a standalone entity, and decided to proceed with Superior after determining that its proposal would create the greatest value for the company and position it for long-term growth. The transaction with Superior would not include Hawker Beechcraft Defense Company (HBDC), which would remain a separate entity. HBDC will continue to operate its highly successful T-6 trainer program and pursue the final certification of the AT-6 light attack aircraft. Robert S. "Steve" Miller, CEO of Hawker Beechcraft, Inc., said, "Superior has had a long-standing interest in the commercial aircraft business of Hawker Beechcraft, having first approached the company several years ago regarding a potential strategic partnership. With Superior's previous experience operating a U.S. business and its demonstrated ability to quickly restore a business to profitability after emerging from Chapter 11, we believe a transaction with Superior would maximize value for Hawker Beechcraft and its stakeholders. Importantly, this combination would give Hawker Beechcraft greater access to the Chinese business and general aviation marketplace, which is forecast to grow more than 10 percent a year for the next 10-15 years. We look forward to working toward a definitive agreement." Bill Boisture, Chairman of Hawker Beechcraft Corporation, said, "The decision to move forward with Superior was based on two key factors: the bid for the company was the most attractive we received during the strategic review process and the going-forward plan offered the most continuity for our business, allowing us to preserve jobs, product lines and our ability to maintain our commitments to our customers. Superior is committed to maintaining Hawker Beechcraft's strong presence in the United States and retaining its current employee base and experienced management team, while positioning the company for future growth at home and abroad." Terms of the Agreement Under the terms of the exclusivity agreement, Superior will acquire Hawker Beechcraft for $1.79 billion and make payments over the next six weeks to support ongoing jet-related operations, which will help Hawker Beechcraft to sustain the jet business until the close of the transaction, thus preserving significant future opportunity for growth. Superior's proposal reflects its intention to make Hawker Beechcraft its flagship investment; maintain Hawker Beechcraft's U.S. headquarters, management team and employees; and continue product development throughout its commercial product lines. During the 45-day exclusivity period, Superior will perform confirmatory diligence while the two companies negotiate definitive documentation of the transaction. The companies expect to enter into definitive documentation prior to the conclusion of the exclusivity period. If the parties successfully negotiate a definitive agreement, that agreement would be subject to a further competitive public auction process. HBDC is not part of the proposed transaction and neither ownership nor control of HBDC will transfer to Superior. In the event that HBDC is sold, up to $400 million of the $1.79 billion purchase price will be refundable to Superior. If negotiations with Superior are not concluded in a timely manner, Hawker Beechcraft will proceed with seeking confirmation of the Joint Plan of Reorganization it filed with the U.S. Bankruptcy Court on June 30, 2012, which contemplates Hawker Beechcraft emerging as a standalone entity with a more focused portfolio of aircraft. Superior has received and expects to continue receiving the full support of the City of Beijing municipal government in completing the transaction. In addition, Superior is working to obtain all regulatory approvals from the Chinese central government for this foreign investment project. The transaction also is subject to approval by the U.S. Committee on Foreign Investment in the United States (CFIUS) and would be subject to additional customary U.S. regulatory reviews and approvals. Additionally, Bankruptcy Court approval is required for Hawker Beechcraft's agreement to negotiate exclusively with Superior and for any definitive agreement that may be negotiated with Superior. The proposed combination of Hawker Beechcraft and Superior will not require a financing condition. Hawker Beechcraft's legal representative is Kirkland & Ellis LLP; its financial advisor is Perella Weinberg Partners LP; and its restructuring advisor is Alvarez & Marsal. Hawker Beechcraft entered into the exclusivity agreement in consultation with lenders holding a majority of the company's pre-petition secured debt (Senior Secured Lenders). The Senior Secured Lenders' legal representative is Wachtell Lipton Rosen & Katz and their financial advisor is Houlihan Lokey. Superior Aviation Beijing Co., Ltd. is an aerospace manufacturer that engages in the research and development, production and sale of general aviation engines and parts. Superior is 60 percent owned by Beijing Superior Aviation Technology Corporation Ltd., a closely-held private entity, and 40 percent owned by Beijing E- Town International Investment & Development Corporation Ltd., a company controlled by the Beijing municipal government that supports the financing of strategic investments in certain industries. Superior's legal representative is Locke Lord LLP and its financial advisor is Grant Thornton. About Hawker Beechcraft Hawker Beechcraft Inc., a designer and manufacturer of light and medium-sized jet, turboprop and piston aircraft, filed for Chapter 11 reorganization together with 17 affiliates (Bankr. S.D.N.Y. Lead Case No. 12-11873) on May 3, 2012, having already negotiated a plan that eliminates $2.5 billion in debt and $125 million of annual cash interest expense. The plan, to be filed by June 30, will give 81.9% of the new stock to holders of $1.83 billion of secured debt, while 18.9% of the new shares are for unsecured creditors. The proposal has support from 68% of secured creditors and holders of 72.5% of the senior unsecured notes. Hawker is 49%-owned by affiliates of Goldman Sachs Group Inc. and 49%-owned by Onex Corp. The Company's balance sheet at Dec. 31, 2011, showed $2.77 billion in total assets, $3.73 billion in total liabilities and a $956.90 million total deficit. Other claims include pensions underfunded by $493 million. Hawker's legal representative is Kirkland & Ellis LLP, its financial advisor is Perella Weinberg Partners LP and its restructuring advisor is Alvarez & Marsal. Epiq Bankruptcy Solutions LLC is the claims and notice agent. Sidley Austin LLP serves as legal counsel and Houlihan Lokey Howard & Zukin Capital Inc. serves as financial advisor to the DIP Agent and the Prepetition Agent. Wachtell, Lipton, Rosen & Katz represents an ad hoc committee of senior secured prepetition lenders holding 70% of the loans. Milbank, Tweed, Hadley & McCloy LLP represents an ad hoc committee of holders of the 8.500% Senior Fixed Rate Notes due 2015 and 8.875%/9.625% Senior PIK Election Notes due 2015 issued by Hawker Beechcraft Acquisition Company LLC and Hawker Beechcraft Notes Company. The members of the Ad Hoc Committee -- GSO Capital Partners, L.P. and Tennenbaum Capital Partners, LLC -- hold claims or manage accounts that hold claims against the Debtors' estates arising from the purchase of the Senior Notes. Deutsche Bank National Trust Company, the indenture trustee for senior fixed rate notes and the senior PIK-election notes, is represented by Foley & Lardner LLP. An Official Committee of Unsecured Creditors appointed in the case has selected Daniel H. Golden, Esq., and the law firm of Akin Gump Strauss Hauer & Feld LLP as legal counsel. The Committee tapped FTI Consulting, Inc., as its financial advisor. HOSTESS BRANDS: Deadline to Sue Lenders on Aug. 29 -------------------------------------------------- The Hon. Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York, in a fourth order amending final order dated Feb. 3, 2012, authorized Hostess Brands, Inc., et al., to obtain postpetition financing; and utilize cash collateral. The Debtors, the Official Committee of Unsecured Creditors and the Prepetition Secured Parties had engaged in discussions and agreed to amend the Final DIP order. Pursuant to the agreement, the first sentence of paragraph 21 of the final DIP order will be further amended to read as: The stipulations and admissions contained in paragraph 6 of the Final Order will be binding on all parties-in-interest, including, without limitation, the Debtors and the Creditors' Committee, unless, and solely to the extent that an adversary proceeding or other contested matter has been commenced by the Debtors (or the Creditors' Committee, if they have been granted standing to do so) on behalf of the Debtors' estates against the Prepetition Secured parties in connection with any matter related to the Existing Agreements, the Indenture or the Prepetition Collateral, in each case by no later Aug. 29, 2012, provided, however, that the stipulations and admissions contained in paragraph 6(b) with respect to the Revolving Priority Collateral became binding on all parties- in-interest upon entry of the Second Amendment Order. In all other respects, the Final DIP Order remains the same. As reported in the Troubled Company Reporter on May 23, 2012, the Debtors have said that the up to $75 million of secured DIP term loan facility and access to cash collateral are necessary to meet ongoing working capital and general business needs. The initial DIP lenders are Silver Point, Monarch Alternative Capital, LP, Gannett Peak CLO I, Ltd. and Credit Value Partners, LP. The DIP facility will mature within the first anniversary of the closing date. About Hostess Brands Founded in 1930, Irving, Texas-based Hostess Brands Inc., is known for iconic brands such as Butternut, Ding Dongs, Dolly Madison, Drake's, Home Pride, Ho Hos, Hostess, Merita, Nature's Pride, Twinkies and Wonder. Hostess has 36 bakeries, 565 distribution centers and 570 outlets in 49 states. Hostess filed for Chapter 11 bankruptcy protection early morning on Jan. 11, 2011 (Bankr. S.D.N.Y. Case Nos. 12-22051 through 12-22056) in White Plains, New York. Debtor-affiliates that filed separate Chapter 11 petition are IBC Sales Corporation, IBC Trucking LLC, IBC Services LLC, Interstate Brands Corporation, and MCF Legacy Inc. Hostess Brands disclosed assets of $982 million and liabilities of $1.43 billion as of Dec. 10, 2011. Debt includes $860 million on four loan agreements. Trade suppliers are owed as much as $60 million. The bankruptcy filing was made two years after predecessors Interstate Bakeries Corp. and its affiliates emerged from bankruptcy (Bankr. W.D. Mo. Case No. 04-45814). Ripplewood Holding LLC, after providing $130 million to finance the plan, obtained control of IBC's business following the prior reorganization. Hostess Brands is privately held. The new owners pursued new Chapter 11 cases to escape from what they called "uncompetitive and unsustainable" union contracts, pension plans, and health benefit programs. In 2011, Hostess retained Houlihan Lokey to explore sales of its smaller assets and individual brands. Houlihan Lokey oversaw the sale of Mrs. Cubbison's to Sugar Foods Corporation for $12 million, but was unable to sell any of Hostess' core assets. Judge Robert D. Drain oversees the case. Hostess has hired Jones Day as bankruptcy counsel; Stinson Morrison Hecker LLP as general corporate counsel and conflicts counsel; Perella Weinberg Partners LP as investment bankers, FTI Consulting, Inc. to provide an interim treasurer and additional personnel for the Debtors, and Kurtzman Carson Consultants LLC as administrative agent. Matthew Feldman, Esq., at Willkie Farr & Gallagher, and Harry Wilson, the head of turnaround and restructuring firm MAEVA Advisors, are representing the Teamsters union. Attorneys for The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union and Bakery & Confectionery Union & Industry International Pension Fund are Jeffrey R. Freund, Esq., at Bredhoff & Kaiser, P.L.L.C.; and Ancela R. Nastasi, Esq., David A. Rosenzweig, Esq., and Camisha L. Simmons, Esq., at Fulbright & Jaworski L.L.P. An official committee of unsecured creditors has been appointed in the case. The committee selected New York law firm Kramer Levin Naftalis & Frankel LLP as its counsel. Tom Mayer and Ken Eckstein head the legal team for the committee. HUSSEY COPPER: Seeks Fourth Extension of Plan Exclusivity --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Hussey Copper Corp. for a fourth time is seeking an enlargement of the exclusive right to propose a liquidating Chapter 11 plan. If approved by the bankruptcy court in Delaware at an Aug. 24 hearing, the plan-filing deadline will be pushed out by two months to Sept. 2. According to the report, Hussey said it filed a proposed Chapter 11 plan in early May "to spur ongoing negotiations" intended to result in a "consensual resolution of outstanding issues." A prior hearing for approval of the explanatory disclosure statement was rescheduled for July 18. The company previously said that issues to be resolved include "significant" claims of the Pension Benefit Guaranty Corp. About Hussey Copper Hussey Copper Corp., based in Leetsdale, Pennsylvania, is one of the leading manufacturers of copper products in the United States. Hussey Copper was founded in Pittsburgh in 1848. The Company and its affiliates, which operate one manufacturing facility in Leetsdale and two facilities in Eminence, Kentucky, manufacture "a wide range of value-added copper products and copper-nickel products. The Company has more than 500 full-time employees. Hussey Copper Corp. filed a Chapter 11 petition (Bankr D. Del. Case No. 11-13010) on Sept. 27, 2011, with a deal to sell substantially all assets. Five other affiliates also filed separate petitions (Case Nos. 11-13012 to 11-13016). Hussey Copper Ltd. estimated $100 million to $500 million in assets and debts. Hussey Copper Corp. estimated up to $50,000 in assets and up to $100 million in debts. Mark Minuti, Esq., at Saul Ewing LLP, serves as counsel to the Debtors. Donlin Recano & Company Inc. is the claims and notice agent. The Debtors tapped Winter Harbor, LLC in substitution for Huron Consulting Services LLC. An official creditors' committee has been appointed in the case. The panel selected Lowenstein Sandler PC as counsel. The panel selected FTI Consulting, Inc. as restructuring and financial advisor. Hussey filed for bankruptcy with a deal to sell the assets to stalking horse bidder, KHC Acquisitions LLC, a unit of Kataman Metals LLC. US private equity firm Patriarch Partners beat Kataman at an auction and officially acquired Hussey on Dec. 16, 2011. The buyout firm of distressed debt mogul Lynn Tilton acquired Hussey for $107.8 million after a nine-hour, 34-round auction. Kataman is represented in the case by David D. Watson, Esq., and Scott Opincar, Esq., at McDonald Hopkins LLC, in Cleveland. Counsel to PNC Bank NA, as lender, issuer and agent for the Debtors' secured lenders, are Lawrence F. Flick II, Esq., Blank Rome LLP, in New York, and, Regina Stango Kelbon, Esq., at Blank Rome LLP, in Wilmington. Following the sale, Bankruptcy Judge Brendan L. Shannon approved the name change of Hussey Copper Corp. et al., to HCL Liquidation Ltd. INDIANAPOLIS DOWNS: Settles With Former Manager Cordish ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Indianapolis Downs LLC reached a settlement with the property's former manager, The Cordish Co. The settlement simplifies the process of winning approval of the reorganization plan at an Aug. 22 confirmation hearing. The report relates that the track and Cordish were in multiple disputes over a license agreement and the contract where Cordish assisted in constructing, developing and managing the project. Cordish was making an unsecured claim of $17 million and a separate claim for $33 million allegedly representing an expense of the Chapter 11 case that must be paid in full for Indianapolis Downs to emerge from bankruptcy. According to the report, under the settlement filed last week with the bankruptcy court in Delaware, Baltimore-based Cordish will be paid $3.5 million cash not later than Aug. 22. In addition, Cordish will have an approved unsecured claim for $12 million. Cordish waives all other claims. The racetrack is asking the bankruptcy judge to hold a hearing on July 17 for approval of the settlement. About Indianapolis Downs Indianapolis Downs LLC operates Indiana Live -- http://www.indianalivecasino.com/-- a combined race track and casino at a state-of-the-art 283 acre Shelbyville, Indiana site. It also operates two satellite wagering facilities in Evansville and Clarksville, Indiana. Total revenue for 2010 was $270 million, representing an 8.7% increase in 2009. The casino captured 53% of the Indianapolis market share. In July 2001, Indianapolis Downs was granted a permit to conduct a horse track operation in Shelvyville, Indiana, and started operating the track in 2002. It was granted permission to operate the casino at the racetrack operation in May 2007. The casino began operations in July 2010. Indianapolis Downs and subsidiary, Indianapolis Downs Capital Corp., sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 11-11046) in Wilmington, Delaware, on April 7, 2011. Indianapolis Downs estimated $500 million to $1 billion in assets and up to $500 million in debt as of the Chapter 11 filing. According to a court filing, the Debtor owes $98,125,000 on a first lien debt. It also owes $375 million on secured notes and $72.6 million on subordinated notes. Matthew L. Hinker, Esq., Scott D. Cousins, Esq., and Victoria Watson Counihan, Esq., at Greenberg Traurig, LLP in Wilmington, Delaware, have been tapped as counsel to the Debtors. Christopher A. Ward, Esq., at Polsinelli Shughart PC, in Wilmington, Delaware, is the conflicts counsel. Lazard Freres & Co. LLC is the investment banker. Bose Mckinney & Evans LLP and Bose Public Affairs Group LLC serve as special counsel. Kobi Partners, LLC, is the restructuring services provider. Epiq Bankruptcy Solutions is the claims and notice agent. INTEGRATED ENVIRONMENTAL: Had $468,800 Net Loss in 1st Quarter -------------------------------------------------------------- Integrated Environmental Technologies, Ltd., filed its quarterly report on Form 10-Q, reporting a net loss of $468,771 on $45,799 of revenues for the three months ended March 31, 2012, compared with a net loss of $544,423 on $39,510 of revenues for the same period last year. The Company's balance sheet at March 31, 2012, showed $1.15 million in total assets, $1.44 million in total liabilities, and a stockholders' deficit of $289,842. As reported in the TCR on April 2, 2012, Weaver, Martin & Samyn, LLC, in Kansas City, Missouri, expressed substantial doubt about Integrated Environmental's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has incurred significant recurring operating losses, negative cash flows from operations and has a working capital deficiency. "The Company also has no lending relationships with commercial banks and is dependent on the completion of financings in order to continue operations." A copy of the Form 10-Q is available for free at: http://is.gd/ZyZDLH About Integrated Environmental Little River, S.C.-based Integrated Environmental Technologies, Ltd., operates through its wholly-owned subsidiary, I.E.T., Inc., a Nevada corporation incorporated on Jan. 11, 2002. IET produces and sells hypochlorous acid ("Anolyte") as well as an anti-oxidizing, mildly alkaline solution ("Catholyte" and, together with Anolyte, the "Solutions"), that provide an environmentally friendly alternative for cleaning, sanitizing and disinfecting as compared to the hazardous chemicals traditionally prevalent in commercial use. The Company manufactures proprietary EcaFlo(R) equipment that is used to produce the Solutions for distribution by the Company and, under certain circumstances, such equipment is leased by the Company to customers for use at a customer's facility. INTERNATIONAL COMMERCIAL: Had $21,608 Net Loss in First Quarter --------------------------------------------------------------- International Commercial Television Inc. filed its quarterly report on Form 10-Q, reporting a net loss of $21,608 on $2.66 million of sales for the three months ended March 31, 2012, compared with a net loss of $233,529 on $532,238 of sales for the same period of 2011. The Company's balance sheet at March 31, 2012, showed $1.52 million in total assets, $2.22 million in total liabilities, and a stockholders' deficit of $703,710 EisnerAmper, LLP, in Edison, New Jersey, expressed substantial douobt about International Commercial Television's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that of the Company's recurring losses from operations and negative cash flows from operations. A copy of the Form 10-Q is available for free at: http://is.gd/8Qp0oa Wayne, Pa.-based International Commercial Television Inc. sells various consumer products. The products are primarily marketed and sold throughout the United States and internationally via infomercials. INTERNATIONAL HOME: Wants First Bank to Turnover Property --------------------------------------------------------- International Home Products, Inc., et al., filed with the U.S. Bankruptcy Court for the District of Puerto Rico an adversary proceeding against First Bank of Puerto Rico, and Rene Lopez, Jane Do, and the conjugal partnership constituted between them, asking that, among other things: -- First Bank turnover to the Debtor all property that First Bank has transferred to its possession; and -- the Court find that First Bank's effort to file finance statements in July 2011 without the Debtors' knowledge violates First Bank's duty of good faith. The loan relationship between the Debtor and First Bank began in January 2001. In 2009, the parties concluded an amended and restated credit agreement which did not have any supporting security agreements assigning the Debtor's income in rents. The Debtors relate that with respect to First Bank's January 2001 security interest, it expired after 10 years because First Bank never filed a continuation statement. The parties agreed to leave the status quo intact pending a new agreement and new security agreement. During several months of negotiations, the Debtor and First Bank exchanged many drafts of potential agreements. However, the Debtor contends that First Bank filed a financing statement in July 2001 with the Puerto Rico Department of State without the consent of the Debtor and contrary to First Bank's representations of good faith. The Debtors note that First Bank's action cause substantial harm to the Debtor -- loss of property (e.g. accounts receivable valued over $38 million), and harm to relationship with their customers and vendors. A copy of the adversary proceeding is available for free at http://bankrupt.com/misc/INTERNATIONALHOME_adversarycase.pdf About International Home Products International Home Products, Inc., is engaged in the sale, financing of "Lifetime" cookware and other kitchenware as well as sale of account receivables in the secondary market. It is the exclusive distributor of "Lifetime" products in Puerto Rico for over 40 years. The Company filed for Chapter 11 bankruptcy protection (Bankr. D.P.R. Case No. 12-02997) on April 19, 2012. Carmen D. Conde Torres, Esq., in San Juan, P.R., serves as the Debtor's counsel. Wigberto Lugo Mendel, CPA, serves as its accountants. The Debtor disclosed $66,155,798 and $43,350,031 in liabilities as of the Chapter 11 filing. Secured lender First-Bank Puerto Rico is represented by Manuel Fernandez-Bared, Esq., and Jane Patricia Van Kirk, Esq., at Toro, Colon, Mullet, Rivera & Sifre, P.S.C. IZEA INC: Had $917,200 Net Loss in First Quarter ------------------------------------------------ IZEA, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $917,190 on $1.65 million of revenue for the three months ended March 31, 2012, compared with a net loss of $656,329 on $922,778 of revenue for the same period last year. The Company's balance sheet at March 31, 2012, showed $1.02 million in total assets, $3.75 million in total liabilities, and a stockholders' deficit of $2.73 million. Cross, Fernandez & Riley, LLP, in Orlando, Florida, expressed substantial doubt about IZEA's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has incurred recurring operating losses and had an accumulated deficit at Dec. 31, 2011, of $18,130,784. A copy of the Form 10-Q is available for free at: http://is.gd/pSMjmp IZEA, Inc., headquartered in Orlando, Fla., believes it is a world leader in social media sponsorships ("SMS"), a rapidly growing segment within social media where a company compensates a social media publisher to share sponsored content within their social network. The Company accomplishes this by operating multiple marketplaces that include its platforms SocialSpark, SponsoredTweets and WeReward, as well as its legacy platforms PayPerPost and InPostLinks. JEFFERSON COUNTY: Asks Judge to Clarify His Sewer Ruling -------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Jefferson County, Alabama, is asking the bankruptcy judge in Birmingham to reconsider or modify aspects of his opinion on June 29 limiting expenses the county can deduct before turning sewer revenue over to holders of sewer bonds. The county's motion for reconsideration has the effect of putting off the time for filing an appeal. In a court filing last week, the county said it is "still evaluating its options" regarding the June 29 decision and "may ultimately determine to appeal." Mr. Rochelle recounts that U.S. Bankruptcy Judge Thomas B. Bennett ruled late last month that the bond indenture limits what the county may deduct from sewer revenue before paying the remainder to bondholders. He refused to allow the county to make deductions for depreciation, amortization and reserves for future expenses. Judge Bennett said that the U.S. Bankruptcy Code doesn't permit deductions greater than those allowed by the indenture. He also said that the county may not pay Chapter 9 professional costs from sewer revenue. According to the report, in last week's reconsideration motion, the county asked Judge Bennett to clarify his opinion to state that some legal expenses can be charged against bondholders once they are actually incurred. Alternatively, the county wants Judge Bennett to modify his opinion by saying that the question of attorneys' fees is "fully reserved" and will be decided in later rulings. The county's reconsideration motion is on the bankruptcy court's calendar for July 25. The lawsuit over control of the sewers and revenue is Bank of New York Mellon v. Jefferson County, Alabama (In re Jefferson County, Alabama), 12-00016, U.S. Bankruptcy Court, Northern District of Alabama (Birmingham). About Jefferson County Jefferson County has its seat in Birmingham, Alabama. It has a population of 660,000. Jefferson County filed a bankruptcy petition under Chapter 9 (Bankr. N.D. Ala. Case No. 11-05736) on Nov. 9, 2011, after an agreement among elected officials and investors to refinance $3.1 billion in sewer bonds fell apart. John S. Young Jr. LLC was appointed as receiver by Alabama Circuit Court Judge Albert Johnson in September 2010. Jefferson County's bankruptcy represents the largest municipal debt adjustment of all time. The county said that long-term debt is $4.23 billion, including about $3.1 billion in defaulted sewer bonds where the debt holders can look only to the sewer system for payment. The county said it would use the bankruptcy court to put a value on the sewer system, in the process fixing the amount bondholders should be paid through Chapter 9. Judge Thomas B. Bennett presides over the Chapter 9 case. Lawyers at Bradley Arant Boult Cummings LLP and Klee, Tuchin, Bogdanoff & Stern LLP, led by Kenneth Klee, represent the Debtor as counsel. Kurtzman Carson Consultants LLC serves as claims and noticing agent. Jefferson estimated more than $1 billion in assets. The petition was signed by David Carrington, president. The bankruptcy judge in January 2012 ruled that the state court- appointed receiver for the sewer system largely lost control as a result of the bankruptcy. Before deciding whether Jefferson County is eligible for Chapter 9, the bankruptcy judge will allow the Alabama Supreme Court to decide whether sewer warrants are the equivalent of "funding or refunding bonds" required under state law before a municipality can be in bankruptcy. U.S. District Judge Thomas B. Bennett ruled in March 2012 that Jefferson County is eligible under state law to pursue a debt restructuring under Chapter 9. Holders of more than $3 billion in defaulted sewer debt had challenged the county's right to be in Chapter 9. KANE & KANE: Former Partners Can't Intervene in Avoidance Suit -------------------------------------------------------------- Bankruptcy Judge Erik P. Kimball dismissed Charles J. Kane and Harley N. Kane as intervenors in the adversary proceeding, MICHAEL R. BAKST as Trustee in Bankruptcy for KANE & KANE, A PARTNERSHIP, Plaintiff, v. UNITED STATES OF AMERICA, Defendant, Adv. Proc. No. 10-01022 (Bankr. S.D. Fla.). The Court previously allowed the Kanes, former general partners of the Debtor, to intervene in the adversary proceeding on the ground that the Kanes argued the funds transferred to the Defendant were their property rather than property of the Debtor. The Court now ruled that the Kanes are collaterally estopped from claiming the money transferred from the Debtor to the Defendant was property of the Kanes individually and not property of the Debtor law firm. In addition, the Kanes do not have a direct, substantial and legally protectable interest in the funds that were the subject of the Transfers or in the transactions giving rise to the Transfers for purposes of intervention in the action. The Chapter 7 Trustee on Jan. 7, 2010, initiated the adversary proceeding to recover fraudulent transfers and for other relief, alleging that the Debtor made various transfers to the Defendant: $310,000 on April 14, 2008 in payment for Charles Kane's personal federal income tax liability; $290,000 on April 14, 2008 in payment for Harley Kane's personal federal income tax liability; $7,706 on Aug. 28, 2009 in payment for Charles Kane's personal federal income tax liability; $60,000 on Sept. 15, 2008 in payment for Charles Kane's personal federal income tax liability; $60,000 on Sept. 15, 2008 in payment for Harley Kane's personal federal income tax liability; and $165 on Oct. 7, 2008 in payment for Charles Kane's personal federal income tax liability. A copy of the Court's July 3, 2012 Order is available at http://is.gd/ffXuXAfrom Leagle.com. About Kane & Kane Kane & Kane, A Partnership, was a law firm formed as a Florida general partnership. Charles J. Kane and Harley N. Kane, both members of the Florida Bar, were the only partners in the firm. In 2004, Stewart Tilghman Fox & Bianchi, P.A., William C. Hearon, P.A., and Todd S. Stewart, P.A., filed suit against the Debtor and the Kanes in the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida. On April 24, 2008, the State Court entered its Final Judgment in favor of Stewart et al. and against the Debtor, Charles Kane and Harley Kane, jointly and severally, in the amount of $2,000,000 plus pre and post-judgment interest. The firm, Charles Kane and Harley Kane each filed voluntary Chapter 11 petitions on Nov. 17, 2008. The Court dismissed the three Chapter 11 cases effective March 30, 2009, after the Court found that they had been filed in bad faith. The firm filed a voluntary Chapter 7 petition (Bankr. S.D. Fla. Case No. 09-15556) on March 30, 2009. Michael R. Bakst was appointed as Chapter 7 Trustee. Charles Kane and Harley Kane also filed voluntary chapter 7 petitions on the same day. LEHMAN BROTHERS: Has Stipulation Resolving 3 BNP Paribas Claims --------------------------------------------------------------- In a bankruptcy court-approved stipulation, Lehman Brothers Holdings Inc., as Chapter 11 plan administrator, and BNP Paribas agreed that: 1. BNP Paribas' Claim No. 67346 is: (a) allowed as a general unsecured claim in LBHI Class 9A for $367,219,369, which reflects the Allowed LBSF Derivative Guarantee Claim, (b) allowed as a general unsecured claim in LBHI Class 9A for $2,253,419, which reflects the Allowed LBCS Derivative Guarantee Claim, (c) allowed as a general unsecured claim in LBHI Class 3 for $250,650,677.16, which reflects the Allowed Note Claim, and (d) disallowed as to any additional claims or amounts asserted therein by BNPP, including any unliquidated and contingent claims or amounts. 2. BNP Paribas' Claim No. 67938: (a) is disallowed as to the Allowed BNPP LBHI Claims, which are marked as allowed on proof of claim number 67346, and (b) shall remain open on the Claims Register with respect to all remaining claims asserted by BNPP therein in the aggregate (i) unsecured amount of $332,866,069.33 plus interest and additional unliquidated and contingent amounts, and (ii) administrative amount of $17,659,061.98 plus interest and additional unliquidated and contingent claims, pending further reconciliation by the Parties. 3. BNP Paribas' Claim No. 67877 is disallowed and shall be expunged from the Claims Register. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. Lehman is set to make its first payment to creditors under its $65 billion payout plan on April 17, 2012. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on Sept. 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on Sept. 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-700) LEHMAN BROTHERS: Assigns Swap Agreement to 1271 Counterparty ------------------------------------------------------------ In a bankruptcy court-approved stipulation, the Minnesota Masonic Home Care Center and Lehman Brothers Special Financing Inc. and Lehman Brothers Holdings Inc. agree, among others, that pursuant to Sections 363(b)(1) and 365(f) of the Bankruptcy Code, LBSF is authorized to complete and deliver all instruments and documents and take all other actions as may be necessary or appropriate to execute, implement, consummate and effectuate an Assignment Transaction related to a certain 1992 ISDA Master Agreement. Under the Swap Agreement, LBSF has an obligation to pay 67% of the floating one-month USD-LIBOR-BBA interest rate on a notional amount that declines over time from $20,331,667, and Minnesota Masonic has the obligation to pay a fixed rate of interest of 3.346% on the same declining notional amount. These obligations expire on July 1, 2022, and until such time, payments are required to be made in arrears on a net basis by the party owing the larger amount semiannually, on each January 1 and July 1 (subject to a business day convention). LBSF and Minnesota Masonic have negotiated a transaction pursuant to which LBSF will assign all of its rights and obligations under the Swap Agreement to 1271 Counterparty Company LLC, a wholly- owned, non-debtor subsidiary of LBSF, as evidenced by and in accordance with a novation agreement among LBSF, the Assignee, Minnesota Masonic, and Deutsche Bank AG, London Branch, as credit support provider for the Assignee. LBSF will pay certain de minimis expenses incurred by Minnesota Masonic in connection with the Novation Agreement. Pursuant to the Novation Agreement, the obligations of the Assignee will be guaranteed by DB, and LBHI will be relieved of its obligations as credit support provider and guarantor under the Swap Agreement. LBSF will pay DB a fee for entering into the guaranty agreement and enabling the Assignee and, ultimately, LBSF to obtain the benefits of the Swap Agreement. The Guaranty Fee is a market rate that has been approved by the statutory committee of unsecured creditors. To capture the value of the Swap Agreement, contemporaneously with the execution of the Novation Agreement LBSF will enter into a new interest rate swap agreement with the Assignee and interest rate cap agreements with DB which, taken together, replicate for LBSF the economic benefits and risks that exist under the Swap Agreement. LBSF expects to enter into agreements to hedge its exposure under the New Swap Agreements. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. Lehman is set to make its first payment to creditors under its $65 billion payout plan on April 17, 2012. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on Sept. 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on Sept. 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-700) LEHMAN BROTHERS: Resolves Centerbridge Entities' Claims ------------------------------------------------------- Lehman Commercial Paper, Inc., acting through Lehman Brothers Holdings Inc., in its capacity as Plan Administrator, and CCP Acquisition Holdings, LLC, and CCP Credit Acquisition Holdings, LLC -- Centerbridge Entities -- and HLI Credit Investor Irishco Limited stipulate and agree, among others, that: (i) The Centerbridge Entities' Make-Whole Claims shall be disallowed and expunged, and (ii) The Centerbridge Entities' Univision Trade Claim shall be allowed as a general unsecured claim against LCPI in Class 4A under the Plan in the amount of $362,800. The Centerbridge Entities are authorized to retain the Post- Petition Make-Whole Payments -- $8,882,987.08 -- in full settlement, satisfaction, release and discharge of the Make-Whole Claims. The effect of the Stipulation is that the Centerbridge Entities shall receive a distribution equal to 57.52% in respect of the Make-Whole Claims. The Court approved the Stipulation. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. Lehman is set to make its first payment to creditors under its $65 billion payout plan on April 17, 2012. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on Sept. 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on Sept. 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-700) LEHMAN BROTHERS: Removal of Pate Lawsuit to District Court Sought ----------------------------------------------------------------- Jenea Williams Pate commenced an adversary proceeding on April 2, 2012, against Lehman Brothers Holding Inc., Aurora Bank FSB, McCurdy & Candler, LLC, et al., asking the court to determine the value, extent and validity of the Defendants' interest in the real property she owns located at 1020 Longpointe Pass Alpharetta, GA 30005. Ms. Pate is seeking removal of her action in its entirety now pending in the Magistrate Court Forsyth County Case No. 12MG0901 to the U.S. District Court for the District of New York and by reference and local rules from the District Court to the U.S. Bankruptcy Court for the District of New York. Ms. Pate obtained a loan -- the Mortgage Note -- securitized under Mortgage Pass-Through Certificate Series 2007-1, of which U.S. Bank National Association is the trustee of the trust under the PSA. The Note is said to be an asset within Lehman's bankruptcy estate. Aurora Bank allegedly represented to Ms. Pate that it is the originator the subject mortgage and has transferred its interest in the mortgage to Lehman. Ms. Pate asserts that Aurora Bank and Lehman committed fraud in filing its proof of claim as servicing agent to U.S. Bank without any shred of proof that Aurora Bank is authorized to do so. Ms. Pate admits that she signed a document styled as a "First Note" on the subject property. She argues that Aurora Bank falsely represented that they were funding the "Note." She further says that she has not seen the original styled "Note" since signing and its whereabouts is undisclosed. Aurora Bank and McCurdy subsequently initiated a foreclosure action on the property. Ms. Pate argues that Aurora Bank and Lehman lack standing to foreclose because they have no first hand knowledge of the loan, no authority to testify as to the validity of the loan documents or existence of the loan, and no legal authority to draft mortgage assignments relating to the loan. By her complaint, Ms. Pate asks the Court to rule that: (a) the claim allegedly owed to Lehman by Plaintiffs is wholly unsecured; and (b) Lehman is not the owner of the Plaintiff's property. Ms. Pate is also seeking an award of punitive damages, saying that the conduct of the Defendants constitutes libel that tends to injure her in her business and reputation. Plan Administrator Seeks Consolidation LBHI, as Plan Administrator, asks the Court to consolidate the Removal Action and the Initial Adversary Proceeding because consolidation will serve the interests of judicial economy, will reduce unnecessary expense and delay for all of the parties, and will relieve the burden on the Court. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. Lehman is set to make its first payment to creditors under its $65 billion payout plan on April 17, 2012. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on Sept. 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on Sept. 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-700) LGC 231: Case Summary & 14 Largest Unsecured Creditors ------------------------------------------------------ Debtor: LGC 231, LLC fdba Lapour Grand Central, LLC 5525 South Decatur Boulevard, Suite 101 Las Vegas, NV 89118-6247 Bankruptcy Case No.: 12-17932 Chapter 11 Petition Date: July 5, 2012 Court: United States Bankruptcy Court District of Nevada (Las Vegas) Judge: Bruce T. Beesley Debtor's Counsel: Samuel A. Schwartz, Esq. THE SCHWARTZ LAW FIRM, INC. 6623 Las Vegas Blvd. So., Suite 300 Las Vegas, NV 89119 Tel: (702) 385-5544 Fax: (702) 385-2741 E-mail: sam@schwartzlawyers.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 14 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/nvb12-17932.pdf The petition was signed by Jeffrey S. LaPour, president of managing member. LIBERTY HARBOR: Hearing on Relief of Stay Adjourned to Aug. 7 ------------------------------------------------------------- The Hon. Novalyn L. Winfield of the U.S. Bankruptcy Court for the District of New Jersey denied The Jersey City Redevelopment Agency's motion to dismiss the Chapter 11 case of Liberty Harbor Holding, LLC, et al. The Court also ordered that the motion of JCRA for relief from the automatic stay is adjourned to Aug. 7, 2012, at 2 p.m. As reported in the Troubled Company Reporter on May 25, 2012, JCRA requested for an order (a) dismissing the Chapter 11 bankruptcy cases of or, alternatively, (b) granting relief from the automatic stay. About Liberty Harbor Jersey City, New Jersey-based Liberty Harbor Holding, LLC, along with two affiliates, sought Chapter 11 protection (Banrk. D. N.J. Lead Case No. 12-19958) in Newark on April 17, 2012. Liberty, as of April 16, 2012, had total assets of $350.08 million, comprising of $350 million of land, $75,000 in accounts receivable and $458 cash. The Debtor says that it has $3.62 million of debt, consisting of accounts payable of $73,500 and unsecured non- priority claims of $3,540,000. The Debtor's real property consists of Block 60, Jersey City, NJ 100% ownership Lots 60, 70, 69.26, 61, 62, 63, 64, 65, 25H, 26A, 26B, 27B, 27D. Affiliates that filed separate petitions are: Liberty Harbor II Urban Renewal Co., LLC (Case No. 12-19961) and Liberty Harbor North, Inc. (Case No. 12-19964). Judge Novalyn L. Winfield presides over the case. The petition was signed by Peter Mocco, managing member. LIBERTY HARBOR: Unsecured Creditors Committee Down to 3 Members --------------------------------------------------------------- Roberta A. DeAngelis, U.S. Trustee for Region 3, amended the appointment of the Official Committee of Unsecured Creditors in the Chapter 11 cases of Liberty Harbor Holding, LLC, et al., to reflect that Jennifer Palermo and Greg Mischke are no longer in the Committee. The Committee now comprises of: 1. Laura A. Brinkerhoff Brinkerhoff Environmental Services, Inc. 1805 Atlantic Avenue Manasquan, NJ 08736 Tel: (732) 223-2225 Fax: (732) 233-3666 2. Jorge Medetti Jomitti Iron Works 3444 Kennedy Blvd. Jersey City, NJ 07302 Tel: (201) 284-2442 Fax: (201) 763-5514 3. Edward J. Scannavino, chairperson Scannavino & Sons Plumbing 115 N. 50th Street North Bergen, NJ 07047 Tel: (201) 239-8582 Fax: (201) 653-2256 About Liberty Harbor Jersey City, New Jersey-based Liberty Harbor Holding, LLC, along with two affiliates, sought Chapter 11 protection (Banrk. D. N.J. Lead Case No. 12-19958) in Newark on April 17, 2012. Liberty, as of April 16, 2012, had total assets of $350.08 million, comprising of $350 million of land, $75,000 in accounts receivable and $458 cash. The Debtor says that it has $3.62 million of debt, consisting of accounts payable of $73,500 and unsecured non- priority claims of $3,540,000. The Debtor's real property consists of Block 60, Jersey City, NJ 100% ownership Lots 60, 70, 69.26, 61, 62, 63, 64, 65, 25H, 26A, 26B, 27B, 27D. Affiliates that filed separate petitions are: Liberty Harbor II Urban Renewal Co., LLC (Case No. 12-19961) and Liberty Harbor North, Inc. (Case No. 12-19964). Judge Novalyn L. Winfield presides over the case. The petition was signed by Peter Mocco, managing member. LIGHTSQUARED INC: Falcone Prepares Defense in SEC Suit ------------------------------------------------------ The Wall Street Journal's Juliet Chung reports that Philip Falcone, manager of hedge fund Harbinger Capital Partners LLC, has vowed to fight allegations by the Securities and Exchange Commission, including misappropriating client assets, favoring certain customers over others and manipulating bond prices. According to WSJ, people familiar with Mr. Falcone's defense said he plans to try deflecting blame to a former Harbinger operating chief and two lawyers who advised him to borrow $113.2 million in 2009 from a Harbinger fund to pay his personal taxes even though other investors were blocked from withdrawing money. The report recounts the SEC alleges that Mr. Falcone, 49, and the operating chief, Peter Jenson, misled investors and an outside law firm when Mr. Falcone borrowed the money. Bruce Karpati, chief of the asset-management unit of the SEC's enforcement division, declined to comment further. According to the WSJ report, Mr. Falcone is expected to contend that borrowing the money was the best option for his investors, since most of his assets were illiquid and because of what he believed to be a lack of financing alternatives. The loan also prevented a possible tax lien on his Harbinger assets, which could have hurt the fund, according to the people familiar with his defense. Matthew Dontzin, Esq., represents Mr. Falcone. WSJ relates the people familiar with Mr. Falcone's defense, some of which was spelled out to SEC officials before the suit was filed, said he got the loan on the advice of in-house lawyer Robin Roger, Esq., an outside lawyer from Sidley Austin LLP with whom he never communicated directly, and Mr. Jenson. WSJ reports Mr. Jenson's lawyer, Charles Clark, disputed Mr. Falcone's recollection of events, saying that Mr. Falcone actually ignored the advice of Mr. Jenson, who left the firm in June 2011. A spokesman for Mr. Falcone and Harbinger declined to respond to Mr. Clark's statement. The report also relates people familiar with Mr. Falcone's defense strategy said his lawyers will argue that advice from the other law firm, Schulte Roth & Zabel LLP, related to a different situation. They said Sidley had accurate information and suggested the loan. Representatives of the two law firms declined to comment, WSJ says. 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. LIGHTSQUARED INC: Files Schedules of Assets and Liabilities ----------------------------------------------------------- LightSquared LP filed with the U.S. Bankruptcy Court for the Southern District of New York its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $0 B. Personal Property $3,776,168,248* C. Property Claimed as Exempt D. Creditors Holding Secured Claims $1,700,571,106* E. Creditors Holding Unsecured Priority Claims $0 F. Creditors Holding Unsecured Non-priority Claims $1,881,493* ----------- ----------- TOTAL $3,776,168,248* $1,702,452,599* Debtor-affiliates also filed their respective schedules, disclosing: Company Assets Liabilities ------- ------ ----------- LigthSquared Corp. $93,078,391* $1,700,728,828* SkyTerra(Canada) Inc. $1,006,777* $1,729,977,618* LigthSquared Bermuda Ltd. $0* $0* LightSquared Subsidiary LLC $0* $1,700,571,106* LigthSquared Inc. of Virginia $0* $1,700,571,106* LightSquared Network LLC $9,361,166* $0* TMI Communications Delaware, Limited Partnership $11,436,241* $1,700,571,106* SkyTerra Rollup Sub LLC $0* $0* SkyTerra Investors LLC $0* $0* LigthSquared Investors Holdings Inc. $0* $1,700,571,106* LigthSquared GP Inc. $0* $1,700,571,106* SkyTerra Rollup LLC $0* $0* One Dot Six Corp. $21,297,976* $322,344,059* SkyTerra Holdings(Canada) Inc. $0* $1,700,571,106* One Dot Four Corp. $0* $322,333,494* ATC Technologies, LLC $80,221* $1,700,571,106* One Dot Six TVCC Corp. $0* $322,333,494* LigthSquared Finance Co. $0* $0* * plus undetermined amounts Full-text copies of schedules are available for free at: http://bankrupt.com/misc/LIGHTSQUARED_INC_atc_sal.pdf http://bankrupt.com/misc/LIGHTSQUARED_INC_bermuda_sal.pdf http://bankrupt.com/misc/LIGHTSQUARED_INC_corp_sal.pdf http://bankrupt.com/misc/LIGHTSQUARED_INC_finance_sal.pdf http://bankrupt.com/misc/LIGHTSQUARED_INC_gp_sal.pdf http://bankrupt.com/misc/LIGHTSQUARED_INC_investors_sal.pdf http://bankrupt.com/misc/LIGHTSQUARED_INC_lp_sal.pdf http://bankrupt.com/misc/LIGHTSQUARED_INC_network_sal.pdf http://bankrupt.com/misc/LIGHTSQUARED_INC_onedot_sal.pdf http://bankrupt.com/misc/LIGHTSQUARED_INC_onedotsix_sal.pdf http://bankrupt.com/misc/LIGHTSQUARED_INC_one_sal.pdf http://bankrupt.com/misc/LIGHTSQUARED_INC_sal.pdf http://bankrupt.com/misc/LIGHTSQUARED_INC_skyterracanada_sal.pdf http://bankrupt.com/misc/LIGHTSQUARED_INC_skyterraholdings_sal.pdf http://bankrupt.com/misc/LIGHTSQUARED_INC_skyterrainvestors_sal.pd f http://bankrupt.com/misc/LIGHTSQUARED_INC_skyterrarollup_sal.pdf http://bankrupt.com/misc/LIGHTSQUARED_INC_skyterra_sal.pdf http://bankrupt.com/misc/LIGHTSQUARED_INC_subsidiary_sal.pdf http://bankrupt.com/misc/LIGHTSQUARED_INC_tmi_sal.pdf 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. LIGHTSQUARED INC: Hearing on DIP Loan Adjourned to July 17 ---------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York adjourned from June 28, 2012 to July 17, at 10 a.m. (prevailing Eastern time), the hearing to consider LightSquared Inc., et al.'s motion to (i) obtain postpetition financing; (b) grant liens and provide superpriority administrative expense status; and (c) grant adequate protection. A full-text copy of the blacklined proposed order is available for free at http://bankrupt.com/misc/LIGHTSQUARED_BlacklinedDIP.pdf As reported in the Troubled Company Reporter on June 26, 2012, is seeking approval of a $30 million credit to help finance the Chapter 11 effort. The new facility is being provided by the so-called Inc. lenders owed $322.3 million. Interest on the new loan at 11% will be paid with more debt. Similarly, the 3% fee on initial funding for the loan is payable with more debt. The bulk of the loan, about $28 million, may be used only to continue work on subsidiary One Dot Six. Along with interim approval, LightSquared can borrow $10 million. According to the report, LightSquared eventually won an agreement to use incoming cash representing collateral for the Inc. lenders and for the so-called LP lenders, who are owed $1.7 billion from a secured borrowing in October 2010 by LightSquared LP. The cash agreement allows the lenders to return to court to ask for more protection from diminution of their collateral. 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. MAMMOTH LAKES, CA: Chapter 9 Case Summary ----------------------------------------- Debtor: Town of Mammoth Lakes, California P.O. Box 1609 Mammoth Lakes, CA 93456 Bankruptcy Case No.: 12-32463 Chapter 9 Petition Date: July 3, 2012 Court: U.S. Bankruptcy Court Eastern District of California (Sacramento) About the Debtor: Mammoth Lakes, Calif., is a small California resort community near Yosemite National Park. It is located 9 miles northwest of Mount Morrison, at an elevation of 7,880 feet. The population was 7,093 at the 2000 census. Mammoth Lakes has a reputation as a skiing destination. The town council authorized the bankruptcy filing after its largest creditor declined mediation on a $43 million judgment against the town. Debtor's Counsel: Michael L. Tuchin, Esq. KLEE, TUCHIN, BOGDANOFF & STERN, LLP 1999 Avenue of the Stars, 39th Floor Los Angeles, CA 90067 Tel: (310) 407-4000 Estimated Assets: $100,000,001 to $500,000,000 Estimated Debts: $50,000,001 to $100,000,000 The petition was signed by Dave Wilbrecht, town manager. Debtor's List of Its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Mammoth Lakes Land Acquisition Legal Claims/ $42,746,755 865 South Figueroa Street, 10th Judgments Street Los Angeles, CA 90017-2543 CalPERS Pension/Retirement $4,154,446 Lincoln laza North 400 Q. Street, Room N3340 Sacramento, CA 95814 California JPIA Insurance $3,406,106 8081 Moody Street Cooperative La Palma, CA 90623 Union Bank of California NA Bond/COP/ Long $1,720,000 Trustee for Holders of Series Term Debt 2000 COPS 445 S. Figueroa Street Los Angeles, CA 90071-1402 PARS Post-Retirement Health Care Pension/Retirement $581,235 Plan 4350 Von Karman Avenue, Suite 100 Newport Beach, CA 92660 State Water Resources Control Bond/COP/Long $501,461 Board Term Debt P.O. Box 100 Sacramento, CA 95812 Citizens Business Bank Bond/COP/Long $317,763 Holders of 2004 COPS PFLA Project Term Debt 701 North Haven Avenue, Suite 250 Ontario, CA 91764 PARS Safety Pension/Retirement $213,979 Citizens Business Bank Bond/COP/Long $201,446 Term Debt California Dept. of Bond/COP/Long $145,882 Transportation Term Debt Eastern Sierra Transportation Contract $93,918 Peterbilt Truck Parts and Trade Debt $54,470 Equipment, LLC Minaret Village Center Leases $50,578 Mammoth Unified School District Leases $42,000 Mark Wardlaw Employment Related $35,108 Dennis Rottner Employment Related $33,935 Patrick Vargas Employment Related $25,622 Peter Bernasconi Employment Related $24,911 Dan Watson Employment Related $24,072 Marc Moscowitz Employment Related $23,777 MAMMOTH LAKES: S&P Cuts Series 2000 COPs Rating to 'C' From 'BB' ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Mammoth Lakes, Calif.'s series 2000 certificates of participation (COPs) to 'C' from 'BB'. The outlook is stable. "The 'C' rating reflects our view of the town's decision to file for bankruptcy protection under Chapter 9 of the U.S. Bankruptcy Code," said Standard & Poor's credit analyst Sussan Corson. Mammoth Lakes' next lease payment, which underlies the series 2000 COPs, is due Nov. 15, 2012, for a Dec. 1, 2012, debt service payment; the annual debt service on the series 2000 certificates is about $200,000, or 1.2% of the town's general fund expenditures, and is paid semi-annually on June 1 and Dec. 1. Town officials report the series 2000 COPs' debt service reserve is fully funded in cash; however, they do not expect to rely on debt service reserves for certificate payment. According to town officials, Mammoth Lakes has included the series 2000 certificates payment in the fiscal 2013 budget and intends to continue to budget and appropriate for these obligations. "Officials report that, after discussions with the trustee, they do not intend to extend the term or restructure payments on the certificates. Notwithstanding the above, however, we are unsure how the bankruptcy filing may affect future debt service payments," S&P said. "Mammoth Lakes' town council decided to file for bankruptcy after failed mediation with its largest creditor. Standard & Poor's understands that the first hearing in front of the bankruptcy judge will take place on July 12, 2012. The stable outlook reflects what we view as Mammoth Lakes' inclusion of the certificates payment in its fiscal 2013 budget despite its filing for bankruptcy protection under Chapter 9," S&P said. "Due to the town's budgeting for lease payments and its stated intention to continue to pay on the COPs, we don't expect to change the rating in the next year; however, we could lower the rating if the town fails to pay debt service on the COPs from its available resources or from the reserve fund," S&P said. MARIANA RETIREMENT FUND: Retiree Asks Judge to Probe Legal Fees --------------------------------------------------------------- Marianas Variety reports that Mary E. Flanagan, a Florida-based retiree who previously served as attorney in the Office of the Attorney General and Office of the Public Auditor, wants U.S. Bankruptcy Judge Robert J. Faris to look into the $850,000 in legal fees sought by professionals in the NMI Retirement Fund's Chapter 11 petition. According to the report, Ms. Flanagan, in her July 6 letter to Judge Faris, Mr. Flanagan said, "Please require a thorough accounting and closely examine the reasonableness of all Fund monies proposed to be paid to the various professionals now involved in this case. Please exercise your authority to protect the Fund's dwindling assets from further exorbitant unnecessary and unjustified fees." According to the report, Ms. Flanagan and other off-island retirees have monitored the bankruptcy proceedings "helplessly" and they do not agree that $1.2 million isn't just "pocket change." She said $1.2 million would be enough to pay 200 retirees their minimum annual pension of $6,000. The report adds Ms. Flanagan told Judge Faris the selection process for the law firm Brown Rudnick "is suspect and may well have been manipulated." She said that of all the fees requested for payment, Brown Rudnick is charging "a large portion." The report, citing court filings, notes Brown Rudnick LLP is claiming $765,937 of the approximately $850,000 in total legal fees and expenses or 90% of the total costs of the services provided by the professionals in the course of the Fund's Chapter 11 proceedings. The report notes Ms. Flanagan cited as examples the filing of multiple actions against the CNMI government and autonomous agencies for non-payment of employer contributions and transferring the Superior Court's $231 million judgment to the federal bankruptcy court for collection, even before the bankruptcy court ruled on its jurisdiction. She also questioned the firm's court filing seeking the court's approval of the transfer of the San Vicente property, the report notes. According to the report, owing to the apparent secrecy over the negotiation of the retainer agreement with Brown Rudnick, Ms. Flanagan asked that the court demand and closely scrutinize an itemized breakdown of the firm's claimed costs and expenses relating to its representation of the Fund in the Chapter 11 case. The report relates Ms. Flanagan said that agreement did not have inputs from any governmental agency or even the Commonwealth Retirement Association. Although she questioned the fees asked by Brown Rudnick, Ms. Flanagan recognized the necessary professional services rendered by the Creditors Committee and the U.S. Trustee who "must be fairly paid and no one would dispute that." The report adds the creditors committee counsel, Gelber, Gelber & Ingersoll is claiming $65,124.61 in legal fees and expenses. Five of the seven members of the creditors committee are asking $336.90 in expenses. The Fund earlier explained that the $1.2 million in fees and expenses was just an estimated amount of the total costs, the report says. The report relates, with the recent filing for payment of $850,000 in total fees aside, court records showed that the Fund paid Brown Rudnick before April 17 an advance retainer of $250,000, $15,000 of which was paid to AlixPartners LLC for public relations work. The firm, however, also revealed in its court filing providing pro bono work for several months prior to petition date. The report says it also discounted the final request for payment by 204.60 hours or $95,418. Judge Faris will hold an administrative cost hearing on July 27 at 9:30 a.m. About NMI Retirement Fund The Northern Mariana Islands Retirement Fund -- http://www.nmiretirement.com/-- is a public corporation of the Commonwealth of the Northern Mariana Islands that receives and invests retirement contributions and pays certain benefits to or on account of certain retirees of the Commonwealth government, their survivors, and certain disabled persons. The Fund, through its administrator Richard Villagomez, filed a Chapter 11 bankruptcy petition in the U.S. District Court for the Northern District of Mariana Islands in Saipan (Case No. 12-00003) on April 17, 2012. The Fund is represented by Brown Rudnick LLP and the Law Office of Braddock J. Huesman, LLC. The Fund said in court papers that the Chapter 11 filing was precipitated by the discrepancy between the Debtor's current ability to pay benefits to beneficiaries and the Debtor's current obligations to those same beneficiaries. The Fund said it would exhaust its cash by July 2014. It has been unable to collect a $325 million judgment against the islands' government, and the commonwealth decided to reduce contributions toward workers' pensions. As a result of continuous underfunding, which necessitated withdrawing from its portfolio to cover funding shortfalls, the value of the Fund's assets has fallen from $353,475,412 in 2009 to its current level of $268,448,997, the Debtor's counsel has said. The counsel also said the Fund is subject to liabilities (both current and actuarial) totaling about $911 million. An official committee of unsecured creditors, consisting of Fund members, has been appointed in the case. U.S. Bankruptcy Judge Robert J. Faris held a hearing on June 1, 2012, where he said from the bench that the fund isn't eligible for Chapter 11 because it's an agent of the commonwealth government. The judge, however, said he won't formally dismiss the case until July or August. MARKETING WORLDWIDE: Levin Consulting Holds 9.3% Equity Stake ------------------------------------------------------------- In a Schedule 13G filing with the U.S. Securities and Exchange Commission, Levin Consulting Group, LLC, disclosed that, as of July 5, 2012, it beneficially owns 45,000,000 shares of common stock of Marketing Worldwide Corporation which represents 9.3% of the shares outstanding. A copy of the filing is available for free at http://is.gd/yeO3v1 About Marketing Worldwide Based in Howell, Michigan, Marketing Worldwide Corporation operates through the holding company structure and conducts its business operations through its wholly owned subsidiaries Colortek, Inc., and Marketing Worldwide, LLC. Marketing Worldwide, LLC, is a complete design, manufacturer and fulfillment business providing accessories for the customization of vehicles and delivers its products to large global automobile manufacturers and certain Vehicle Processing Centers primarily in North America. MWW operates in a 23,000 square foot leased building in Howell Michigan. Colortek, Inc., is a Class A Original Equipment painting facility and operates in a 46,000 square foot owned building in Baroda, which is in South Western Michigan. MWW invested approximately $2 million into this paint facility and expects the majority of its future growth to come from this business. The Company reported a net loss of $2.27 million for the year ended Sept. 30, 2011, compared with a net loss of $2.34 million during the prior year. After auditing the financial statements for the year ended Dec. 31, 2011, RBSM LLP, in New York, expressed substantial doubt about the Company's ability to continue as a going concern following the Company's 2011 financing results. The independent auditors noted that the Company has generated negative cash flows from operating activities, experienced recurring net operating losses, is in default of loan certain covenants, and is dependent on securing additional equity and debt financing to support its business efforts. The Company's balance sheet at March 31, 2012, showed $1.31 million in total assets, $5.86 million in total liabilities, $1.69 million in series A convertible preferred stock, and a $6.24 million total stockholders' deficiency. MARTECH USA: Fee Guidelines Critical in Ch.11, Larger Ch.7 Cases ---------------------------------------------------------------- Bankruptcy Judge Donald MacDonald, IV, granted the final fee application of William Artus, Esq., the general counsel to the Chapter 7 trustee of MarTech USA, Inc. (Bankr. D. Alaska Case No. 93-00889), as follows: Fees requested: $33,960.00 Services provided prior to court approval: <504.00> Unreasonable amount of time: <480.00> Preliminary claim review: <2,256.00> Correction of docketing errors: <960.00> Credit for "wrap-up" services: 480.00 Total Fees Allowed: $30,240.00 All of his requested costs, $973.18, will be allowed. Mr. Artus's application covers the time period from Dec. 14, 2004, through May 31, 2012. He requests an allowance of fees in the amount of $33,960 and costs in the sum of $973.18, for a total award of $34,933.18. Kay Hill, Assistant United States Trustee, objected to the final fee application. She asks the Court to disallow $7,344 of Mr. Artus's requested fees, arguing, among others that, Mr. Artus's fee itemization does not comply with AK LBR 2016-1(c) or United States Trustee Guidelines; Mr. Artus billed an unreasonable amount of time for the preparation of a motion; and the time billed by Mr. Artus for his preliminary review of the 1,600+ claims filed in the case should be disallowed because an attorney cannot be compensated for performing duties allocated to the trustee under 11 U.S.C. Sec. 704(a). The Court said the U.S. Trustee's project category guideline is indispensable in chapter 11 cases and in larger chapter 7 cases, and should be followed by professionals seeking fees in such cases. "Because Mr. Artus has persistently failed to comply with the UST Guidelines, I feel that some form of penalty is appropriate," the judge said. A copy of the Court's July 3, 2012 Memorandum is available at http://is.gd/YUmsjbfrom Leagle.com. MATTHEW JENKINS: Court Denies Bid to Dismiss Chapter 7 Case ----------------------------------------------------------- Bankruptcy Judge Laura T. Beyer denied the request of W. Andrew Leliever to dismiss the Chapter 7 bankruptcy case of Matthew Alan Jenkins, f/d/b/a Shephard Service Company. "[T]he facts presented in this case call for the Court to exercise its discretion to deny the Motion," Judge Beyer said. She also held that "dismissing the Debtor's case would reflect the absurd result of dismissal of the chapter 7 case of an apparently insolvent, unemployed debtor." The Debtor's petition reflected a bare-bones filing that listed only Federated Financial Corporation of America as creditor. The Petition was filed one day after entry of an Order to Show Cause Why Matt Jenkins Should Not be Held in Contempt of Court and Order Forbidding Transfer of Defendant's Property by The Honorable Donald W. Stephens in the case of Federated Financial Corporation of America v. Matt Jenkins, individually and d/b/a Shephard Service Company, Case No. 09-CVS-002084, pending in Wake County, North Carolina Superior Court. Six days after the Petition Date, on April 17, 2012, the Debtor sent an e-mail to the Bankruptcy Court stating that he had reconsidered his bankruptcy filing and would be voluntarily dismissing his bankruptcy case the following day. The Debtor's bankruptcy papers indicate that he is not employed and has no regular income. Judge Beyer said the Debtor does not qualify for chapter 13. Further, there is no indication in the Debtor's Bankruptcy Papers that a reorganization pursuant to chapter 11 would be appropriate or even possible. For these reasons, as well as the fact that the Debtor has not consented, conversion of the Debtor's case is not an option. The Bankruptcy Papers appear to be incomplete, but the only valuable assets that the Debtor disclosed are litigation claims and judgments. Pre-petition, the Debtor had a practice of suing debt buyers, debt collectors, and in the instance of Federated, a judgment creditor, pursuant to the Fair Debt Collection Practices Act, the Telephone Consumer Protection Act, and other similar statutes. Proceeds from those lawsuits, listed in the Bankruptcy Papers as totaling $235,278 in the two years before the Petition Date, were the reason that the Debtor "failed" the so-called "means test." However, the Court noted, there is no indication in the Bankruptcy Papers that the Debtor has any portion of the lawsuit proceeds that he has collected or other sources of funds with which to satisfy creditors were his case to be dismissed. The Dismissal Motion by Mr. LeLiever, a creditor, was opposed by another creditor, Federated. The Bankruptcy Administrator declined to ask the Court to dismiss or convert the Debtor's case despite the fact that the presumption of abuse arose based on the means test and, in fact, opposed the Motion. Judge Beyer said she is persuaded that the arguments in the Chapter 7 Trustee's Objection, the Federated Objection, and the objection by the Bankruptcy Administrator state a case for the Court's exercise of discretion in denying the Motion. The Court said the Chapter 7 Trustee has been active in seeking recoveries for the bankruptcy estate, and it appears that the best interests of the creditor body would be for the Debtor's case to proceed in chapter 7. A copy of the Court's July 2, 2012 Order is available at http://is.gd/rmLXAHfrom Leagle.com. Matthew Allen Jenkins filed a pro se, voluntary Chapter 7 petition (Bankr. W.D.N.C. Case No. 12-50413) on April 11, 2012. James T. Ward, Sr., was appointed as Chapter 7 trustee. MATTRESS FOR YOU: Case Summary & 10 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Mattress For You, LLC 4305 Northeast Expressway Doraville, GA 30340 Bankruptcy Case No.: 12-67132 Chapter 11 Petition Date: July 6, 2012 Court: United States Bankruptcy Court Northern District of Georgia (Atlanta) Judge: James R. Sacca Debtor's Counsel: Brian C. Near, Esq. THE NEAR LAW FIRM 3690 Holcomb Bridge Rd., Suite B Norcross, GA 30092 Tel: (770) 242-0850 Fax: (404) 521-4167 E-mail: nearlawfirm@hotmail.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 10 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ganb12-67132.pdf The petition was signed by Jack Korshak, managing member. MERRIMACK PHARMACEUTICALS: Had $23.4 Million Q1 Net Loss -------------------------------------------------------- Merrimack Pharmaceuticals, Inc., filed its quarterly report on Form 10-Q, reporting reported a net loss of $23.40 million on $11.34 million of collaboration revenues for the three months ended March 31, 2012, compared with a net loss of $13.53 million on $6.46 million of collaboration revenues for the same period of 2011. The Company's balance sheet at March 31, 2012, showed $64.45 million in total assets, $108.05 million in total liabilities, $268.23 million in convertible preferred stock, $456,000 in non-controlling interest, and a shareholders' deficit of $312.29 million. As reported in the TCR on April 9, 2012, PricewaterhouseCoopers LLP, in Boston, Massachusetts, expressed substantial doubt about Merrimack Pharmaceuticals' ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has suffered recurring losses from operations and has insufficient capital resources available as of Dec. 31, 2011, to fund planned operations through 2012. A copy of the Form 10-Q is available for free at: http://is.gd/xKD29T Cambridge, Mass.-based Merrimack Pharmaceuticals, Inc., a biopharmaceutical company discovering, developing and preparing to commercialize innovative medicines consisting of novel therapeutics paired with companion diagnostics. The Company's initial focus is in the field of oncology. The Company has five programs in clinical development. In it most advanced program, the Company is conducting a pivotal Phase 3 clinical trial. MF GLOBAL: CME Settlement Put Off Until Aug. 8 ---------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that even though the Commodity Futures Trading Commission and the Securities Investor Protection Corp. filed papers in support, the trustee liquidating MF Global Inc. put off the hearing that would have been held on July 11 for approval of a settlement with CME Group Inc. The new hearing date is Aug. 8. According to the report, the settlement would dispose of the entire $175 million of MF Global funds held at CME, the owner of the world's largest commodity and futures exchanges. Of the total, $130 million would be divided evenly between MF Global's foreign and domestic customers. In addition, CME is subordinating $30 million of its claims. The settlement provides for the sale of the shares of CME that MF Global owns, with the proceeds going to the MF Global trustee. SIPC and the CFTC both say the settlement falls within the range of reasonableness and should therefore be approved to avoid the uncertainties of litigation over an interplay between federal law and exchange rules. About MF Global New York-based MF Global (NYSE: MF) -- http://www.mfglobal.com/-- is one of the world's leading brokers of commodities and listed derivatives. MF Global provides access to more than 70 exchanges around the world. The firm is also one of 22 primary dealers authorized to trade U.S. government securities with the Federal Reserve Bank of New York. MF Global's roots go back nearly 230 years to a sugar brokerage on the banks of the Thames River in London. MF Global Holdings Ltd. and MF Global Finance USA Inc. filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15059 and 11-5058) on Oct. 31, 2011, after a planned sale to Interactive Brokers Group collapsed. As of Sept. 30, 2011, MF Global had $41,046,594,000 in total assets and $39,683,915,000 in total liabilities. It is easily the largest bankruptcy filing so far this year. Judge Honorable Martin Glenn presides over the Chapter 11 case. J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve as bankruptcy counsel. The Garden City Group, Inc., serves as claims and noticing agent. The petition was signed by Bradley I. Abelow, Executive Vice President and Chief Executive Officer of MF Global Finance USA Inc. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. U.S. regulators are investigating about $633 million missing from MF Global customer accounts, a person briefed on the matter said Nov. 3, according to Bloomberg News. Bankruptcy Creditors' Service, Inc., publishes MF GLOBAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by MF Global Holdings and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MOLYCORP INC: S&P Assigns 'B' Corporate Credit Rating ----------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Colorado-based Molycorp Inc. The rating outlook is stable. "At the same time, we assigned a 'B' issue-level rating (the same as the corporate credit rating) to the company's $650 million senior secured notes due 2020. The recovery rating on these notes is '3', indicating our expectation that lenders can expect average (50% to 70%) recovery in the event of a payment default. The notes have been sold pursuant to Rule 144A with registration rights. Molycorp will use proceeds from the notes to finance a portion of the acquisition of Neo Materials Inc. (not rated), a Toronto-based producer and processor of permanent magnet powders, rare earths and other metals, and for general corporate purposes. Pending the completion of the Neo Materials acquisition, the proceeds will be deposited into an escrow account," S&P said. Molycorp is a miner, processor, and producer of rare earth elements, which are a group of 17 elements generally found together in the earth's crust that are used in a variety of high tech applications. "The rating and outlook reflect what we consider to be the combination if its "vulnerable" business risk profile and "aggressive" financial risk profile," S&P said. "In our view, the company's vulnerable business risk profile stems from exposure to volatile pricing, the pricing and supply uncertainties resulting from China's control of the supply of global rare earth elements, the execution risks inherent in starting up a mining operation and integrating the Neo Materials acquisition, and reliance on a single mine to drive future performance," said Standard & Poor's credit analyst Marie Shmaruk. "Our view of the business risk also takes into consideration the company's relatively large reserve base and the growing demand for certain of these elements, which the risk of new entrants and the potential reengineering of products to lower dependence on rare earth elements somewhat offset. In our view, the aggressive financial risk profile reflects the company's lack of operating history, high capital spending needs, what we would consider relatively high debt levels (considering the start up and integration risks facing its business), and, in our assessment, the company's "less than adequate" liquidity, which could cause the company to slow its mine development plans, resulting in lower-than-expected cash flow," S&P said. Molycorp is aggressively pursuing a strategy to become one of the world's most integrated producers of rare earth products, including oxides, metals, alloys, and magnets used in high tech, defense, clean energy, and water treatment technology. It is reopening the Mountain Pass mine, which had been inactive for a decade, although the company continued to process ore from existing stockpiles. This site has a significant reserve base (more than 20 years at full production) and the potential to expand reserves on the current site. The mine is slated to resume production by the end of 2012 at an expected rate of 20,000 metric tons per year of rare earth oxides (REO) and up to 40,000 metric tons per year in 2013 when the company expect it to complete the second phase of its expansion. "We estimate that the combined company's capital expenditures will total about $700 million in 2012, including spending to complete both phases of this project. The company has the majority of its 2012 output contracted at market-based prices with average terms of three to five years. In addition to reopening the mine, the company has made a number of acquisitions in the past year or so to expand its processing capabilities, including operations in Estonia and the U.S., and has recently announced it is acquiring Toronto-based Neo Materials, producer and processor of permanent magnet powders, rare earths, and other metals," S&P said. The Neo Materials acquisition expands Molycorp's direct exposure to China, the largest rare earth-consuming nation. The transaction expands production capabilities to include Neo Materials' magnet powder portfolio used to produce neodymium-iron-boron bonded rare earth magnets, which are in high demand for use in a variety of applications including hard disk drives, wind turbines, and drive motors for electric vehicles. It also expands Molycorp's rare metals portfolio to include gallium, rhenium, and indium, which are used in advanced electronics, photovoltaic, aerospace, catalytic converters, and lighting. "In our view, integrating this acquisition -- a company that is larger than Molycorp and whose major operations are in China -- could pose major challenges for management, particularly as it is simultaneously ramping up the Mountain Pass operation," S&P said. China controls the supply of rare earths. It produces about 95% and consumes about 70% of rare earths used globally. Beginning in 2010, China began to severely limit exports, partially reflecting depleting supply and environmental concerns as well as putting further pressure on users of rare earths to site their operations in China. These restrictions resulted in skyrocketing prices in 2011, creating a market characterized by speculation and users of rare earths scrambling to ensure supply. Although prices have since moderated, they seem to have stabilized at levels significantly higher than historical levels. "However, in our view, China's control of supply creates pricing risk, since it could release supply under political duress (the U.S. filed a recent World Trade Organization case), lowering speculative demand and easing supply shortages. Moreover, over the longer term, high prices could encourage new entrants or cause end users to reengineer products, thus creating oversupply. However, based on Molycorp's assessment, only one other new entrant has a mine that is close to production. In our view, developing, permitting, and financing a new mine could take several years, and for some applications, there are no suitable substitutes. As a result, we anticipate that pricing will be volatile, based on perceptions of China's policies, but should on average be high enough for the company to generate free cash flow once the mine is complete," S&P said. Both Molycorp and Neo Materials lack a history of strong operating results. The Mountain Pass mine has only recently resumed production and has been processing ore from prior mining activities. Given strong prices in 2011, Molycorp posted about $182 million in EBITDA, which was in stark contrast with EBITDA losses from 2008 through 2010. Neo Materials' results also improved in 2011, with EBITDA increasing to about $299 million compared with an average of about $65 million per year during the prior five years. "In light of this lack of operating history, we feel that the total debt level contemplated, totaling about $865 million, is somewhat aggressive. In addition, the proposed financing increases fixed cash outflows in a period of heavy capital spending and operating challenges. We expect the combined company to generate between $350 million and $400 million of EBITDA in 2012, which would result in debt to EBITDA between 2x and 3x, and funds from operations (FFO) to total debt between 25% and 30%, which we would consider strong for the rating," S&P said. "However, in our view, delays and cost overruns related to the completion of the Mountain Pass mine or higher-than-expected costs, lower prices, or difficulties in integrating Neo Materials could dramatically weaken these ratios. The outlook is stable. Although market conditions for the company's products remain relatively strong, which should allow the company to complete the reopening of its mine and begin to generate cash flow in 2013, the company is subject to commodity price fluctuations, execution risks and operating risks inherent in reopening the mine, and integration risks associated with the Neo Materials acquisition," S&P said. "We could raise the ratings if the company completed its growth platform and gained sufficient operating traction to improve liquidity and demonstrate the sustainability of its business, without operating significant leverage to do so. We could lower the ratings if the company ran into delays, cost overruns, or operating difficulties in opening and operating the Mountain Pass operation, leading to weak liquidity and deterioration in credit metrics," S&P said. MUSCLEPHARM CORP: Gary Davis Joins as Chief Financial Officer ------------------------------------------------------------- Gary L. Davis has been appointed as chief financial officer of MusclePharm Corporation, succeeding Larry Meer, who will continue with the Company as treasurer. Mr. Davis most recently served as executive vice president and chief financial officer of Bodybuilding.com, a Sports, Fitness and Nutritional Supplement on-line retail store and a large retailer of MusclePharm products. He previously was vice president and chief financial officer of US Ecology Corporation. Mr. Davis earned a bachelor's degree in accounting from Boise State University and master's degree in finance from Rochester Institute of Technology. He is a licensed Certified Public Accountant and serves on the boards of Jayden DeLuca Foundation and HP Holdings, Inc. "Gary brings extensive financial and operations experience to MusclePharm at a time when the company is experiencing rapid growth, introducing new products and entering new distribution channels," said Brad Pyatt, chief executive officer of MusclePharm. "His deep knowledge of the dietary supplement industry and long association with MusclePharm products will allow him to step in seamlessly and do well with the demands and fast pace of our company. We are deeply appreciative to Larry Meer, for guiding us through our recent, formative years and happy he will continue to be part of our financial team, working closely with Gary." "As MusclePharm matures as a company and enters a new stage of growth and development, the diverse skill set Gary brings to us will be invaluable," added John Bluher, chief operating officer of MusclePharm. "Gary's broad, cross-disciplined experience, from working with nutritional supplement distribution giant Bobybuilding.com to SEC reporting and working with publicly traded and privately owned Fortune 500 and Inc. 500 companies, make him an ideal fit." Mr. Davis will be paid an annual gross salary starting at $130,000, receive a cash bonus of $30,000 for the remainder of 2012 in the event of satisfactory performance, and he will participate in the Company's standard employee benefit plans. About MusclePharm Headquartered in Denver, Colorado, MusclePharm Corporation (OTC BB: MSLP) -- http://www.muslepharm.com/-- is a healthy life- style company that develops and manufactures a full line of National Science Foundation approved nutritional supplements that are 100% free of banned substances. MusclePharm is sold in over 120 countries and available in over 5,000 U.S. retail outlets, including GNC and Vitamin Shoppe. MusclePharm products are also sold in over 100 online stores, including bodybuilding.com, Amazon.com and Vitacost.com. For the year ended Dec. 31, 2011, Berman & Company, P.A., in Boca Raton, Florida, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has a net loss of $23,280,950 and net cash used in operations of $5,801,761 for the year ended Dec. 31, 2011; and has a working capital deficit of $13,693,267, and a stockholders' deficit of $12,971,212 at Dec. 31, 2011. The Company's balance sheet at March 31, 2012, showed $7.55 million in total assets, $24.76 million in total liabilities, and a $17.21 million total stockholders' deficit. The Company's restated statement of operations reflects a net loss of $23.28 million in 2011, compared with a net loss of $19.56 million in 2010. NEPHROS INC: Incurred $557,000 Net Loss in First Quarter -------------------------------------------------------- Nephros, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $557,000 on $533,000 of revenues for the three months ended March 31, 2012, compared with a net loss of $707,000 on $681,000 of revenues for the corresponding period of 2011. The Company's balance sheet at March 31, 2012, showed $3.60 million in total assets, $2.57 million in total liabilities, and stockholders' equity of $1.03 million. As reported in the TCR on March 29, 2012, Rothstein Kass, in Roseland, N.J., expressed substantial doubt about Nephros, Inc.'s ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has incurred negative cash flow from operations and net losses since inception. A copy of the Form 10-Q is available for free at: http://is.gd/tFV8N3 Headquartered in River Edge, N.J., Nephros, Inc. (OTC bb: NEPH) -- http://www.nephros.com/-- is a medical device company developing and marketing filtration products for therapeutic applications, infection control, and water purification. NEW VENTURES: Case Summary & 18 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: New Ventures Associates, LLC dba Crow Lane Landfill 20 Crow Lane Newburyport, MA 01950 Bankruptcy Case No.: 12-15761 Chapter 11 Petition Date: July 5, 2012 Court: United States Bankruptcy Court District of Massachusetts (Boston) Judge: Joan N. Feeney Debtor's Counsel: Alan L. Braunstein, Esq. Guy B. Moss, Esq. Macken Toussaint, Esq. RIEMER & BRAUNSTEIN, LLP Three Center Plaza Boston, MA 02108 Tel: (617) 880-3516 Fax: (617) 880-3456 E-mail: abraunstein@riemerlaw.com gmoss@riemerlaw.com mtoussaint@riemerlaw.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 18 largest unsecured creditors is available for free at http://bankrupt.com/misc/mab12-15761.pdf The petition was signed by William A. Thibeault, sole member. NORTHAMPTON GENERATING: Has Until Aug. 17 to Propose Ch. 11 Plan ---------------------------------------------------------------- The Hon. J. Craig Whitley of the U.S. Bankruptcy Court for the Western District of North Carolina extended Northampton Generating Co. LP's exclusive periods to file and solicit acceptances for the proposed plan of reorganization until Aug. 17, 2012, and Oct. 16, respectively. As reported in the Troubled Company Reporter on June 29, 2012, the Debtor sought an enlargement of exclusivity by three months to Sept. 30. About Northampton Generating Northampton Generating Co. LP is the owner of a 112 megawatt electric generating plant in Northampton, Pennsylvania. The plant is fueled with waste products, including waste coal, fiber waste, and tires. The power is sold under a long-term agreement to an affiliate of FirstEnergy Corp. Northampton Generating filed for Chapter 11 bankruptcy (Bankr. W.D.N.C. Case No. 11-33095) on Dec. 5, 2011. Hillary B. Crabtree, Esq., and Luis Manuel Lluberas, Esq., at Moore & Van Allen PLLC, in Charlotte, N.C., serve as counsel to the Debtors. Houlihan Lokey Capital, Inc., is the financial advisor. The Debtor estimated assets and debts of up to $500 million. Debt includes $73.4 million owing on senior bonds issued through the Pennsylvania Economic Development Financing Authority. No request for the appointment of a trustee or examiner has been made, and no statutory committee or trustee has been appointed in this case. NORTHSTAR AEROSPACE: Has Final Approval on $29 Million in Loans --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the reorganization of Northstar Aerospace (USA) Inc. is proceeding without a hitch in advance of an auction on July 17 and a hearing on July 24 for approval of sale. The bankruptcy court in Delaware gave final approval for $29 million in financing on July 3. Fifth Third Bank, received final approval to lend a maximum of $22 million. The bank is already owed $39.5 million on a revolving credit and $18.9 million on a term loan. The bankruptcy court also gave final approval for a $7 million junior loan from Boeing Co. The court, according to the report, also authorized a management incentive plan. The bankruptcy judge approved a $420,000 bonus program for 10 executives and managers. Payments are contingent on completion of a sale to private-equity investor Wynnchurch Capital Ltd. About Northstar Aerospace Chicago, Illinois-based Northstar Aerospace -- http://www.nsaero.com/-- is an independent manufacturer of flight critical gears and transmissions. With operating subsidiaries in the United States and Canada, Northstar produces helicopter gears and transmissions, accessory gearbox assemblies, rotorcraft drive systems and other machined and fabricated parts. It also provides maintenance, repair and overhaul of components and transmissions. Its plants are located in Chicago, Illinois; Phoenix, Arizona and Milton and Windsor, Ontario. Northstar employs over 700 people across its operations. Northstar Aerospace, along with affiliates, filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-11817) in Wilmington, Delaware, on June 14, 2012, to sell its business to affiliates of Wynnchurch Capital, Ltd., absent higher and better offers. Attorneys at SNR Denton US LLP and Bayard, P.A. serve as counsel to the Debtors. The Debtors have obtained approval to hire Logan & Co. Inc. as the claims and notice agent. Certain Canadian affiliates are also seeking protection pursuant to the Companies' Creditors Arrangement Act, R.S.C.1985, c. C-36, as amended. As of March 31, 2012, Northstar disclosed total assets of $165.1 million and total liabilities of $147.1 million. Approximately 60% of the assets and business are with the U.S. debtors. NUSTAR ENERGY: S&P Lowers CCR to 'BB+' on Weak Performance ---------------------------------------------------------- Standard & Poor's Ratings Services it lowered its ratings on San Antonio-based midstream energy company NuStar Energy Partners L.P., including the corporate credit rating, to 'BB+' from 'BBB-' and revised the outlook to stable. "Our issue-level rating on NuStar's senior unsecured notes is 'BB+' (the same as the corporate credit rating). We are assigning a recovery rating of '3', which indicates our expectation for average (50% to 70%) recovery if a payment default occurs," S&P said. "The downgrade reflects that NuStar's financial risk profile will be considerably weaker than we previously expected due to losses in its asphalt-refining and fuels-marketing segments, which requires covenant relief in the second and third quarters of 2012," said Standard & Poor's credit analyst Michael Grande. NuStar's financial performance for the quarter ended June 30, 2012 will be very weak, hurt by poor results in the asphalt refining business and a trading loss. The partnership's asphalt operations will generate negative EBITDA and the fuels-marketing segment will generate a loss because the partnership did not hedge its heavy fuel oil and bunker fuel inventories for about two months even as commodity prices sharply declined. Consequently, NuStar was going to breach its debt to EBITDA covenant of 5.5x as of June 30, 2012 and 5x as of Sept. 30, 2012 were it not for an amendment to its credit facility by its lenders. "NuStar's decision not to hedge its inventory when it historically used hedges in the past raises concerns about NuStar's financial policies, and, together with the potential breach of financial covenants, is inconsistent with an investment-grade credit profile, in our opinion. NuStar indicates that its entire fuel oil inventory is fully hedged as of May 25, 2012 and the partnership intends to remain fully hedged in the future," S&P said. "The outlook on NuStar is stable, and reflects our view that the partnership will reduce debt to EBITDA to about 4.75x by 2013 from more than 5x in 2012 and have sufficient liquidity to fund its growth initiatives during the next 12 to 18 months. We could lower the rating if NuStar exhibits a more aggressive financial strategy in managing its businesses, such that there is a renewed focus on segments with a higher degree of business risk and more volatile cash flows, or if NuStar cannot reduce leverage below 5x," S&P said. A higher rating, currently not under consideration, is possible over time if we see management embrace more conservative financial policies and demonstrate that it can consistently maintain leverage in the low-4x area. NUTRACEA: Had $9.4 Million Net Loss in First Quarter ---------------------------------------------------- NutraCea filed its quarterly report on Form 10-Q, reporting a net loss of $9.37 million on $9.75 million of revenues for the three months ended March 31, 2012, compared with a net loss of $4.09 million on $8.65 million of revenues for the same period of 2011. The Company's balance sheet at March 31, 2012, showed $50.61 million in total assets, $36.04 million in total liabilities, $9.54 million of redeemable noncontrolling interest in Nutra SA, and stockholders' equity of $5.03 million. As reported in the TCR on April 5, 2012, BDO USA, LLP, in Phoenix, Arizona, expressed substantial doubt about NutraCea's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has suffered recurring losses from operations resulting in an accumulated deficit of $194.9 million. "Although the Company emerged from bankruptcy in November 2010, there continues to be substantial doubt about its ability to continue as a going concern." A copy of the Form 10-Q is available for free at: http://is.gd/Vr3dzo Scottsdale, Ariz.-based NutraCea. a California corporation, is a human food ingredient and animal nutrition company focused on the procurement, bio-refining and marketing of numerous products derived from rice bran. PALM BEACH: Judge Takes Different Approach to Reference Withdrawal ------------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that a federal district judge in Florida took a different approach to the question of how to handle fraudulent transfer suits. A bankruptcy trustee filed 15 suits to recover $126.3 million in fraudulent transfers. One of the defendants asked U.S. District Judge Kenneth A. Marra to remove the suit from bankruptcy court, saying the lower court doesn't have constitutional authority to rule in the case following the U.S. Supreme Court's decision one year ago in Stern v. Marshall. The report notes that in similar circumstances, district judges are prone to allow the case to proceed in bankruptcy court until ready for trial, and then remove the suit to district court if the defendant demands a jury trial. Instead, Judge Marra directed that the case remain in bankruptcy court where the bankruptcy judge would initially determine whether the bankruptcy court has constitutional authority to issue a final judgment. When the case goes up on appeal, Judge Marra said he will then decide whether the bankruptcy court erred in finding the ability to render a final judgment. If he later decides the bankruptcy court can't make final determinations in fraudulent transfer suits, Judge Marra said he would treat the bankruptcy judge's decision as a report and recommendation. Judge Marra said his decision doesn't preclude the defendant from filing another motion for withdrawal of the reference if the defendant decides to exercise its right to a jury trial. The case is Mukamal v. KBC Financial Products Ltd. (In re Palm Beach Finance Partners LP), 12-80277, U.S. District Court, Southern District of Florida (West Palm Beach). About Palm Beach Funds Palm Beach Gardens, Florida-based Palm Beach Finance Partners, L.P., was a hedge fund. The Company solicited capital contributions from third-party limited partners, and proceeded to invest substantial amounts of the capital with the Petters Company, Inc. The Company filed for Chapter 11 on Nov. 30, 2009 (Bankr. S.D. Fla. Case No. 09-36379.) The Debtor's affiliate, Palm Beach Finance II, L.P., also filed for bankruptcy (Bankr. S.D. Fla. Case No. 09-36396). Paul A. Avron, Esq., and Paul Steven Singerman, Esq., assisted the Debtors in their restructuring efforts. Palm Beach Finance II estimated $500 million to $1 billion in assets and liabilities in its petition. In October 2010, Judge Paul G. Hyman confirmed the Plan of Liquidation for Palm Beach Finance Partners, L.P., and Palm Beach Finance II, L.P., proposed by Barry Mukamal, as Chapter 11 trustee and Geoffrey Varga, as joint official liquidator of the Debtors. The Chapter 11 trustee is represented by Michael S. Budwick, Esq. at Meland Russin & Budwick, P.A. PATRIOT COAL: Files for Chapter 11 Reorganization ------------------------------------------------- Patriot Coal Corporation (NYSE: PCX) and nearly 100 affiliates filed voluntary Chapter 11 petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y. Lead Case No. 12-12900) on July 9, 2012. Patriot said it had $3.57 billion of assets and $3.07 billion of debts, and has arranged $802 million of financing to continue operations during the reorganization. "The coal industry is undergoing a major transformation and Patriot's existing capital structure prevents it from making the necessary adjustments to achieve long-term success," said Patriot Chairman and Chief Executive Officer Irl F. Engelhardt. "Our objective is to use the reorganization process to address important issues in an orderly way and make the Company stronger and more competitive." Spun off from Peabody Energy Corp. in 2007, Patriot has 12 active mining complexes in Appalachia and the Illinois Basin, and controls about 1.9 billion tons of proven and probable coal reserves. Patriot sold 31.1 million tons of coal in 2011. It reported a net loss of $198.5 million on $2.33 billion of revenue for the 12 months ended March 31, 2012. Patriot has 4,000 employees, with 42% represented by the United Mine Workers of America. Patriot expects its mining operations and customer shipments to continue in the ordinary course throughout the reorganization process. Patriot believes that the protection afforded by a court- supervised reorganization process, including the ability to access new financing, will provide the Company with additional time and flexibility to address its financial challenges and position Patriot for long-term viability and success. Road to Bankruptcy Patriot said its business outlook has been impacted by a number of challenges that are affecting the coal industry, including reductions in U.S. thermal coal demand due to competition from low priced natural gas, challenging environmental regulations affecting the cost of producing and using coal, and weaker international and domestic economies. The Company has reacted to the lower domestic demand by reducing production and increasing sales to the export markets. During recent months, the cancellation of customer contracts, lower thermal coal prices and rising expenditures for environmental and other liabilities have severely constrained the Company's liquidity and financial flexibility. Mark N. Schroeder, CFO and senior vice president, explains in a court filing, "The Debtors' business has reached the point of unsustainability absent utilization of the tools presented by chapter 11. In recent years, the demand for coal has decreased, in large part because alternative sources of energy have become increasingly attractive to electricity generators in light of declining natural gas prices and more burdensome environmental and other governmental regulations. At the same time, the Debtors' liabilities have been increasing as the Debtors face sharply rising costs to comply with such regulations and because of unsustainable labor-related legacy liabilities. As an example of the regulatory impact, within the past two years, the Debtors have received an adverse court ruling, prompted by non-governmental organization lawsuits, and entered into a subsequent consent decree requiring the Debtors to build water treatment facilities that will cost hundreds of millions of dollars." In light of the decreased demand for both thermal and metallurgical coal, the Debtor this year idled at least 5 coal mines, eliminated 1,000 employee and contractor positions, and decreased annual thermal coal production by just under 5 million tons. During the first half of this year, Patriot was approached by certain customers seeking to cancel or delay shipments of coal contracted for delivery under their coal supply agreements. Recently, two of Patriot's customers, Bridgehouse Commodities Trading Limited and Keystone Industries LLC, defaulted on their contractual obligations to purchase hundreds of thousands of tons of coal from Patriot at prices favorable to Patriot. On April 3, 2012 and June 1, 2012, Patriot filed actions for damages against Bridgehouse and Keystone for breaches of contract. In May, Patriot said it had hired Blackstone Group LP to work on a new financing package. It also installed Engelhardt as chief executive, replacing Richard Whiting. Patriot hired Davis Polk & Wardwell as its law firm. Prepetition Capital Structure As of the Petition Date, $300.7 million in letters of credit were issued and outstanding and $25 million in direct borrowings were outstanding under a $427.5 million secured credit facility with lenders and Bank of America, N.A., as administrative agent. The Debtors also owe $51.8 million under an accounts receivable securitization facility. Patriot Coal has issued two series of unsecured notes: (a) $250 million in 8.25% senior unsecured notes due 2018, which are guaranteed by substantially all of the Debtor subsidiaries of Patriot Coal and (b) $200 million in 3.25% unsecured convertible notes due 2013. In 2005, a subsidiary of Patriot Coal issued unsecured promissory notes in conjunction with an exchange transaction involving the acquisition of Illinois Basin coal reserves. As of the Petition Date, $7 million was outstanding under the promissory notes. $802 Million Financing In conjunction with its reorganization, Patriot has obtained a commitment for $802 million in debtor-in-possession financing from Citigroup Global Markets Inc., Barclays Bank PLC, and Merrill Lynch, Pierce, Fenner & Smith Incorporated as joint lead arrangers. This facility will provide borrowing availability through a "first out" DIP facility consisting of a $125 million asset based revolver and a $375 million term loan to be obtained from Citibank, acting as administrative agent and collateral agent, and a "second out" DIP facility consisting of a $302 million facility, into which existing letters of credit outstanding under the existing Credit Facility will be rolled, to be obtained from BofA, acting as administrative agent and collateral agent. Only $377 million of the DIP facility will be used to refinance outstanding debt, thereby providing the Debtors with $425 million of aggregate incremental liquidity. Upon approval by the Bankruptcy Court, the new financing and cash generated from Patriot's ongoing operations will be used to support the business during the reorganization process. First Day Motions Patriot has filed various motions with the Bankruptcy Court in support of its reorganization, including requesting authorization to continue paying employee wages and providing health care and other benefits. Patriot has also asked for authority to continue existing customer programs and intends to pay suppliers in full under normal terms for goods and services provided after the filing date of July 9, 2012. The Debtors have already identified 34 agreements that provide no ongoing benefit to the estates. The Debtors say would save $22 million in total upon the rejection of these agreements. The Debtors expect to pay officers and directors $270,000 and other employees $34.5 million within the 30-day period following the Petition Date. No payments will be made to professionals and financial consultants during the same period. The Debtors expect $172 million in cash receipts and $145 million in cash disbursements for the first 30 days postpetition. Davis Polk & Wardwell LLP is serving as legal advisor, Blackstone Advisory Partners LP is serving as financial advisor, and AP Services, LLC is providing interim management services to Patriot in connection with the reorganization. Ted Stenger, a Managing Director at AlixPartners LLP, the parent company of AP Services, has been named Chief Restructuring Officer of Patriot, reporting to the Chairman and CEO. About Patriot Coal Patriot Coal Corporation is a producer and marketer of coal in the eastern United States, with 12 active mining complexes in Appalachia and the Illinois Basin. Patriot ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls approximately 1.9 billion tons of proven and probable coal reserves. PATRIOT COAL: Case Summary & 50 Largest Unsecured Creditors ----------------------------------------------------------- Lead Debtor: Patriot Coal Corporation 12312 Olive Boulevard, Suite 400 Saint Louis, MO 63141 Bankruptcy Case No.: 12-12900 Ninety-nine affiliates that filed separate Chapter 11 petitions: Debtor Case No. ------ -------- Patriot Beaver Dam Holdings, LLC 12-12898 PCX Enterprises, Inc. 12-12899 Affinity Mining Company 12-12902 Apogee Coal Company, LLC 12-12903 Appalachia Mine Services, LLC 12-12904 Beaver Dam Coal Company, LLC 12-12905 Big Eagle, LLC 12-12906 Big Eagle Rail, LLC 12-12907 Black Stallion Coal Company, LLC 12-12908 Black Walnut Coal Company 12-12909 Bluegrass Mine Services, LLC 12-12910 Brook Trout Coal, LLC 12-12911 Catenary Coal Company, LLC 12-12913 Central States Coal Reserves of Kentucky, LLC 12-12914 Charles Coal Company, LLC 12-12916 Cleaton Coal Company 12-12917 Coal Clean LLC 12-12918 Coal Properties, LLC 12-12919 Coal Reserve Holding Limited Liability Company No. 2 12-12920 Colony Bay Coal Company 12-12921 Cook Mountain Coal Company, LLC 12-12922 Corydon Resources LLC 12-12923 Coventry Mining Services, LLC 12-12924 Coyote Coal Company LLC 12-12925 Cub Branch Coal Company LLC 12-12926 Dakota LLC 12-12927 Day LLC 12-12928 Dixon Mining Company, LLC 12-12929 Dodge Hill Holding JV, LLC 12-12930 Dodge Hill Mining Company, LLC 12-12931 Dodge Hill of Kentucky, LLC 12-12932 EACC Camps, Inc. 12-12933 Eastern Associated Coal, LLC 12-12934 Eastern Coal Company, LLC 12-12935 Eastern Royalty, LLC 12-12936 Emerald Processing, L.L.C. 12-12937 Gateway Eagle Coal Company, LLC 12-12938 Grand Eagle Mining, LLC 12-12939 Heritage Coal Company LLC 12-12940 Highland Mining Company, LLC 12-12941 Hillside Mining Company 12-12942 Hobet Mining, LLC 12-12943 Indian Hill Company LLC 12-12944 Infinity Coal Sales, LLC 12-12945 Interior Holdings, LLC 12-12946 IO Coal LLC 12-12947 Jarrell?s Branch Coal Company 12-12948 Jupiter Holdings LLC 12-12949 Kanawha Eagle Coal, LLC 12-12950 Kanawha River Ventures I, LLC 12-12951 Kanawha River Ventures II, LLC 12-12952 Kanawha River Ventures III, LLC 12-12953 KE Ventures, LLC 12-12954 Little Creek LLC 12-12955 Logan Fork Coal Company 12-12956 Magnum Coal Company LLC 12-12957 Magnum Coal Sales LLC 12-12958 Martinka Coal Company, LLC 12-12959 Midland Trail Energy LLC 12-12960 Midwest Coal Resources II, LLC 12-12961 Mountain View Coal Company, LLC 12-12962 New Trout Coal Holdings II, LLC 12-12963 Newtown Energy, Inc. 12-12964 North Page Coal Corp. 12-12965 Ohio County Coal Company, LLC 12-12966 Panther LLC 12-12967 Patriot Coal Company, L.P. 12-12968 Patriot Coal Sales LLC 12-12969 Patriot Coal Services LLC 12-12970 Patriot Leasing Company LLC 12-12971 Patriot Midwest Holdings, LLC 12-12972 Patriot Reserve Holdings, LLC 12-12973 Patriot Trading LLC 12-12974 Pine Ridge Coal Company, LLC 12-12975 Pond Creek Land Resources, LLC 12-12976 Pond Fork Processing LLC 12-12977 Remington Holdings LLC 12-12978 Remington II LLC 12-12979 Remington LLC 12-12980 Rivers Edge Mining, Inc. 12-12981 Robin Land Company, LLC 12-12982 Sentry Mining, LLC 12-12983 Snowberry Land Company 12-12984 Speed Mining LLC 12-12985 Sterling Smokeless Coal Company, LLC 12-12986 TC Sales Company, LLC 12-12987 The Presidents Energy Company LLC 12-12988 Thunderhill Coal LLC 12-12989 Trout Coal Holdings, LLC 12-12990 Union County Coal Co., LLC 12-12991 Viper LLC 12-12992 Weatherby Processing LLC 12-12993 Wildcat Energy LLC 12-12994 Wildcat, LLC 12-12995 Will Scarlet Properties LLC 12-12996 Winchester LLC 12-12997 Winifrede Dock Limited Liability Company 12-12998 Yankeetown Dock, LLC 12-12999 Type of Business: Patriot Coal Corporation is a producer and marketer of coal in the eastern United States, with 13 active mining complexes in Appalachia and the Illinois Basin. The Company ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls roughly 1.9 billion tons of proven and probable coal reserves. Chapter 11 Petition Date: July 9, 2012 Court: U.S. Bankruptcy Court Southern District of New York Judge: Hon. Shelley C. Chapman Debtors' Counsel: Marshall S. Huebner, Esq. Damian S. Schaible, Esq. Brian M. Resnick, Esq. Michelle M. McGreal, Esq. DAVIS POLK & WARDWELL LLP 450 Lexington Avenue New York, New York 10017 E-mail: marshall.huebner@davispolk.com damian.schaible@davispolk.com brian.resnick@davispolk.com michelle.mcgreal@davispolk.com Debtors' Financial Advisor: ALIXPARTNERS, LLP 2000 Town Center, Suite 2400 Southfield, MI 48075 Debtors' Claims and Noticing Agent: GCG PO Box 9898 Dublin, Ohio 43017-5798 Toll Free: 1 (877) 600-6531 International: (336) 542-5677 E-mail: PCXInfo@gcginc.com Total Assets: $3,568,840,000 as of May 31, 2012 Total Debts: $3,072,248,000 as of May 31, 2012 The petitions were signed by Jacquelyn A. Jones, vice president, associate general counsel & corporate secretary. Debtors' Consolidated List of Their 50 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ WILMINGTON TRUST COMPANY 8.25% SENIOR $250,000,000 1100 NORTH MARKET STREET NOTES DUE 2018 RODNEY SQUARE NORTH WILMINGTON, DE 19890 FAX: (302) 636-4144 CORPORATE TRUST SERVICES 3.25% $200,000,000 60 LIVINGSTONE AVENUE CONVERTIBLE ST. PAUL, MN 55518 SENIOR NOTES DUE 2013 ALPHA NATURAL RESOURCES, INC. CONTRACT UNLIQUIDATED ATTN JACINDA BELT DAMAGES 999 CORPORATE BLVD SUITE 300 LINTHICUM, MD 21090 PHONE: (410) 689-7500 FAX: (276) 628-2951 BENTLEY BADGETT II AND LINDA PROMISSORY $7,332,550 BADGETT NOTES TJ EDWARDS, DONALD BOWLES 1822 N. MAIN STREET MADISONVILLE, KY 42431 PHONE: (270) 821-0408 PHONE: (270) 821-2913 FAX: (270) 825-4350 AMERICAN FREEDOM INNOVATIONS REJECTION UNLIQUIDATED LLC DAMAGES 250 CROSS POINT BLVD EVANSVILLE, IN 47715 PHONE: 812-473-0700 FAX: 812-425-2339 CSX TRANSPORTATION INC TRADE $6,352,748 500 WATER ST, 15TH FL DEBT JACKSONVILLE, FL 32202-4057 PHONE: (904) 279-4967 DAYTON POWER & LIGHT REJECTION UNLIQUIDATED ATTN: TERESA MARRINAN AND DAMAGES CHARLENE BELL 1065 WOODMAN DRIVE DAYTON, OH 45432 FAX: (937) 259-7250 FAX: (937) 259-7848 FAX: (937) 331-4990 RICHARDWHITING MISCELLANEOUS $5,533,576 JENNMAR CORPORATION TRADE DEBT $4,774,368 258 KAPPA DRIVE PO BOX 111253 PITTSBURGH, PA 15238 PHONE: (412) 963-9071 FAX: (412) 963-9767 JMAC LEASING INC REJECTION UNLIQUIDATED PO BOX 726 DAMAGES CEREDO,WV 25507 FAX: 304-538-2439 CAPITAL SOURCE BANK REJECTION UNLIQUIDATED ATTN: DAVID HEIDT DAMAGES 30 SOUTHWACKER DRIVE, SUITE 3500 CHICAGO, IL 60606 PHONE: (312) 706-2102 FAX: (312) 577-7902 JOY MINING MACHINERY TRADE DEBT $3,346,303 4111 N. WATER TOWER PLACE SUITE B MT. VERNON, IL 62864 PHONE: (800) 742-5569 FAX: (618) 242-8509 CECIL I.WALKER MACHINERY CO. TRADE DEBT $3,339,153 PO BOX 905258 CHARLOTTE, NC 28290-5258 PHONE: (304) 949-6400 EXT 2341 FAX: (304)683-3113 UNITED CENTRAL INDUSTRIAL SUPPLY TRADE DEBT $3,156,337 1150 NATIONAL MINE ROAD MADISONVILLE, KY 42431 PHONE: (270) 821-6333 FAX: (270) 825-0244 AMERICAN ELECTRIC POWER TRADE DEBT UNLIQUIDATED PO BOX 24401 CANTON, OH 44701-4404 PHONE: (800) 982-4237 CATERPILLAR GLOBAL MINING TRADE DEBT $2,021,145 2045 WEST PIKE STREET HOUSTON, PA 15342 PHONE: (309) 675-1000 FAX: (859) 497-0818 FAX: (724) 743-1201 RALEIGH MINE & INDUSTRIAL TRADE DEBT $1,865,428 PO BOX 72 MOUNT HOPE, WV 25880 PHONE: (304) 877-5503 FAX: (304) 877-5684 J. H. FLETCHER & CO. TRADE DEBT $1,776,261 402 HIGH STREET HUNTINGTON,WV 25722-2187 PHONE: (304) 525-7811 FAX: (304) 523-1317 INDUSTRIAL SUPPLY SOLUTIONS INC TRADE DEBT $1,371,701 PO BOX 798012 ST. LOUIS, MO 63179-8000 FAX: (304) 346-1639 AFCO 4501 COLLEGE BLVD, SUITE 320 TRADE DEBT $1,258,900 LEAWOOD, KS 66211-2328 PHONE: (800) 288-6901 NELSON BROTHERS LLC TRADE DEBT $1,150,614 820 SHADES CREEK PARKWAY, SUITE 2000 BIRMINGHAM, AL 35209 PHONE: (800) 972-2684 FAX: (304) 340-1530 RISH EQUIPMENT CO TRADE DEBT $1,099,571 RT 44 YUMA CAMP RD LOGAN,WV 25601 PHONE: (304) 752-9313 PHONE: (304) 380-0282 FAX: (304) 752-9318 JABO SUPPLY CORP TRADE DEBT $866,857 PO BOX 238 HUNTINGTON,WV 25707-0238 PHONE: (304) 736-8333 FAX: (304) 736-8551 ENVIROMINE INC TRADE DEBT $835,060 PO BOX 11716 CHARLESTON,WV 25339 PHONE: (304) 552-3379 FAX: (888) 248-5302 MONK MINING SUPPLY, INC. TRADE DEBT $799,695 PO BOX 905895 CHARLOTTE, NC 28290-5895 PHONE: (276) 988-9641 FAX: (276) 988-8263 SGS NORTH AMERICA INC TRADE DEBT $765,701 P. O. BOX 2502 CAROL STREAM, IL 60132-2502 PHONE: (270) 827-1187 FAX: (270) 826-0719 BANK OF THE WEST REJECTION UNLIQUIDATED ATTN: SUZANNEWEAVER DAMAGES 844 WEST PAMPA MESA, AZ 85210 PHONE: (480) 768-1799 FAX: (480) 456-0047 CHISLER INC TRADE DEBT $714,937 153 BLUE GOOSE RD FAIRVIEW,WV 26570 PHONE: (304) 798-3202 FAX: (304) 798-3211 SUNCREST RESOURCES LLC TRADE DEBT $700,000 2550 EAST STONE DRIVE SUITE 200 KINGSPORT, TN 37660 PHONE: (423) 723-0230 COGAR MANUFACTURING INC TRADE DEBT $693,888 PO BOX 532 BECKLEY,WV 25802 PHONE: (304) 252-4435 FAX: (304) 252-8003 FAX: (304) 252-4514 I.B.M. CORP. TRADE DEBT $685,878 PO BOX 534151 ATLANTA, GA 30353-4151 PHONE: (845) 759-2526 POWELL CONSTRUCTION CO., INC TRADE DEBT $675,250 3622 BRISTOL HIGHWAY JOHNSON CITY, TN 37601 SHONK LAND COMPANY LLC TRADE DEBT $670,000 PO BOX 969 CHARLESTON,WV 25324 ALLEGHENY POWER TRADE DEBT UNLIQUIDATED 800 CABIN HILL DRIVE GREENSBURG, PA 15601-0001 PHONE: (800) 255-3443 PENN VIRGINIA OPERATING CO LLC TRADE DEBT $633,981 PO BOX 102992 ATLANTA, GA 30368-2992 MINE EQUIPMENT & MILL SUPPLY CO TRADE DEBT $614,733 370 MINE EQUIPMENT ROAD DAWSON SPRINGS, KY 42408 PHONE: (812) 402-4070 FAX: (812) 402-4077 FAX: (270) 797-3010 LOGAN CORP TRADE DEBT $584,699 212 NORTH OHIO AVE CLARKSBURG,WV 26301 PHONE: (800) 473-0110 FAX: (304) 623-5676 FAX: (304) 759-4817 FLOMIN COAL INC TRADE DEBT $581,599 PO BOX 405655 ATLANTA, GA 30384-5655 PHONE: (606) 432-1535 FAX: (606) 437-0563 FAX: (606) 835-9146 KOMATSU FINANCIAL LIMITED REJECTION UNLIQUIDATED PARTNERSHIP DAMAGES ATTN: JIMMY JOSEPH 1701 WEST GOLF ROAD SUITE 300 CHICAGO, IL 60693 PHONE: (847) 437-5800 FAX: (847) 437-7097 SOMERSET CAPITAL GROUP, LTD. REJECTION UNLIQUIDATED ATTN: YOLANDA DELANEY DAMAGES MERRITT CORPORATEWOODS 612 WHEELERS FARMS RD MILFORD, CT 06461 PHONE: (203) 382-2721 FAX: (203) 394-6192 PHILLIPS 66 RECEIVABLE TRADE DEBT $539,264 21064 NETWORK PLACE CHICAGO, IL 60673-1210 PHONE: (800) 448-6630 GE CAPITAL TMS TRADE DEBT $532,378 P. O. BOX 3083 CEDAR RAPIDS, IA 52406-3083 FAX: (319) 841-6324 CHISLER BROTHERS CONTRACTING TRADE DEBT $495,730 LLC PO BOX 101 PENTRESS,WV 26544 PHONE: (304) 879-5511 FAX: (304) 879-5012 AMERCABLE INCORPORATED TRADE DEBT $454,704 350 BAILEY ROAD ELDORADO, AR 71730 PHONE: (800) 643-1516 FAX: (870) 309-3582 UNITED LEASING, INC. REJECTION UNLIQUIDATED ATTN: MARTHA AHLERS DAMAGES 3700 MORGAN AVENUE EVANSVILLE, IN 47715 PHONE: (812) 485-3578 FAX: (812) 474-4359 FAX: (812) 485-3642 ALLEY TRUCKING LLC TRADE DEBT $425,569 PO BOX 47 BELFRY, KY 41514 PHONE: (606) 353-4422 FAX: (606) 353-1270 LONGWALL ASSOCIATES, INC. TRADE DEBT $411,619 212 KENDALL AVENUE CHILHOWIE, VA 24319 PHONE: (276) 646-2004 FAX: (276) 646-3999 COALFIELD SERVICES INC TRADE DEBT $402,002 3203 PEPPERS FERRY ROAD WYTHEVILLE, VA 24382-4947 PHONE: (276) 228-3167 FAX: (276) 228-7912 FIFTH THIRD LEASING COMPANY REJECTION UNLIQUIDATED ATTN: DAVID SCHLAF DAMAGES 8000 MARYLAND AVENUE SUITE 1400 ST. LOUIS, MO 63105 PHONE: (314) 889-3307 FAX: (314) 889-3377 RBS ASSET FINANCE, INC. REJECTION UNLIQUIDATED ATTN: JOHN STOGSDILL DAMAGES 71 S WACKER DRIVE 28TH FLOOR CHICAGO, IL 60606 PHONE: (312) 777-3556 FAX: (312) 777-4003 PAVILLION AUTO: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Pavillion Auto Wash, LLC aka Arizona Auto Wash c/o Mann, Berens & Wisner, LLP Attn: Adam D. Melton 3300 N. Central Avenue Suite 2400 Phoenix, AZ 85012 Bankruptcy Case No.: 12-15092 Chapter 11 Petition Date: July 5, 2012 Court: United States Bankruptcy Court District of Arizona (Phoenix) Judge: George B. Nielsen Jr. Debtor's Counsel: Adam D. Melton, Esq. MANN, BERENS & WISNER LLP 3300 N Central Ave., Suite 2400 Phoenix, AZ 85012 Tel: (602) 258-6200 Fax: (602) 258-6212 E-mail: amelton@mbwlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. The petition was signed by Scott Oxman, managing member. PEGASUS RURAL: Xanadoo Frequency Auction Scheduled for Aug. 20 -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that bankrupt subsidiaries of Xanadoo Co. were authorized to conduct an Aug. 20 auction for the sale of their most valuable frequency assets if they don't land an agreement to refinance the business and pay secured lenders in full. According to the report, auction and sale procedures approved by the U.S. Bankruptcy Court in Delaware authorize the lenders to purchase assets not already under contract with a $30.5 million credit against secured debt. The lenders will be the so-called stalking horse bidder at one or two auctions to be held Aug. 20. If the assets are sold through the auction rather than through a refinancing coupled with a reorganization plan, there will be a hearing on Aug. 22 for approval of the sale. The report relates that under the rules, if the company finds a new lender to pay existing lenders in full, the Chapter 11 plan must be filed by Aug. 21. The company previously said there is "potential" for distribution to unsecured creditors. The assets to be sold include 23 licenses in the 700 megahertz frequency band that were purchased in 2000 and 2001 for $96 million. In addition, the companies will sell licenses they lease in the 2.5 gigahertz spectrum. From the lenders' credit bid, $30 million is attributed to the 700 megahertz frequency band. The bankruptcy court has already approved the sale of tower facilities for $3 million to Rhino Communications Inc., according to court records. About Pegasus Rural Broadband Pegasus Rural Broadband, LLC, and its affiliates, including Xanadoo Holdings Inc., sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 11-11772) on June 10, 2011. The Debtors are subsidiaries of Xanadoo Company, a 4G wireless Internet provider. Xanadoo Co. was not among the Chapter 11 filers. The subsidiaries sought Chapter 11 protection after they were unable to restructure $52 million in 12.5% senior secured promissory notes that matured in May. The notes are owing to Beach Point Capital Management LP. Xanadoo Holdings, through Xanadoo LLC -- XLC -- offers wireless high-speed broadband service, including digital phone services, under the Xanadoo brand utilizing licensed frequencies in the 2.5 GHz frequency band. As of May 31, 2011, XLC served 12,000 subscribers in Texas, Oklahoma and Illinois. In the summer of 2010, the Debtors closed all of their retail stores and kiosks in its six operating markets and severed all fulltime sales personnel. Since the closings, the Debtors relied one key retailer in each market to serve as local point of presence to market customer transactions. Judge Peter J. Walsh presides over the case. Rafael Xavier Zahralddin-Aravena, Esq., Shelley A. Kinsella, Esq., and Jonathan M. Stemerman, Esq., at Elliott Greenleaf, in Wilmington, Delaware, serve as counsel to the Debtor. NHB Advisors Inc. is their financial advisors. Epiq Systems, Inc., is the claims and notice agent. Xanadoo Holdings, Pegasus Guard Band and Xanadoo Spectrum each estimated assets of $100 million to $500 million and debts of $50 million to $100 million. The Chapter 11 filing followed the maturity in May 2011 of almost $60 million in secured notes owing to Beach Point Capital Management LP. The Court denied a motion by the secured noteholders to dismiss the Chapter 11 case and appoint a Chapter 11 trustee. The companies filed a proposed reorganization plan in February predicting sale of licenses in the 700 megahertz spectrum would pay all secured and unsecured creditors in full, with interest. In a separate filing, the companies said the assets will be turned over to secured lenders if there is neither a lender nor a buyer to finance a plan. The plan will be funded either by a new loan or by selling the business and the assets. PINNACLE AIRLINES: Says Business Plan a 'Work in Progress' ---------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Pinnacle Airlines Corp. for the first time is seeking an extension of the exclusive right to file a Chapter 11 plan. The Memphis-based airline reorganizing in New York told the judge in the court filing that negotiations with the creditors' committee on a reorganization plan "have not yet begun." Pinnacle also said the business plan "is a work in progress." The bankruptcy judge will consider the so-called exclusivity motion on July 18. If approved, no one else could file a plan until Sept. 28. About Pinnacle Airlines Pinnacle Airlines Corp. (NASDAQ: PNCL) -- http://www.pncl.com/-- a $1 billion airline holding company with 7,800 employees, is the parent company of Pinnacle Airlines, Inc.; Mesaba Aviation, Inc.; and Colgan Air, Inc. Flying as Delta Connection, United Express and US Airways Express, Pinnacle Airlines Corp. operating subsidiaries operate 199 regional jets and 80 turboprops on more than 1,540 daily flights to 188 cities and towns in the United States, Canada, Mexico and Belize. Corporate offices are located in Memphis, Tenn., and hub operations are located at 11 major U.S. airports. Pinnacle Airlines Inc. and its affiliates, including Colgan Air, Mesaba Aviation Inc., Pinnacle Airlines Corp., and Pinnacle East Coast Operations Inc. filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Lead Case No. 12-11343) on April 1, 2012. Judge Robert E. Gerber presides over the case. Lawyers at Davis Polk & Wardwell LLP, and Akin Gump Strauss Hauer & Feld LLP serve as the Debtors' counsel. Barclays Capital and Seabury Group LLC serve as the Debtors' financial advisors. Epiq Systems - Bankruptcy Solutions serves as the claims and noticing agent. The petition was signed by John Spanjers, executive vice president and chief operating officer. Pinnacle Airlines' balance sheet at Sept. 30, 2011, showed $1.53 billion in total assets, $1.42 billion in total liabilities and $112.31 million in total stockholders' equity. Debtor-affiliate Colgan Air, Inc. disclosed $574,482,867 in assets and $479,708,060 in liabilities as of the Chapter 11 filing. Delta Air Lines, Inc., the Debtors' major customer and post- petition lender, is represented by David R. Seligman, Esq., at Kirkland & Ellis LLP. A seven-member official committee of unsecured creditors has been appointed in the case. The Committee selected Goodrich Corporation as its chairperson. The Committee tapped Morrison & Foerster LLP as its counsel. RG STEEL: Has Morris Nichols as Delaware Bankruptcy Co-Counsel -------------------------------------------------------------- RG Steel LLC, et al., ask the U.S. Bankruptcy Court for the District of Delaware for permission to employ Morris, Nichols, Arsht & Tunnel LLP as Delaware bankruptcy co-counsel. By separate application, the Debtors have sought permission to employ (i) the law firm of Willkie Farr & Gallagher LLP as bankruptcy co-counsel; (ii) Sea Port Group Securities, LLC as investment banker; and (iii) Conway MacKenzie Management Services, LLC. Morris Nichols will coordinate with WF&G, Sea Port and Conway to make every effort to avoid and minimize duplication of services in the cases. Morris Nichols will, among other things: -- assist WF&G in representing the Debtors; -- perform all necessary services as the Debtors' Delaware bankruptcy co-counsel; and -- take all necessary actions to protect and preserve the Debtors' estates during the Chapter 11 cases. Prior to the commencement of the cases, the Debtors made payments to Morris Nichols totaling $126,119 in connection with the advice and services regarding financial restructuring. Accordingly, Morris Nichols holds a balance of $126,119 as an advance payment for services to be rendered and expenses to be incurred. To the best of the Debtors' knowledge, Morris Nichols is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. A hearing on July 10, 2012 at 10:00 a.m. has been set. About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. The bankruptcy court has approved the sale of a non-operating plant in Steubenville, Ohio, for $15 million. RG STEEL: Gets Final Approval to Obtain DIP Financing ----------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware, in a final order, authorized RG Steel LLC, et al., to: -- continue obtaining postpetition loans, advances and other financial accommodations from Wells Fargo Capital Finance, LLC, in its capacity as administrative agent for itself and other financial institutions; -- use cash collateral; and -- grant replacement liens, superpriority administrative claim status to administrative agent; and adequate protection to (i) administrative agent, (ii) Cerberus Business Finance, LLC (second lien agent); and to The Renco Group, Inc., (third lien lender) on account of their respective liens on the prepetition collateral, subject to certain carve out expenses. As of the Petition Date, the Debtors indebtedness includes: 1. $443,643,089, plus interest to the agents, lenders and bank product providers under the prepetition loan documents; 2. $218,729,347 plus interest to second lien agent and lenders; 3. $130,096,978, plus interest to third lien lender. The Debtors would use the loan to fund their business operations. A full-text copy of the approved budget is available for free at http://bankrupt.com/misc/WPSTEEL_dipfinancing_order.pdf Objection Roberta A. DeAngelis, the U.S. Trustee for Region 3, objected to the Debtors' motion to obtain postpetition financing, stating that, among other things, the Local Rule requires that absent justification for a contrary provision, all parties-in-interest have an investigation period of at least 75 days from entry of the financing order to investigate the validity, perfection and amount of the secured creditors' prepetition lien and to investigate claims against the secured creditor, plus a creditors' committee, if formed, will have at least 60 days after committee formation to perform the same investigation. Additionally, the U.S. Trustee noted that it is inappropriate for the lenders to suggest that the creditors' committee can adequately represent the interests of all parties-in-interest in the cases. Among other things, the committee serves as a fiduciary only to the general unsecured creditors. About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. RG STEEL: Deadline to Submit Initial Bids on July 25 ---------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved RG Steel LLC, et al.'s procedures for the sale of substantially all of their assets. The bid procedures contemplate a July or August auction for the assets, which include main plants in Sparrows Point, Maryland; Warren, Ohio; and Wheeling, West Virginia. No buyer is yet under contract. The approved bid procedures provides for this timeline: July 25, 2012, at 12 noon: Bid Deadline July 30, at 5 p.m. Deadline to identify stalking horse purchaser July 31, at 10 a.m.: auction(if no stalking horse purchaser is identified) Aug. 21, at 10 a.m.: sale hearing (if a stalking horse purchaser is identified) Aug. 8, at 1 p.m.: sale hearing (if no stalking horse purchaser is identified) Aug. 23, at 10 a.m.: sale hearing (if the stalking horse purchase is identified) The auction will be held the offices of Willkie Farr & Gallagher LLP, at 787 Seventh Avenue, New York City. Objections, if any, to the sale hearing are due one business day prior to the hearing date. The identification of the stalking horse purchaser will be with the consent of the senior prepetition and DIP agents and the Creditors' Committee. Pursuant to the bid procedures, Wells Fargo Capital Finance, LLC; Cerberus Business Finance, LLC (second lien agent); and The Renco Group, Inc., will be deemed to be a potential bidder. A copy of the bidding procedures is available for free at http://bankrupt.com/misc/WPSTEEL_biddingprocedures_order.pdf About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. SCHLOTSKY'S INC: 5th Cir. Rules on Introducing Evidence ------------------------------------------------------- During a bankruptcy proceeding, John C. Wooley and Jeffrey J. Wooley sought judicial notice of the content of filings from a prior but related bankruptcy proceeding. The bankruptcy court granted motions to strike the documents when they were designated as part of the record in an earlier appeal. Because it would have been improper to take judicial notice of the contents of filings from another case and the bankruptcy court and district court did not err, the U.S. Court of Appeals for the Fifth Circuit affirmed the district court ruling. The Wooleys are former officers and directors of Schlotsky's Inc. which filed for Chapter 11 bankruptcy in August 2004. In December 2008, the Wooleys filed a motion seeking permission from the bankruptcy court to pursue claims against Haynes and Boone and former outside directors on behalf of the bankruptcy estate which was denied. At a hearing on the Wooleys' motion, the Wooleys' attorney requested that the bankruptcy court take judicial notice of evidence their expert relied upon which was previously admitted in a different adversarial proceeding. The bankruptcy court declined to take notice stating: "I have a problem with using judicial notices as substitute for the introduction of materials that might otherwise be subject to legitimate evidence objections." The Wooleys appealed and designated these documents as part of the record even though the documents were never properly admitted to this proceeding. The appellees filed motions to strike those portions of the appellate record which were not admitted at the hearing. The motions to strike were granted on Jan. 21, 2010, striking nine documents from the record on appeal. The Wooleys appealed and the district court affirmed noting that the Wooleys waived this argument due to deficient briefing and, in the alternative, that the bankruptcy court did not err in striking the disputed evidence. The Wooleys timely appealed. "We see no reason to require a court to take judicial notice of the contents of evidence not properly introduced in the bankruptcy proceeding and conclude that the district court did not abuse its discretion in affirming the bankruptcy court's grant of the appellees' motion to strike," the Fifth Circuit said. The case is JOHN C. WOOLEY; JEFFREY J. WOOLEY, Appellants, v. HAYNES & BOONE, L.L.P.; SAM COATES; PIKE POWERS; JOHN SHARP; SARAH WEDDINGTON; GARY CADENHEAD, Appellees, No. 11-51108 (5th Cir.). A copy of the Fifth Circuit's July 5, 2012 per curiam decision is available at http://is.gd/CbruX9from Leagle.com. SHENGDATECH INC: Sets Aug. 30 Plan Confirmation Hearing ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that ShengdaTech Inc. scheduled an Aug. 30 confirmation hearing for approval of the liquidating Chapter 11 plan when the bankruptcy judge in Reno, Nevada, approved disclosure materials last week. According to the report, the disclosure statement shows that unsecured creditors with $173 million in claims might take home less than 1%. The plan creates a liquidating trust to distribute assets in the order of priority established in bankruptcy law. There are no secured claims, according to the disclosure statement. Noteholders' claims for violation of securities laws won't be paid unless unsecured claims are paid in full. The liquidating trust will pursue lawsuits in China. About ShengdaTech Headquartered in Shanghai, China, ShengdaTech, Inc., makes nano precipitated calcium carbonate for the tire industry. ShengdaTech converts limestone into nano-precipitated calcium carbonate (NPCC) using its proprietary and patent-protected technology. NPCC products are increasingly used in tires, paper, paints, building materials, and other chemical products. In addition to its broad customer base in China, the Company currently exports to Singapore, Thailand, South Korea, Malaysia, India, Latvia and Italy. ShengdaTech sought Chapter 11 bankruptcy protection from creditors (Bankr. D. Nev. Case No. 11-52649) on Aug. 19, 2011, in Reno, Nevada, in the United States. The Shanghai-China based company said in its bankruptcy filing it would fire all of its officers and restructure to try to recover from an accounting scandal. The Company disclosed US$295.4 million in assets and US$180.9 million in debt as of Sept. 30, 2011. The Company's legal representative in its Chapter 11 case is Greenberg Traurig, LLP. On Aug. 23, 2011, the Court entered an interim order confirming the Board of Directors Special Committee's appointment of Michael Kang as the Debtor's chief restructuring officer. Alvarez & Marsal North America, LLC, is the Company's chief restructuring officer. As reported in by the Troubled Company Reporter on Sept. 7, 2011, the United States Trustee appointed AG Ofcon, LLC, The Bank of New York, Mellon (in its role as indenture trustee for bondholders), and Zazove Associates, LLC, to serve on the Official Committee of Unsecured Creditors of ShengdaTech, Inc. Hogan Lovells US serves as counsel for ShengdaTech's official committee of unsecured creditors. SOLAR MILLENNIUM: U.S. Court Recognizes German Proceeding --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware recognized Solar Millennium AG's proceeding pending in the local court of Furth, Germany, as "foreign main proceeding." The Court also ordered that all relief afforded to a foreign main proceeding is granted to the German Proceeding, the Company and the Petitioners respectively, including, without limitation, the protections afforded by Section 362 of the Bankruptcy Code. Volker Bohm, serves as the foreign representative of the Debtor and as duly authorized foreign representatives as defined by Section 101(24) of title 11 of the United States Code. The Court also ordered that, among other things, all persons and entities are immediately enjoined from (a) commencing or continuing any legal proceeding or action against the Debtor, its assets located in the United States, or proceeds thereof; (b) enforcing any judicial, quasi-judicial administrative or regulatory judgment, assessment or order or arbitration award against the Debtor; (c) commencing or continuing any legal proceeding or action to create, perfect, or enforce any lien, setoff, or other claim against the Debtor-affiliates About Solar Millennium AG Solar Millennium AG, is a company based in Germany that operates value-added chain of solar-thermal power plants. Rechstanwalt Volker Bohm, the insolvency administrator, says SMAG commenced insolvency proceedings with a local court in Germany on Dec. 31, 2011. The Furth court in February 2012 ascertained that SMAG is insolvent and over-indebted. Volker Bohm filed for Chapter 15 protection (Bankr. D. Del. Case No. 12-11722) on June 4, 2012. R. Craig Martin, Esq., at DLA Piper LLP (US) represents the Debtor's restructuring effort. The Debtor estimated assets at $50 million to $100 million and debts at $100 million to $500 million. The Company did not file a list of creditors together with its petition. Affiliate Solar Trust of America, LLC previously filed for separate Chapter 11 petition (Bankr. Case No. 12-11136) on April 2, 2012. SOLAR TRUST: NextEra, BrightSource Approved to Buy Projects ----------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that NextEra Energy Inc. received formal authority to buy the unfinished 1,000-megawatt facility in Blythe, California, owned by Solar Millennium Inc. NextEra is paying $10 million cash plus contingent payment of as much as an additional $40 million when the project is completed. The U.S. Bankruptcy Court in Delaware also approved selling the 500-megawatt project under development in Desert Center, California, to BrightSource Energy Inc. for a price that could be as much as about $30 million, if all contingent payments are made. About Solar Trust Solar Trust of America LLC, Solar Millennium Inc., and nine affiliates filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-11136) on April 2, 2012. Solar Trust is a joint venture created by Solar Millennium AG and Ferrostaal AG to develop solar projects at locations in California and Nevada. Located in the "Solar Sun Belt" of the American Southwest, the project sites have extremely high solar radiation levels, and allow the Debtors' projects to harness high levels of solar power generation. Projects include the rights to develop one of the world's largest permitted solar plant facilities with capacity of 1,000 MW in Blythe, California. Two other projects contemplated 500 MW solar power facilities in Desert Center, California and Amargosa Valley, Nevada. Although the Debtors have obtained highly valuable transmission right and permits, each project is only in the developmental phase and does not generate revenue for the Debtors. Ferrostaal ceased providing funding two years ago and SMAG, due to its own deteriorating financial condition, stopped providing funding after December 2011. NextEra Energy Resources LLC has committed to provide a postpetition secured credit facility and has expressed an interest in serving as stalking horse purchaser for certain of the Debtors' assets. Attorneys at Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. K&L Gates LLP is the special corporate counsel. Ridgecrest Solar Power Project, LLC, and two entities filed for Chapter 11 protection (Bankr. D. Del. Case Nos. 12-11204 to 12-11206) on April 10, 2012. Ridgecrest Solar, et al., are affiliates of Solar Trust of America LLC. STA Development, LLC, one of the debtors that filed for bankruptcy April 2, owns 100% of the interests in Ridgecrest, et al. Ridgecrest Solar Power estimated up to $50,000 in assets and debts. Ridgecrest Solar I, LLC, estimated up to $50,000 in assets and up to $10 million in liabilities. SOLYNDRA LLC: Wants Until Aug. 31 to Propose Reorganization Plan ---------------------------------------------------------------- Solyndra LLC, et al., ask the U.S. Bankruptcy Court for the District of Delaware to extend, for the third time, their exclusive periods to file and solicit acceptances for the proposed plan of reorganization until Aug. 31, 2012, and Nov. 2, respectively. This is the third exclusivity extension motion filed by the Debtors. The Debtors explain that they need more time to negotiate an acceptable plan with creditors and to prepare adequate financial and non-financial information concerning the ramifications of any proposed plan for disclosure to creditors. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Solyndra didn't say when a plan would be filed or what the plan could mean in terms of recoveries by creditors. A hearing on Aug. 8 at 9:30 a.m. (Eastern Time) has been set. Objection, if any, are due Aug. 1, at 4:00 p.m. 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. SPECIALTY PRODUCTS: US Trustee Balks at More Asbestos Attorneys --------------------------------------------------------------- Amanda Bransford at Bankruptcy Law360 reports that U.S. Trustee Roberta A. DeAngelis, the trustee in Specialty Products Holdings Corp.'s bankruptcy, told a Delaware bankruptcy court Thursday that a group of asbestos personal injury claimants should not be able to retain additional lawyers to advise on medical science issues because their services would be redundant. About Specialty Products Cleveland, Ohio-based Specialty Products Holdings Corp., aka RPM, Inc., is a wholly owned subsidiary of RPM International Inc. The Company is the holding company parent of Bondex International, Inc., and the direct or indirect parent of certain additional domestic and foreign subsidiaries. The Company claims to be a leading manufacturer, distributor and seller of various specialty chemical product lines, including exterior insulating finishing systems, powder coatings, fluorescent colorants and pigments, cleaning and protection products, fuel additives, wood treatments and coatings and sealants, in both the industrial and consumer markets. The Company filed for Chapter 11 bankruptcy protection on May 31, 2010 (Bankr. D. Del. Case No. 10-11780). Gregory M. Gordon, Esq., Dan B. Prieto, Esq., and Robert J. Jud, Esq., at Jones Day, serve as bankruptcy counsel. Daniel J. DeFranceschi, Esq., and Zachary I. Shapiro, Esq., at Richards Layton & Finger, serve as co-counsel. Logan and Company is the Company's claims and notice agent. The Company estimated its assets and debts at $100,000,001 to $500,000,000. The Company's affiliate, Bondex International, Inc., filed a separate Chapter 11 petition on May 31, 2010 (Case No. 10-11779), estimating its assets and debts at $100,000,001 to $500,000,000. STELLAR GT: Sale Failed to Close, Wants Confirmation Order Amended ------------------------------------------------------------------ Stellar GT TIC LLC and VFF TIC LLC, and Wells Fargo Bank, N.A., ask the U.S. Bankruptcy Court for the District of Maryland to modify the Nov. 22, 2011, confirmation order for the Plan of Reorganization dated Sept. 30, 2011. Wells Fargo serves as trustee for the registered holders of Deutsche Mortgage & Asset Receiving Corporation, COMM 2007-C9, Commercial Mortgage Pass-Through Certificates, U.S. Bank National Association, as trustee, as successor in interest to Bank of America, National Association, as Trustee, as successor in interest to Wells Fargo Bank, N.A., as Trustee for the registered holders of Deutsche Mortgage & Asset Receiving Corporation, CD 2007-CD5 Commercial Mortgage Pass-Through Certificates, and FCP Georgian Towers, LLC, acting by and through Situs Holdings, LLC, in its capacity as special servicer. According to the parties, the Plan contains two options for satisfying the more than $200 million in mortgage debt secured by the Debtors' Project -- (a) sale of the Project to a third party pursuant to auction procedures approved by the Court, with the net proceeds used to pay as much of the secured debt as possible; or (b) a consensual restructuring of the secured debt, whereby the B Note holder converts all or a portion of its indebtedness to equity in the Debtors as reorganized. The parties note that after the confirmation hearing, both the prevailing bidder, at $193 million -- Lowe Enterprises Real Estate Group-East, Inc., and the second highest bidder, at $173 million - - Berkshire Property Advisors, LLC failed to close on the purchase of the project after entering into a purchase agreement and binding letter of intent, respectively. Due to the failure to close by Lowe and Berkshire, the parties engaged in discussion with Georgian Investors LLC to purchase the Project. Pantzer, through its affiliate Pantzer Properties, Inc., participated in the auction procedures, but was out-bid by Lowe and Berkshire. Pantzer has agreed, subject to due diligence and an appropriate sale order, to purchase the Project for $168 million. Accordingly, the parties request that the Court modify the Plan and the confirmation order to provide that Pantzer is the "purchaser" and the Pantzer Purchase Agreement is the "purchase agreement" under the Plan and the confirmation order, and deeming the sale of the project by Debtors to Pantzer pursuant to the Pantzer Purchase Agreement as the "auction sale closing" under section 1.8 of the Plan. About Stellar GT TIC and VFF TIC Stellar GT TIC LLC and VFF TIC LLC own an 891-unit multi-family high rise property, consisting of two 14-story apartment buildings, located at 8750 Georgia Avenue in Silver Spring, Maryland, commonly known as "The Georgian". FCP Georgian Towers holds certain notes evidencing a mortgage loan guaranteed by the Debtors in the aggregate original principal amount of $185,000,000. On Dec. 30, 2009, FCP commenced a receivership action in the Circuit Court for Montgomery County, Case No. 324928-V, seeking the appointment of a receiver for the Project. Stellar GT TIC and VFF TIC filed for Chapter 11 bankruptcy (Bankr. D. Md. Case Nos. 11-22977 and 11-22980) on June 22, 2011. Judge Paul Mannes presides over the case. Michelle Maloney-Raymond is the case administrator. Matthew G. Summers, Esq., and Michelle McGeogh, Esq., at Ballard Spahr LLP, in Baltimore, serve as the Debtors' counsel. Mark Taylor, Esq. -- mdtaylor@kilpatricktownsend.com -- at Kilpatrick Townsend & Stockton LLP, in Washington, DC; and Jantra Van Roy, Esq. -- jvanroy@zeklaw.com -- at Zeichner Ellman & Krause LLP, in New York, represent the Lender. The U.S. Trustee for Region 4 notified the Court that he has not appointed an unsecured creditors' committee in the Chapter 11 cases of Stellar GT TIC LLC and VFF TIC LLC. The Debtors negotiated a plan of reorganization before filing for Chapter 11. The plan is premised on either (1) a sale of the project pursuant to an auction process or (2) a consensual restructuring of the secured debt. Broker CB Richard Ellis Inc. was hired to conduct the sale. On Nov. 22, 2011, Judge Mannes entered an order (I) finally approving the disclosure statement and (II) confirming Stellar GT TIC and VFF TIC's Joint Plan of Reorganization and authorizing (A) Sale of "The Georgian"free and clear of all liens, claims and interests and alternatively (B) restructuring pursuant to the Plan if the Sale does not close. The highest and best price offered at the Auction was the $193 million offer made by Lowe Real Estate Group-East, Inc. STOCKTON, CA: Has More Leverage Than Companies Over Creditors ------------------------------------------------------------- Steven Church at Bloomberg News reports that lawyers for Stockton, California's bondholders, who face a fight with the bankrupt city over proposed cuts, arrived in court July 6 armed with fewer weapons than investors owed money by reorganizing companies. Stockton, according to Bloomberg, is trying to become the first American city to use bankruptcy to successfully impose losses on bondholders. Bondholders will be limited to two main options if they are to block Stockton in court, said Lee Bogdanoff, a bankruptcy attorney: get the case thrown out or defeat the city's reorganization proposal. "The most important power they have is a seat at the negotiating table," Bogdanoff, a founding partner of Klee, Tuchin, Bogdanoff & Stern LLP in Los Angeles, said in a telephone interview. "They can try to influence the decision makers." An initial hearing was held July 6 in U.S. Bankruptcy Court in Sacramento, where the city proposed a tentative schedule for the case, which gives bondholders and other creditors until Aug. 24 to decide whether they will try to oppose the city's eligibility to remain in bankruptcy. Should any creditor file an objection to the bankruptcy filing, the city proposed that U.S. Bankruptcy Judge Christopher Klein, the chief bankruptcy judge in Sacramento, schedule a hearing for the end of October. Unlike a company, the city doesn't need to ask Judge Klein for permission to pay any bills it ran up before filing for court protection, such as wages, utility bills or rents. As a result, creditors won't be able to use the hearing to pressure the city on its spending habits, Mr. Bogdanoff said. Chapter 9 of the U.S. Bankruptcy Code also bars creditors from offering their own reorganization plan. Nor are they entitled to form an official committee with legal fees paid by the city. Unsecured creditors typically have those rights under the code's Chapter 11, which is used by companies to try to stay in business and reorganize. Public officials' fear of alienating the bond market may be bondholders' most powerful tool, said Jim Spiotto, a bankruptcy attorney with Chapman & Cutler LLP in Chicago who helped write a book about municipalities in financial distress. "You have to take into consideration what happens if you increase the risk perspective in the financial markets," Mr. Spiotto said. Cutting bond debt today may "increase the cost of borrowing in the future." Aug. 9 Challenge Deadline Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that creditors of Stockton, California, have until Aug. 9 to decide whether to challenge the city's eligibility for being in Chapter 9 bankruptcy. The bankruptcy judge in Sacramento set the deadline at a July 6 hearing. The bankruptcy judge said he will place restrictions on the release of details about mediation that the city and creditors conducted before bankruptcy. About Stockton, Calif. The City of Stockton, California, filed a Chapter 9 petition (Bankr. E.D. Calif. Case No. 12-32118) in Sacramento on June 28, 2012, becoming the largest city to seek creditor protection in U.S. history. The city was forced to file for bankruptcy after talks with bondholders and labor unions failed. Stockton estimated more than $1 billion in assets and in excess of $500 million in liabilities. The city, with a population of about 300,000, identified the California Public Employees Retirement System as the largest unsecured creditor with a claim of $147.5 million for unfunded pension costs. In second place is Wells Fargo Bank NA as trustee for $124.3 million in pension obligation bonds. The list of largest creditors includes $119.2 million owing on four other series of bonds. The city is being represented by Marc A. Levinson, Esq., at Orrick, Herrington & Sutcliffe LLP. The petition was signed by Robert Deis, city manager. Mr. Levinson also represented the city of Vallejo, Calif. in its 2008 bankruptcy. Vallejo filed for protection under Chapter 9 (Bankr. E.D. Calif. Case No. 08-26813) on May 23, 2008. It estimated $500 million to $1 billion in assets and $100 million to $500 million in debts in its petition. In August 2011, Vallejo was given green light to exit the municipal reorganization. The Chapter 9 plan restructures $50 million of publicly held debt secured by leases on public buildings. Although the Plan doesn't affect pensions, it adjusts the claims and benefits of current and former city employees. Bankruptcy Judge Michael McManus released Vallejo from bankruptcy on Nov. 1, 2011. SWIFT AIR: Lack of Funding Forced Chapter 11 -------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Swift Air LLC, a charter airline providing service for seven professional sport teams, filed a petition for Chapter 11 protection, when it was unable to arrange a $5 million loan to cover the slow period from April into September when the sports teams aren't playing. The Federal Aviation Administration is yet to give authorization to lease two more to be flown under contract with Saipan Air Inc. Swift Air, LLC, filed a Chapter 11 petition in its home-town in Phoenix (Bankr. D. Ariz. Case No. 12-14362) on June 27, 2012. Michael W. Carmel, Esq., at Michael W. Carmel, Ltd., serves as counsel. The Debtor estimated assets of under $1 million and debts exceeding $10 million. T BANCSHARES: Incurred $528,000 Net Income in First Quarter ----------------------------------------------------------- T Bancshares, Inc., filed its quarterly report on Form 10-Q, reporting net income of $528,000 on $1.23 million of net interest income (before provision for loan losses) for the three months ended March 31, 2012, compared with a net loss of $1.83 million on $1.24 million of net interest income (before provision for loan losses) for the same period last year. The Company's balance sheet at March 31, 2012, showed $115.80 million in total assets, $100.59 million in total liabilities, and stockholders' equity of $15.21 million. In 2010, the Bank was informed by the Office of the Comptroller of the Currency that the Comptroller intended to institute an enforcement action for alleged violations of the Federal Trade Commission Act in connection with certain merchants and a payment processor that were Bank customers between Sept. 1, 2006, and Aug. 27, 2007. The Comptroller proposed that the Bank enter into a formal agreement with the Comptroller (the "Agreement"). To avoid the expense, delay, and uncertainty related to potential litigation with its primary regulator, the Bank negotiated a settlement with the Comptroller. Accordingly, on April 15, 2010, the Bank executed the Agreement, neither admitting nor denying the Comptroller's findings, which among other provisions required the Bank to reimburse eligible consumers for charges made by the merchants to the eligible consumers. On Oct. 28, 2011, the Comptroller concurred that the Bank had fulfilled this obligation. The Agreement also contains the general terms outlined as follows: -- require the Bank to establish a capital plan which, among other provisions, details the Banks plan to achieve tier 1 capital ratio of 9% and total risk based capital ratio of 11.5%; -- require the Bank to develop a written program designed to reduce the level of criticized assets; -- require the Bank to develop and implement an asset liquidity enhancement plan designed to increase the amount of asset liquidity maintained by the Bank, including a loan to deposit ratio of 85%; and -- require the Bank to develop a written profit plan to improve and sustain the earnings of the Bank. The Bank submitted required capital, liquidity enhancement, and profit plans, as well as a written program to reduce criticized assets to the Comptroller in accordance with the requirements of the Agreement. Although the Comptroller believed the plans were reasonable and did not object to the plans and program as submitted, there is no assurance that the Bank will be able to comply with all of the remaining requirements of the Agreement. Although as of March 31, 2012, the Bank's capital ratios exceeded the requirements set forth in the Agreement, there is no assurance the Bank will continue to meet those requirements in the future. To be categorized as well capitalized under prompt corrective action provisions, the Bank must maintain minimum total risk- based, tier 1 risk-based, and tier 1 leverage ratios. However, regardless of the Bank's capital position, the requirement in the Agreement to meet and maintain a specific capital level means that the Bank may not be deemed to be well capitalized under regulatory requirements as of March 31, 2012. The capital ratios required by the Agreement are 11.5% total capital to risk weighted assets and 9.00% tier 1 capital to average assets. As of March 31, 2012, the Bank's total capital to risk weighted assets ratio was 17.43%. The Bank's tier 1 capital to average assets ratio was 14.15%. Both ratios exceed the requirements set forth in the Agreement. If the Bank fails to meet the minimum capital requirements set forth in the Agreement, the Comptroller may provide written notice that the Bank's capital is materially deficient. Should that occur, the Bank would have 60 days to submit a capital contingency plan to the Comptroller for review. A copy of the Form 10-Q is available for free at: http://is.gd/PCy8MX T Bancshares, Inc., is a bank holding company headquartered in Dallas, Texas, offering a broad array of banking services through T Bank, N.A. The Company's principal markets include North Dallas, Addison, Plano, Frisco, Southlake and the neighboring Texas communities. TANNIN INC: SE Property Says Plan Fails Liquidation Test -------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Alabama continued until July 24, 2012, at 8:30 a.m., the hearing to consider the confirmation of Tannin, Inc.'s Amended Plan of Reorganization. At the hearing, the Court will also consider the objection of creditor SE Property Holdings, LLC, as successor by merger to Vision Bank, a secured creditor in the Debtor's case, well as a possible unsecured creditor, depending on the Court's valuation of the subject property at issue. SEPH objects to the confirmation of the Amended Plan dated April 30, 2012, because, among other things: 1. the Debtor's proposal of providing SEPH with partial dirt for total debt is improper -- the Court has not valued the subject collateral as of the filing of the objection, and the Debtor's expert has not been deposed, though the parties are working to schedule that deposition prior to the July 24, 2012, confirmation hearing; 2. the Debtor's Plan is filed in bad faith; and 3. the Debtor's Plan does not satisfy the liquidation test -- SEPH will not receive or retain under the Plan on account of its claim, property of a value, as of the effective date of the Plan, that is not less than SEPH would receive or retain if the Debtor were liquidated under Chapter 7. The Plan According to the Amended Disclosure Statement, the Debtor will convey the West 21 to Vision bank in full and final satisfaction of its debt. The Debtor will convey Lots 8 and 10 of Phase V to First Federal Bank in satisfaction of its secured claim. First Federal's deficiency claim will be limited to $100,000 and treated as an unsecured claim. The Debtor intends to make payments to secured creditors from the proceeds of sales of lots. The Debtor will pay the Baldwin County Revenue Commission and the IRS each such creditor's unsecured priority claim, plus any applicable statutory interest, in equal monthly installments over a period of 12 consecutive months. Finally, the Debtor will pay its unsecured creditors 100% of their respective allowed claims, without interest, in 12 quarterly payments. The Debtor will make the unsecured payments from proceeds of sales of lots. Shareholder George Gounares will retain his stock in the Debtor. A full-text copy of the Amended Plan is available for free at http://bankrupt.com/misc/TANNIN_INC_ds_1amended.pdf About Tannin, Inc. Orange Beach, Alabama-based Tannin, Inc., filed for Chapter 11 protection (Bankr. S.D. Ala. Case No. 12-00593) on Feb. 20, 2012. Alexandra K. Garrett, Esq., and Lawrence B. Voit, Esq., at Silver, Voit & Thompson represents the Debtor in its restructuring effort. The Debtor has scheduled assets of $54,396,740 and scheduled liabilities at $2,379,421. The petition was signed by George A. Gounares, president. TEARLAB CORP: Had $9.1 Million Net Loss in First Quarter -------------------------------------------------------- TearLab Corp. filed its quarterly report on Form 10-Q, reporting a net loss of $9.10 million on 422,000 of revenue for the three months ended March 31, 2012, compared with a net loss of $1.67 million on $824,000 of revenue for the comparable period of 2011. The Company's balance sheet at March 31, 2012, showed $11.74 million in total assets, $9.37 million in total current liabilities, and stockholders' equity of $2.37 million. As reported in the TCR on April 9, 2012, Ernst & Young LLP, in San Diego, California, expressed substantial doubt about TearLab's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that of the Company's recurring losses from operations and working capital deficit. A copy of the Form 10-Q is available for free at: http://is.gd/HLm5Hk TearLab Corp. is an in-vitro diagnostic company based in San Diego, California. The Company is commercializing a proprietary tear testing platform, the TearLab(R) Osmolarity System that enables eye care practitioners to test for highly sensitive and specific biomarkers using nanoliters of tear film at the point-of- care. TSC GLOBAL: Chapter 7 Trustee Liquidating Assets ------------------------------------------------ A Chapter 7 trustee is liquidating assets of TSC Global, LLC, in order to raise funds to pay creditors, as a result of a May 8, 2012 order by Judge Kevin Gross. The Debtors sought the conversion of their Chapter 11 cases to Chapter 7 due to the administrative insolvency of their estates. The month before, the sought for a voluntary dismissal but the request was met with opposition by stakeholders. About TSC Global Charlotte, North Carolina-based TSC Global, LLC, aka Monomoy Holdings III, LLC, and 10 affiliates filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Lead Case No. 12-10505) on Feb. 13, 2012, in order to deleverage their capital structure and restructure operations. TSC Global estimated $10 million to $50 million in assets and liabilities as of the Chapter 11 filing. TSC claimed to be a leading distributor of consumer brand products to America's top retailers, travel centers and convenience stores. The Debtors tapped McDonald Hopkins LLC as restructuring counsel, Polsinelli Shugart PC as Delaware local counsel; Realization Services, Inc., as financial and restructuring advisors, and Livingston Partners LLC as investment bankers. TYCON REALTY: Case Summary & 3 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Tycon Realty, LLC 3401 Urbana Pike Frederick, MD 21704 Bankruptcy Case No.: 12-22545 Chapter 11 Petition Date: July 5, 2012 Court: United States Bankruptcy Court District of Maryland (Greenbelt) Judge: Wendelin I. Lipp Debtor's Counsel: Craig Lawrence Holcomb, Esq. HOLCOMB & STRAILE, LLC P.O. Box 7327 Gaithersburg, MD 20898 Tel: (301) 656-5594 E-mail: craig.holcomb@handslawllc.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its three largest unsecured creditors is available for free at http://bankrupt.com/misc/mdb12-22545.pdf The petition was signed by Kevin F. Dolan, president. ULURU INC: Had $843,400 Net Loss in First Quarter ------------------------------------------------- ULURU Inc. filed its quarterly report on Form 10-Q, reporting a net loss of $843,409 on $60,005 of revenues for the three months ended March 31, 2012, compared with a net loss of $1.16 million on $75,171 of revenues for the same period of 2011. The Company's balance sheet at March 31, 2012, showed $6.83 million in total assets, $3.11 million in total liabilities, and stockholders' equity of $3.72 million. Lane Gorman Trubitt, PLLC, in Dallas, Texas, expressed substantial doubt about ULURU's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has suffered recurring losses from operations, negative cash flows from operating activities and is dependent upon raising additional funds from strategic transactions, sales of equity, and/or issuance of debt. "The Company's ability to consummate such transactions is uncertain." A copy of the Form 10-Q is available for free at http://is.gd/uC9nYZ Addison, Texas-based ULURU Inc. is a diversified specialty pharmaceutical company committed to developing and commercializing a broad range of innovative wound care and muco-adhesive film products based on its patented Nanoflex(R) and OraDisc(TM) drug delivery technologies, with the goal of improving outcomes for patients, health care professionals, and health care payers. VELO HOLDINGS: Trulia Inc. Out as Committee Member -------------------------------------------------- Tracy Hope Davis, the U.S. Trustee for Region 2, served an amended list of members of the Official Committee of Unsecured Creditors in the Chapter 11 cases of Velo Holdings Inc., et al., to reflect the replacement of Trulia, Inc., with Amy Glass. The Committee now comprises of: 1. TransUnion Interactive, Inc. Attn: Richard S. Siegel, general counsel 555 West Adams Street Chicago, IL 60661 Tel: (312) 985-2373 Fax: (312) 466-6815 2. One Technologies, L.P. Attn: Fred Loeber, general counsel 8144 Walnut Hill Lane, Suite 600 Dallas, TX 75231 Tel: (469) 916-1700 Fax: (469) 916-1707 3. Amy Glass 1013 Trenton Place Wilmington, DE 19801 Tel: (302) 521-1444 About Velo Holdings, V2V et al. V2V Corp. is a premier direct marketing services company, providing individuals and businesses with access to a wide-variety of consumer benefits in the United States, Canada, and the United Kingdom. V2V was founded in 1989 as a membership services company that marketed its membership programs exclusively via telemarketing and, after having nearly a decade of continued growth, went public in 1996. In 2007, V2V was acquired by a consortium of private equity firms led primarily by investing affiliates of One Equity Partners. Norwalk, Connecticut-based Velo Holdings Inc. and various affiliates, including V2V, filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case Nos. 12-11384 to 12-11386 and 12-11388 to 12-11398) on April 2, 2012. The debtor-affiliates are V2V Holdings LLC, Coverdell & Company, Inc., V2V Corp., LN Inc., FYI Direct Inc., Vertrue LLC, Idaptive Marketing LLC, My Choice Medical Holdings Inc., Adaptive Marketing LLC, Interactive Media Group (USA) Ltd., Brand Magnet Inc., Neverblue Communications Inc., and Interactive Media Consolidated Inc. Judge Martin Glenn presides over the case. Lawyers at Dechert LLP serve as the Debtors' counsel. The Debtors' financial advisors are Alvarez & Marsal Securities LLC. The Debtors' investment banker is Alvarez & Marsal North America, LLC. Quinn Emanuel Urquhart & Sullivan, LLP, serves as the Debtors' special counsel. Epiq Bankruptcy Solutions serves as the Debtors' claims agent. Velo Holdings estimated $100 million to $500 million in assets and $500 million to $1 billion in debts. The petitions were signed by George Thomas, general counsel. Lawyers at Willkie Farr & Gallagher LLP represent Barclays, the First Lien Prepetition Agent and the DIP Agent. The First Lien Prepetition Agent and DIP Agent also has hired FTI Consulting, Inc. Sidley Austin LLP represents the Second Lien Prepetition Agent. Tracy Hope Davis, U.S. Trustee for Region 2, appointed three unsecured creditors to serve on the Official Committee of Unsecured Creditors of Velo Holdings Inc., et al. VENOCO INC: S&P Keeps 'B' Corp. Credit Rating on Watch Negative --------------------------------------------------------------- Standard & Poor's Ratings Services said it is keeping its ratings on Denver-based Venoco Inc., including the 'B' corporate credit rating, on CreditWatch with negative implications, where it placed them on Jan. 18, 2012. Standard & Poor's placed its ratings on Venoco on CreditWatch negative following the announcement that the company had entered into a definitive merger agreement under which its chairman and CEO, Tim Marquez, would acquire the company through a wholly owned entity, Denver Parent Corp. (unrated). The announcement followed a five-month evaluation of the proposal by a special committee of Venoco's board of directors, which concluded that Marquez's proposal was in the best interests of the public shareholders. Venoco extended the deadline until July 20 for its CEO to arrange financing for the propose buyout. The total purchase price is about $1.45 billion, including the assumption of $685 million in debt. Marquez, along with affiliated trusts and foundations, currently owns 50.3% of Venoco's common shares outstanding, which, if the deal is approved, will be reinvested into Denver Parent. Consequently, Denver Parent will have to raise about $385 million to $400 million to fund the buyout, including fees and expenses. "If the buyout is funded with equity, there would be minimal impact to our leverage ratios," said Standard & Poor's credit analyst Ben Tsocanos. "However, if the deal is funded with 50% or more debt, as we expect, debt-to-EBITDAX could exceed 5x at the end of 2012, which is above our expectations for the current rating. We believe the financing will include some portion of debt," Mr. Tsocanos said. "Although covenants on Venoco's existing credit facility require the company to maintain leverage below 4x, we believe a new or amended facility could be put in place following the capital restructuring," Mr. Tsocanos said. "The buyout proposal has received the required shareholder approval (a majority of the remaining 49.7% shareholders voted in favor). It is subject to customary regulatory approvals and a financing condition. Assuming the required approvals are received, we expect closing to occur shortly after acceptable financing is obtained," Mr. Tsocanos said. "Depending on how the buyout proposal is ultimately structured, we could lower the corporate and issue-level ratings if leverage exceeds 5x," Mr. Tsocanos said. Standard & Poor's intends to resolve the CreditWatch listing once it obtains details regarding financing of the buyout deal, likely by the end of July 2012. VISTEON CORP: Moody's Affirms B1 Corp Family Rating; Outlook Neg ---------------------------------------------------------------- Moody's Investors Service affirmed Visteon Corporation's Corporate Family and Probability of Default Rating at B1, following the company's announcement of its tender offer to acquire the remaining 30% of the public shares of its Korean affiliate, Halla Climate Control Corp. (HCC), that it does not already own for KRW913 billion (US$805 million) in cash. The rating outlook for Visteon is stable(m). The company's Speculative Grade Liquidity rating was affirmed at SGL-3. The rating agency noted that if the financing of the transaction is completed as currently contemplated, it would result in the company's existing rated debt being structurally subordinate to new debt used to fund the purchase of the HCC shares. Depending on the outcome of the tender for the HCC shares, this could result in a downgrade of the current B2 rating assigned to Visteon's $500 million senior unsecured note by no more than one rating notch. Accordingly, the rating outlook for that instrument is negative. The following ratings were affirmed: Visteon Corporation: Corporate Family Rating, at B1; Probability of Default, at B1; Speculative Grade Liquidity Assessment, at SGL-3; B2 (LGD4, 60%), for the $500 million guaranteed senior unsecured note The asset based revolving credit facility is not rated by Moody's. Ratings Rationale The affirmation of Visteon's B1 Corporate Family Rating reflects Moody's view that benefits of complete ownership of HCC, combined with Moody's expectation of continued improvement in Visteon's operating performance, offset the initial debt burden and interest costs associated with the US$815 million bridge loan incurred to finance the tender offer. Through the complete ownership of HCC, Visteon will benefit from the elimination of minority interest expense associated with the shares it does not own and from the opportunity to implement operating improvements within the combined group. Visteon hopes to achieve approximately $20 million of operational and tax synergies in the first year following completion of the transaction. Although the amount of the initial bridge loan is sizeable in relation to Visteon's existing funded debt, it is expected that the company will use cash at HCC to pay down a portion of the bridge financing following completion of the transaction. The bridge loan is the direct obligation of a Korean affiliate of Visteon and is funded through the local Korean market. Upon 100% ownership of HCC shares, the remaining balance of the bridge loan is expected to be refinanced with longer-term debt and Visteon has indicated that it has received a commitment for the permanent financing. Pro forma for the acquisition debt, Moody's estimates the company's LTM March 31, 2012 debt/EBITDA to be about 3.0x. While pro forma interest coverage for the LTM March 31, 2012 period will be weakened to about 2.0x, Moody's expects this coverage to improve over the intermediate term as cash flow at HCC is used to pay down debt. The rating outlook is stable(m), reflecting the potential for increased control of HCC to benefit Visteon's overall performance and the expectation that Visteon will maintain strong financial metrics and a sound liquidity profile. The change in the outlook of Visteon's B2 rated senior unsecured notes to negative incorporates Moody's view that the additional debt within Visteon's Korean operations used to fund the tender offer will further structurally subordinate the company's U.S. senior unsecured notes to debt at foreign entities. For 2011, North America represented only 16% of Visteon's consolidated sales. If the acquisition financing is completed as currently contemplated, the rating of the senior unsecured notes will likely be lowered by one notch to reflect this structural subordination even though the assessment of Visteon's overall credit profile remains consistent with the B1 assigned Corporate Family Rating. Visteon's competitive market positions in its automotive climate control and interiors businesses is expected to continue to benefit from over $1 billion of new business wins achieved in fiscal 2011 and the company's geographic diversity, with Asia representing 42% of fiscal 2011 revenues and North America representing 16%. This diversity will help offset regional economic uncertainty due to growing macro-economic pressures, particularly in Europe (36% of revenues). While customer concentrations are high (Hyundai/Kia and Ford, representing 31% and 27% of 2011 revenues, respectively), these customers are building popular platforms and are well positioned for growth. Visteon is anticipated to have an adequate liquidity profile over the next twelve months supported by cash balances and availability under the asset-based revolving credit facility. Unrestricted cash balances as of March 31, 2012 were approximately $694 million. Cash balances will also be bolstered by the net proceeds from the announced sale of the company's lighting business and corporate center. As of March 31, 2012, the $220 million asset-based revolver had no cash drawings and was completely available. Concurrent with the tender offer, the commitment of the asset- based revolver was reduced to $175 million. While modest in size, the facility is expected to be largely undrawn over the near term. Visteon's free cash flow generation is expected to improve over the intermediate term as previous capital expenditures to support higher revenues moderate. The asset-based revolving credit facility does not have financial covenants. Alternate liquidity is limited by debt incurrence covenants under the credit facilities. Consideration for a higher outlook or rating would require continued operating performance improvement supporting EBIT/interest above 3.0x and sustaining Debt/EBITDA at about 2.5x. Sustaining positive free cash flow generation would also be a consideration for potential positive rating action. Developments that could lead to lower outlook or ratings include deterioration in automotive industry conditions that are not offset by cost saving actions resulting in EBIT/interest sustained below 2.5x or Debt/EBITDA sustained above 3.5x. Deteriorating liquidity could also lead to a lower outlook or rating. The principal methodology used in rating Visteon 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. Visteon, headquartered in Van Buren Township, Michigan, is a leading global automotive supplier that designs, engineers and manufactures innovative climate, electronic, interior and lighting products for vehicle manufacturers. The company has facilities in 26 countries and employs approximately 26,000 people. Revenues for the year ending December 31, 2011 were approximately $8.0 billion. VISTEON CORP: S&P Keeps 'B+' Corp. Credit Rating After Halla Deal ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on Van Buren Township, Mich.-based Visteon Corp., including its 'B+' corporate credit rating. The outlook is stable. The pending Halla transaction will add an estimated $800 million of debt, raising our estimate of debt-to-EBITDA to a peak of about 2.5x compared with 1.5x for the 12 months ended March 31, 2012. "We assume Visteon will begin reducing debt when the transaction closes; it will use excess cash flow to amortize significant amounts of the debt in two to three years," S&P said. "Visteon's interiors business remains a candidate for some form of divestiture," said Standard & Poor's credit analyst Robert Schulz. "The company noted the well-publicized prospective weakness in European automotive production as one reason for terminating the proposed interiors sale, but we expect the company will continue to work toward a transaction or series of transactions to divest this noncore segment," S&P said "We view the company's financial profile as still consistent with the 'B+' rating, although the company now has less cushion for underperformance. We previously stated that we could lower the rating if the cumulative effect of various potential strategic shifts appeared likely to hinder prospects for positive cash flow or leverage that would consistently exceed 2.5x," S&P said. "The ratings on Visteon reflect our expectation that the company will continue its recent operating performance, including maintaining EBITDA margins in the upper single-digit area. We also assume Visteon's debt-to-EBITDA will decline back towards 2x from a peak of 2.5x following the Halla transaction," S&P said. "Our stable outlook reflects our belief that the company can generate positive discretionary cash flow over time, achieve EBITDA margins in the high single digits, and retain about $600 million in cash. We estimate that revenues will likely decline because of asset sales, and that EBITDA margins will be about 9%. We assume leverage will peak about 2.5x after the Halla transaction and that Visteon will begin reducing debt when the transaction closes," S&P said. "We believe the company and the board continues to consider alternatives to dispose of the interiors business. Still, so far at least, we do not believe these actions point to an intention to increase financial leverage. We would review this assumption if specific actions indicated otherwise," S&P said. VOLKSWAGEN-SPRINGFIELD: Taps Marcher as Financial Consultant ------------------------------------------------------------ Volkswagen-Springfield, Inc., asks the U.S. Bankruptcy Court for the Eastern District of Virginia for permission to employ Marcher Consultants, Inc., as its financial consultant. Marcher will, among other things: -- analyze the Debtor's prepetition financial performance; -- prepare for and testify in Court regarding cash collateral issues and related matters; and -- assist the Debtor in complying with its administrative responsibilities, as preparing schedules and statements of financial affairs. The Debtor intends to compensate Marcher at the maximum rate of $250 per hour, subject to review by the Court. Marcher received a retainer in the amount of $25,000. The retainer was paid by the Debtor through Wiley Rein LLP. As of the Petition Date, $9,025 of the retainer had been applied to prepetition services, leaving $15,975 available to apply towards postpetition services. To the best of the Debtor's knowledge, Marcher does not hold or represent any interest adverse to the estate of the Debtor. About Volkswagen-Springfield Springfield, Virginia-based Volkswagen-Springfield, Inc., filed a Chapter 11 petition (Bankr. E.D. Va. Case No. 12-12905) in Alexandria on May 7, 2012. The Debtor operates one of the largest Volkswagen franchised dealerships in the Mid-Atlantic region. The Debtor estimated assets and debts of $10 million to $50 million as of the Chapter 11 filing. Judge Robert G. Mayer oversees the case. The Debtor is represented by Dylan G. Trache, Esq., and John T. Farnum, Esq., at Wiley Rein LLP, in McLean, Virginia. Pursuant to recent default notices, Branch Banking and Trust Company has asserted that it is owed $19.6 million. Jonathan L. Hauser, Esq., at Troutman Sanders LLP, represents BB&T. No creditors' committee has yet been appointed in the case. VOLKSWAGEN-SPRINGFIELD: Opposes Relief of Stay for BB&T ------------------------------------------------------- Volkswagen-Springfield, Inc., asks the U.S. Bankruptcy Court for the Eastern District of Virginia to deny Branch Banking and Trust Company's motion for relief from stay. BB&T has asked the Court to modify the automatic stay provided for by the provisions of the Bankruptcy Code. BB&T is the Debtor's primary prepetition lender. BB&T asserts that its position is secured by substantially all of the assets of the Debtor well as non-Debtor assets of the Debtor's principal. BB&T claims that it is owed approximately $18 million exclusive of professional fees and expenses. The Debtor explains that, among other things: -- BB&T is adequately protected and there is no cause to grant relief from the stay; and -- the Debtor has equity in the collateral property and the collateral property is necessary for an effective reorganization. About Volkswagen-Springfield Springfield, Virginia-based Volkswagen-Springfield, Inc., filed a Chapter 11 petition (Bankr. E.D. Va. Case No. 12-12905) in Alexandria on May 7, 2012. The Debtor operates one of the largest Volkswagen franchised dealerships in the Mid-Atlantic region. The Debtor estimated assets and debts of $10 million to $50 million as of the Chapter 11 filing. Judge Robert G. Mayer oversees the case. The Debtor is represented by Dylan G. Trache, Esq., and John T. Farnum, Esq., at Wiley Rein LLP, in McLean, Virginia. Pursuant to recent default notices, Branch Banking and Trust Company has asserted that it is owed $19.6 million. Jonathan L. Hauser, Esq., at Troutman Sanders LLP, represents BB&T. No creditors' committee has yet been appointed in the case. W.R. GRACE: Completes Chemical Admixture Acquisition ---------------------------------------------------- W. R. Grace & Co. has acquired Rheoset Industria e Comercio de Aditivos Ltda. ("Rheoset"). Rheoset is a leading manufacturer of concrete admixtures in Brazil. Financial terms of the transaction were not disclosed. Rheoset specializes in quality concrete admixtures based on proprietary, value-added concrete technologies that enhance the performance of concrete and contribute to higher quality, longer lasting structures. These technologies help customers across the value chain achieve efficient production and enhanced productivity. This acquisition adds manufacturing capacity at Rio de Janeiro and Recife, complementing Grace's existing operations at Sorocaba and Bahia. "Rheoset's product lines are highly complementary to Grace's concrete admixture product and technology portfolio," said Craig Merrill, Vice President and General Manager, Americas for Grace Construction Products, a business segment of Grace. "The acquisition will accelerate the pace of product and technology development, enabling the more rapid creation of new customer solutions and new value in this segment." Andrew Bonham, President of Grace Construction Products adds, "This acquisition is part of Grace's strategy of growth in high margin segments, investing in manufacturing capacity to serve emerging regions, and extending the Grace brand in our core business segments." About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. W.R. Grace obtained confirmation of a plan co-proposed with the Official Committee of Asbestos Personal Injury Claimants, the Official Committee of Equity Security Holders, and the Asbestos Future Claimants Representative. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. Implementation of the Plan has been held up by appeals in District Court from various parties, including a group of prepetition bank lenders and the Official Committee of Unsecured Creditors. District Judge Ronald Buckwalter on Jan. 31, 2012, entered an order affirming the bankruptcy court's confirmation of W.R. Grace & Co. and its debtor affiliates' Plan of Reorganization. Bankruptcy Judge Judith Fitzgerald had approved the Plan on Jan. 31, 2011. On April 20, 2012, the company filed a motion with the Bankruptcy Court to approve the definitive agreements among itself, co-proponents of the Plan, BNSF railroad, several insurance companies and the representatives of Libby asbestos personal injury claimants, to settle objections to the Plan. Pursuant to the agreements, the Libby claimants and BNSF would forego any further appeals to the Plan. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) WALTER ENERGY: S&P Alters Outlook to Negative; Keeps 'BB-' CCR -------------------------------------------------------------- Standard & Poor's Ratings Services revised the outlook on Walter Energy Inc. to negative from stable. "At the same time, we affirmed our ratings on the company, including the 'BB-' corporate credit rating. "The outlook revision reflects our view that metallurgical (met) coal prices remain under pressure -- partly because of slower steel production overseas," said Standard & Poor's credit analyst Marie Shmaruk. "As a consequence, Walter Energy is likely to post weaker profits than we had previously anticipated with a slimmer cushion under certain financial covenants. Our corporate credit rating on Walter Energy reflects our opinion of the company's business risk as "weak" and its financial risk as "significant," S&P said. Key risks include difficult mining conditions at the company's Southern Appalachian mines, the volatile nature of met coal sales and prices, and elevated debt related to the company's acquisition of Western Coal Corp. in 2011. "Adequate liquidity, Walter Energy's high-quality met coal reserves, and our view that production costs will improve as operating issues at its Alabama mines are resolved somewhat offset these factors. We expect Walter Energy to generate $700 million to $800 million of EBITDA in 2012, down from our previous estimate of $800 million to $900 million. This implies leverage near or above 3.5x (after pension and other adjustments). Our new baseline scenario reflects our expectation for prices for high-quality met coal to remain around the current benchmark ($200 to $220 per metric ton) and for the company's costs (which were operating issues at the company's Alabama mines in 2011 forced up) to moderate somewhat but remain high over the next couple of quarters," S&P said. Management recently affirmed its met coal production guidance (between 11.5 million and 13 million metric tons in 2012). However, the company also guided toward lower prices in the second quarter (based on previously priced contracts) and flat costs (quarter over quarter). "That said, we do expect met coal prices to improve over the medium-to-longer term and for Walter Energy's production costs to improve, as operating issues in Alabama are resolved and as operations in Canada ramp up," S&P said. Walter Energy is a midsize coal producer but one of the largest miners focused almost exclusively on met coal. The company possesses high-quality met coal reserves and has benefited during the past year from favorable met coal prices. Nonetheless, demand and pricing for met coal has historically been volatile since it's tied to steel production at integrated steel mills, which is highly cyclical. Adding to the price volatility is that prices are now contracted quarterly, as opposed to annually in the past. "The negative outlook acknowledges the currently weak pricing environment for met coal and reflects the likelihood that EBITDA will be lower than we had previously assumed, with slimmer-than- expected cushion under financial covenants. Our baseline assumption is for $700 million to $800 million of EBITDA in 2012 with leverage at or above 3x. We would lower our rating if leverage climbs and holds above 4x (with pension and other adjustments). This could occur if met coal prices drop further and Walter Energy experiences additional operating challenges that increase its production costs," S&P said. "It is our expectation that the company would successfully negotiate covenant relief under this downside scenario. An upgrade is unlikely in the current operating environment but we would revise our outlook to stable if met coal prices recover later in 2012 and Walter Energy's production costs improve such that leverage drops near or below 3x EBITDA. This could occur if the company hits its 11.5 million to 13.0 million metric ton production guidance, prices for high-quality met coal top $220 per metric ton, and production costs fall closer to $100 per ton," S&P said. WARNER SPRINGS: Amends Schedules of Assets and Liabilities ---------------------------------------------------------- Warner Springs Ranchowners Association filed with the U.S. Bankruptcy Court for the Southern District of California amended schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $11,275,000 B. Personal Property $2,804,894 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $0 E. Creditors Holding Unsecured Priority Claims $14,525 F. Creditors Holding Unsecured Non-priority Claims $1,451,551 ----------- ----------- TOTAL $14,079,894 $1,466,076 The Debtor disclosed in the previous iteration of the schedules total assets of $13,060,419 and total liabilities of $454,060. About Warner Springs Ranchowners Based in Warner Springs, California, Warner Springs Ranchowners Association dba Warner Springs Ranch filed for Chapter 11 protection (Bankr. S.D. Calif. Case No. 12-03031) on March 1, 2012. Judge Louise DeCarl Adler presides over the case. Daniel Silva, Esq., and Jeffrey D. Cawdrey, Esq., at Gordon & Rees LLP, represent the Debtor. The Debtor scheduled assets of $13.06 million and debts of $454,000 as of the Chapter 11 filing. WARNER SPRINGS: Pala Band Cries Mismanagement, Wants Chapter 7 -------------------------------------------------------------- Party-in-interest, Pala Band of Mission Indians, a federally recognized Indian Tribal Entity, asks the U.S. Bankruptcy Court for the Southern District of California to convert the Chapter 11 case of Warner Springs Ranchowners Association to one under Chapter 7 the Bankruptcy Code, or, in the alternative, to appoint a trustee in the case. According to Pala, among other things: a) there is a substantial or continuing loss to or diminution of the estate and the absence of a reasonable likelihood of rehabilitation; b) there is gross mismanagement of the estate; c) the Debtor failed to comply with orders and rules of the court; and d) there is unexcused failure to satisfy timely any filing or reporting requirement established by this title or by any rule applicable to the case. About Warner Springs Ranchowners Association Based in Warner Springs, California, Warner Springs Ranchowners Association dba Warner Springs Ranch filed for Chapter 11 protection (Bankr. S.D. Calif. Case No. 12-03031) on March 1, 2012. Judge Louise DeCarl Adler presides over the case. Daniel Silva, Esq., and Jeffrey D. Cawdrey, Esq., at Gordon & Rees LLP, represent the Debtor. The Debtor's amended schedules disclosed $14,079,894 in assets and $1,466,076 in liabilities as of the Chapter 11 filing. WEST END: Defending Trustee Motion Is No Disqualification --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that U.S. Bankruptcy Judge Stuart M. Bernstein ruled last week that there is no per se rule saying that opposition to a motion for appointment of a Chapter 11 trustee, even if unsuccessful, isn't compensable. According to the report, even if a bankrupt company's lawyer loses a motion for appointment of a Chapter 11 trustee, Judge Bernstein said that opposition does not "ipso facto" show that the lawyer is representing the interests of management in violation of "fiduciary duties owed to the debtor." Judge Bernstein, the report relates, said that a bankrupt company's lawyers are "certainly not required to 'roll over' simply because the U.S. Trustee and the SEC" seek a trustee. The judge rejected the government's argument that opposing a trustee disqualified the lawyer from representing the company. If that were the case, Judge Bernstein said, a company's lawyer would be disqualified in "every instance in which a debtor and its counsel oppose a motion to appoint a Chapter 11 trustee." WIZZARD WORLD: Had $303,900 Net Loss in First Quarter ----------------------------------------------------- Wizzard World, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $303,903 on $520,155 of convention revenue for the three months ended March 31, 2012, compared with net income of $573,124 on $536,656 of convention revenue for the same period of 2011. Loss from operations for the three months ended March 31, 2012, was $355,024 as compared to a loss of $1.02 million for the three months ended March 31, 2011. Other income (expense) for the three months ended March 31, 2012, was $51,121, as compared to $1.59 million for the three months ended March 31, 2011. The decrease is primarily attributable to the company realizing a gain on fair market value -- derivative liability in the amount of $1.41 million during the three months ended March 31, 2011, as compared to a $225,778 gain during the three months ended March 31, 2012. The Company's balance sheet at March 31, 2012, showed $1.44 million in total assets, $4.67 million in total liabilities, and a stockholders' deficit of $3.23 million. Li & Company, PC, in Skillman, New Jersey, expressed substantial doubt about Wizzard World's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company had an accumulated deficit and had a net loss and net cash used in operating activities for the year then ended. A copy of the Form 10-Q is available for free at http://is.gd/FUp3yN Wizzard World, Inc., is a producer of pop culture and multimedia conventions ("Comic Cons") across North America that markets movies, TV shows, video games, technology, toys, social networking/gaming platforms, comic books and graphic novels. These Comic Cons provide sales, marketing, promotions, public relations, advertising and sponsorship opportunities for entertainment companies, toy companies, gaming companies, publishing companies, marketers, corporate sponsors and retailers. WIZZARD SOFTWARE: Had $997,200 Net Loss in First Quarter -------------------------------------------------------- Wizzard Software Corporation filed its quarterly report on Form 10-Q, reporting a net loss of $997,230 on $1.86 million of revenue for the three months ended March 31, 2012, compared with a net loss of $606,759 on $1.57 million of revenue for the same period last year. The Company's balance sheet at March 31, 2012, showed $14.57 million in total assets, $953,657 in total current liabilities, and stockholders' equity of $13.61 million. As reported in the TCR on April 5, 2012, Gregory & Associates, LLC, in Salt Lake City, Utah, expressed substantial doubt about Wizzard Software' ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has not yet established profitable operations and has incurred significant losses since its inception. A copy of the Form 10-Q is available for free at: http://is.gd/bOU7Bu Pittsburgh, Pa.-based Wizzard Software Corporation's business includes Media, Software and Healthcare. Wizzard's core focus is on its Media business, which consists of providing podcasting hosting, distribution, audience analysis, advertising, content subscriptions and App sales for podcast producers worldwide. Its legacy Software business focuses on selling and supporting speech recognition and text-to-speech technology from IBM and AT&T. Its legacy Healthcare business focuses on providing home health services and nurse staffing in the Western part of the United States. WOUND MANAGEMENT: Had $287,500 Net Income in First Quarter ---------------------------------------------------------- Wound Management Technologies, Inc., filed its quarterly report on Form 10-Q, reporting net income of $287,505 on $104,133 of revenues for the three months ended March 31, 2012, compared with a net loss of $4.48 million on $935,412 of revenues for the same period of 2011. "The increase in net income is the result of reduced costs related to debt settlement and warrant expense and the decrease in the fair value of the Company's derivative liabilities," the Company said in the filing. The Company's balance sheet at March 31, 2012, showed $3.27 million in total assets, $6.90 million in total liabilities, and a stockholders' deficit of $3.63 million. Pritchett, Siler & Hardy, P.C., in Salt Lake City, Utah, expressed substantial doubt about Wound Management's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has incurred substantial losses and has a working capital deficit. A copy of the Form 10-Q is available for free at: http://is.gd/cVslPGb Fort Worth, Texas-based Wound Management Technologies, Inc., markets and sells the patented CellerateRX(R) product in the expanding advanced wound care market; particularly with respect to diabetic wound applications. WVSV HOLDINGS: Cooley, LLP OK'd to Handle Petition for Review ------------------------------------------------------------- The Hon. Redfield T. Baum of the U.S. Bankruptcy Court for the District of Arizona authorized WVSV Holdings, LLC, to employ the law firm Cooley, LLP, as special counsel for the purpose of representing the Debtor in connection with a petition for review to the Arizona Supreme Court. Cooley is representing the Debtor on an hourly basis, ranging from $135 to $1,160 per hour. Stephen C. Neal, Esq., a partner at Cooley, attests to the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code About WVSV Holdings W.V.S.V. Holdings LLC, the owner of about 13,000 acres of vacant land in Buckeye, Arizona, filed a petition for Chapter 11 protection (Bankr. D. Ariz. Case No. 12-10598) on May 14, 2012, in Phoenix. The Debtor claims that the three tracts of land planned for "future development" are worth $120 million and secure $57.3 million in debt. The Debtor scheduled $120.04 million in assets and $57.35 million in liabilities. West Valley Ventures, LLC, owns 75% of the Debtor, and Breycliffe, LLC, owns the remaining 25%. Judge Redfield T. Baum, Sr., presides over the case. Michael W. Carmel, Esq., serves as the Debtor's counsel. The petition was signed by Lee Allen Johnson, manager of West Valley Ventures, manager. The U.S. Trustee has not appointed an official committee of unsecured creditors in the Debtor's case because an insufficient number of persons holding unsecured claims against the Debtor have expressed interest in serving on a committee. The UST reserves the right to appoint the committee should interest develop among the creditors. WVSV HOLDINGS: OK'd to Employ Land Advisors to Sell Property ------------------------------------------------------------ The Hon. Redfield T. Baum of the U.S. Bankruptcy Court for the District of Arizona authorized WVSV Holdings, LLC, to employ Land Advisors Organization to sell approximately 13,260 acres of real property located in Western Maricopa County on behalf of the Debtor. Land Advisors would be entitled to compensation of 4-1/2% of the gross purchase price. To the best of the Debtor's knowledge, Land Advisors is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About WVSV Holdings W.V.S.V. Holdings LLC, the owner of about 13,000 acres of vacant land in Buckeye, Arizona, filed a petition for Chapter 11 protection (Bankr. D. Ariz. Case No. 12-10598) on May 14, 2012, in Phoenix. The Debtor claims that the three tracts of land planned for "future development" are worth $120 million and secure $57.3 million in debt. The Debtor scheduled $120.04 million in assets and $57.35 million in liabilities. West Valley Ventures, LLC, owns 75% of the Debtor, and Breycliffe, LLC, owns the remaining 25%. Judge Redfield T. Baum, Sr., presides over the case. Michael W. Carmel, Esq., serves as the Debtor's counsel. The petition was signed by Lee Allen Johnson, manager of West Valley Ventures, manager. The U.S. Trustee has not appointed an official committee of unsecured creditors in the Debtor's case because an insufficient number of persons holding unsecured claims against the Debtor have expressed interest in serving on a committee. The UST reserves the right to appoint the committee should interest develop among the creditors. * Automatic Stay No Protection for Trademark Violation ------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Circuit Court of Appeals in Cincinnati ruled on July 5 that filing bankruptcy does not prevent the bankrupt from being sued outside of bankruptcy court for contempt of a district court order enjoining trademark violations. The case is Powers v. Dominic's Restaurant of Dayton Inc., 10-33767, 6th U.S. Circuit Court of Appeals (Cincinnati). * Tax on Late-Filed Return Isn't Dischargeable ---------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the Bankruptcy Appellate Panel in Denver joined the U.S. Court of Appeals from New Orleans in ruling that a debt reflected in a late-filed tax return isn't discharged in bankruptcy under Section 523(a)(1)(B)(i) of the Bankruptcy Code. The case, according to the report, involves a couple who failed to file a federal tax return for 2001. The Internal Revenue Service assessed 2001 taxes in 2005. The couple filed a form 1040 for 2001 in 2006. They filed Chapter 7 bankruptcy in 2011. The bankruptcy judge ruled that the 2001 tax debt wasn't discharged under Section 523, and the appellate panel agreed in an opinion written by U.S. Bankruptcy Judge Tom R. Cornish. Judge Cornish, the report relates, reached the same conclusion as the Fifth Circuit in New Orleans in an opinion in January in a case named McCoy v. Mississippi State Tax Commission. A tax return filed after an IRS assessment "does not meet applicable filing requirements" and bars the tax debt from discharge, Cornish's opinion concludes. The case is Wogoman v. Internal Revenue Service (In re Wogoman), U.S. Bankruptcy Appellate Panel for the 10th Circuit (Denver). * Discharged Defendant Not Considered for Diversity --------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that a federal district judge in Louisville, Kentucky, ruled that a bankrupt who received a discharge is only a nominal defendant whose residence isn't to be taken into consideration when deciding on diversity of citizenship jurisdiction. The case is Jackson v. Textron Inc., 12-154, U.S. District Court, Western District of Kentucky (Louisville). * S&P 2012 Global Default Tally Still at 39 as of July 4 -------------------------------------------------------- The 2012 global corporate default tally remains unchanged last week at 39 issuers through July 4, said an article published Thursday by Standard & Poor's Global Fixed Income Research. This total is nearly double the default tally at this time last year. By region, 23 of the 39 defaulters were based in the U.S., nine were in the emerging markets, five in Europe, and two in the other developed region (Australia, Canada, Japan, and New Zealand). In comparison, the 2011 total (through June 28) was 20: 12 defaulters in the U.S., two in the emerging markets, two in Europe, and four in the other developed region. So far this year, missed payments accounted for 13 defaults, distressed exchanges accounted for eight, bankruptcy filings accounted for six, and another eight defaulters were confidential. The remaining four entities defaulted for various other reasons. In 2011, 21 issuers defaulted because of missed interest or principal payments, and 13 because of bankruptcy filings -- both of which were among the top reasons for defaults in 2010. Distressed exchanges -- another top reason for default in 2010 -- followed with 11 defaults in 2011. Of the remaining defaults, two issuers failed to finalize refinancing on bank loans, two were subject to regulatory action, one had its banking license revoked by its country's central bank, one was appointed a receiver, and two were confidential. * Montgomery Bank Failure Raises Year's Total to 32 --------------------------------------------------- Montgomery Bank & Trust of Ailey, Ga., was closed July 6, by the Georgia Department of Banking and Finance, which appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Ameris Bank of Moultrie, Ga., to assume all of the deposits of Montgomery Bank & Trust. The FDIC estimates that the cost to the Deposit Insurance Fund will be $75.2 million. Montgomery Bank & Trust is the 32nd FDIC-insured institution to fail in the nation this year, and the sixth in Georgia. 2012 Failed Banks List The FDIC was appointed as receiver for the closed banks. To protect the depositors, the FDIC entered into a purchase and assumption agreement with various banks that agreed to assume the deposits of most of the closed banks. The FDIC also entered into loss-share transactions on assets bought by the banks. For this year, the failed banks are: Loss-Share Transaction Party FDIC Cost Assets of Bank That Assumed to Insurance Closed Bank Deposits & Bought Fund Closed Bank (millions) Certain Assets (millions) ----------- ----------- ----------------- ------------ Montgomery Bank & Trust $173.6 Ameris Bank $75.2 The Farmers Bank $163.9 Clayton Bank and Trust $28.3 Security Exchange Bank $151.0 Fidelity Bank $34.3 Putnam State Bank $169.5 Harbor Community Bank $37.4 Waccamaw Bank $533.1 First Community Bank $51.1 Farmers' and Traders' $43.1 First State Bank $8.9 First Capital Bank $46.1 F & M Bank $5.6 Carolina Federal $54.4 Bank of North Carolina $15.2 Alabama Trust Bank $51.6 Southern States Bank $8.9 Security Bank, N.A. $101.0 Banesco USA $10.8 Plantation Federal $486.4 First Federal Bank $76.0 Inter Savings Bank $473.0 Great Southern Bank $117.5 Bank of the Est. Shore $166.7 [No Acquirer] $41.8 Palm Desert Nat'l $125.8 Pacific Premier Bank $20.1 HarVest Bank of Md. $164.3 Sonabank $17.2 Fort Lee Federal $51.9 Alma Bank $14.0 Fidelity Bank $818.2 The Huntington Nat'l $92.8 Premier Bank $268.7 Int'l Bank of Chi. $64.1 Covenant Bank $95.7 Stearns Bank, N.A. $31.5 New City Bank $71.2 [No Acquirer] $17.4 Global Commerce Bank $143.7 Metro City Bank $17.9 Central Bank of Georgia $278.9 Ameris Bank $67.5 Home Savings of Amer. $434.1 [No Acquirer] $38.8 Charter National Bank $93.9 Barrington Bank $17.4 SCB Bank $182.6 First Merchants Bank $33.9 Patriot Bank $111.3 First Resource Bank $32.6 BankEast $272.6 U.S. Bank N.A. $75.6 Tennessee Commerce $1,185.0 Republic Bank & Trust $416.8 First Guaranty Bank $377.9 CenterState Bank $82.0 American Eagle $19.6 Capital Bank, N.A. $3.2 The First State Bank $416.8 Hamilton State Bank $416.8 Central Florida $79.1 CenterState Bank $24.4 In 2011 there were 92 failed banks, compared with 157 in 2010, 140 in 2009 and just 25 for 2008. The failures in 2010 were the most since 1992, when 179 institutions were taken over by regulators. A complete list of banks that failed since 2000 is available at: http://www.fdic.gov/bank/individual/failed/banklist.html 813 Banks in Problem List The FDIC's Quarterly Banking Profile for Dec. 31, 2011, says that The number of institutions on the FDIC's "Problem List" declined from 844 to 813 during the quarter, and total assets of "problem" institutions fell from $339 billion to $319.4 billion. The number of institutions in the "problem list" has decreased for the third consecutive quarter. The FDIC defines "problem" institutions as those with financial, operational or managerial weaknesses that threaten their viability. The deposit insurance fund, which protects customer holdings up to $250,000 per account in the event of a failure, saw its balance increase in the fourth quarter to $9.2 billion (unaudited) from $7.8 billion in the third quarter, the eighth consecutive quarterly increase. Problem Institutions Failed Institutions -------------------- ------------------- Year Number Assets (Mil) Number Assets (Mil) ---- ------ ------------ ------ ------------ 2011 813 $319,432 92 $34,923 2010 884 $390,017 157 $92,085 2009 702 $402,800 140 $169,700 2008 252 $159,405 25 $371,945 2007 76 $22,189 3 $2,615 2006 50 $8,265 0 $0 2005 52 $6,607 0 $0 2004 80 $28,250 4 $170 Federal regulators assign a composite rating to each financial institution, based upon an evaluation of financial and operational criteria. The rating is based on a scale of 1 to 5 in ascending order of supervisory concern. "Problem" institutions are those institutions with financial, operational, or managerial weaknesses that threaten their continued financial viability. Depending upon the degree of risk and supervisory concern, they are rated either a "4" or "5." The number and assets of "problem" institutions are based on FDIC composite ratings. Prior to March 31, 2008, for institutions whose primary federal regulator was the OTS, the OTS composite rating was used. * Commercial Bankruptcy Filings Fewest in Four Years ---------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the 4,620 commercial bankruptcies in June were the fewest since January 2008, while bankruptcies of all types last month were the third-fewest in two years. Bankruptcies are dropping fastest among wealthy individuals and larger companies that file to reorganize or sell assets in Chapter 11, according to data compiled from court records by Epiq Systems Inc. Last month's 718 Chapter 11 filings were the fewest since April 2008 and represented a 22% fall from May and a 28% contraction from June 2011. According to the report, the 99,000 total bankruptcies in June were 5% fewer than May and 14% below June 2011. June's commercial bankruptcies represented an 8.7% decline from May and a 26% plunge from June 2011. So far this year, there have been about 632,000 bankruptcies of all types. If the pace continues for the remainder of the year, total filings will come in about 8% below the 1.38 million in 2011. The report notes that last year, bankruptcies were 11.7% fewer than the 1.56 million in 2010, the most bankruptcies since 2005. Year to date, bankruptcies of all types declined in all 50 states. The states with the most filings per capita were Nevada, Tennessee and Georgia, the same order as in May, Epiq said. The all-time record for bankruptcy was set in 2005 with 2.1 million. Americans that year were filing bankruptcy in advance of new laws making it more difficult for individuals to cancel debt. In the last two weeks before the law changed, 630,000 American sought bankruptcy protection. * Mortgage Casualties Fall as Fewer Financial Institutions Fail --------------------------------------------------------------- MortgageDaily.com said in a statement that the number of mortgage- related businesses to fail or close down during the first six months of this year is down by more than a quarter from the same point in 2011. Despite an increase in mortgage bankers to call it quits, including some high-profile firms, fewer banks and credit unions are failing. During the second quarter, the demise of 25 mortgage-related entities was tracked in the Mortgage Graveyard from Mortgage Daily. Casualties eased from the first quarter's 27. The decline was even more substantial compared to the 37 tracked in the second-quarter 2011. Compared to the first half of last year, the first-half 2012 total was down 30 percent thanks to a more than one-third decline in bank failures and a one-half reduction in the number of credit unions to go down. Type 1st Half 2012 1st Half 2011 ---- ------------- ------------- Nonbanks 13 10 Banks 31 48 Credit Unions 8 16 Total 52 74 But mortgage bankers to close their doors have grown by 30 percent. Second-quarter non-bank casualties included Residential Capital LLC, which was thrown into Chapter 11 Bankruptcy by parent Ally Financial Inc. Also ending operations was Saxon Mortgage Services Inc. after parent Morgan Stanley sold the subsidiary's assets to Ocwen Financial Corp. Another high-profile retreat was MetLife Bank, which exited the reverse mortgage sector. Since the end of the second quarter, Montgomery Bank & Trust was closed down by the Georgia Department of Banking and Finance. The failure of the Ailey, Ga., bank came less than two weeks after the Department of Justice announced the indictment of one of the bank's directors who is accused of embezzling $17 million and hasn't been seen since reportedly telling acquaintances that he planned to kill himself. During the three months ended May 31, the Federal Deposit Insurance Corp. and the Comptroller of the Currency issued a combined 246 regulatory orders against banks, climbing from 221 orders issued in the three months ended Feb. 29. The increase suggests that the third quarter could see an uptick in bank failures. * Weintraub Genshlea Merges With Weissmann Wolff ------------------------------------------------ Weintraub Genshlea Chediak Tobin & Tobin Law Corporation and Weissmann Wolff Bergman Coleman Grodin LLP have jointly disclosed the merger of their respective business and entertainment law firms. The combined firm, named Weintraub Tobin Chediak Coleman Grodin Law Corporation, which will be known as Weintraub Tobin, will have more than 70 attorneys in offices in Sacramento, San Francisco and Los Angeles. In addition to the expanded focus on entertainment and its convergence with technology and finance, key practice areas include corporate, banking, securities, employment, litigation and dispute resolution, intellectual property, tax, trusts and estate planning, real estate and bankruptcy. "After our successful expansion in the San Francisco market with the merger of Tobin & Tobin late last year, we turned our eyes toward Los Angeles and found a firm that mirrors our culture and complements our specialty practice areas," said Michael Kvarme, Weintraub Tobin's managing shareholder. "The combination with Weissmann Wolff offers clients a fully integrated team of business attorneys that are held in high esteem by the entertainment industry. In addition, with our expanded and solid presence throughout California, we are large enough to offer superior depth and breadth of expertise but small enough to enable efficiencies and flexibility that ultimately benefit all clients." "The combined capabilities and expanded services of the firm benefit our clients in that we now have a larger geographical reach and further depth in meeting all of their business needs. The firm's outstanding attorneys offer a broad range of business and litigation services that will ideally complement our entertainment focus," said Marvin Gelfand, managing partner for Weissmann Wolff. The Los Angeles Office will continue to advise its entertainment industry clients across film, television, animation, videogames, digital media and publishing including Scholastic, Random House, Warner Bros., NBC/Universal, Doug Liman (director:Mr. and Mrs. Smith)(director:The Bourne Identity)(executive producer:Covert Affairs)(executive producer:Suits), Jan DeBont (director:Speed)(director:Twister), Diane Lane, Cheech Marin and Tracey Ullman, to name a few. Via the San Francisco Office, entertainment clients will have access to the legal expertise and relationships established with leading technology groups. With offices in Sacramento, San Francisco and Los Angeles, Weintraub Tobin pledges to be an innovative provider of sophisticated legal services to dynamic businesses and business owners, as well as non-profits and individuals with litigation, business and entertainment needs. * Large Companies With Insolvent Balance Sheets ----------------------------------------------- Total Share- Total Total Holders' Working Assets Equity Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------ -------- ------- AUTOZONE INC AZO US 6,148.9 (1,416.8) (623.1) ATLATSA RESOURCE ATL SJ 920.8 (233.7) 20.0 LORILLARD INC LO US 3,351.0 (1,666.0) 919.0 MEAD JOHNSON MJN US 2,866.7 (28.5) 635.2 TAUBMAN CENTERS TCO US 3,096.4 (275.8) - CLOROX CO CLX US 4,386.0 (106.0) (689.0) DUN & BRADSTREET DNB US 1,903.8 (628.3) (261.0) VERISK ANALYTI-A VRSK US 1,892.0 (10.3) (147.7) DIRECTV-A DTV US 21,912.0 (3,377.0) 1,210.0 WEIGHT WATCHERS WTW US 1,176.1 (1,856.8) (1,057.9) LIMITED BRANDS LTD US 6,616.0 (131.0) 1,526.0 VERISIGN INC VRSN US 1,882.8 (71.3) 831.1 CHOICE HOTELS CHH US 443.2 (26.2) 2.1 MARRIOTT INTL-A MAR US 6,171.0 (848.0) (1,442.0) AMC NETWORKS-A AMCX US 2,125.8 (1,004.9) 506.4 CROWN HOLDINGS I CCK US 7,178.0 (82.0) 731.0 DOMINO'S PIZZA DPZ US 601.3 (1,365.7) 58.8 DISH NETWORK-A DISH US 12,409.5 (55.6) 778.4 HCA HOLDINGS INC HCA US 27,139.0 (7,324.0) 1,667.0 SALLY BEAUTY HOL SBH US 1,789.9 (69.2) 478.8 GRAHAM PACKAGING GRM US 2,947.5 (520.8) 298.5 INCYTE CORP INCY US 293.6 (248.9) 133.9 NAVISTAR INTL NAV US 11,384.0 (407.0) 1,658.0 PEER REVIEW MEDI PRVW US 1.4 (3.4) (3.8) IPCS INC IPCS US 559.2 (33.0) 72.1 CHENIERE ENERGY CQP US 1,762.3 (574.9) 31.7 DISH NETWORK-A EOT GR 12,409.5 (55.6) 778.4 CAPMARK FINANCIA CPMK US 20,085.1 (933.1) - REXNORD CORP RXN US 3,290.9 (80.8) 551.0 UNISYS CORP UIS US 2,455.6 (1,240.4) 430.5 AMERISTAR CASINO ASCA US 2,026.3 (45.8) (13.5) BOSTON PIZZA R-U BPF-U CN 166.1 (91.7) (1.5) RURAL/METRO CORP RURL US 303.7 (92.1) 72.4 VECTOR GROUP LTD VGR US 886.1 (132.7) 145.6 PROOFPOINT INC PFPT US 64.7 (29.1) (33.7) DEAN FOODS CO DF US 5,758.6 (52.7) 296.0 RENAISSANCE LEA RLRN US 57.0 (28.2) (31.4) CIENA CORP CIEN US 1,928.6 (41.1) 924.4 PROTECTION ONE PONE US 562.9 (61.8) (7.6) MONEYGRAM INTERN MGI US 5,136.2 (92.5) (16.2) NATIONAL CINEMED NCMI US 788.5 (347.4) 102.6 CARMIKE CINEMAS CKEC US 420.8 (1.9) (26.1) REVLON INC-A REV US 1,156.7 (679.6) 184.9 FIESTA RESTAURAN FRGI US 364.8 (3.2) (9.0) REGAL ENTERTAI-A RGC US 2,307.0 (552.6) 46.5 CABLEVISION SY-A CVC US 7,088.5 (5,609.6) (218.0) HUGHES TELEMATIC HUTC US 110.2 (101.6) (113.8) JUST ENERGY GROU JE CN 1,543.0 (527.2) (481.0) JUST ENERGY GROU JE US 1,543.0 (527.2) (481.0) DELTA AIR LI DAL US 44,189.0 (1,011.0) (5,347.0) AMER AXLE & MFG AXL US 2,502.3 (376.4) 264.6 FIFTH & PACIFIC FNP US 796.8 (161.9) 9.7 QUALITY DISTRIBU QLTY US 330.8 (67.6) 54.5 ACCO BRANDS CORP ACCO US 1,044.9 (68.3) 311.8 OMEROS CORP OMER US 21.1 (12.7) 1.0 SINCLAIR BROAD-A SBGI US 1,771.2 (87.2) 3.9 FREESCALE SEMICO FSL US 3,371.0 (4,472.0) 1,444.0 ISTA PHARMACEUTI ISTA US 124.7 (64.8) 2.2 NPS PHARM INC NPSP US 183.3 (54.4) 130.0 CENTENNIAL COMM CYCL US 1,480.9 (925.9) (52.1) THRESHOLD PHARMA THLD US 89.7 (77.4) 72.8 EDGEN GROUP INC EDG US 555.6 (154.7) 267.4 MERRIMACK PHARMA MACK US 64.4 (43.6) 21.0 NOVADAQ TECHNOLO NDQ CN 23.5 (3.9) 7.5 PRIMEDIA INC PRM US 208.0 (91.7) 3.6 PDL BIOPHARMA IN PDLI US 235.0 (243.8) 56.6 NEXSTAR BROADC-A NXST US 578.2 (179.9) 34.5 GENCORP INC GY US 874.0 (171.3) 47.3 NYMOX PHARMACEUT NYMX US 6.4 (5.2) 2.9 PLAYBOY ENTERP-B PLA US 165.8 (54.4) (16.9) ABSOLUTE SOFTWRE ABT CN 127.2 (3.2) 14.0 PLAYBOY ENTERP-A PLA/A US 165.8 (54.4) (16.9) FAIRPOINT COMMUN FRP US 1,929.1 (149.8) 38.1 PALM INC PALM US 1,007.2 (6.2) 141.7 CC MEDIA-A CCMO US 16,489.3 (7,802.6) 1,550.1 MERITOR INC MTOR US 2,565.0 (945.0) 193.0 VIRGIN MOBILE-A VM US 307.4 (244.2) (138.3) DENNY'S CORP DENN US 336.2 (2.6) (16.3) GLG PARTNERS INC GLG US 400.0 (285.6) 156.9 GLG PARTNERS-UTS GLG/U US 400.0 (285.6) 156.9 ORGANOVO HOLDING ONVO US 11.2 (37.4) 9.7 ADVANCED BIOMEDI ABMT US 0.2 (1.9) (1.5) ODYSSEY MARINE OMEX US 21.9 (14.2) (13.9) GOLD RESERVE INC GRZ CN 78.3 (25.8) 56.9 CINCINNATI BELL CBB US 2,657.9 (701.3) (42.6) GOLD RESERVE INC GRZ US 78.3 (25.8) 56.9 HUGHES TELEMATIC HUTCU US 110.2 (101.6) (113.8) ARRAY BIOPHARMA ARRY US 120.0 (78.8) 28.4 LIN TV CORP-CL A TVL US 804.7 (75.7) 47.4 THERAPEUTICS MD TXMD US 1.5 (3.4) (1.3) NB MANUFACTURING NBMF US - (0.0) (0.0) ********* 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 ***