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/raid1/www/Hosts/bankrupt/TCR_Public/120720.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, July 20, 2012, Vol. 16, No. 200 Headlines 1717 MARKET PLACE: Files Chapter 11 in Missouri 1717 MARKET: Case Summary & Unsecured Creditor 2279-2283 THIRD AVENUE: Files Chapter 11; Lenders to Take Condos 2279-2283 THIRD AVENUE: Voluntary Chapter 11 Case Summary 400 BLAIR: Court OKs Carl Person as Special Litigation Counsel 5042 HOLDINGS: West Virginia's Berkeley Inn Files for Chapter 11 ACE AVIATION: To Transfer Stock Exchange Listing to NEX AMBAC FINANCIAL: Committee Taps Tavakoli et al. as Consultants AMBAC FINANCIAL: AAC Exercised Surplus Note Call Options ARIUS3D: Pursuing Financing to Submit Late Annual Report ASPENBIO PHARMA: Had $1.9 Million Net Loss in First Quarter CHINA GINSENG: Had $282,000 Net Loss in March 31 Quarter AVENTINE RENEWABLE: S&P Cuts Corporate Credit Rating to 'CC' BEACHWALK LP: Files for Chapter 11 in Indiana BEACHWALK LP: Case Summary & 5 Largest Unsecured Creditors ARBCO CAPITAL: Stern Wrests $11M Clawback from Bankruptcy Court BERNARD L. MADOFF: Trustee, Calif. Atty. General in Mediation BETSEY JOHNSON: Capstone Approved as Committee Financial Advisor BETSEY JOHNSON: Court OKs DJM Realty as Real Estate Advisor BETSEY JOHNSON: Court Approves Hahn & Hessen as Committee Counsel BETSEY JOHNSON: Names Marcum LLP as Accountants BTA BANK: Chapter 15 Case Summary CAMBRIDGE HEART: Extends Investment Rights Termination to July 31 CANYONS AT DEBEQUE RANCH: Files for Chapter 11 in Denver CASELLA WASTE: Moody's Affirms 'B3' Corp. Family Rating CANYONS AT DEBEQUE: Case Summary & 10 Largest Unsecured Creditors CARPENTER CONTRACTORS: To Present Plan for Confirmation Aug. 22 CDC CORP: Taps Ver Ploeg to Handle Insurance Coverage Matters CENTRAL FALLS, RI: Plan to Return Only 45% to Unsec. Creditors CENTRAL FEDERAL: Commences Public Offering of Common Stock CHAI-NA-TA CORP: Obtains Certificate of Intent to Dissolve CHINA BAK: Had $15.6 Million Net Loss in 1st Quarter CIP INVESTMENT: Files for Chapter 11 in Kansas City CIP INVESTMENT: Case Summary & 18 Unsecured Creditors CIRCLE STAR: Elmer Reed Appointed to Board of Directors CIRCUS AND ELDORADO: Court Sets Aug. 17 General Claims Bar Date CLAIRE'S STORES: Completes Employee Stock Options Exchange Offer COLORADO-FAYETTE: Files for Chapter 11 Bankruptcy Protection COMPTON, CA: May Be Next in Spate Of Calif. City Bankruptcies COMVERGE INC: Posts $2.7 Million Net Loss in 1st Quarter CORDILLERA GOLF: Lender Says Golf Course Not Worth $33-Mil. CORDILLERA GOLF: Rust Omni Beats 2 Other Claims Agent for Job DANCEHALL LLC: Judge Recuses Self in Involuntary Case DEWEY & LEBOEUF: U.S. Trustee Balks at Over $700K in Bonuses DIGITAL GENERATION: S&P Puts 'BB-' CCR on CreditWatch Negative DREIER LLP: Amaranth Blocks Trustee's Bid to Hire Adviser DYNEGY INC: Seeks Extension of Exclusivity Period to Dec. 13 EC DEVELOPMENT: Posts $250,100 Net Loss in 1st Quarter EASTMAN KODAK: Retiree Committee's Fee Cap Removed EASTMAN KODAK: Secured Creditors Worry Over Magnitude of Fees EASTMAN KODAK: Returns $482,000 to BNY Mellon EASTMAN KODAK: Has Deal for Payment of Retirees' Expenses ENERGY FOCUS: Had $1.9 Million Net Loss in 1st Quarter ESSENTIAL POWER: Moody's Rates $565MM Sr. Secured Term Loan 'Ba2' FENDER MUSICAL: S&P Puts B Corp. Credit Rating on Watch After IPO FIRST FINANCIAL: Posts $289,000 Net Loss in 1st Quarter FOREST OIL: S&P Cuts Corporate Credit Rating to 'B+'; Outlook Neg GAMETECH INTERNATIONAL: James Robertson Named President & CEO GENELINK INC: Susan Hunt Succeeds John Webb as Interim CFO GUIDED THERAPEUTICS: LuViva Receives CE Mark Approval HEADLEE MANAGEMENT: Buffalo Wild Wings Outlets on Auction Block HEMCON MEDICAL: Offers Shares for Unsecured Creditors HOMEWARD RESIDENTIAL: Moody's Assigns 'B1' Corp. Family Rating HORIZON PHARMA: Had $23.7 Million Net Loss in 1st Quarter HOVNANIAN ENTERPRISES: Swaps 3.8MM Class A Shares for $15MM Debt HOWREY LLP: Firm's Creditors Share 'Milk Case' Fee HOWREY LLP: Gets OK to Subpoena 70 Firms That Hired Ex-Partners HRK HOLDINGS: Hiring Stichter Riedel as Chapter 11 Counsel HRK HOLDINGS: Sec. 341 Creditors' Meeting Set for July 30 INDYMAC BANCORP: CEO Dismissed for SEC's Risk-Weighting Claims INNOVATION VENTURES: Moody's Assigns 'B2' CFR/PDR; Outlook Stable INTERNATIONAL HOME: Court OKs Aquino Cordova as External Auditor INVERSIONES ISLETA: Case Summary & 15 Unsecured Creditors IVANHOE ENERGY: Had $10.7 Million Net Loss in 1st Quarter J2 GLOBAL: Moody's Assigns 'B1' Corp. Family Rating JEDD LLC: Hiring Gullett Sanford as Bankruptcy Counsel JENNE HILL: Has Plan Settlement With Wells Fargo JENNE HILL: Hires Cannon Blaylock & Wise as Appraiser L-3 COMMS: Fitch Assigns 'BB+' Rating on Sr. Subordinated Debt LEVEL 3: Moody's Rates New $300MM Senior Unsecured Notes 'Caa2' LEVEL 3: S&P Rates $300 Million Senior Notes 'CCC' LIBERTY HARBOR: Pays $22 Million to Settle Condemnation Row LIGHTSQUARED INC: Judge to Approve $51.4-Mil. DIP Loan LUCID INC: Had $3.4 Million Net Loss in First Quarter MAIN STREET: Voluntary Chapter 11 Case Summary MEDIA GENERAL: Incurs $146.3 Million Net Loss in 2nd Quarter MF GLOBAL: CFTC Files General Creditor Claim MF GLOBAL: Trial on $700MM Claim vs. KPMG Set for 2013 MF GLOBAL: Holdings Amends Schedules of Assets & Debts MF GLOBAL: Finance USA's Schedules of Assets & Debts MOMENTIVE PERFORMANCE: Plans to Reduce Workforce by 6% MONTANA ELECTRIC: Increased Transparency for Co-ops Sought MUSCLEPHARM CORP: Sr. Execs. Give Back 2011 Cash & Stock Bonuses NALLS DEVELOPMENT: Files for Chapter 11 in Washington D.C. NALLS DEVELOPMENT: Voluntary Chapter 11 Case Summary OFFICE PRODUCTS: Case Summary & 20 Largest Unsecured Creditors PACE UNIVERSITY: Moody's Affirms 'Ba1' Rating on Revenue Bonds PATRIOT COAL: UMWA Officials Discuss Bankruptcy Filing PEGASUS RURAL: Xanadoo Units Given More Time to File Plan PEREGRINE FINANCIAL: CEO Wasendorf Bail Hearing Moved to July 27 PEREGRINE FINANCIAL: Only 11 Clients Have Returnable Assets PINNACLE AIRLINES: Ernst & Young OK'd to Audit 2012 Financials PINNACLE AIRLINES: Has Until Oct. 28 to Decide on Unexpired Leases PINNACLE AIRLINES: County of Erie Can Pursue Prepetition Claims PROELITE INC: Isaac Blech Discloses 71.2% Equity Stake REDPRAIRIE CORP: Moody's Rates New $380MM Credit Facility 'B2' REDPRAIRIE CORP: S&P Rates $380MM Senior Secured Credit 'B+' REFCO INC: Judge Tosses Malpractice Claims vs. Schulte RG STEEL: Wins Court OK of Amended Management Incentive Plan RG STEEL: Committee Taps Huron Consulting as Financial Advisor RG STEEL: Committee Seeks OK for Kramer Levin as Counsel RG STEEL: Committee Proposes Saul Ewing as Bankruptcy Co-Counsel RG STEEL: Morris Nichols Arsht OK'd as Delaware Co-Counsel RG STEEL: July 30 Deadline for Schedules and Statements RITZ CAMERA: Wants to Assume Store Closing Sales Agreements SAN BERNARDINO, CA: City Council Declares Fiscal Emergency SANTANDER PR: Fitch Lowers Rating on Preferred Stock to 'BB' SEDONA DEVELOPMENT: Competing Plan Outlines Hearing Set for Aug. 1 SIONIX CORPORATION: Posts $1.3 Million Net Loss in March 31 Qtr. SLS CAPITAL: July 24 Hearing on Chapter 15 Recognition SMITHFIELD FOODS: Moody's Rates Senior Unsecured Notes 'B1' SMITHFIELD FOODS: S&P Rates $650MM Senior Secured Notes 'BB' SOLYNDRA LLC: Feds' $5MM Thompson River Claim May Quell Criticism SOMAXON PHARMACEUTICALS: Posts $2.1 Million Net Loss in Q1 2012 SUPERVALU: S&P Lowers Corp. Credit Rating to 'B'; Outlook Negative TALON THERAPEUTICS: Amends 2006 Employee Stock Purchase Plan TRANSATLANTIC PETROLEUM: Had $4.8-Mil. Net Loss in 1st Quarter TRIDENT MICROSYSTEMS: Committee Taps Campbells as Cayman Counsel TRIDENT MICROSYSTEMS: Two New Members in Creditors Committee U.S. POSTAL: May Default on Future Retirees Fund UNITED BANCSHARES: Had $237,800 Net Loss in 1st Quarter UROLOGIX INC: Had $968,000 Net Loss in March 31 Quarter UTSTARCOM INC: Himanshu Shah Discloses 12.5% Equity Stake VELO HOLDINGS: Wants Until Nov. 28 to Propose Chapter 11 Plan VERMILLION INC: Posts $1.8-Mil. Net Loss in First Quarter VESCOR CAPITAL: TIC Investors Sue Bank, Law Firm Over Ponzi Scheme VITRO SAB: TRO Against Bondholders Extended During Appeal VORNADO REALTY: Fitch Rates $300MM Series K Preferred Stock 'BB+' VS FOX RIDGE: Wants to Employ Parsons Kinghorn as Counsel WYLDFIRE ENERGY: Sec. 341 Creditors' Meeting Set for Aug. 3 * Filial Piety No Defense in Nondischargeability Suit * Mortgages Can't Be Corrected After Chapter 11 Filing * 6 States Face Mounting Budget Crisis, Report Warns * Warren Buffett Sees Likely Increase in Municipal Bankruptcies * U.S. Public-Pension Shortfall $4.6 Trillion, Budget Group Says * SEC Fines Huron Consulting for Overstating Income * BOOK REVIEW: Abraham Zaleznik's Learning Leadership ********* 1717 MARKET PLACE: Files Chapter 11 in Missouri ----------------------------------------------- 1717 Market Place LLC, a grocery-store business, filed for Chapter 11 protection (Bankr. W.D. Ms. Case No. 12-bk-00984) on July 17 in Springfield, Missouri. According to the docket, the Chapter 11 Plan and the Disclosure Statement are due Nov. 14, 2012. The Debtor estimated assets and liabilities of at least $10 million. G&S Holdings LLC owns 98% of the company and the remaining 2% is owned by J. Scott Schaefer and Richard T. Gregg, according to court papers. The Christian, Missouri-based company identified law firm Mitchell, Kristl & Leiber PC as its only unsecured creditor, owed $43,687. 1717 Market Place said it is a defendant in a lawsuit brought by Regions Bank in Joplin, Missouri, relating to a promissory note. The bank is seeking the appointment of a receiver. 1717 MARKET: Case Summary & Unsecured Creditor ---------------------------------------------- Debtor: 1717 Market Place, L.L.C. 727 West Mount Vernon Street Nixa, MO 65714 Bankruptcy Case No.: 12-61339 Chapter 11 Petition Date: July 17, 2012 Court: U.S. Bankruptcy Court Western District of Missouri (Springfield) Judge: Arthur B. Federman Debtor's Counsel: David E. Schroeder, Esq. DAVID SCHROEDER LAW OFFICES, P.C. 1524 East Primrose Street, Suite A Springfield, MO 65804-7915 Tel: (417) 890-1000 Fax: (417) 886-8563 E-mail: bk1@dschroederlaw.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The petition was signed by Richard T. Gregg, co-managing member. The list of 20 largest unsecured creditors only contains a single entry: Entity Nature of Claim Claim Amount ------ --------------- ------------ Mitchell, Kristl & Lieber -- $43,687 Attorneys at Law 1220 Washington, 3rd Floor Kansas City, MO 64105-2245 2279-2283 THIRD AVENUE: Files Chapter 11; Lenders to Take Condos ---------------------------------------------------------------- 2279-2283 Third Avenue Associates LLC and 2279-2283 Third Avenue Development LLC filed Chapter 11 petitions (Bankr. S.D.N.Y. Case No. 12-13092 and 13093) with a plan that would transfer ownership of condominium buildings to secured lenders. The Debtors were formed in January 2006 for the purpose of acquiring two vacant parcels across the street from each other on Third Avenue and 124th Street, in Manhattan. The Debtors completed development of the properties in 2009. One property is a seven story elevator mixed use building with 12 residential units, of which 5 units were sold and 7 are currently rental units, 1 community rental facility and 2 commercial storefronts The second property is a seven-story mixed use building with 18 residential units, 2 stories of commercial units and a basement commercial unit. Third Avenue Associates obtained financing from commerce bank of $14 million and Development obtained mezzanine financing from HSBC Capital (USA) Inc. in the amount of $6 million. HSBC refused to grant additional $700,000 in financing requested by the Debtor to fund build-outs required by the Internal Revenue Service. The Commerce note -- which was assigned to TD Bank and then to LSV-JCR 124th LLC -- was secured by a mortgage on the Properties, and the HSBC obligation is secured by a mortgage on Associates' membership interest owned by Development. The HSBC note matured in 2011 and HSBC called the loan into default and commenced a foreclosure action. The state court entered an order appointing Steven Weiss as receiver of rents. THSBC has assigned its mezzanine note to LCP-GC LLC. On July 3, 2012, the Debtors and the secured lenders entered into a settlement which provides, inter alia, that the Debtors will cooperate and with and effectuate the transfers of the properties to the secured lenders through a Chapter 11 plan. Accordingly, the Debtors filed the Chapter 11 petitions to consummate the settlement. The Debtors are represented by: Jonathan S. Pasternak, Esq. RATTET PASTERNAK, LLP 550 Mamaroneck Avenue, Suite 510 Harrison, NY 10528 Tel: (914) 381-7400 Fax: (914) 381-7406 E-mail: jsp@rattetlaw.com 2279-2283 THIRD AVENUE: Voluntary Chapter 11 Case Summary --------------------------------------------------------- Debtor: 2279-2283 Third Avenue Associates LLC 2279-2283 Third Avenue New York, NY 10035 Bankruptcy Case No.: 12-13092 Affiliate that simultaneously filed Chapter 11 petition: Entity Case No. ------ -------- 2279-2283 Third Avenue Development LLC 12-13093 Chapter 11 Petition Date: July 17, 2012 Court: U.S. Bankruptcy Court Southern District of New York (Manhattan) Judge: James M. Peck About the Debtors: The Debtors were formed in January 2006 for the purpose of acquiring two vacant parcels across the street from each other on Third Avenue and 124th Street, in Manhattan. The Debtors completed development of the properties in 2009. One property is a seven story elevator mixed use building with 12 residential units, of which 5 units were sold and 7 are currently rental units, 1 community rental facility and 2 commercial storefronts. The second property is a seven-story mixed use building with 18 residential units, 2 stories of commercial units and a basement commercial unit. Debtors' Counsel: Jonathan S. Pasternak, Esq. RATTET PASTERNAK, LLP 550 Mamaroneck Avenue, Suite 510 Harrison, NY 10528 Tel: (914) 381-7400 Fax: (914) 381-7406 E-mail: jsp@rattetlaw.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The Debtors did not file a list of largest creditors together with petitions. The petitions were signed by Michael Waldman, managing member and sole member of 2279-2283 Third Avenue Realty, LLC. Affiliate that previously sought Chapter 11 protection: Entity Case No. Petition Date ------ -------- ------------- 3210 Riverdale Associates LLC 12-11286 03/20/12 400 BLAIR: Court OKs Carl Person as Special Litigation Counsel -------------------------------------------------------------- 400 Blair Realty Holdings, LLC sought and obtained permission from the U.S. Bankruptcy Court to employ Carl E. Person, Esq. as special litigation counsel. 400 Blair Realty Holdings, LLC, in Morristown, New Jersey, was formed in June 2000 to acquire real property improved with 181,000 sq. ft industrial building situated on 14.7 acres located at 400 Blair Road, Carteret, Middlesex County, New Jersey. The Property was acquired on Aug. 6, 1999. United States Land Resources, L.P., holds a 50% equity interest in 400 Blair. USLR's general partner is United States Realty Resources, Inc., and Lawrence S. Berger is the president of USRR. 400 Blair's other member is Success Treuhand GmbH, which holds a 50% equity interest. Success is a trust set up under German law. Success operates much like a United States trust company. Success' sole owner is Eckart Straub, a German national. 400 Blair filed for Chapter 11 bankruptcy (Bankr. D. N.J. Case No. 11-37887) on Sept. 23, 2011, after a court appointed a receiver for its property and ordered a foreclosure sale. Judge Michael B. Kaplan presides over the case. In its petition, the Debtor estimated $10 million to $50 million in assets and $1 million to $10 million in debts. The petition was signed by Lawrence S. Berger, manager. The Debtor's bankruptcy counsel is Morris S. Bauer, Esq., at Norris McLaughlin & Marcus, PA, in Bridgewater, New Jersey. 5042 HOLDINGS: West Virginia's Berkeley Inn Files for Chapter 11 ---------------------------------------------------------------- Bloomberg News reports that the Country Inn at Berkeley Springs filed for protection from creditors under Chapter 11 in Martinsburg, West Virginia. The Morgan, West Virginia-based business goes by the corporate name 5042 Holdings Ltd. The spa retreat declared more than $1 million in assets and liabilities. The reorganization plan is to be filed by Nov. 17. 5042 Holdings, Limited, filed a Chapter 11 petition (Bankr. N.D. W.V. Case No. 12-00984) on July 17, 2012. Robert W. Trumble, Esq., at McNeer Highland McMunn & Varner, L.C., serves as counsel to the Debtor. ACE AVIATION: To Transfer Stock Exchange Listing to NEX ------------------------------------------------------- ACE Aviation Holdings Inc. said July 16 that the Toronto Stock Exchange ("TSX") has advised ACE that it no longer meets the continued listing requirements of the TSX as a result of the previously announced appointment of Ernst & Young Inc. as liquidator of ACE and the resignation of all of the directors and officers of ACE. The TSX has advised ACE that if it did not voluntarily delist by September 14, 2012, the TSX would delist its common shares. As a result, ACE has applied to voluntarily delist its common shares from the TSX effective at the close of business on September 14, 2012. ACE has confirmed with the NEX board of the TSX Venture Exchange that its common shares will be eligible for listing on NEX. ACE expects that the transfer of the listing of its common shares from the TSX to NEX will occur on September 17, 2012, the trading day immediately following the delisting from the TSX. The listing of the common shares of ACE on NEX is subject to final acceptance by NEX. About ACE Aviation Headquartered in Montreal, Canada, ACE Aviation Holdings Inc. (Toronto: ACE-A.TO) -- http://www.aceaviation.com/-- is the parent holding company of Air Canada, Aeroplan, Jazz, Air Canada Technical Services, Air Canada Vacations, Air Canada Cargo, and Air Canada Ground Handling Services. For 2011, ACE recorded a loss and reduction in net assets in liquidation of $90 million. This includes unrealized losses of $76 million and $5 million respectively on ACE's investment and warrants in Air Canada. In the fourth quarter of 2011, ACE recorded a loss and reduction in net assets in liquidation of $21 million. This includes unrealized losses of $15 million and $1 million respectively on ACE's investment and warrants in Air Canada. ACE Aviation on Feb. 10, 2012 announced its intention to seek shareholder approval for its winding-up, the distribution of its remaining net assets and ultimately its dissolution in the future. ACE Aviation said that further to the approval by its shareholders on April 25, 2012 of a special resolution providing for the voluntary liquidation of ACE, the Quebec Superior Court - Commercial Division has issued an order appointing Ernst & Young Inc. as liquidator of ACE. Effective as of June 28, all of the directors and officers of ACE have resigned from their positions and the liquidator is vested with the powers of the directors of ACE. AMBAC FINANCIAL: Committee Taps Tavakoli et al. as Consultants -------------------------------------------------------------- The Official Committee of Unsecured Creditors in Ambac Financial Group Inc.'s Chapter 11 cases seeks the Court's authority to retain Nader Tavakoli, Victor Mandel and Jeffrey S. Stein as consultants. Ambac Financial Group, Inc.'s confirmed Fifth Amended Plan of Reorganization provides that on the effective date, the term of the current members of the Debtor's board of directors will expire and the new board of the Reorganized Debtor will consist of the Reorganized Debtor's Chief Executive Officer and four additional directors to serve on an interim basis before an election of new directors by shareholders. The Creditors Committee has the right to appoint three of the Interim Directors and an informal group of certain unaffiliated holders of Senior Notes has the right to appoint one of the Interim Directors. The Committee and the Informal Group chose the "Consultants" to be three of the four Interim Directors. The fourth Interim Director, Charles Lemonides, currently represents ValueWorks, LLC, a member of the Committee. Mr. Tavakoli is the chairman and chief executive officer of EagleRock Capital Management, a private investment partnership based in New York City. Mr. Mandel is the founding partner of Criterion Advisors LLC, an investment advisory firm focused on corporate governance-led activist investment situations. Mr. Stein is the founder and managing partner of Stein Advisors LLC, an advisory firm that provides consulting services to institutional investors. To promote an efficient transition between the Current Board and the New Board, the Debtor has proposed to the Committee and the Consultants that for period between the Plan Confirmation Date and the Plan Effective Date, the Debtor will (i) grant the Consultants access to certain Company information, (ii) facilitate meetings between the Consultants and the officers of the Company or the Management, (iii) provide the Consultants with advance copies of proposed agendas and related materials for all board meetings, (iv) permit the Consultants to meet and conduct discussions with members of the Current Board, and (v) allow the Consultants to advise the Committee and its professionals regarding the information the Consultants learn in their observations and interactions with Management and the Current Board. The Consultants will be bound by the terms of a confidentiality agreement dated July 12, 2012, for all information exchanged. The Committee anticipates that the Consultants will, to the extent agreed by the parties, provide these services pursuant to a Consultant Agreement: (a) review and analyze the Debtor's business, assets, liabilities, operations, cash flows, properties, financial condition and prospects of the Debtor operations, and strategic issues at a level customary for members of the Current Board; (b) attend, either in person or telephonically and subject to the Consultants' scheduling conflicts, an initial orientation session and additional informational sessions with the Management from time to time as necessary to address in greater detail business areas or issues that are important to a board-level understanding of the Debtor; (c) review select materials (with the exception of governance and other privileged materials) provided to the Current Board or its committees in connection with Board and its committees meetings including, without limitation, agendas for such meetings; (d) subject to their respective availability, attend the Debtor's regularly scheduled meetings of the Board on August 7, November 6 and December 11, to meet and discuss business and other Debtor issues with the Current Board, solicit the Current Board's views on such issues, and offer advice to the Current Board; (e) attend additional informal meetings with members of the Current Board as may be arranged by agreement of the Consultants and the Debtor to promote an orderly emergence from bankruptcy and transition to the New Board; and (f) advise the Committee on information learned during their observations and interactions with Management and the Current Board, including, without limitation, information regarding the Debtor's strategic relationship opportunities, acquisition opportunities and financing alternatives. In consideration for the Services, the Committee seeks authority for the Debtor to: -- pay the Consultants a fee of $22,500 per calendar quarter (pro rated for partial quarters); and -- promptly reimburse the Consultants for all reasonable, out- of-pocket expenses incurred by the Consultants. The Consultant Agreement provides for customary indemnification provisions for the Consultants by the Debtor. Each of the Consultants certifies, solely with respect to himself, that, to the best of his knowledge, he (i) has no outstanding agreement, obligation or interest that would result in his holding or representing an adverse interest to the Debtor's estate; (ii) is not owed any prepetition amounts from the Debtor, and (iii) believes he is a "disinterested person" as defined under Section 101(14) of the Bankruptcy Code. About Ambac Financial Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provided financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac Financial filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-15973) in Manhattan on Nov. 8, 2010. Ambac said it will continue to operate in the ordinary course of business as "debtor- in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. Ambac's bond insurance unit, Ambac Assurance Corp., did not file for bankruptcy. AAC is being restructured by state regulators in Wisconsin. AAC is domiciled in Wisconsin and regulated by the Office of the Commissioner of Insurance of the State of Wisconsin. The parent company is not regulated by the OCI. Ambac's consolidated balance sheet -- which includes non-debtor Ambac Assurance Corp -- showed US$30.05 billion in total assets, US$31.47 billion in total liabilities, and a US$1.42 billion stockholders' deficit, at June 30, 2010. On an unconsolidated basis, Ambac said in a court filing that it has assets of (US$394.5 million) and total liabilities of US$1.6826 billion as of June 30, 2010. Bank of New York Mellon Corp., as trustee to seven different types of notes, is listed as the largest unsecured creditor, with claims totaling about US$1.62 billion. Ambac has employed Hogan Lovells US LLP as bankruptcy counsel, replacing Dewey & LeBoeuf LLP, which has dissolved and sought bankruptcy protection. Ambac's lead counsel, Peter A. Ivanick, Esq., joined Hogan Lovells from Dewey. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. KPMG LLP is tax consultant to the Debtor. Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller, Esq., at Morrison & Foerster LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Lazard Freres & Co. LLC is the Committee's financial advisor. Bankruptcy Judge Shelley C. Chapman entered an order confirming the Fifth Amended Plan of Reorganization of Ambac Financial Group, Inc. on March 14, 2012. The Plan provides for the full payment of secured claims and 8.5% to 13.2% recovery for general unsecured claims. Bankruptcy Creditors' Service, Inc., publishes AMBAC BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Ambac Financial Group and the restructuring proceedings of Ambac Assurance Corp. (http://bankrupt.com/newsstand/or 215/945- 7000). AMBAC FINANCIAL: AAC Exercised Surplus Note Call Options -------------------------------------------------------- Ambac Assurance Corporation related on June 12, 2012, that it issued exercise notices relating to a call option on approximately $289 million of surplus notes. On June 5, 2012, Ambac Assurance issued exercise notices relating to a call option expiring on June 7, 2012, for $500 million of surplus notes. The acquisition of the $500 million of surplus notes has been completed. Following a hearing held on June 4, 2012, the Circuit Court for Dane County, Wisconsin approved a motion submitted by the Wisconsin Commissioner of Insurance, acting as the Rehabilitator of the Segregated Account of Ambac Assurance, permitting Ambac Assurance to exercise two call options on approximately $789 million of surplus notes issued by Ambac Assurance. Ambac Assurance is a guarantor of public finance and structured finance obligations, and is the principal operating subsidiary of Ambac. About Ambac Financial Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provided financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac Financial filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-15973) in Manhattan on Nov. 8, 2010. Ambac said it will continue to operate in the ordinary course of business as "debtor- in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. Ambac's bond insurance unit, Ambac Assurance Corp., did not file for bankruptcy. AAC is being restructured by state regulators in Wisconsin. AAC is domiciled in Wisconsin and regulated by the Office of the Commissioner of Insurance of the State of Wisconsin. The parent company is not regulated by the OCI. Ambac's consolidated balance sheet -- which includes non-debtor Ambac Assurance Corp -- showed US$30.05 billion in total assets, US$31.47 billion in total liabilities, and a US$1.42 billion stockholders' deficit, at June 30, 2010. On an unconsolidated basis, Ambac said in a court filing that it has assets of (US$394.5 million) and total liabilities of US$1.6826 billion as of June 30, 2010. Bank of New York Mellon Corp., as trustee to seven different types of notes, is listed as the largest unsecured creditor, with claims totaling about US$1.62 billion. Ambac has employed Hogan Lovells US LLP as bankruptcy counsel, replacing Dewey & LeBoeuf LLP, which has dissolved and sought bankruptcy protection. Ambac's lead counsel, Peter A. Ivanick, Esq., joined Hogan Lovells from Dewey. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. KPMG LLP is tax consultant to the Debtor. Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller, Esq., at Morrison & Foerster LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Lazard Freres & Co. LLC is the Committee's financial advisor. Bankruptcy Judge Shelley C. Chapman entered an order confirming the Fifth Amended Plan of Reorganization of Ambac Financial Group, Inc. on March 14, 2012. The Plan provides for the full payment of secured claims and 8.5% to 13.2% recovery for general unsecured claims. Bankruptcy Creditors' Service, Inc., publishes AMBAC BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Ambac Financial Group and the restructuring proceedings of Ambac Assurance Corp. (http://bankrupt.com/newsstand/or 215/945- 7000). ARIUS3D: Pursuing Financing to Submit Late Annual Report -------------------------------------------------------- Arius3D Corp. disclosed that the filing of its annual financial statements, management's discussion and analysis and related officer certifications for the financial year ended on March 31, 2012 will be delayed beyond the filing deadline of July 30, 2012. As a result of the liquidity constraints facing the Company, the Company is not in a position to prepare its Annual Filings on a timely basis. As a result of this delay, the Company currently intends to make an application with the Ontario Securities Commission, and other securities commissions in each of British Columbia and Alberta, requesting that a management cease trade order be imposed in respect of this late filing. There is no guarantee that an MCTO will be granted. If an MCTO is granted, the MCTO will prohibit the Chief Executive Officer and Chief Financial Officer, and possibly the directors and other insiders of the Company, from trading in securities of the Company for so long as the required filings have not been completed. The issuance of an MCTO does not generally affect the ability of persons who are not directors, officers or other insiders of the Company to trade in securities of the Company. The Company intends to satisfy the provisions of the alternate information guidelines of National Policy 12-203 - Cease Trade Orders for Continuous Disclosure Defaults as long as it is in default of the filing requirements. This news release constitutes a "default announcement" made pursuant to NP 12-203. The Company is pursuing financing alternatives to enable it to prepare the Annual Filings and currently anticipates that the Annual Filings will be completed by September 28, 2012. About Arius3d Corp. Arius3D -- http://www.arius3d.com-- creates imaging solutions that allow organizations to capture and share unique physical objects in digital form. Arius3D offers 3D imaging systems and services to a growing 3D image library. The Arius3D technology supports wide ranging applications in culture and heritage, entertainment, education and product design with a primary focus of generating image license recurring revenues from rich media content. ASPENBIO PHARMA: Had $1.9 Million Net Loss in First Quarter ----------------------------------------------------------- AspenBio Pharma, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $1.94 million on $7,275 of sales for the three months ended March 31, 2012, compared with a net loss of $2.80 million on $97,316 of sales for the corresponding period a year ago. The Company's balance sheet at March 31, 2012, showed $6.37 million in total assets, $4.26 million in total liabilities, and stockholders' equity of $2.11 million. As reported in the TCR on April 16, 2012, GHP Horwath, P.C., in Denver, Colorado, expressed substantial doubt about AspenBio Pharma'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. A copy of the Form 10-Q is available for free at: http://is.gd/o718Oh Castle Rock, Colo.-based AspenBio Pharma, Inc., is advancing products that address unmet human diagnostic and animal health therapeutic needs. AspenBio was formed in August 2000 as a Colorado corporation to produce purified proteins for diagnostic applications. The Company's primary focus is on advancing AppyScore(TM), its human diagnostic test to aid in the risk management of acute appendicitis, toward commercialization. CHINA GINSENG: Had $282,000 Net Loss in March 31 Quarter -------------------------------------------------------- China Ginseng Holdings, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $281,962 on $902,807 of revenues for the three months ended March 31, 2012, compared with a net loss of $223,630 on $2.01 million of revenues for the three months ended March 31, 2011. For the nine months ended March 31, 2012, the Company reported a net loss of $1.12 million on $3.15 million of revenues, compared with a net loss of $672,237 on $3.09 million of revenues for the nine months ended March 31, 2011. The Company's balance sheet at March 31, 2012, showed $10.27 million in total assets, $6.03 million in total liabilities, and stockholders' equity of $4.24 million. "The Company had an accumulated deficit of $3,952,089 as of March 31, 2012, and there are existing uncertain conditions the Company foresees relating to its ability to obtain working capital and operate successfully. Management's plans include the raising of capital through the equity markets to fund future operations and the generating of revenue through its businesses. Failure to raise adequate capital and generate adequate sales revenues could result in the Company having to curtail or cease operations." "Additionally, even if the Company does raise sufficient capital to support its operating expenses and generate adequate revenues, there can be no assurances that the revenues will be sufficient to enable it to develop business to a level where it will generate profits and cash flows from operations. These matters raise substantial doubt about the Company?s ability to continue as a going concern." As reported in the TCR on Oct. 20, 2011, Meyler & Company, LLC, in Middletown, N.J., expressed substantial doubt about China Ginseng's ability to continue as a going concern, following the Company's results for the fiscal year ended June 30, 2011. The independent auditors noted that the Company has incurred an accumulated deficit of $2.8 million since inception, and there are existing uncertain conditions the Company faces relative to its ability to obtain working capital and operate successfully. A complete text of the Form 10-Q is available for free at: http://is.gd/W0LVqP China Ginseng Holdings, Inc., headquartered in Changchun City, China, was incorporated on June 24, 2004, in the State of Nevada. The Company conducts business through its four wholly-owned subsidiaries located in Northeast China. The Company has been granted 20-year land use rights to 3,705 acres of lands by the Chinese government for ginseng planting and it controls through lease approximately 750 acres of grape vineyards. Since its inception in 2004, the Company has been engaged in the business of farming, processing, distribution and marketing of fresh ginseng, dry ginseng, ginseng seeds, and seedlings. In March 2008, it acquired Tonghua Linyuan Grape Planting Co., Ltd.m, to plant wild mountain grapes. Starting in August 2010, it has gradually shifted the focus of its business from direct sales of ginseng to canned ginseng juice production and wine production. AVENTINE RENEWABLE: S&P Cuts Corporate Credit Rating to 'CC' ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Aventine Renewable Energy Holdings Inc. to 'CC' from 'CCC+'. "We also lowered the rating on the company's senior secured debt due December 2015 ($215.9 million outstanding as of March 31, 2012) to 'CCC-' from 'B-'. The outlook is negative. We revised our liquidity assessment of the company from 'less than adequate' to 'weak'. At the same time, we left our recovery rating of '2' unchanged," S&P said. "The downgrade reflects the company's uncertain liquidity following its announcement that on July 6, 2012, it entered into an amendment to its credit agreement that could effectively prevent it from drawing on its revolving credit facility and letters of credit," said Standard & Poor's credit analyst Matthew Hobby. "The company's 8-K filing also indicates that on July 27, 2012, it may be required to deposit up to $9.2 million (the amount of letters of credit outstanding) into an account for the benefit of lenders. Although this deposit could increase its borrowing base under the credit agreement, it is not clear at this time that the company has sufficient cash reserves to make the deposit," S&P said. "Our ratings on Aventine incorporate its 'highly leveraged' financial risk profile and its 'vulnerable' business risk profile," S&P said. "The negative outlook reflects the risk of additional covenant violations or default in 2012, resulting from low liquidity. The company has not released its financial statements for the second quarter of 2012, but EBITDA was negative $8.9 million in the first quarter of 2012, after the company generated $22.7 million in the fourth quarter of 2011 and $9.6 million in the quarter before that," S&P said. "We could lower the rating if expansion delays or cost overruns indicate that EBITDA is likely to remain negative and constrain liquidity for an extended period. We could raise the rating if liquidity improves, construction is completed on time and within budget, and improved operating performance supports an expectation of debt to EBITDA below 6x," S&P said. BEACHWALK LP: Files for Chapter 11 in Indiana --------------------------------------------- Michigan City, Indiana-based Beachwalk Limited Partnership filed a bare-bones Chapter 11 petition (Bankr. N.D. Ind. Case No. 12-32547) on July 18, 2012. The Debtor estimated assets of $10 million to $50 million and debts of $1 million to $10 million. Related entities Moss Family LP and Beachwalk Limited Partnership filed Chapter 11 petitions (Case Nos. 12-32540 and 12-32541) on July 17. BEACHWALK LP: Case Summary & 5 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Beachwalk Limited Partnership, a Partnership 202 Beachwalk Lane Michigan City, IN 46360 Bankruptcy Case No.: 12-32547 Chapter 11 Petition Date: July 18, 2012 Court: U.S. Bankruptcy Court Northern District of Indiana (South Bend Division) Judge: Harry C. Dees, Jr. Debtor's Counsel: Daniel Freeland, Esq. DANIEL L. FREELAND & ASSOCIATES, P.C. 9105 Indianapolis Boulevard Highland, IN 46322 Tel: (219) 922-0800 E-mail: dlf9601b@aol.com - and ? Frederick L. Carpenter, Esq. DANIEL L. FREELAND & ASSOCIATES, P.C. 9105 Indianapolis Boulevard Highland, IN 46322 Tel: (219) 922-0800 E-mail: dlf9601b@aol.com - and ? Sheila A. Ramacci, Esq. DANIEL L. FREELAND & ASSOCIATES, P.C. 9105 Indianapolis Boulevard Highland, IN 46322 Tel: (219) 922-0800 E-mail: dlf9601b@aol.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The petition was signed by Tom Moss, authorized agent. Affiliate that filed separate Chapter 11 petitions: Entity Case No. Petition Date ------ -------- ------------- Moss Family LP 12-32540 7/17/2012 Beachwalk Limited Partnership 12-32541 7/17/2012 Beachwalk's List of Its Five Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Patrick Okell and Nien Thach Personal Loan $150,789 5307 Braebun Drive Bellaire, TX 77401 Faegre Baker Daniels Business Debt $57,882 600 E. 96th Street, Suite 600 Indianapolis, IN 46240 Internal Revenue Service Penalty on Tax Filing $9,779 P.O. Box 7346 Philadelphia, PA 19101-7346 Woodruff and Sons, Inc. Business Debt $5,873 Haas & Associates Business Debt $4,816 ARBCO CAPITAL: Stern Wrests $11M Clawback from Bankruptcy Court --------------------------------------------------------------- Max Stendahl at Bankruptcy Law360 reports a bankruptcy court cannot resolve an $11 million clawback suit by the trustee for Ponzi-scheming investment firm Arbco Capital Management LLP, U.S. District Judge J. Paul Oetken ruled Thursday, citing the U.S. Supreme Court's landmark decision in Stern v. Marshall. Bankruptcy Law360 relates that Judge Oetken said a bankruptcy court could hear but not enter final judgment on claims by Arbco Chapter 7 Trustee Richard O'Connell against Penson Financial Services Inc. BERNARD L. MADOFF: Trustee, Calif. Atty. General in Mediation ------------------------------------------------------------- The trustee liquidating Bernard L. Madoff's investment firm and California Attorney General Kamala Harris will hold talks to end a deadlock over Ms. Harris's $270 million lawsuit against an alleged beneficiary of the Ponzi scheme. After an in-chambers conference with U.S. Bankruptcy Judge Burton R. Lifland, who oversees the liquidation case of Bernard L. Madoff Investment Securities LLC, the parties agreed to enter mediation in a bid to negotiate through their differences, Bankruptcy Law360 relates. The two sides will use mediation to pursue a settlement, according to a report by Bloomberg news. Bloomberg News recounts that Madoff trustee Irving Picard had asked Judge Lifland to stop Ms. Harris's suit against Stanley Chais's estate, saying only the trustee can collect money for Madoff's Ponzi victims. Ms. Harris contends her suit can proceed because she's using her state policing power to protect consumers from fraud. Carla Main, substituting for Bill Rochelle, the bankruptcy columnist for Bloomberg News, says the combatants portray their fight in court filings as a clash between federal bankruptcy law, which describes a trustee's powers in fraud cases, and state law, governing a state's top law enforcer. In New York, Mr. Picard's home state, he didn't publicly protest in June when Attorney General Eric Schneiderman struck a $410 million settlement with Madoff feeder fund operator Ezra Merkin. Mr. Picard declined to explain why he sued Ms. Harris and not Schneiderman, citing the nonpublic nature of "strategy." Ms. Harris, a Democrat, has sought to press a 2009 complaint in state court in Los Angeles that alleges Chais passed himself off as an "investment wizard" and earned $270 million in fees from 1995 to 2008 for "doing nothing more than funneling all of his investors' capital into an epic Ponzi scheme" without their knowledge or authorization. She is seeking to recover illegal profits and other penalties. While Mr. Picard acknowledges that state policing powers are exempt from bankruptcy rules, he said last month in a court filing that Harris's suit isn't exempt because she's suing someone who is dead and can't be deterred from wrongdoing. Ms. Harris's suit is meant to deter all "bad actors," she said, in answer to Mr. Picard. The Harris case is Picard v. Hall, 12-01001, U.S. Bankruptcy 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. BETSEY JOHNSON: Capstone Approved as Committee Financial Advisor ---------------------------------------------------------------- The Official Committee of Unsecured Creditors of Betsey Johnson LLC sought and obtained authorization from the U.S. Bankruptcy Court for the Southern District of New York to retain Capstone Advisory Group, LLC, as financial advisors. Capstone Advisory, will, among other things: a) review offers received for the Debtors' assets, both on a "going out of business" and "going concern" basis; b) develop a monthly monitoring report to enable the Committee to effectively evaluate the Debtors' liquidity and wind-down activities on an ongoing basis; c) assist and advise the Committee and counsel in reviewing and evaluating any court motions filed or to be filed by the Debtors or any other parties-in-interest; and d) analyze and critique the Debtors' debtor-in-possession financing arrangements. Capstone Advisory will be compensated based on these hourly rates: Executive Director $600-$760 Managing Director $475-$590 Directors $360-$475 Consultants $160-$350 Support Staff $120-$150 Capstone Advisory has agreed to a $30,000 per month fee. In addition, Capstone Advisory will be reimbursed for reasonable out- of-pocket expenses. Capstone Advisory may request a success fee, the amount and conditions of which to be mutually agreed upon with the Committee and subject to Bankruptcy Court approval. To the best of the Committee's knowledge, Capstone Advisory is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Betsey Johnson New York-based women's fashion retailer Betsey Johnson LLC filed a Chapter 11 bankruptcy petition (Bankr. S.D.N.Y. Case No. 12-11732) on April 26, 2012, to effectuate a sale of its assets. Formed as B.J. Vines by its namesake, iconic fashion designer Betsey Johnson in 1978, the Debtor sells clothing, footwear, handbags and a signature fragrance through 63 Betsey Johnson retail stores and outlets in the U.S. The Company, which has 400 employees, also sells its products in department and specialty stores worldwide, including Macy's and Lord & Taylor, and online at http://www.betseyjohnson.com/ Non-debtor subsidiaries operate five stores in Canada and one store in England. In 2010, Steven Madden Ltd. a footwear designer and marketer, swapped US$27.4 million of secured debt for ownership of Betsey Johnson's trademarks and intellectual property. The deal satisfied all outstanding debt under a US$50 million term loan used to finance the business' acquisition by Castanea Partners. At the same time, Castanea, the company's majority owner, made a new capital investment of US$3 million as part of the deal with Madden. Betsey Johnson estimated assets and debts of US$10 million to US$50 million as of the Chapter 11 filing. Judge James Peck oversees the case. The Debtor tapped the law firm of Goulston & Storrs, as counsel; Togut, Segal & Segal, LLP, as co-counsel; and Donlin Recano & Company as claims and notice agent. The petition was signed by Jonathan Friedman, chief financial officer. Hahn & Hessen LLP serves as the Official Committee of Unsecured Creditors' counsel. In May 2012, Betsey Johnson received court approval to begin liquidation after the Debtor failed to attract going concern bidders. Liquidators Gordon Brothers Group Inc. and Hilco Merchant Resources LLC offered the top bid for the right to run the chain's going-out-of-business sales. The bid will bring the Debtor about $5.2 million immediately, and more money could trickle in to pay off its debts if the liquidation effort brings in more money than expected. Hilco is represented by Chris L. Dickerson, Esq., at DLA Piper LLP (US). Counsel for Steven Madden, Ltd., is Neil Herman, Esq., at Morgan, Lewis & Bockius LLP. Counsel for First Niagara Commercial Finance, Inc., the DIP Lender, is James C. Fox, Esq., at Ruberto, Israel & Weiner. BETSEY JOHNSON: Court OKs DJM Realty as Real Estate Advisor ----------------------------------------------------------- Betsey Johnson LLC sought and obtained authorization from the U.S. Bankruptcy Court for the Southern District of New York to employ DJM Realty Services, LLC, as the Debtor's special real estate advisor. To maximize the value of its estate, the Debtor said it requires the assistance of experienced real estate consultants to restructure its portfolio of leasehold interests. DJM will render real estate advisory services to the Debtor including: (a) meeting to ascertain the Debtor's goals, objectives, and financial parameters; (b) negotiating the termination, assignment, or other disposition of leases, including preparing and implementing a marketing plan and assisting the Debtor at any auctions, if needed; (c) negotiating waivers or reductions of prepetition cure amounts and 11 U.S.C. Section 502(b)(6) claims with respect to leases; and (d) reporting periodically to the Debtor regarding the status of negotiations. DJM Realty will be compensated as follows: (I) With respect to marketing leases for assignment, sale, other transfer, or termination (each a "Disposition"), then for each closing of a transaction in which any lease is sold, assigned, or otherwise transferred to a third party (including lease termination transactions with landlords in which the landlord pays the Debtor for the termination and agrees to waive cure claims in consideration for the termination, the sale of so- called "Designation Rights" and sales to purchasers of substantially all the equity or assets of the Debtor), then DJM Realty will earn a fee in a dollar amount equal to 4.0% of the Gross Proceeds of the disposition. The term "Gross Proceeds" hereunder means the total amount of consideration paid or payable (including any cure claim amounts paid or waived) by the purchaser, assignee, designation rights purchaser, landlord, or other transferee. In the event of a sale of substantially all the equity or assets of the Debtor, Gross Proceeds will mean the consideration allocated to the leases by the parties to the transaction; provided, however, DJM's fee for any waived or reduced cure claim will only be payable from the cash portion of the Gross Proceeds from that particular transaction; and (II) If the landlord agrees to reduce or waive the claim it could reasonably assert under Bankruptcy Code Section 502(b)(6) or otherwise, DJM Realty will receive a fee in an amount equal to the lesser of (i) 4.0% of the difference between a validly filed 502(b)(6) Claim and the allowed amount of the 502(b)(6) Claim, and (ii) 50% of what the landlord would have been entitled to receive in distributions as a general unsecured creditor of the Debtor on account of the difference between a validly filed 502(b)(6) Claim and the allowed amount of the 502(b)(6) Claim; provided, however, DJM Realty will only be paid the fee when and if a distribution is made to general unsecured creditors in the Chapter 11 case. The term "validly filed 502(b)(6) Claim" will mean an amount up to twelve months base rent and monthly recurring charges under the lease measured from May 1, 2012, through April 30, 2013, plus any amounts due under the lease attributable to the period prior to April 26, 2012. To the best of the Debtor's knowledge, DJM Realty is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Betsey Johnson New York-based women's fashion retailer Betsey Johnson LLC filed a Chapter 11 bankruptcy petition (Bankr. S.D.N.Y. Case No. 12-11732) on April 26, 2012, to effectuate a sale of its assets. Formed as B.J. Vines by its namesake, iconic fashion designer Betsey Johnson in 1978, the Debtor sells clothing, footwear, handbags and a signature fragrance through 63 Betsey Johnson retail stores and outlets in the U.S. The Company, which has 400 employees, also sells its products in department and specialty stores worldwide, including Macy's and Lord & Taylor, and online at http://www.betseyjohnson.com/ Non-debtor subsidiaries operate five stores in Canada and one store in England. In 2010, Steven Madden Ltd. a footwear designer and marketer, swapped US$27.4 million of secured debt for ownership of Betsey Johnson's trademarks and intellectual property. The deal satisfied all outstanding debt under a US$50 million term loan used to finance the business' acquisition by Castanea Partners. At the same time, Castanea, the company's majority owner, made a new capital investment of US$3 million as part of the deal with Madden. Betsey Johnson estimated assets and debts of US$10 million to US$50 million as of the Chapter 11 filing. Judge James Peck oversees the case. The Debtor tapped the law firm of Goulston & Storrs, as counsel; Togut, Segal & Segal, LLP, as co-counsel; and Donlin Recano & Company as claims and notice agent. The petition was signed by Jonathan Friedman, chief financial officer. Hahn & Hessen LLP serves as the Official Committee of Unsecured Creditors' counsel. In May 2012, Betsey Johnson received court approval to begin liquidation after the Debtor failed to attract going concern bidders. Liquidators Gordon Brothers Group Inc. and Hilco Merchant Resources LLC offered the top bid for the right to run the chain's going-out-of-business sales. The bid will bring the Debtor about $5.2 million immediately, and more money could trickle in to pay off its debts if the liquidation effort brings in more money than expected. Hilco is represented by Chris L. Dickerson, Esq., at DLA Piper LLP (US). Counsel for Steven Madden, Ltd., is Neil Herman, Esq., at Morgan, Lewis & Bockius LLP. Counsel for First Niagara Commercial Finance, Inc., the DIP Lender, is James C. Fox, Esq., at Ruberto, Israel & Weiner. BETSEY JOHNSON: Court Approves Hahn & Hessen as Committee Counsel ----------------------------------------------------------------- The Official Committee of Unsecured Creditors of Betsey Johnson LLC sought and obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to retain Hahn & Hessen LLP as its counsel. Hahn & Hessen will, among other things, assist the Committee in its investigation of the acts, conduct, assets, liabilities and financial condition of the Debtor, the operation of the Debtor's businesses, the desirability of continuance of the businesses and any other matters relevant to the Chapter 11 case or to the business affairs of the Debtor for these hourly rates: Partners $625-$815 Associates $270-$525 Special Counsel & Of Counsel $490-$615 Paralegals $190-$245 Mark S. Indelicato, Esq., a member at Hahn & Hessen, attests to the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Betsey Johnson New York-based women's fashion retailer Betsey Johnson LLC filed a Chapter 11 bankruptcy petition (Bankr. S.D.N.Y. Case No. 12-11732) on April 26, 2012, to effectuate a sale of its assets. Formed as B.J. Vines by its namesake, iconic fashion designer Betsey Johnson in 1978, the Debtor sells clothing, footwear, handbags and a signature fragrance through 63 Betsey Johnson retail stores and outlets in the U.S. The Company, which has 400 employees, also sells its products in department and specialty stores worldwide, including Macy's and Lord & Taylor, and online at http://www.betseyjohnson.com/ Non-debtor subsidiaries operate five stores in Canada and one store in England. In 2010, Steven Madden Ltd. a footwear designer and marketer, swapped US$27.4 million of secured debt for ownership of Betsey Johnson's trademarks and intellectual property. The deal satisfied all outstanding debt under a US$50 million term loan used to finance the business' acquisition by Castanea Partners. At the same time, Castanea, the company's majority owner, made a new capital investment of US$3 million as part of the deal with Madden. Betsey Johnson estimated assets and debts of US$10 million to US$50 million as of the Chapter 11 filing. Judge James Peck oversees the case. The Debtor tapped the law firm of Goulston & Storrs, as counsel; Togut, Segal & Segal, LLP, as co-counsel; and Donlin Recano & Company as claims and notice agent. The petition was signed by Jonathan Friedman, chief financial officer. Hahn & Hessen LLP serves as the Official Committee of Unsecured Creditors' counsel. In May 2012, Betsey Johnson received court approval to begin liquidation after the Debtor failed to attract going concern bidders. Liquidators Gordon Brothers Group Inc. and Hilco Merchant Resources LLC offered the top bid for the right to run the chain's going-out-of-business sales. The bid will bring the Debtor about $5.2 million immediately, and more money could trickle in to pay off its debts if the liquidation effort brings in more money than expected. Hilco is represented by Chris L. Dickerson, Esq., at DLA Piper LLP (US). Counsel for Steven Madden, Ltd., is Neil Herman, Esq., at Morgan, Lewis & Bockius LLP. Counsel for First Niagara Commercial Finance, Inc., the DIP Lender, is James C. Fox, Esq., at Ruberto, Israel & Weiner. BETSEY JOHNSON: Names Marcum LLP as Accountants -------------------------------------------------- Betsey Johnson LLC asks for permission from the U.S. Bankruptcy Court to employ Marcum LLP as accountants. The firm will provide these services: (a) ongoing audits of the Debtor's state sales and use tax obligations, as well as any that may be commenced during the course of the Debtor's chapter 11 case, (b) the preparation of the Debtor's state and federal tax returns for the years ending Dec. 31, 2011 and Dec. 31, 2012, and (c) other tax related matters upon the Debtor's request. In addition, the Debtor desires that Marcum LLP perform services in connection with the Debtor's annual reporting requirements under the Employee Retirement Income Security Act of 1974 for the Betsey Johnson 401(k) Profit Sharing Plan. Robert Spielman, a partner at Marcum LLP, attests that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm's hourly rates are: Professional Rates ------------ ----- Partners $450-595 Senior Managers $275-450 Supervisor $195-250 Accounting Seniors $140-195 About Betsey Johnson New York-based women's fashion retailer Betsey Johnson LLC filed a Chapter 11 bankruptcy petition (Bankr. S.D.N.Y. Case No. 12-11732) on April 26, 2012, to effectuate a sale of its assets. Formed as B.J. Vines by its namesake, iconic fashion designer Betsey Johnson in 1978, the Debtor sells clothing, footwear, handbags and a signature fragrance through 63 Betsey Johnson retail stores and outlets in the U.S. The Company, which has 400 employees, also sells its products in department and specialty stores worldwide, including Macy's and Lord & Taylor, and online at http://www.betseyjohnson.com/ Non-debtor subsidiaries operate five stores in Canada and one store in England. In 2010, Steven Madden Ltd. a footwear designer and marketer, swapped US$27.4 million of secured debt for ownership of Betsey Johnson's trademarks and intellectual property. The deal satisfied all outstanding debt under a US$50 million term loan used to finance the business' acquisition by Castanea Partners. At the same time, Castanea, the company's majority owner, made a new capital investment of US$3 million as part of the deal with Madden. Betsey Johnson estimated assets and debts of US$10 million to US$50 million as of the Chapter 11 filing. Judge James Peck oversees the case. The Debtor tapped the law firm of Goulston & Storrs, as counsel; Togut, Segal & Segal, LLP, as co-counsel; and Donlin Recano & Company as claims and notice agent. The petition was signed by Jonathan Friedman, chief financial officer. Hahn & Hessen LLP serves as the Official Committee of Unsecured Creditors' counsel. In May 2012, Betsey Johnson received court approval to begin liquidation after the Debtor failed to attract going concern bidders. Liquidators Gordon Brothers Group Inc. and Hilco Merchant Resources LLC offered the top bid for the right to run the chain's going-out-of-business sales. The bid will bring the Debtor about $5.2 million immediately, and more money could trickle in to pay off its debts if the liquidation effort brings in more money than expected. Hilco is represented by Chris L. Dickerson, Esq., at DLA Piper LLP (US). Counsel for Steven Madden, Ltd., is Neil Herman, Esq., at Morgan, Lewis & Bockius LLP. Counsel for First Niagara Commercial Finance, Inc., the DIP Lender, is James C. Fox, Esq., at Ruberto, Israel & Weiner. BTA BANK: Chapter 15 Case Summary --------------------------------- Foreign representative: Askhat Niyazbekovich Beisenbayev Chapter 15 Debtor: BTA Bank JSC fka Bank TuranAlem JSC aka JSC BTA Bank 97 Zholdasbekov Street "Samal 2" microdistrict Almaty 050051 Republic of Kazakhstan Chapter 15 Case No.: 12-13081 Chapter 15 Petition Date: July 16, 2012 Court: U.S. Bankruptcy Court Southern District of New York (Manhattan) Judge: James M. Peck About the Debtor: As of May 1, 2012, BTA Bank was the third largest bank in the Republic of Kazakhstan by total assets with a market share of 10.9%, serving approximately 710,218 retail customers, 73,200 small and middle business customers and 1,397 corporate customers, most of which reside or are registered, or maintain their operations, inside Kazakhstan. As of May 1, 2012 the Bank employed 5,290 people inside and 2 people outside Kazakhstan. In October 2009, the Bank applied to the Kazakhstan Financial Court for an order to commence a restructuring. The foreign representative filed a petition (Bankr. S.D.N.Y. Case No. 10-10638) in Manhattan and the judge granted a petition for recognition of the Kazakhstan proceeding as "foreign main proceeding. The Kazakhstan proceedings were closed in August 2010 after all distributions were made. The U.S. case was closed in January 2011. Due to the bank's deteriorating financial situation that began in 2011, the company was forced to seek a second restructuring before the Kazakhstan financial court. The Bank made an application for restructuring under the Banking Law, the Civil Procedural Code and the Amending Law on May 2, 2012. Debtor's Counsel: Evan C. Hollander, Esq. WHITE & CASE LLP 1155 Avenue of the Americas New York, NY 10036 Tel: (212) 819-8660 Fax: (212) 354-8113 E-mail: ehollander@whitecase.com Estimated Assets: More than $1 billion Estimated Debts: More than $1 billion The Company did not file a list of creditors together with its petition. CAMBRIDGE HEART: Extends Investment Rights Termination to July 31 ----------------------------------------------------------------- Cambridge Heart, Inc., entered into an amendment no. 2 to the Subscription Agreement and amendment no. 1 to the Additional Investment Rights with subscribers. On Jan. 17, 2012, the Company entered into two Subscription Agreements pursuant to which the Company issued and sold 8% Secured Convertible Notes due on July 17, 2013, in the aggregate principal amount of $2,500,000 and related Warrants and Additional Investment Rights. The January Subscription Agreements contemplated that the Company would offer and issue, in one or more closings, an additional principal amount of Notes equal to up to $1,500,000 and a corresponding amount of Warrants and Additional Investment Rights, each on substantially the same terms and conditions as granted or issued pursuant to the January Subscription Agreements, for which a closing was required to be completed on or before Feb. 28, 2012. The Company and a Majority in Interest of the subscribers party to the January Subscription Agreements and the February Subscription Agreement entered into Amendment No. 1 to the Subscription Agreements and the Security Agreement, pursuant to which the definition of Additional Offering was amended to permit an Additional Offering to be completed after Feb. 28, 2012, and on or before June 30, 2012. The Amendment extends the termination date of the Additional Investment Rights from July 15, 2012, to July 31, 2012. The Amendment was approved by 65% of the holders of the outstanding securities issued pursuant to the Subscription Agreements as permitted therein. As of July 13, 2012, 100,112,960 shares of the Company's common stock were outstanding. On an as-converted basis, the Company has 124,659,416 shares of common stock issued and outstanding, including 100,112,960 shares of common stock issued, 4,180,602 shares issuable upon conversion of the Series C-1 Convertible Preferred Stock and 20,365,854 shares issuable upon conversion of the Series D Convertible Preferred Stock. A copy of the Amendment is available for free at: http://is.gd/xqghJw About Cambridge Heart Tewksbury, Mass.-based Cambridge Heart, Inc., is engaged in the research, development and commercialization of products for the non-invasive diagnosis of cardiac disease. In its report on the financial statements for the year ended Dec. 31, 2011, McGladrey & Pullen, LLP, in Boston, Massachusetts, expressed substantial doubt about Cambridge Heart's ability to continue as a going concern. The independent auditors noted that of the Company's recurring losses, inability to generate positive cash flows from operations, and liquidity uncertainties from operations. The Company reported a net loss of $5.40 million in 2011, compared with a net loss of $5.17 million in 2010. The Company's balance sheet at March 31, 2012, showed $2.54 million in total assets, $4.68 million in total liabilities, $12.74 million in convertible preferred stock, and a $14.89 million total stockholders' deficit. CANYONS AT DEBEQUE RANCH: Files for Chapter 11 in Denver -------------------------------------------------------- Canyons @ DeBeque Ranch, LLC, filed a bare-bones Chapter 11 petition (Bankr. D. Colo. Case No. 12-24993) in Denver on July 18. The Debtor estimated assets of at least $10 million and debts of up to $10 million. According to the case docket, the Chapter 11 petition and the disclosure statement are due Nov. 15, 2012. The Debtor is represented by Jeffrey S. Brinen, Esq., at Kutner Miller Brinen, P.C., serves as counsel to the Debtor. CASELLA WASTE: Moody's Affirms 'B3' Corp. Family Rating ------------------------------------------------------- Moody's Investors Service has raised the speculative grade liquidity rating of Casella Waste Systems, Inc. to SGL-3 from SGL- 4. All other ratings were unaffected, including the B3 corporate family rating. The negative rating outlook was also unaffected. Rating Rationale The improved speculative grade liquidity rating, denoting adequate liquidity, reflects the company's April 27, 2012 revolving credit facility amendment. The amendment loosened financial ratio test thresholds and thereby restored likelihood of uninterrupted revolver access near-term and reduced the risk of a covenant breach. The B3 corporate family rating and the negative rating outlook continue in recognition of Casella's high financial leverage, negligible free cash flow generation level and declining equity balance-- conditions that raise credit risks and that could persist as soft economic conditions in the U.S. constrain prospects for robust growth of waste volumes. The principal methodology used in rating Casella Waste Systems was the Solid Waste Management Industry Methodology published in Februrary 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Casella Waste Systems, Inc., based in Rutland, VT, is a vertically-integrated regional solid waste services company that provides collection, transfer, disposal and recycling services to residential, industrial and commercial customers, primarily in the eastern United States. Revenues for the fiscal year ended April 30, 2012 were $481 million. CANYONS AT DEBEQUE: Case Summary & 10 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Canyons @ DeBeque Ranch, LLC aka Bluestone Ridge Ranch PUD 2020 Wall Street Butte, MT 59701 Bankruptcy Case No.: 12-24993 Chapter 11 Petition Date: July 18, 2012 Court: U.S. Bankruptcy Court District of Colorado (Denver) Judge: Elizabeth E. Brown Debtor's Counsel: Jeffrey S. Brinen, Esq. KUTNER MILLER BRINEN, P.C. 303 E. 17th Avenue, Suite 500 Denver, CO 80203 Tel: (303) 832-2400 E-mail: jsb@kutnerlaw.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Reid Rosenthal, manager. Affiliate that filed separate Chapter 11 petition: Entity Case No. Petition Date ------ -------- ------------- Bluestone Ridge Ranch East, LLC 1204994 7/18/2012 Canyons @ DeBeque Ranch's List of Its 10 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Blue Stone Ditch Associates -- $9,910 P.O. Box 192 DeBeque, CO 81630 Vahrenwald, Johnson & McMahill -- $7,685 125 South Howes, Suite 1100 Fort Collins, CO 80521 Zancanella & Associates -- $7,419 P.O. Box 1908 1011 Grand Avenue Glenwood Asprings, CO 81602 CRWCD -- $5,832 John Roberts -- $5,000 William Ellis -- $5,000 Barry Baker -- $5,000 Jones & Keller -- $1,200 Dufford, Waldeck, Milburn & Krohn -- $387 WCP 1 -- $382 CARPENTER CONTRACTORS: To Present Plan for Confirmation Aug. 22 --------------------------------------------------------------- Carpenter Contractors of America, Inc., doing business as R & D Thiel, et al., and CCA Midwest, Inc., will seek confirmation of its Chapter 11 plan at a hearing on Aug. 22, 2012 at 9:30 a.m. The deadline for sending ballots accepting or rejecting the Plan is Aug. 8, 2012. Confirmation objections are also due that day. The Debtor on June 19, 2012, received approval of the explanatory Disclosure Statement and obtained permission to begin with the solicitation process. The Debtors filed their Second Amended Disclosure Statement four days prior to the June 19 hearing. The filing was made after First American Bank requested "mostly non-substantive" changes. The U.S. Trustee also filed an objection, saying that releases should not be granted to third parties, but the exculpation provisions have been retained in the June 15 Disclosure Statement. According to the Second Amended Disclosure Statement, payments and distributions under the Plan will be funded by the Debtors' current and ongoing business operations. In addition, First American Bank has agreed to provide the Debtors with the exit facility in the form of a one-year $5,120,000 monitored asset based line of credit renewable annually for three years, and a $2,500,000 term note, repayable in 36 monthly installments. First American will retain its liens on the collateral to secure its allowed secured claims and will receive payments to satisfy all obligations under the bond letters of credit and related agreements. Fifth Third Bank will be paid its secured claim of $35,000 in full in 24 equal monthly installments, amortized at 8% interest. Other secured creditors are unimpaired under the Plan. General unsecured creditors of Carpenter Contractors will participate pro rata in the distribution of quarterly payments in the amount of $50,000 for year 1 of the Plan, Plan, quarterly payments in the amount of $50,000 for year 2 of the Plan, quarterly payments in the amount of $75,000 for year 3 of the Plan, and quarterly payments in the amount $125,000 for each of years 4, 5 and 6 of the Plan. General Unsecured Creditors of CCA Midwest will also receive installment payments. The holders of unsecured claims against Carpenter and CCA are impaired. Holders of equity interests are unimpaired and will retain their ownership interests in the Debtors. A copy of the Second Amended Disclosure Statement is available at: http://bankrupt.com/misc/Carpenter_Contractors_2nd_Amended_DS.pdf About Carpenter Contractors Pompano Beach, Florida-based Carpenter Contractors of America, Inc., dba R&D Thiel, provides carpentry services to builders of new homes primarily in Illinois and Florida. It also manufactures building components and distributes construction materials in Illinois, Florida, and North Carolina. CCA Midwest Inc. provides carpentry services to builders of new homes in Illinois. It is a wholly-owned subsidiary of Carpenter Contractors. Carpenter Contractors and CCA Midwest filed for Chapter 11 bankruptcy protection (Bankr. S.D. Fla. Lead Case No. 10-42604) on Oct. 25, 2010. Chad P. Pugatch, Esq., and Christian Savio, Esq., at Rice Pugatch Robinson & Schiller, P.A., in Ft. Lauderdale, Fl., serve as the Debtors' bankruptcy counsel. Attorneys at Shaw Gussis Fishman Glantz Wolfson & Towbin LLC, serve as special counsel. GlassRatner Advisory & Capital Group, LLC, led by Thomas Santoro, is the Debtors' financial advisor, and Scott L. Spencer, CPA and Crowe Horwath, LLP. is the Debtors' accountant for audit work. Carpenter Contractors disclosed $42,900,573 in assets and $25,861,652 in liabilities as of the Chapter 11 filing. The U.S. Trustee for Region 21 notified the Court that until further notice, he will not appoint a committee of creditors. CDC CORP: Taps Ver Ploeg to Handle Insurance Coverage Matters ------------------------------------------------------------- CDC Corporation asks the U.S. Bankruptcy Court for the Northern District of Georgia for permission to employ Ver Ploeg & Lumpkin, P.A., as special counsel for insurance coverage and litigation matters. On April 27, 2012, an action was filed in the Supreme Court of the State of New York, New York County, styled: Evolution Capital Management, LLC, Evolution CDC SPV Ltd., Global Opportunities Fund Ltd., SPV, Segregated Portfolio M, Evo China Fund and El Fund Ltd., Plaintiffs, against CDC Software Corporation, Wong Chung Kiu, Yip Hak Yung, Asia Pacific Online Limited, Ch'ien Kuo Fung, Francis Kwok-Yu Au, Donald L. Novajosky, Monish Bahl, Thomas M. Britt III, Wong Kwong Chi, and Wang Cheung Yue, Defendants. The New York Action is brought against former employees, officers, or directors, of the Debtor, well as CDC Software Corporation and Asia Pacific Online, Ltd. Each of the defendants named in the New York Action has asserted, or may have the right to assert, a claim against the Debtor for indemnification of any loss arising out of the New York Action. Ver Ploeg will, among other things: a. review and analyze of the policies and insurance-related documents; b. advise and assist the Debtor with regard to available insurance coverages under the policies; and c. advise the Debtor as to the appropriate steps necessary to assert claims against the insurers under the Policies. The Debtor has agreed to pay Ver Ploeg's its standard hourly rates. No compensation will be paid by the Debtor to said law firm except upon application to and approval by the Bankruptcy Court after notice and hearing as required by law. To the best of the Debtor's knowledge, the Ver Ploeg & Lumpkin firm represents no interest adverse to Debtor's estate. About CDC Corp. Based in Atlanta, CDC Corp. (Nasdaq: CHINA) -- http://www.cdccorporation.net/-- is the parent company of CDC Software (Nasdaq: CDCS). CDC Software is based dually in Shanghai, China, and Atlanta and produces enterprise software applications, IT consulting services, outsourced applications development and IT staffing. The company's owners include Asia Pacific Online Ltd., Xinhua News Agency and Evolution Capital Management. CDC Corp., doing business as Chinadotcom, filed a Chapter 11 petition (Bankr. N.D. Ga. Case No. 11-79079) on Oct. 4, 2011. James C. Cifelli, Esq., at Lamberth, Cifelli, Stokes & Stout, PA, in Atlanta, Georgia, serves as counsel. Moelis & Company LLC serves as its financial advisor and investment banker. Marcus A. Watson at Finley Colmer and Company serves as chief restructuring officer. The Debtor estimated assets and debts at US$100 million to US$500 million as of the Chapter 11 filing. The Official Committee of Equity Security Holders of CDC Corp. is represented by Troutman Sanders. The Committee tapped Morgan Joseph TriArtisan LLC as its financial advisor. The stock of CDC Software Corp. was sold for $249.8 million to an affiliate of Vista Equity Holdings. The Debtor's Plan provides that in addition to paying creditors in full and distributing the excess to shareholders, the plan would allow filing lawsuits against insiders who CDC claims were behind the motion to dismiss. China.com filed a competing reorganization plan. CDC interprets the plan as giving releases of claims that CDC's plan would prosecute instead. CENTRAL FALLS, RI: Plan to Return Only 45% to Unsec. Creditors -------------------------------------------------------------- The City of Central Falls, Rhode Island, on July 10, 2012, filed with the Bankruptcy Court a Second Amended Plan For The Adjustment Of Debts and an explanatory disclosure statement. The Chapter 9 Plan, if confirmed, will restructure the City's debt and its operations and put the City on a path towards fiscal stability. The Amended Plan also addresses and resolves the City's obligations to employees, retirees, and vendors. The Amended Plan does not impair the City's bond obligations. According to the Second Amended Disclosure Statement dated July 10, 2012, payment to holders of general unsecured claims and general unsecured convenience claims will be paid a distribution from a pool totaling $600,000 during the six-year plan horizon. The general unsecured convenience claims will be paid 35% of their allowed claim on or prior to June 30, 2013. Any balance remaining in FY 2013 claims pool will be added to the FY 2014 claims pool, and the general unsecured claims will share pro rata in the claims pool on or prior to the following payment dates: June 30, 2014, June 30, 2015, June 30, 2016 and June 30, 2017. In no event will the amount paid to any general unsecured creditor exceed 45% of the Allowed Claim. In the event there are monies remaining in the General Unsecured Creditor's Pool on June 30, 2017, after distribution as stated herein, such monies will be deposited in the City's Capital Fund. "While the City regrets that it cannot pay a higher percentage, the fact is that the City lacks the revenues to do so while maintaining an adequate level of municipal services such as the provision of fire and police protection and the repairing of the City's streets," the City said in the court filing. The Amended Plan does not alter the City's obligations towards funds that are restricted by grants, by federal law and by Rhode Island law; pursuant to the Tenth Amendment to the United States Constitution and the provisions of the Bankruptcy Code that implement the Tenth Amendment, such funds cannot be impacted in the Bankruptcy Case. In summary the Plan provides for these terms: Balloting Information Ballots have been provided with this Amended Disclosure Statement to creditors known to have Claims that are impaired under the Amended Plan. Ballots must be returned to and received by the Ballot Tabulator by no later than 4:30 p.m., Eastern Standard Time, on August 3, 2012. Ballot Tabulator Theodore Orson, Esq. Orson and Brusini Ltd. 144 Wayland Avenue, Providence, RI 02906. Fax: (401) 861-3103 E-mail: torson@orsonandbrusini.com Confirmation Hearing A hearing regarding confirmation of the Amended Plan will be held by the Bankruptcy Court on Aug. 17, 2012, commencing at 10:30 a.m., Eastern Standard Time and continuing on Aug. 20, 2012 if needed. Objections to confirmation must be filed and served by no later than Aug. 3, 2012. Administrative Claims Paid in full, except to the extent that the Holder of an Administrative Claim agrees to a different treatment. Class 1 $12,000,000 General Obligation School Bonds Claims Unimpaired. The bonds are general obligations of the City, and all taxable property in the City is subject to ad valorem taxation without limitation as to rate or amount to pay the bonds and the interest thereon. Pursuant to R.I. Gen. Laws Sec. 45-12-1, the bonds are secured by a Rhode Island statutory lien on property taxes and general fund revenues. Class 2 $8,700,000 General Obligation Municipal Facility Bonds Claims. Unimpaired. The bonds are general obligations of the City, and all taxable property in the City is subject to ad valorem taxation without limitation as to rate or amount to pay the bonds and the interest thereon. Pursuant to R.I. Gen. Laws Sec. 45-12-1, the bonds are secured by a Rhode Island statutory lien on property taxes and general fund revenues. Class 3 $1,300,000 General Obligation School Bonds Claims Unimpaired. The bonds are general obligations of the City, and all taxable property in the City is subject to ad valorem taxation without limitation as to rate or amount to pay the bonds and the interest thereon. Pursuant to R.I. Gen. Laws Sec. 45-12-1, the bonds are secured by a Rhode Island statutory lien on property taxes and general fund revenues. Class 4 $750,000 General Obligation School Bonds Unimpaired. The bonds are general obligations of the City, and all taxable property in the City is subject to ad valorem taxation without limitation as to rate or amount to pay the bonds and the interest thereon. Pursuant to R.I. Gen. Laws Sec. 45-12-1, the bonds are secured by a Rhode Island statutory lien on property taxes and general fund revenues. Class 5 $4,250,000 General Obligation School Bonds Unimpaired. The bonds are general obligations of the City, and all taxable property in the City is subject to ad valorem taxation without limitation as to rate or amount to pay the bonds and the interest thereon. Pursuant to R.I. Gen. Laws Sec. 45-12-1, the bonds are secured by a Rhode Island statutory lien on property taxes and general fund revenues. Class 6 April 10, 2009 Lease Claim Impaired. On the Effective Date, the term of the Rescue Lease will be extended by 2 years, the annual principal payments will be reduced by 50%, and the annual interest rate will be reduced by 1%. Class 7 Retiree Health Insurance Claims Impaired. The Holders of these Claims will have their health care benefits modified in accordance with the restructured health benefits schedule, and will be required to pay 20% co-share premium payments. Class 8 Retiree $10,000 & Under Pension Claims Unimpaired. The Holders of these Claims will not have their annual pension benefits reduced under the newly-designed Central Falls Pension Plan. Class 9 Retiree Reduced to $10,000 Pension Claims Impaired. The Holders of these Claims will have their annual pension benefits reduced to $10,000 under the newly- designed Central Falls Pension Plan. Class 10 Retiree 45% Pension Claims Impaired. The Holders of these Claims will have their annual pension benefits reduced by 55% under the newly-designed Central Falls Pension Plan. Class 11 Retiree Pension Claims Impaired. The Holders of these Claims will have their annual pension benefits reduced by less than 55% in accordance with the formula as set forth under the newly-designed Central Falls Pension Plan. Class 12 Retiree Accidental Disability Pension Claims Impaired. The Holders of these Claims will have their accidental disability retirement benefits modified in accordance with the restricted benefit schedule. Class 13 Employees Covered by the Collective Bargaining Agreement between the City and R.I. Council 94, AFSCME, AFL-CIO Local 1627 for Nov. 23, 2011 to June 30, 2016 Impaired. The Holders of these Claims have had their compensation, healthcare, and other benefits reduced under the Amended Plan. Class 14 Employees Covered by the CBA between the City and the Fraternal Order of Police, Lodge 2 for Nov. 23, 2011 to June 30, 2016 Impaired. The Holders of these Claims have had their compensation, health benefits, retirement benefits and other benefits reduced under the Amended Plan. Class 15 Employees Covered by the CBA between the City and Local 1485, Int'l Assoc. of Fire Fighters, AFL-CIO for Nov. 23, 2011 to June 30, 2016 Impaired. The Holders of these Claims have had their compensation, health benefits, retirement benefits and other benefits reduced under the Amended Plan. Class 16 General Unsecured Claims Impaired. Holders of Allowed General Unsecured Claims will receive their pro rata share of the $600,000 payment of the full distribution to the Holders of Allowed Class 17 General Unsecured Convenience Claims) during the six-year Amended Plan duration from the General Unsecured Claims Pool after distributions are made to or reserves are created for the Holders of the Class 17 Convenience General Unsecured Claims. Because this class of Claims will include contract and lease rejection Claims which are currently unliquidated, it is impossible at this time to estimate the percentage recovery to Holders of these Claims. The recovery will not exceed 45% of the amount of the Claim. Class 17 General Unsecured Convenience Claims of $5,000 or less Impaired. The Holders of these Claims will receive 35% of the amount of their Allowed Claim on or prior to June 30, 2013 in a single lump sum payment. Class 18 Property Tax Overpayment Claims Unimpaired. The Holder of these Claims will have the overpayment of their property taxes credited to their fiscal year 2013 tax bills. Class 19 State of Rhode Island Claims Impaired. The Holder of this Claim will be paid in full but most of the payments will be paid after the term of the plan. A portion of the payments to the Holder of this Claim will be paid from any recovery of a Claim Recovery Trustee to be appointed to recover from any judgment against elected officials in the City. Contact the Debtor's counsel at: Theodore Orson, Esq. ORSON AND BRUSINI LTD. 144 Wayland Avenue Providence, RI 02906 E-mail: torson@orsonandbrusini.com A copy of the Second Amended Disclosure Statement is available at: http://bankrupt.com/misc/Central_Falls_2nd_Amended_Plan_Outline.pdf About Central Falls Central Falls is a city in Providence County, Rhode Island. The population was 18,928 at the 2000 census. Central Falls is the smallest and most densely populated city in Rhode Island. Central Falls sought bankruptcy protection under Chapter 9 of the U.S. Bankruptcy Code (Bankr. D. R.I. Case No. 11-13105) on Aug. 1, 2011. The Chapter 9 filing was made after former Rhode Island Supreme Court Judge Robert Flanders, who serves as state-appointed receiver for the city, was unable to negotiate significant concessions from unions representing police officers, firefighters and other city workers. The city grappled with an $80 million unfunded pension and retiree health benefit liability that is nearly quadruple its annual budget of $17 million. Judge Robert Flanders succeeded the role from retired Superior Court Associate Justice Mark A. Pfeiffer, who was appointed in July 2010. The Central Falls receivership, the state's first, has left the mayor and council without any power to govern. Judge Frank Bailey presides over the Chapter 9 case. Theodore Orson, Esq., at Orson and Brusini Ltd., serves as bankruptcy counsel to the receiver. CENTRAL FEDERAL: Commences Public Offering of Common Stock ---------------------------------------------------------- Central Federal Corporation, the parent company of CFBank, commenced the public offering phase of its stock offering. The Company seeks to raise up to $22.5 million, including a rights offering to existing shareholders and a $4.5 million offering to a group of standby purchasers. The public offering will end as soon as $22.5 million is raised, but no later than Aug. 14, 2012. "We are pleased with the support of our current shareholders and we look forward to working quickly toward the successful completion of the public offering," commented Jerry F. Whitmer, Chairman of the Board. Persons interested in purchasing stock in the public offering may contact the Company's information agent, ParaCap Group, LLC, at 866.719.5037. A registration statement related to these securities has been filed with the SEC and may be viewed on the SEC Web site (www.sec.gov). About Central Federal Fairlawn, Ohio-based Central Federal Corporation (Nasdaq: CFBK) is the holding company for CFBank, a federally chartered savings association formed in Ohio in 1892. CFBank has four full-service banking offices in Fairlawn, Calcutta, Wellsville and Worthington, Ohio. The Company's balance sheet at March 31, 2012, showed $241.44 million in total assets, $232.21 million in total liabilities and $9.22 million in total stockholders' equity. Central Federal reported a net loss of $5.42 million in 2011, a net loss of $6.87 million in 2010, and a net loss of $9.89 million in 2009. In the auditors' report accompanying the consolidated financial statements for the year ended Dec. 31, 2011, Crowe Horwath LLP, in Cleveland, Ohio, expressed substantial doubt about the Company's ability to continue as a going concern. The Company's auditors noted that the Holding Company and its wholly owned subsidiary (CFBank) are operating under regulatory orders that require among other items, higher levels of regulatory capital at CFBank. The Company has suffered significant recurring net losses, primarily from higher provisions for loan losses and expenses associated with the administration and disposition of nonperforming assets at CFBank. These losses have adversely impacted capital at CFBank and liquidity at the Holding Company. At Dec. 31, 2011, regulatory capital at CFBank was below the amount specified in the regulatory order. Failure to raise capital to the amount specified in the regulatory order and otherwise comply with the regulatory orders may result in additional enforcement actions or receivership of CFBank. Regulatory Matters On May 25, 2011, Central Federal Corporation and CFBank each consented to the issuance of an Order to Cease and Desist (the Holding Company Order and the CFBank Order, respectively, and collectively, the Orders) by the Office of Thrift Supervision (OTS), the primary regulator of the Holding Company and CFBank at the time the Orders were issued. The Holding Company Order required it, among other things, to: (i) submit by June 30, 2011, a capital plan to regulators that establishes a minimum tangible capital ratio commensurate with the Holding Company's consolidated risk profile, reduces the risk from current debt levels and addresses the Holding Company's cash flow needs; (ii) not pay cash dividends, redeem stock or make any other capital distributions without prior regulatory approval; (iii) not pay interest or principal on any debt or increase any Holding Company debt or guarantee the debt of any entity without prior regulatory approval; (iv) obtain prior regulatory approval for changes in directors and senior executive officers; and (v) not enter into any new contractual arrangement related to compensation or benefits with any director or senior executive officer without prior notification to regulators. The CFBank Order required CFBank to have by Sept. 30, 2011, and maintain thereafter, 8% Tier 1 (Core) Capital to adjusted total assets and 12% Total Capital to risk weighted assets. CFBank will not be considered well-capitalized as long as it is subject to individual minimum capital requirements. CFBank did not comply with the higher capital ratio requirements by the Sept. 30, 2011, required date. CHAI-NA-TA CORP: Obtains Certificate of Intent to Dissolve ---------------------------------------------------------- Chai-Na-Ta Corp. announced that pursuant to section 211 (7) of the Canada Business Corporations Act, the Corporation has obtained a Certificate of Intent to Dissolve from Corporations Canada dated July 9, 2012. The Corporation will cease to carry on business except to the extent necessary for the liquidation. Once the liquidation of the Corporation and the final payments to the Corporation's creditors and the final distributions to its shareholders are completed, the Corporation will make an application to Corporations Canada for a Certificate of Dissolution. 2012 First Quarter Results Chai-Na-Ta Corp. reported a net loss of C$293,000 on C$2.75 million of revenue for the three months ended March 31, 2012, compared with net income of C$1.16 million on C$3.53 million of revenue for the same period in 2011. The Company's balance sheet at March 31, 2012, showed C$11.41 million in total assets, C$688,000 in total liabilities, and stockholders' equity of C$10.72 million. "During the first quarter of 2012, the Board of Directors of the Company instructed management to initiate a plan to liquidate the Company subject to approval of the shareholders. Subsequent to the end of the reporting period, the shareholders of the Company approved the plan to liquidate the Company. The Company will continue to operate while selling the remaining inventory from the 2011 harvest which is expected to be completed in the second quarter of 2012. As such, there is substantial doubt about the Company's ability to continue indefinitely as a going concern." A copy of the Corporation's Interim Condensed Consolidated Financial Statements for the three months ended March 31, 2012, is available for free at http://is.gd/ATCiLe Chai-Na-Ta Corp., based in Richmond, British Columbia, farmed, processed and distributed North American ginseng as bulk root. The Company operates in international markets and conducts business in Canada (bulk root farming operations and certain bulk root sales) as well as Hong Kong and China (bulk root sales centre in Asia). CHINA BAK: Had $15.6 Million Net Loss in 1st Quarter ---------------------------------------------------- China BAK Battery, Inc., reported a net loss of $15.63 million on $32.78 million of revenues for the three months ended March 31, 2012, compared with a net loss of $4.08 million on $46.71 million of revenues for the three months ended March 31, 2011. For the six months ended March 31, 2012, the Company reported a net loss of $17.45 million on $104.54 million of revenues, compared with a net loss of $7.74 million on $110.24 million of revenues for the six months ended March 31, 2011. The Company's balance sheet at March 31, 2012, showed $469.62 million in total assets, $349.46 million in total liabilities, and stockholders' equity of $120.16 million. "We had a working capital deficiency, accumulated deficit from recurring net losses incurred for the current and prior periods as at March 31, 2012, and significant short-term debt obligations maturing in less than one year." As reported in the TCR on Dec. 20, 2011, PKF, in Hong Kong, China, expressed substantial doubt about China BAK's ability to continue as a going concern, following the Company's results for the fiscal year ended Sept. 30, 2011. The independent auditors noted that the Company has a working capital deficiency, accumulated deficit from recurring net losses incurred for the current and prior years and significant short-term debt obligations maturing in less than one year as of Sept. 30, 2011. A copy of the Form 10-Q is available for free at: http://is.gd/81ulJw Shenzhen, P.R.C.-based China BAK Battery, Inc., is a global manufacturer of lithium-based battery cells. The Company produces battery cells for OEM customers and replacement battery manufacturers. CIP INVESTMENT: Files for Chapter 11 in Kansas City --------------------------------------------------- CIP Investment Properties, LLC, filed a Chapter 11 petition (Bankr. D. Kan. Case No. 12-21952) in Kansas City on July 17, 2012. The Debtor, a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101(51B), estimated assets and debts of $10 million to $50 million. According to the case docket, the schedules of assets and liabilities and the statement of financial affairs are due July 31, 2012. The Chapter 11 plan and the disclosure statement are due Nov. 14. CIP INVESTMENT: Case Summary & 18 Unsecured Creditors ----------------------------------------------------- Debtor: CIP Investment Properties, LLC 8200 E. Thorn Drive Wichita, KS 67226 Bankruptcy Case No.: 12-21952 Chapter 11 Petition Date: July 17, 2012 Court: U.S. Bankruptcy Court District of Kansas (Kansas City) Debtor's Counsel: Mark G. Stingley, Esq. BRYAN CAVE LLP 3500 One Kansas City Place 1200 Main Street Kansas City, MO 64105 Tel: (816) 374-3200 E-mail: mgstingley@bryancave.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The petition was signed by David F. Hoff, president. Debtor's list of its 18 largest unsecured creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Total Inc. -- $225,133 3729 Dora Wichita, KS 67213 Gensler -- $25,851 P.O. Box 848279 Dallas, TX 75284-8279 PNB Visa -- $22,897 P.O. Box 569100 Dallas, TX 75356-9100 Building Controls -- $19,446 City of Wichita -- $14,922 NCRI -- $13,057 Alley Investments -- $12,500 Eklunds Elevator -- $12,400 Rheinschmidt Marble & Granite -- $11,992 Kansas Trane -- $9,769 C&C Maintenance -- $8,076 Rheinschmidt Tile & Marble -- $7,870 JP Weigand -- $5,000 Schindler Elevator -- $2,869 Early Bird Lawncare -- $2,253 Spangenberg Phillips -- $1,479 Boesen Plumb Elv -- $1,403 KGE Kansas -- $479 CIRCLE STAR: Elmer Reed Appointed to Board of Directors ------------------------------------------------------- The Board of Directors of Circle Star Energy Corp. increased the size of the Board to consist of four members and pursuant to Article 3, Section 9 of the Bylaws of the Company, Elmer Reed was appointed by the Board as a director of the Company, effective July 16, 2012, to fill the vacancy. Elmer Reed has over 41 years of oil field service & operational experience. Mr. Reed is currently Vice President, Executive Sales for Select Energy Services. Prior to joining Select Energy Services, Mr. Reed worked in various management positions for BJ Services Company, Newpark Drilling Fluids, and Halliburton Energy Services where he reported directly to the President. Mr. Reed serves on the Board of Directors of Keane Group, a drilling and completions company, and has served as Director and Secretary/Treasurer of the International Oilmen's Golf Association for over 30 years. Mr. Reed is active in IPAA and a lifetime member of Society of Petroleum Engineers, Houston Livestock Show and Rodeo, and Houston Farm and Ranch. Mr. Reed is a graduate of Texas Tech University with a BBA in Management. About Circle Star Houston, Tex.-based Circle Star Energy Corp. owns royalty, leasehold, operating, net revenue, net profit, reversionary and other mineral rights and interests in certain oil and gas properties in Texas. The Company's properties are in Crane, Scurry, Victoria, Dimmit, Zavala, Grimes, Madison, Robertson, Fayette, and Lee Counties. The Company's balance sheet at Jan. 31, 2012, showed $3.91 million in total assets, $6.75 million in total liabilities and a $2.84 million total stockholders' deficit. The Company said in its quarterly report for the period ended Jan. 31, 2012, that there is substantial doubt about its ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon continued financial support from the Company's shareholders, the ability of the Company to obtain necessary financing to continue operations, and the attainment of profitable operations. The Company can give no assurance that future financing will be available to it on acceptable terms if at all or that it will attain profitability. These factors raise substantial doubt about the Company's ability to continue as a going concern. CIRCUS AND ELDORADO: Court Sets Aug. 17 General Claims Bar Date --------------------------------------------------------------- The Hon. Bruce T. Beesley of the U.S. Bankruptcy Court for the District of Nevada established Aug. 17, 2012, at 4 p.m., as the deadline for any individual or entity to file proofs of claim against Circus & Eldorado Joint Venture, et al. The Court also set Nov. 13, at 4 p.m. as the governmental unit bar date. Proofs of claim must be filed by mailing, sending by messenger or overnight courier, or hand delivering the proof of claim to: Circus and Eldorado Claims Processing Center Kurtzman Carson Consultants LLC 2335 Alaska Avenue El Segundo, CA 90245 About Circus and Eldorado Circus and Eldorado Joint Venture and Silver Legacy Capital Corp. filed for Chapter 11 bankruptcy (Bankr. D. Nev. Case Nos. 12-51156 and 12-51157) on May 17, 2012. Circus and Eldorado Joint Venture owns and operates the Silver Legacy Resort Casino, a 19th century silver mining themed hotel, casino and entertainment complex located in downtown Reno, Nevada. The casino and entertainment areas at Silver Legacy are connected by skyway corridors to the neighboring Eldorado Hotel & Casino and the Circus Circus Hotel and Casino, each of which are owned by affiliates of the Debtors. Together, the three properties comprise the heart of the Reno market's prime gaming area and room base. Silver Legacy Capital is a wholly owned subsidiary of the Joint Venture and was created and exists for the sole purpose of serving as a co-issuer of the mortgage notes due 2012. SLCC has no operations, assets or revenues. Eldorado Hotel & Casino and Circus Circus Hotel and Casino are not debtors in the Chapter 11 cases. The Company did not make the required principal payment of its 10.125% mortgage notes on the maturity date of March 1, 2012. The company also elected not to make the scheduled interest payment. As a result, an aggregate of $142.8 million principal amount of Notes were outstanding and accrued interest of $7.23 million on the Notes, as of March 1, 2012, is due and payable. The Debtors have entered into a Restructuring Support Agreement with Capital Research and Management Company, a holder of a substantial portion of the mortgage notes. A copy of the RSA dated March 15, 2012, is available for free at http://is.gd/diDPh3 The RSA contemplates a proposed plan will be filed no later than June 1, 2012. The plan will contain creditor treatments that have already been negotiated with and agreed to by creditor constituents. The Debtors will seek approval of the explanatory disclosure statement within 45 days after the Petition Date and obtain confirmation of the Plan 60 days later. Judge Bruce T. Beesley presides over the case. Paul S. Aronzon, Esq., and Thomas P. Kreller, Esq., at Milbank, Tweed, Hadley & McCloy LLP; and Sallie B. Armstrong, Esq., at Downey Brand LLP, serve as the Debtors' counsel. The Debtors' financial advisor is FTI Consulting Inc. The claims agent is Kurtzman Carson Consultants LLC. The Bank of New York Mellon Trust Company, N.A., the trustee for the Debtors' 10-1/8% Mortgage Notes due 2012, is represented by Craig A. Barbarosh, Esq., and Karen B. Dine, Esq., at Pillsbury Winthrop Shaw Pittman LLP. Circus and Eldorado Joint Venture disclosed $264,649,800 in assets and $158,753,490 in liabilities as of the Chapter 11 filing. The petitions were signed by Stephanie D. Lepori, chief financial officer. The Plan dated June 1, 2012, pays much of its debt in cash and the balance with new secured liens. August B. Landis, Acting U.S. Trustee for Region 17, appointed three creditors to serve in the Official Committee of Unsecured Creditors in the Debtors' Chapter 11 cases. Stutman, Treister & Glatt Professional Corporation represents the Committee. CLAIRE'S STORES: Completes Employee Stock Options Exchange Offer ---------------------------------------------------------------- The offer by Claire's Inc., the parent corporation of Claire's Stores, Inc., to exchange certain performance based stock options held by employees of the Company and its affiliates, including the named executive officers, in each case previously granted pursuant to the Claire's Inc. Amended and Restated Stock Incentive Plan, for new performance based stock options of the Parent granted on a 1 for 2 basis, was completed on July 16, 2012. The Exchange Offer had commenced on June 15, 2012. For every two Original Options tendered by an Eligible Employee, that Eligible Employee received one New Option with an exercise price of $10 per share. Each New Option was granted pursuant to the Plan and a grant letter. Each New Option will vest in equal installments on the first two anniversaries after the first to occur of: (i) the date of a Qualified IPO at a price of at least $25 per share; (ii) any date following a Qualified IPO when the average stock price over the preceding 30 consecutive trading days exceeds $25; or (iii) any date before a Qualified IPO where more than 25% of the outstanding shares of the Parent are sold for cash or marketable consideration having a value of at least $25 per share. If, on or after the occurrence of an event described in (i), (ii) or (iii), but prior to the second anniversary thereof, there occurs a change of control of Parent, each New Option then outstanding will immediately vest. Under the terms of the Plan, a "Qualified IPO" means a sale by Parent of shares in an initial underwritten public offering registered under the Securities Act of 1933 resulting in the listing of the shares on a nationally recognized stock exchange, including, without limitation the Nasdaq Stock Market, that results in any cash proceeds to Parent. The New Options will expire on July 16, 2019. A copy of the Form 8-K is available for free at: http://is.gd/XAGDWm About Claire's Stores Claire's Stores, Inc. -- http://www.clairestores.com/-- operates as a specialty retailer of fashion accessories and jewelry for preteens and teenagers, as well as for young adults in North America and internationally. It offers jewelry products that comprise costume jewelry, earrings, and ear piercing services; and accessories, including fashion accessories, hair ornaments, handbags, and novelty items. Based in Pembroke Pines, Florida, Claire's Stores operates under two brands: Claire's(R), which operates worldwide and Icing(R), which operates only in North America. As of Jan. 31, 2009, Claire's Stores, Inc., operated 2,969 stores in North America and Europe. Claire's Stores also operates through its subsidiary, Claire's Nippon, Co., Ltd., 213 stores in Japan as a 50:50 joint venture with AEON, Co., Ltd. The Company also franchises 198 stores in the Middle East, Turkey, Russia, South Africa, Poland and Guatemala. The Company's balance sheet at April 28, 2012, showed $2.77 billion in total assets, $2.80 billion in total liabilities and a $39.53 million stockholders' deficit. Bankruptcy Warning If the Company is unable to generate sufficient cash flow and is otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on its indebtedness, or if the Company otherwise fail to comply with the various covenants, including financial and operating covenants in the instruments governing its indebtedness, the Company could be in default under the terms of the agreements governing those indebtedness. In the event of that default: * the holders of those indebtedness may be able to cause all of the Company's available cash flow to be used to pay those indebtedness and, in any event, could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest; * the lenders under the Company's Credit Facility could elect to terminate their commitments thereunder, cease making further loans and institute foreclosure proceedings against the Company's assets; and * the Company could be forced into bankruptcy or liquidation. COLORADO-FAYETTE: Files for Chapter 11 Bankruptcy Protection ------------------------------------------------------------ Weimar, Texas-based Colorado-Fayette Medical Center filed a voluntary Chapter 11 petition (Bankr. W.D. Tex. Case No. 12-11575) on July 10, 2012, estimating $1 million to $10 million in assets and debts. Andy Behlen at The Schulenburg Sticker reports that Colorado- Fayette Medical Center said in a press statement it would take four to six months "to readdress the issues from the last 10 years that have brought the hospital to this point of financial crisis." According to the report, in April, CFMC lost $5.8 million since 2002, averaging over a half-million every year for the last decade. Colorado-Fayette Medical Center -- http://www.cfmctx.org/-- is a 38-bed, private nonprofit 501(c)(3), acute-care healthcare facility serving the residents of Central Texas with a variety of diversified healthcare services. The primary service areas are Colorado, Fayette, and Lavaca counties. The Medical Center owns and operates the Flatonia Community Clinic and the Schulenburg Community Clinic. It also has an in-house Rehabilitation Department and a Home Health Agency. Judge H. Christopher Mott presides over the case. Lynn H. Butler, Esq., at Brown McCarroll, LLP, represents the Debtor as counsel. The petition was signed by Tommy Brasher, chairperson of the board of directors. COMPTON, CA: May Be Next in Spate Of Calif. City Bankruptcies ------------------------------------------------------------- Jonathan Randles at Bankruptcy Law360 reports that the cash- strapped city of Compton is reportedly considering filing for bankruptcy, a move that would make it the fourth California city in recent months to opt for bankruptcy protection to manage mounting debts. Compton Treasurer Douglas Sanders told city council members at a Tuesday meeting that the city, which is facing a budget shortfall of more than $42 million, will need to decide by Aug. 1 whether the municipality will pay its bonds, default on them or file for bankruptcy, Bankruptcy Law360 citing a Los Angeles Times report. The city will run out of money for paying employees on Sept. 1 at its current cash consumption rate, according to city comptroller Steven Ajobiewe, Reuters said. Compton Mayor Eric J. Perrodin said he has brought charges of "waste, fraud and abuse of public monies" to the attention of California officials, Reuters reported. Compton, California is a city of 93,000 people on the outskirts of Los Angeles. COMVERGE INC: Posts $2.7 Million Net Loss in 1st Quarter -------------------------------------------------------- Comverge, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $2.72 million on $32.58 million of revenue for the three months ended March 31, 2012, compared with a net loss of $9.79 million om $18.63 million of revenue for the corresponding period a year ago. The Company's balance sheet at March 31, 2012, showed $106.20 million in total assets, $70.02 million in total liabilities, and stockholders' equity of $36.18 million. As reported in the TCR on April 16, 2012, PricewaterhouseCoopers LLP, in Atlanta, Georgia, expressed substantial doubt about Comverge'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 combination of the expected operating performance, the amount of cash flow that is expected from operations, debt that is due in 2012, and the restrictive debt covenants with which the Company may not comply, raises substantial doubt about 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/FhePdH Norcross, Georgia-based Comverge, Inc., is a provider of intelligent energy management, or IEM, solutions that empower utilities, commercial and industrial customers, and residential consumers to use energy in a more effective and efficient manner. CORDILLERA GOLF: Lender Says Golf Course Not Worth $33-Mil. ----------------------------------------------------------- The Bankruptcy Court in Colorado may need to conduct proceedings to determine the real value in dollars of The Club at Cordillera. Alpine Bank in Vail, Colo., which is owed $12.7 million in pre- bankruptcy debt tied with the club, is disputing the $33 million tag placed by the club's owner and operator, Cordillera Golf Club, LLC. The Debtor relies on an appraisal conducted by Chrysalis Valuation Consultants, LLC, early in June 5. However, according to the bank, the appraisal is not a true "as is" valuation, and overstates the property's value as collateral. Whatever the value at this point, even the Debtor concedes that the value of the property is rapidly eroding, the bank said. Using numbers adopted by the Debtor, the bank said the property has already lost at least 34% of its appraised value in the last three years. Alpine is trying to block the Debtor's request to obtain $4.7 million in debtor-in-possession financing. The Debtor said it needs the money to finance the Chapter 11 proceedings pursuant to a 52-week budget. The proposed loan primes Alpine's interest in the Debtor's property. However, the Debtor said Alpine is oversecured given the value of the property. Alpine said it is preparing an appraisal to confirm the Debtor's overstatement. That appraisal is not yet completed. About Cordillera Golf Cordillera Golf Club, LLC filed for protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case No. 12-11893) on June 26, 2012, 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 A. Wilhelm, manager of CGH Manager LLC, manager, signed the Chapter 11 petition. Mr. 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. In the petition, the Debtor estimated $10 million to $50 million in assets and debts, including secured debt of $12.7 million owed to Alpine Bank and a $7.5 million secured claim by Mr. Wilhelm. Delaware Bankruptcy Judge Christopher S. Sontchi presides over the case. Lawyers at Young, Conaway, Stargatt & Taylor and Foley & Lardner LLP serve as the Debtor's counsel. Omni Management Group LLC serves as the Debtor's claims agent. On July 16, 2012, the Delaware Court granted the request of certain club members to transfer the venue of the case to the Bankruptcy Court in Colorado. The case has been endorsed to Hon. A. Bruce Campbell in Denver (Bankr. D. Colo. Case No. 12-24882). An official committee of unsecured creditors has been appointed in the case. The Committee members consist of various homeowner and trade creditors of the Debtor. All members have Colorado addresses. The Committee is represented by Munsch Hardt Kopf & Harr, PC as counsel. Certain homeowners also have retained separate counsel, Michael S. Kogan, Esq., at Kogan Law Firm, APC. Secured lender, Alpine Bank in Vail, Colo., is represented by lawyers at Ballard Spahr LLP. CORDILLERA GOLF: Rust Omni Beats 2 Other Claims Agent for Job ------------------------------------------------------------- At the onset of its Chapter 11 case, Cordillera Golf Club, LLC, sought and obtained permission from the Delaware bankruptcy court to employ Rust Omni Consulting/Omni Bankruptcy as claims and noticing agent. The Debtor said that in view of the number of possible claimants and the complexity of the business, appointment of a claims and noticing agent is both necessary and in the best interest of the estate and creditors. Prior to the petition date, the club provided the firm with a $15,000 retainer. The firm's normal hourly rates range from $25 to $195. The club said that prior to selecting Rust Omni, it obtained and reviewed engagement proposals from at least two other court- approved claims and noticing agents to ensure selection from a competitive process. The Debtor said that, based on the three proposals, Rust Omni's rates are competitive and reasonable given Rust Omni's quality of service and expertise. The Debtor said Rust Omni's selection as claims and noticing agent satisfies the Court's Protocol for the Employment of Claims and Noticing Agents Under 28 U.S.C. Sec. 156(c), dated Feb. 1, 2012. Paul H. Deutch, executive managing director at Rust Omni, attests that the firm neither holds nor represents any interest adverse to the Debtor's estate and that it is a "disinterested person" as that term is defined in 11 U.S.C. Sec. 101(14). About Cordillera Golf Cordillera Golf Club, LLC filed for protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case No. 12-11893) on June 26, 2012, 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 A. Wilhelm, manager of CGH Manager LLC, manager, signed the Chapter 11 petition. Mr. 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. In the petition, the Debtor estimated $10 million to $50 million in assets and debts, including secured debt of $12.7 million owed to Alpine Bank and a $7.5 million secured claim by Mr. Wilhelm. The Debtor says the real property is valued at $33 million pursuant to an appraisal by Chrysalis Valuation Consultants LLC dated June 5. Alpine Bank disputes the appraisal. Delaware Bankruptcy Judge Christopher S. Sontchi presides over the case. Lawyers at Young, Conaway, Stargatt & Taylor and Foley & Lardner LLP serve as the Debtor's counsel. Omni Management Group LLC serves as the Debtor's claims agent. On July 16, 2012, the Delaware Court granted the request of certain club members to transfer the venue of the case to the Bankruptcy Court in Colorado. The case has been endorsed to Hon. A. Bruce Campbell in Denver (Bankr. D. Colo. Case No. 12-24882). An official committee of unsecured creditors has been appointed in the case. The Committee members consist of various homeowner and trade creditors of the Debtor. All members have Colorado addresses. The Committee is represented by Munsch Hardt Kopf & Harr, PC as counsel. Certain homeowners also have retained separate counsel: Michael S. Kogan, Esq. KOGAN LAW FIRM, APC 1901 Avenue of the Stars, Suite 1050 Los Angeles, CA 90067 Telephone: (310) 432-2310 E-mail: mkogan@koganlawfirm.com Secured lender, Alpine Bank in Vail, Colo., is represented by: Vincent J. Marriott, III, Esq. Sarah Schindler-Williams Esq. BALLARD SPAHR LLP 1735 Market Street, 51st Floor Philadelphia, PA 19103 Telephone: (215) 665-8500 Facsimile: (215) 864-8999 E-mail: marriott@ballardspahr.com schindlerwilliamss@ballardspahr.com - and ? Tobey M. Daluz, Esq. Joshua E. Zugerman, Esq. BALLARD SPAHR LLP 919 North Market Street, 11th Floor Wilmington, DE 19801 Telephone: (302) 252-4465 Facsimile: (302) 252-4466 E-mail: daluzt@ballardspahr.com zugermanj@ballardspahr.com DANCEHALL LLC: Judge Recuses Self in Involuntary Case ----------------------------------------------------- The involuntary Chapter 11 bankruptcy case filed against Dancehall LLC has been reassigned to Judge Diane Davis after Judge Robert E. Littlefield Jr. decided to recuse himself. The case also was transferred to another division within the Northern District of New York but the case number remains the same. Creditors allegedly owed in excess of $160,000 in the aggregate on account of a prepetition loan, filed an involuntary Chapter 11 petition against Niskayuna, New York-based Dancehall, LLC (Bankr. N.D.N.Y. Case No. 12-11696) on June 22, 2012. The petitioning creditors are Carl Florio, Daniel J. Hogarty, Jr., E. Stewart Jones, Jr., Alexander Keeler, John Murray, Michael Nahl, John Nigro, Daniel Nolan, James T. O'Hearn, and Peter E. Platt. They are represented by Peter A. Pastore, Esq., at McNamee, Lochner, Titus & Williams, PC, as counsel. DEWEY & LEBOEUF: U.S. Trustee Balks at Over $700K in Bonuses ------------------------------------------------------------ Lana Birbrair at Bankruptcy Law360 reports that the U.S. trustee overseeing the New York bankruptcy of Dewey & LeBoeuf LLP on Wednesday objected to the firm's proposal to dole out up to $700,000 in retention and incentive bonuses to its remaining 52 employees, calling it "premature" and potentially economically unfeasible. Bankruptcy Law360 relates that U.S. Trustee Tracy Hope Davis objected to the motion asking the New York bankruptcy court to authorize incentive and retention plans for the employees, including 44 operational staff working in departments like human resources, finance and IT. Dewey now employs 52 people, plus managers, to bill former clients and collect money with help from an operational staff. Retention payments of $450,000 might not be economically feasible and the liquidating firm hasn't provided information to support its bonus plan, the trustee, Tracy Hope Davis, said in a filing in U.S. Bankruptcy Court in Manhattan, according to Bloomberg News. 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 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. DIGITAL GENERATION: S&P Puts 'BB-' CCR on CreditWatch Negative -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Irving, Texas-based Digital Generation Inc. (including the 'BB-' corporate credit rating) on CreditWatch with negative implications. "Digital Generation will explore strategic alternatives to increase shareholder value. Possible alternatives include partnerships, business model alternatives, a sale, or other transaction. We therefore have placed our ratings (including the 'BB-' corporate credit rating) on CreditWatch with negative implications," S&P said. "Digital Generation's performance in the first quarter of 2012 was below our expectations. Quarterly revenue was 46%, including the acquisition of MediaMind Technologies Inc. (completed the second half of 2011). Pro forma revenues and EBITDA were about flat. For the 12 months ended March 31, 2012, debt leverage was 3.5x, down from 3.7x at the end of 2011. Digital Generation repaid $26.2 million of bank debt during the quarter. Liquidity is provided by $59 million in cash and cash equivalents and short-term investments, about $117 million of availability under its $120 million revolving credit facility, and moderate discretionary cash flow," S&P said. "In resolving the CreditWatch listing, we will assess the likely credit impact of the strategic alternative chosen by Digital Generation's board of directors," said Standard & Poor's credit analyst Andy Liu, "and discuss with the management team their operating and financial strategies." DREIER LLP: Amaranth Blocks Trustee's Bid to Hire Adviser --------------------------------------------------------- Amanda Bransford at Bankruptcy Law360 reports that Amaranth Partners LLC asked a New York bankruptcy court Tuesday not to let Dreier LLP's trustee hire a consultant who has previously advised Amaranth to consult on an adversary suit over $28 million allegedly transferred to Amaranth as part of Dreier's founder's Ponzi scheme. About Marc Dreier and Dreier LLP Marc Dreier founded New York-based law firm Dreier LLP -- http://www.dreierllp.com/-- in 1996. On Dec. 8, 2008, the U.S. Securities and Exchange Commission filed a suit, alleging that Mr. Dreier made fraudulent offers and sales of securities in several cities, selling fake promissory notes to hedge and other private investment funds. The SEC asserted that Mr. Dreier also distributed phony financial statements and audit opinions, and recruited accomplices in connection with that scheme. Mr. Dreier, currently in prison, was charged by the U.S. government for conspiracy, securities fraud and wire fraud (S.D.N.Y. Case No. 09-cr-00085). Dreier LLP sought Chapter 11 protection (Bankr. S.D.N.Y. Case No. 08-15051) on Dec. 16, 2008. Stephen J. Shimshak, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP, was tapped as counsel. The Debtor estimated assets of $100 million to $500 million, and debts between $10 million and $50 million in its Chapter 11 petition. Sheila M. Gowan, a partner with Diamond McCarthy, was appointed Chapter 11 trustee for the Dreier law firm. Ms. Gowan is represented by Jason Porter, Esq., at Diamond McCarthy LLP. Wachovia Bank National Association, the Dreier LLP Chapter 11 trustee, and Steven J. Reisman as post-confirmation representative of the bankruptcy estate of 360networks (USA) Inc. signed a petition that put Mr. Dreier into bankruptcy under Chapter 7 on Jan. 26, 2009 (Bankr. S.D.N.Y. Case No. 09-10371). Mr. Dreier, 60, pleaded guilty to fraud and other charges in May 2009. The scheme to sell $700 million in fake notes unraveled in late 2008. Mr. Dreier is serving a 20-year sentence in a federal prison in Minneapolis. DYNEGY INC: Seeks Extension of Exclusivity Period to Dec. 13 ------------------------------------------------------------ BankruptcyData.com reports that Dynegy filed with the U.S. Bankruptcy Court a motion to extend the exclusive period during which the Company can file a Chapter 11 plan and solicit acceptances thereof through and including November 13, 2012 and December 31, 2012, respectively. The motion explains, "At this critical juncture - with a sale process about to commence - the Operating Debtors believe it is imperative to maintain exclusivity to provide certainty and comfort to potential bidders in order to maximize the probability of a successful sale process." The Court scheduled an August 9, 2012 hearing to consider the motion. About Dynegy Through its subsidiaries, Houston, Texas-based Dynegy Inc. (NYSE: DYN) -- http://www.dynegy.com/-- produces and sells electric energy, capacity and ancillary services in key U.S. markets. The power generation portfolio consists of approximately 12,200 megawatts of baseload, intermediate and peaking power plants fueled by a mix of natural gas, coal and fuel oil. Dynegy Holdings LLC and four other affiliates of Dynegy Inc. sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-38111) Nov. 7, 2011, to implement an agreement with a group of investors holding more than $1.4 billion of senior notes issued by Dynegy's direct wholly-owned subsidiary, Dynegy Holdings, regarding a framework for the consensual restructuring of more than $4.0 billion of obligations owed by DH. If this restructuring support agreement is successfully implemented, it will significantly reduce the amount of debt on the Company's consolidated balance sheet. Dynegy Holdings disclosed assets of $13.77 billion and debt of $6.18 billion. Dynegy Inc. on July 6, 2012, filed a voluntary petition to reorganize under Chapter 11 (Bankr. S.D.N.Y. Case No. 12-36728) to effectuate a merger with Dynegy Holdings, pursuant to Holdings' Chapter 11 plan. A settlement, which has already been approved by the bankruptcy court, provides for Dynegy Inc. and Holdings to merge and for the administrative claim granted to Dynegy Inc. in the Holdings Chapter 11 case to be transferred out of Dynegy Inc. for the benefit of its shareholders. Dynegy Holdings and its affiliated debtor-entities are represented in the Chapter 11 proceedings by Sidley Austin LLP as their reorganization counsel. Dynegy and its other subsidiaries are represented by White & Case LLP, who is also special counsel to the Debtor Entities with respect to the Roseton and Danskammer lease rejection issues. The financial advisor is FTI Consulting. The Official Committee of Unsecured Creditors in Holdings' cases has tapped Akin Gump Strauss Hauer & Feld LLP as counsel. Dynegy Inc. is represented by White & Case LLP and advised by Lazard Freres & Co. LLC. EC DEVELOPMENT: Posts $250,100 Net Loss in 1st Quarter ------------------------------------------------------ EC Development, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $250,104 on $164,985 of revenues for the three months ended March 31, 2012, compared with a net loss of $445,312 on $56,591 of revenues for the same period of 2011. The Company's balance sheet at March 31, 2012, showed $5.83 million in total assets, $1.42 million in total liabilities, and stockholders' equity of $4.41 million. As reported in the TCR on April 11, 2012, Schulman Wolfson & Abruzzo, LLP, in New York, New York, expressed substantial doubt about EC Development'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 operating losses, negative working capital, no operating cash flow and future losses are anticipated. "The Company's plan of operations, even if successful, may not result in cash flow sufficient to finance and expand its business which raises 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/9S9aLf Shawnee, Oklahoma-based EC Development, Inc., markets and sells, casino-management systems in the form of a suite of cutting-edge technology solutions under the brand name "Tahoe". EASTMAN KODAK: Retiree Committee's Fee Cap Removed -------------------------------------------------- Eastman Kodak Co. said it agrees to the proposed removal of cap on fees of the retirees committee's lawyers and other advisers, provided the services that will be rendered are necessary for the committee to fulfill its duties under U.S. bankruptcy law. The retirees committee proposed for removal of the fee cap so that it could carry out its duties to approximately 56,000 retired Kodak workers. The fee cap, the committee said, "makes it impossible for the retirees committee to receive adequate representation" given the magnitude of Eastman Kodak's bankruptcy case. The decision handed down by Judge Allan Gropper earlier this year approved an initial monthly fee cap of $50,000 for the retiree committee's lawyers and other bankruptcy professionals. But it would increase to $100,000 per month after the committee receives a notice of Eastman Kodak's proposal to modify or terminate the medical benefits, and $175,000 per month after it receives a written proposal from the company. Lisa Uhlman at Bankruptcy Law360 reports that U.S. Bankruptcy Judge Allan L. Gropper on Wednesday broadened the powers of the official committee of retirees in Eastman Kodak Co.'s bankruptcy, granting its request that his order approving the committee's creation be altered to remove a fee cap and authority-limiting language. Judge Gropper approved the motion asking him to clarify and reconsider his April 16 order directing the appointment of the committee under Section 1114 of the Bankruptcy Code, Bankruptcy Law360 says. Medical Benefits Motion Eastman Kodak in April withdrew a motion to end medical benefits for retirees eligible for Medicare. The move would have affected about 16,000 retirees who stopped working after October 1991 or who became eligible to receive long-term disability benefits after that date. About Eastman Kodak Rochester, New York-based Eastman Kodak Company and its U.S. subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan. Subsidiaries outside of the U.S. were not included in the filing and are expected to continue to operate as usual. Kodak, founded in 1880 by George Eastman, was once the world's leading producer of film and cameras. Kodak sought bankruptcy protection amid near-term liquidity issues brought about by steeper-than-expected declines in Kodak's historically profitable traditional businesses, and cash flow from the licensing and sale of intellectual property being delayed due to litigation tactics employed by a small number of infringing technology companies with strong balance sheets and an awareness of Kodak's liquidity challenges. In recent years, Kodak has been working to transform itself from a business primarily based on film and consumer photography to a smaller business with a digital growth strategy focused on the commercialization of proprietary digital imaging and printing technologies. Kodak has 8,900 patent and trademark registrations and applications in the United States, as well as 13,100 foreign patents and trademark registrations or pending registration in roughly 160 countries. Kodak disclosed $5.10 billion in assets and $6.75 billion in liabilities as of Sept. 30, 2011. The net book value of all assets located outside the United States as of Dec. 31, 2011 is $13.5 million. Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. FTI Consulting, Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is the investment banker. Kurtzman Carson Consultants LLC is the claims agent. The Official Committee of Unsecured Creditors has tapped Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel. Michael S. Stamer, Esq., David H. Botter, Esq., and Abid Qureshi, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the Unofficial Second Lien Noteholders Committee. Robert J. Stark, Esq., Andrew Dash, Esq., and Neal A. D'Amato, Esq., at Brown Rudnick LLP, represent Greywolf Capital Partners II; Greywolf Capital Overseas Master Fund; Richard Katz, Kenneth S. Grossman; and Paul Martin. EASTMAN KODAK: Secured Creditors Worry Over Magnitude of Fees ------------------------------------------------------------- The committee representing Eastman Kodak Co.'s secured debt holders have expressed concern over the "magnitude of the fees" sought by the company's bankruptcy professionals. Eastman Kodak's professionals have filed applications seeking interim approval of almost $42.3 million in fees and expenses for the period January 19 to April 30, 2012. Of the 16 professionals, 11 reportedly billed roughly $1 million. Eastman Kodak's "very significant and alarming cash burn has continued unabated throughout these cases," according to the committee's lawyer, Michael Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York. Mr. Stamer pointed out that Eastman Kodak and its affiliated debtors have burned more than $40 million of cash in May alone, and more than $165 million of cash during the first 18 weeks of their bankruptcy cases. He further said the "substantial fee" requests of the Kodak professionals "are only exacerbating this problem." "Even more troubling is the fact that the compensation period was a relatively uneventful period in these Chapter 11 cases," Mr. Stamer said. "There were no contested matters culminating in a major trial or involving significant discovery or evidentiary proceedings." Eastman Kodak's legal counsel Sullivan & Cromwell LLP reportedly sought interim approval of $11,046,720 in fees and expenses while the turnaround firm AP Services, LLC sought approval of $10,169,752. About Eastman Kodak Rochester, New York-based Eastman Kodak Company and its U.S. subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan. Subsidiaries outside of the U.S. were not included in the filing and are expected to continue to operate as usual. Kodak, founded in 1880 by George Eastman, was once the world's leading producer of film and cameras. Kodak sought bankruptcy protection amid near-term liquidity issues brought about by steeper-than-expected declines in Kodak's historically profitable traditional businesses, and cash flow from the licensing and sale of intellectual property being delayed due to litigation tactics employed by a small number of infringing technology companies with strong balance sheets and an awareness of Kodak's liquidity challenges. In recent years, Kodak has been working to transform itself from a business primarily based on film and consumer photography to a smaller business with a digital growth strategy focused on the commercialization of proprietary digital imaging and printing technologies. Kodak has 8,900 patent and trademark registrations and applications in the United States, as well as 13,100 foreign patents and trademark registrations or pending registration in roughly 160 countries. Kodak disclosed $5.10 billion in assets and $6.75 billion in liabilities as of Sept. 30, 2011. The net book value of all assets located outside the United States as of Dec. 31, 2011 is $13.5 million. Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. FTI Consulting, Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is the investment banker. Kurtzman Carson Consultants LLC is the claims agent. The Official Committee of Unsecured Creditors has tapped Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel. Michael S. Stamer, Esq., David H. Botter, Esq., and Abid Qureshi, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the Unofficial Second Lien Noteholders Committee. Robert J. Stark, Esq., Andrew Dash, Esq., and Neal A. D'Amato, Esq., at Brown Rudnick LLP, represent Greywolf Capital Partners II; Greywolf Capital Overseas Master Fund; Richard Katz, Kenneth S. Grossman; and Paul Martin. EASTMAN KODAK: Returns $482,000 to BNY Mellon --------------------------------------------- Eastman Kodak Co. entered into an agreement, which requires the company to return $482,000 to The Bank of New York Mellon. The funds were erroneously deposited into an account held by Qualex Inc., an affiliate of Eastman Kodak, according to court papers. The agreement was approved by the bankruptcy court on July 10. A full-text copy of the agreement is available without charge at http://bankrupt.com/misc/Kodak_StipMisdirectedTransfer.pdf About Eastman Kodak Rochester, New York-based Eastman Kodak Company and its U.S. subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan. Subsidiaries outside of the U.S. were not included in the filing and are expected to continue to operate as usual. Kodak, founded in 1880 by George Eastman, was once the world's leading producer of film and cameras. Kodak sought bankruptcy protection amid near-term liquidity issues brought about by steeper-than-expected declines in Kodak's historically profitable traditional businesses, and cash flow from the licensing and sale of intellectual property being delayed due to litigation tactics employed by a small number of infringing technology companies with strong balance sheets and an awareness of Kodak's liquidity challenges. In recent years, Kodak has been working to transform itself from a business primarily based on film and consumer photography to a smaller business with a digital growth strategy focused on the commercialization of proprietary digital imaging and printing technologies. Kodak has 8,900 patent and trademark registrations and applications in the United States, as well as 13,100 foreign patents and trademark registrations or pending registration in roughly 160 countries. Kodak disclosed $5.10 billion in assets and $6.75 billion in liabilities as of Sept. 30, 2011. The net book value of all assets located outside the United States as of Dec. 31, 2011 is $13.5 million. Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. FTI Consulting, Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is the investment banker. Kurtzman Carson Consultants LLC is the claims agent. The Official Committee of Unsecured Creditors has tapped Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel. Michael S. Stamer, Esq., David H. Botter, Esq., and Abid Qureshi, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the Unofficial Second Lien Noteholders Committee. Robert J. Stark, Esq., Andrew Dash, Esq., and Neal A. D'Amato, Esq., at Brown Rudnick LLP, represent Greywolf Capital Partners II; Greywolf Capital Overseas Master Fund; Richard Katz, Kenneth S. Grossman; and Paul Martin. EASTMAN KODAK: Has Deal for Payment of Retirees' Expenses --------------------------------------------------------- Eastman Kodak Co. entered into an agreement establishing supplemental procedures for reimbursement of expenses incurred by members of the committee of retired Kodak workers prior to the approval of the retention of the committee's counsel. New York-based Sullivan & Cromwell LLP will present the agreement on July 24 to Judge Allan Gropper of the U.S. Bankruptcy Court in Manhattan for approval. A full-text copy of the agreement is available without charge at http://bankrupt.com/misc/Kodak_StipERProcessRetirees.pdf About Eastman Kodak Rochester, New York-based Eastman Kodak Company and its U.S. subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan. Subsidiaries outside of the U.S. were not included in the filing and are expected to continue to operate as usual. Kodak, founded in 1880 by George Eastman, was once the world's leading producer of film and cameras. Kodak sought bankruptcy protection amid near-term liquidity issues brought about by steeper-than-expected declines in Kodak's historically profitable traditional businesses, and cash flow from the licensing and sale of intellectual property being delayed due to litigation tactics employed by a small number of infringing technology companies with strong balance sheets and an awareness of Kodak's liquidity challenges. In recent years, Kodak has been working to transform itself from a business primarily based on film and consumer photography to a smaller business with a digital growth strategy focused on the commercialization of proprietary digital imaging and printing technologies. Kodak has 8,900 patent and trademark registrations and applications in the United States, as well as 13,100 foreign patents and trademark registrations or pending registration in roughly 160 countries. Kodak disclosed $5.10 billion in assets and $6.75 billion in liabilities as of Sept. 30, 2011. The net book value of all assets located outside the United States as of Dec. 31, 2011 is $13.5 million. Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. FTI Consulting, Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is the investment banker. Kurtzman Carson Consultants LLC is the claims agent. The Official Committee of Unsecured Creditors has tapped Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel. Michael S. Stamer, Esq., David H. Botter, Esq., and Abid Qureshi, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the Unofficial Second Lien Noteholders Committee. Robert J. Stark, Esq., Andrew Dash, Esq., and Neal A. D'Amato, Esq., at Brown Rudnick LLP, represent Greywolf Capital Partners II; Greywolf Capital Overseas Master Fund; Richard Katz, Kenneth S. Grossman; and Paul Martin. ENERGY FOCUS: Had $1.9 Million Net Loss in 1st Quarter ------------------------------------------------------ Energy Focus, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $1.87 million on $5.30 million of revenue for the three months ended March 31, 2012, compared with a net loss of $2.81 million on $5.46 million of revenue for the same period last year. The Company's balance sheet at March 31, 2012, showed $14.68 million in total assets, $10.17 million in total liabilities, and stockholders' equity of $4.51 million. As reported in the TCR on April 11, 2012, Plante & Moran, PLLC, in Cleveland, Ohio, expressed substantial doubt about Energy Focus'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 incurred net losses of $6,055,000, $8,517,000, and $11,015,000 during the years ended Dec. 31, 2011, 2010, and 2009. A copy of the Form 10-Q is available for free at: http://is.gd/IFmnR5 Solon, Ohio-based Energy Focus, Inc., designs, develops, manufactures, and markets energy-efficient lighting products, and is a provider of turnkey, energy-efficient, lighting solutions in the governmental and public sector market, general commercial market, and the pool market. ESSENTIAL POWER: Moody's Rates $565MM Sr. Secured Term Loan 'Ba2' ----------------------------------------------------------------- Moody's Investors Service has assigned a Ba2 rating to Essential Power, LLC's issuance of $565 million in a senior secured term loan due 2019 and a $100 million revolving credit facility due 2017. The outlook is stable. Proceeds will be used to repay the existing indebtedness as well as transaction fees and expenses. Rating Rationale The ratings reflect, among other things, the high proportion of cash flow that is either contracted or hedged with creditworthy counterparties and the rapid de-leveraging of the first lien term facilities. The ratings also reflect the risks related to the uncertainty of the level of capacity payments received through the portfolio's participation in the capacity markets in PJM and ISO- NE as well as the risks associated with the portfolio's exposure to merchant power. The primary factors supporting the ratings are: 1) largely stable and predictable cash flows over the next few years due to an existing power purchase agreement (PPA), payments from a physical tolling arrangement, financial hedges and known capacity payments from ISO-NE and PJM; 2) the ability to sell into the constrained eastern region of PJM power markets and ISO-NE; and 3) structural features that include a 100% cash sweep that allows for rapid de- leveraging of the term loan under most scenarios. Additionally, the projects have been in commercial operation for a number of years with experienced management. They have tested and commercially proven technology with good operating histories and high availabilities. The ratings also reflect: 1) uncertainty in the level of capacity payments during the later years of the debt tenor; 2) some exposure to merchant market risk, and; 3) risk of financial hedge imperfection. The project's output is not fully contracted for the tenor of the debt, and there is pricing uncertainty related to capacity payments (after the 2015/16 capacity auction year for PJM and ISO-NE). This transaction represents a refinancing of the existing 1st and 2nd lien debt into a 1st lien senior secured facility. Despite the higher level of 1st lien debt in this refinancing, the new Ba2 rating reflects Essential Power's improved financial performance, the simplification of the debt structure, the extension of the heat rate call option hedges to 2016, and the lower interest costs associated with the elimination of the 2nd lien debt. At the closing of the new 1st lien senior secured term financing, Moody's expects to withdraw the ratings on Essential Power's existing 1st and 2nd lien debt. In the eastern area of PJM, Essential Power owns, through subsidiaries, an 80% interest in the Lakewood Energy facility, a 246 MW (nameplate) dual-fueled cogeneration facility that uses ABB 11NM turbines (Essential Power's interest is 197 MW). The Ocean Peaking and Rock Springs facilities, both of which are natural gas-fired peaking facilities utilizing GE7FA turbines, each with approximately 350 MW (nameplate) of capacity, make up the balance of the PJM portfolio. In ISO-New England, Essential Power owns and manages a collection of oil-fired and natural gas-fired aero-derivative units (oil - 3x20MW Pratt and Whitney and gas - 2x48 GE LM6000), a dual-fueled (oil and natural gas) steam turbine generator, and several `run- of-the-river' hydro-electric generation facilities, which together represent a total of 281 MW of nameplate capacity in Massachusetts at its EPEM business unit (EPEM stands for EP Energy Massachusetts, LLC). Essential Power also owns and manages the Newington Energy facility, which is a 540 MW (nameplate) dual- fueled combined-cycle facility located on the border of New Hampshire and Maine that uses GE 7FA turbines. Essential Power is 100% owned by a fund managed by Industry Funds Management ("IFM"). IFM is an investment management company based in Australia specializing in the management of private investment products across infrastructure, listed equities, private equity and debt. It is ultimately owned by over 30 major Australian pension funds. IFM has US$34 billion under management across a range of investment products, including US$10 billion of global infrastructure investments under management. The principal methodology used in this rating was Power Generation Projects published in December 2008. Essential Power, LLC (Essential Power; formerly North American Energy Alliance, LLC) is a wholesale power generation and marketing company. It is a special purpose entity formed by Industry Funds Management Pty Ltd. (IFM or Sponsor) to acquire and hold a portfolio of five power generation assets totaling 1,721 MW located in the ISO-New England and PJM power markets. The portfolio was acquired from Consolidated Edison Development, Inc in 2008. FENDER MUSICAL: S&P Puts B Corp. Credit Rating on Watch After IPO ----------------------------------------------------------------- Standard & Poor's Ratings Services placed all ratings on Fender Musical Instruments Corp., including the 'B' corporate credit rating, on CreditWatch with positive implications, meaning S&P could either raise or affirm the ratings upon completion of its review. About $260 million of reported total debt was outstanding at March 31, 2012. "The CreditWatch placement follows the announcement that Fender has commenced its initial public offering (IPO). We believe the company will use a substantial portion of net proceeds from the offering to repay a portion of the term loan due 2014, which will likely result in improved credit measures," said Standard & Poor's credit analyst Stephanie Harter. "Currently we assess Fender's financial risk profile as 'highly leveraged' and its business risk profile as 'weak'. We believe the expected improvement in credit metrics following the expected term loan reduction could result in improved credit metrics that are within ranges for an 'aggressive' financial risk descriptor, which includes total adjusted leverage of between 4x to 5x, and funds from operations (FFO) to debt between 12% to 20%," S&P said. "Key credit factors in our assessment of Fender's business risk profile include its narrow business focus, customer concentration, the discretionary nature of its products, and the highly competitive musical instruments industry in which it operates," S&P said. "We will resolve the CreditWatch listing upon completion of the IPO when more information regarding the final amount of debt reduction becomes available. Our review will include an assessment of Fender's capital structure, financial policy, and recent and expected operating performance," S&P said. FIRST FINANCIAL: Posts $289,000 Net Loss in 1st Quarter ------------------------------------------------------- First Financial Service Corporation filed its quarterly report on Form 10-Q, reporting a net loss of $289,000 on $8.18 million of net interest income (before provision for loan losses) for the three months ended March 31, 2012, compared with a net loss of $2.07 million on $8.62 million of net interest income (before provision for loan losses) for the same period in 2011. The Company's balance sheet at March 31, 2012, showed $1.206 billion in total assets, $1.153 billion in total liabilities, and stockholders' equity of $52.92 million. "In its 2012 Consent Order with the FDIC and KDFI, the Bank agreed to achieve and maintain a Tier 1 capital ratio of 9.0% and a total risk-based capital ratio of 12.0% by June 30, 2012. At March 31, 2012, we were not in compliance with the Tier 1 and total risk- based capital requirements. We notified the bank regulatory agencies that the increased capital levels would not be achieved and anticipate that the FDIC and KDFI will reevaluate our progress toward achieving the higher capital ratios at June 30, 2012." "The 2012 Consent Order requires that if the Bank should be unable to reach the required capital levels by June 30, 2012, and if the Bank is in receipt of written directions by the FDIC and KDFI, then the Bank would within 30 days develop, adopt and implement a written plan to sell or merge itself into another federally insured financial institution. The 2012 Consent Order requires the Bank to continue to adhere to the plans implemented in response to the 2011 Consent Order, and includes the substantive provisions of the 2011 Consent Order." "The Bank's Consent Order with the FDIC and KDFI requires us to obtain the consent of the Regional Director of the FDIC and the Commissioner of the KDFI to declare and pay cash dividends to the Corporation. We are also no longer allowed to accept, renew or rollover brokered deposits (including deposits through the CDARs program) without prior regulatory approval." As reported in the TCR on April 9, 2012, Crowe Horwath LLP, in Louisville, Ky., audited the Company's financial statements for 2011. The independent auditors said that the Company has recently incurred substantial losses, largely as a result of elevated provisions for loan losses and other credit related costs. "In addition, both the Company and its bank subsidiary, First Federal Savings Bank, are under regulatory enforcement orders issued by their primary regulators. First Federal Savings Bank is not in compliance with its regulatory enforcement order which requires, among other things, increased minimum regulatory capital ratios. First Federal Savings Bank's continued non-compliance with its regulatory enforcement order may result in additional adverse regulatory action." A copy of the Form 10-Q is available for free at: http://is.gd/5DVkvB Elizabethtown, Kentucky-based First Financial Service Corporation was incorporated in August 1989 under Kentucky law and became the holding company for First Federal Savings Bank of Elizabethtown, effective on June 1, 1990. Since that date, the Corporation has engaged in no significant activity other than holding the stock of the Bank and directing, planning and coordinating its business activities. FOREST OIL: S&P Cuts Corporate Credit Rating to 'B+'; Outlook Neg ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Denver-based Forest Oil Corp. to 'B+' from 'BB-'. The outlook is negative. "At the same time, we lowered the issue rating on Forest's senior secured debt to 'BB' (two notches above the corporate credit rating) from 'BB+'. The recovery rating on this debt remains '1', indicating our expectation of very high (90% to 100%) recovery in the event of a default. We also lowered the issue rating on the senior unsecured debt to 'B-' (two notches lower than the corporate credit rating) from 'B'. The recovery rating on this debt is '6', indicating our expectation of negligible (0% to 10%) recovery for lenders in the event of a default," S&P said. "The downgrade reflects our expectation that leverage will be higher than previously thought, because of delays in asset sales as well as lower second half production guidance," said Standard & Poor's credit analyst Marc D. Bromberg. "We project that leverage over the next several years will be very aggressive, at nearly 4.5x without debt paydown.' At the same time, both the CEO and COO recently left the company (a board member is currently operating as CEO on an interim basis), and we think that there is now more execution uncertainty with respect to both asset sales and operating performance." "The company's asset monetization program has been slower than we had thought, and recent sale proceeds have been below our expectations. Without asset sales or joint ventures, we see limited potential to pay down debt, given our expectation that the company will outspend cash flows for the remainder of 2012 and in 2013. Because of the decline in oil prices, coupled with the recent executive departures, we think that there is a risk that asset sales could continue to underperform our previous expectations," S&P said. "Our rating on Forest reflects the company's 'weak' business risk and 'aggressive' financial risk. Our assessment of the company's business risk is based on its participation in the volatile and capital-intensive E&P industry. Ratings also reflect its exposure to currently weak natural-gas and its aggressive debt balances. The ratings also reflect our assessment of Forest's 'strong' liquidity," S&P said. "The outlook is negative because we believe Forest could exceed leverage of 4.5x in 2013 depending on the pace of its asset monetization program and total proceeds. We believe there is a degree of uncertainty with respect to its operating performance and asset sales given the company's management changes along with the sizeable capital allocation in the Eagle Ford, which is still a relatively new play for the company. If we anticipate that Forest's leverage is likely to be above 4.5x for a sustained period, we could lower the rating to 'B'," S&P said. "A stabilization of the rating will require asset monetization, such that debt to EBITDA is likely to be approximately 4x for the next year or two. Our timeframe either to lower the rating or to revise the outlook to stable is in the next 12 months," S&P said. GAMETECH INTERNATIONAL: James Robertson Named President & CEO ------------------------------------------------------------- Gametech International, Inc.'s Board of Directors unanimously voted to appoint James Robertson to serve as the Company's President and Chief Executive Officer, effective as of July 13, 2012. Mr. Robertson joined the Company in January 2009 as General Counsel. Mr. Robertson was subsequently appointed to serve as Corporate Secretary and in July 2010 was promoted to the role of Vice President and General Counsel and made responsible for the direction of the legal, intellectual property, regulatory compliance, human resources, and risk management functions of the Company. Mr. Robertson holds a Bachelor's Degree in Business Administration from the University of Colorado, a Masters of Business Administration from the University of Nevada Las Vegas, and a Juris Doctorate from the University of Nevada Las Vegas, William S. Boyd School of Law. Prior to joining the Company, Mr. Robertson worked in the legal departments of First Data Corporation and International Game Technology. Mr. Robertson also serves as a member of the Company's Compliance Committee. Upon recommendation of the Compensation Committee of the Board of Directors of the Company, Mr. Robertson will receive an annual base salary of $160,000 as President and Chief Executive Officer of the Company. Mr. Robertson's appointment as an officer of the Company remains all times subject to all applicable regulatory approvals and all qualification requirements of any gaming commissions, boards or similar regulatory enforcement authorities which the Company is subject to. On July 13, 2012, Scott H. Shackelton resigned as the Company's Interim President. Mr. Shackelton will continue to serve as a member of the Company's Board of Directors. Mr. Shackelton will also remain employed with the Company, and will continue to receive compensation at his current an annual base salary of $150,000, through a transition period ending on July 27, 2012. About Gametech International Based in Reno, Nevada, GameTech develops and manufactures gaming entertainment products and systems. GameTech holds a significant position in the North American bingo market with its interactive electronic bingo systems, portable and fixed-based gaming units, and complete hall management modules. It also holds a significant position in select North American VLT markets, primarily Montana, Louisiana, and South Dakota, where it offers video lottery terminals and related gaming equipment and software. It also offers Class III slot machines and server-based gaming systems. GameTech International, Inc. and its wholly owned subsidiaries have filed Chapter 11 petitions (Bankr. D. Del. Lead Case No. 12-11964) on July 2, 2012, to effect a restructuring of the company's debt obligations. GameTech disclosed total assets of $27.22 million and total liabilities of $22.88 million as of Jan. 29, 2012. Judge Peter J. Walsh presides over the case. Andrew E. Robinson signed the petition as senior vice president, chief financial officer, and treasurer. The Debtors are represented by Greenberg Traurig, LLP. Kinetic Advisors, LLC, serves as the Debtors' financial advisor. GENELINK INC: Susan Hunt Succeeds John Webb as Interim CFO ---------------------------------------------------------- GeneLink, Inc., terminated the employment of John A. Webb as Chief Financial Officer of the Company. Effective July 13, 2012, Susan Hunt was appointed as Interim CFO of the Company. Ms. Hunt, 51, has served as the Corporate Controller at GeneLink, Inc., since January 2012. She has over 20 years of financial and management accounting experience, including audit experience with a major accounting firm. Prior to joining GeneLink, Inc., she served as a financial consultant and CPA with Robert Half Management Resources, the Controller of Allentown Art Museum and the Publisher of The Morning Call, a daily newspaper. Ms. Hunt has a Master's degree in Accounting from Stetson University and a Master's in Business Administration (magna cum laude) from Rollins College. She has been licensed as a CPA in Florida since 1983. About Genelink Based in Orlando, Fla., GeneLink, Inc., is a solution provider in the genetically customized nutritional and personal care marketplace. The Company's balance sheet at March 31, 2012, showed $2.65 million in total assets, $4.12 million in total liabilities, and a stockholders' deficit of $1.47 million. Hancock Askew & Co., LLP, in Savannah, Georgia, expressed substantial doubt about GeneLink'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 a working capital deficit of $436,310, has incurred recurring operating losses since inception including a loss of $3.8 million in 2011 and had an accumulated deficit at Dec. 31, 2011, of $24,560,315. GUIDED THERAPEUTICS: LuViva Receives CE Mark Approval ----------------------------------------------------- Guided Therapeutics, Inc., has received notification that CE Mark approval has been granted for LuViva Advanced Cervical Scan, a non-invasive device used to detect cervical disease that leads to cancer, instantly and at the point of care. The CE Mark is required to sell products in the 27 nations that comprise the European Union. There are about 146 million women who are targeted by existing or planned cervical cancer screening programs in EU member states, according the European Cancer Observatory. "The notification of CE Mark for LuViva is a significant milestone for the company and allows us to begin our European launch later this year, as planned," said Mark L. Faupel, Ph.D., president and CEO of Guided Therapeutics. "We believe that together with our distributors, we have a tremendous opportunity to improve the detection of cervical disease, reduce false positives and unnecessary biopsies, and provide significant savings to healthcare systems throughout Europe." "Notification of the CE Mark and previously announced Health Canada approval for LuViva further validates the product and our ability to manufacture to the highest standards. We expect the CE Mark award will generate more demand for the product and open opportunities in markets outside the EU as well. In addition to the more than 20 countries already covered by distribution agreements, we plan to expand our network to additional countries in Europe, Latin America and Asia and having the CE Mark should accelerate those efforts," Dr. Faupel added. The CE Mark notification is the first of two expected for LuViva. A second CE Mark application is expected to be filed later this year to comply with updated European medical device standards and to include design improvements. The company also must continue to pass annual ISO audits of its quality system in order to maintain the CE Mark on its products. The company has passed two consecutive ISO audits, the last being in January of 2012. In addition to the CE Mark, LuViva has marketing approval from Health Canada and remains under U.S. Food and Drug Administration premarket approval review. Guided Therapeutics was awarded ISO 13485 certification in January, 2011. The study used to support LuViva's CE Mark application was the multi-center U.S. pivotal trial, in which 1,607 women at risk for developing cervical disease were evaluated. In this patient population, LuViva was able to detect cervical cancer up to two years earlier than the Pap test, human papillomavirus (HPV) test, colposcopy and biopsy. LuViva detected 86.3 percent of the cervical disease cases that had been missed by Pap, HPV tests and biopsy. LuViva would have reduced the number of unnecessary biopsies by about 40 percent. LuViva is initially intended as a follow-up test after a positive Pap result. About Guided Therapeutics Guided Therapeutics, Inc. (OTC BB and OTC QB: GTHP) -- http://www.guidedinc.com/-- is developing a rapid and painless test for the early detection of disease that leads to cervical cancer. The technology is designed to provide an objective result at the point of care, thereby improving the management of cervical disease. Unlike Pap and HPV tests, the device does not require a painful tissue sample and results are known immediately. GT has also entered into a partnership with Konica Minolta Opto to develop a non-invasive test for Barrett's Esophagus using the LightTouch technology platform. In its report on the Company's 2011 Form 10-K, UHY LLP, in Sterling Heights, Michigan, noted that the Company's recurring losses from operations and accumulated deficit raise substantial doubt about its ability to continue as a going concern. The Company reported a net loss of $6.64 million in 2011, compared with a net loss of $2.84 million in 2010. The Company's balance sheet at March 31, 2012, showed $3.08 million in total assets, $2.17 million in total liabilities and $908,000 in total stockholders' equity. Bankruptcy Warning According to the Form 10-K for the year ended Dec. 31, 2011, the Company's capital-raising efforts are ongoing. If sufficient capital cannot be raised during the fourth quarter of 2012, the Company has plans to curtail operations by reducing discretionary spending and staffing levels, and attempting to operate by only pursuing activities for which it has external financial support, such as under the Konica Minolta development agreement and additional NCI or other grant funding. However, there can be no assurance that such external financial support will be sufficient to maintain even limited operations or that the Company will be able to raise additional funds on acceptable terms, or at all. In that a case, the Company might be required to enter into unfavorable agreements or, if that is not possible, be unable to continue operations, and to the extent practicable, liquidate or file for bankruptcy protection. HEADLEE MANAGEMENT: Buffalo Wild Wings Outlets on Auction Block --------------------------------------------------------------- Kaija Wilkinson at gulflive.com reports the Buffalo Wild Wings at 4101 Denny Ave., in Pascagoula, Mississippi, has closed and is up for auction, 2-1/2 years after Headlee Management Corp., which had a stake in it, filed for Chapter 11 bankruptcy protection. According to the report, Headlee Management owned various fast- food franchises, and had ownership interest in a Buffalo Wild Wings in Montgomery, Alabama, which is also on the auction block. The report notes Headlee operated 11 restaurants in all, including four KFCs in New York State and two Arby's in Connecticut. The report says the local store has been closed for at least a month. The report relates the local and Montgomery stores being auctioned by Plainview, New York-based David R. Maltz & Co. -- info@MaltzAuctions.com -- are described as "fully operating turnkey opportunities" which together generated at least $220,000 in net income and $2.9 million in net sales in 2011. Headlee Management Corp. operated 11 KFC restaurants and owned interest in Buffalo Wild Wings restaurants in Kingston, Alabama, and Mississippi. The Company filed for Chapter 11 protection on Dec. 8, 2009 (Bankr. S.D.N.Y. Case No. 09-38420). Judge Cecelia G. Morris presides over the case. Scott S. Markowitz, Esq., at Tarter Krinsky & Drogin LLP, represents the Debtor. The Debtor estimated both assets and debts of between $1 million and $10 million. HEMCON MEDICAL: Offers Shares for Unsecured Creditors ----------------------------------------------------- HemCon Medical Technologies, Inc., will seek approval at a hearing on Aug. 9, 2012, of the disclosure statement explaining its proposed Chapter 11 Plan of Reorganization. HemCon will begin soliciting votes on the Plan and schedule a confirmation hearing after the Disclosure Statement is approved. According to the Disclosure Statement, dated July 2, 2012, the reorganized Debtor will recapitalize by raising $8 million to $12 million in new capital. The Debtor plans to sell between 1 million and 1.5 million shares of Series A Preferred Stock to angel investors (including unsecured creditors and equity security holders), and sell between 2 million and 3 million shares to private equity funds or other institutional investors. A total of between 3 million and 4.5 million shares is expected to be sold in the offering. The Series A Preferred Shares will be issued at approximately $2.50 per share. It will have a liquidation preference of par plus 5% per annum per share and be converted into Common Stock when the Company conducts a public offering of its Common Stock at a price of at least $7.50 per share. The Company has already engaged in substantial discussions with various parties and received a written indication of interest from private equity. Common Shares Holders of general unsecured claims, which are impaired under the Plan, will be issued approximately a total of $1.1 million shares of common stock. Common stock will be issued at the rate of one share for each $50 of unsecured debt. One million shares of new common stock will be reserved for issuance under potential stock options for employees and directors for post-Effective Date services as stock options, restricted stock, or other stock-based grants. HemCon is planning to increase the number of employees post- confirmation in support of its lyophilized dried plasma product and to a limited extent in the areas of sales force, manufacturing, regulatory affairs, and new product development. Other Claims and Interest Each holder of an unsecured claim equal to or less than $5,000 or who elects to reduce his unsecured claim to $5,000 will not receive shares but will instead be paid 50% of the allowed amount of the claim within 60 days following the later of the effective date. Bank of America, as administrative agent, holds a secured claim on account of debt owed to BoA, Bank of the West and Silicon Valley Bank. The secured claim will be fixed at $5 million and payable with interest from and after the Effective Date at a fixed rate equal to 4.5% per annum with interest-only payments on a monthly basis until the fifth anniversary of the Effective Date, at which time the principal balance and any remaining unpaid interest will be paid. The claim will continue to be secured by a security interest in Reorganized Debtor's assets of the same kind and category and with the same priority that it held as of the Petition Date. The amount of debt in excess of BoA's allowed secured claim will be treated as a general unsecured claim. Holders of equity securities will not be entitled to any distributions on account of their existing interests, although they will have the opportunity to acquire Series A Preferred Stock in Reorganized Debtor. A copy of the Disclosure Statement is available at: http://bankrupt.com/misc/Hemcon_Medical_Plan_Outline.pdf About HemCon Medical Technologies Portland, Oregon-based HemCon Medical Technologies Inc., fdba HemCon, Inc. filed a Chapter 11 bankruptcy petition (Bankr. D. Ore. Case No. 12-32652) on April 10, 2012, estimating up to $50 million in assets and liabilities. Founded in 2001, HemCon -- http://www.hemcon.com/-- is a diversified medical technology company that develops, manufactures and markets innovative wound care, anti-microbial and oral care products for the military, emergency medical, surgical, dental and over-the-counter markets. HemCon has subsidiaries in the United Kingdom and Europe. The bankruptcy filing comes after an en banc decision by the U.S. Court of Appeals for the Federal Circuit on March 15, 2012, which affirmed an award of $34.2 million in damages to Marine Polymer Technologies Inc. in a patent infringement case initiated in 2006. HemCon's European subsidiary is not subject to the Chapter 11 proceedings. Judge Elizabeth L. Perris presides over the case. Attorneys at Tonkon Torp LLP represent the Debtor. The petition was signed by Nick Hart, CFO. The Official Committee of Unsecured Creditors has retained David A. Foraker and the firm of Greene & Markley PC as counsel. HOMEWARD RESIDENTIAL: Moody's Assigns 'B1' Corp. Family Rating -------------------------------------------------------------- Moody's Investors Service assigned a first-time B1 corporate family rating (CFR) to Homeward Residential Holdings, Inc.(Homeward Residential) and a B1 senior secured rating to the company's planned $300 million senior secured term loan and $75 million senior secured revolving facility; all have a stable outlook. Ratings Rationale The B1 ratings reflects the company's steady financial performance, adequate risk-adjusted returns, modest leverage versus peers, and expected revenue diversification between its servicing and origination businesses. Offsetting these positive attributes is Homeward Residential's limited franchise in the fragmented and highly competitive residential mortgage market, start-up loan origination business along with the company's reliance on secured and short-term funding, which results in a high level of encumbered assets and limits financial flexibility. Homeward Residential is a residential mortgage originator and servicer, headquartered in Coppell, Texas, owned by private equity funds managed by WL Ross & Co. In November 2011, the company began originating and selling servicing retained Fannie and Freddie (GSE) eligible mortgages. The $300 million senior secured term loan will be used to redeem approximately $285 million of preferred stock and transaction expenses and the $75 million revolver will be used for working capital and growth. In May, the company rebranded itself and changed the name of the holding company along with the primary operating subsidiary to Homeward Residential Holdings, Inc and Homeward Residential, Inc. from AHMSI Holdings, Inc. and American Home Mortgage Servicing, Inc., respectively. The company's growth strategy is focused on its newly established prime mortgage banking model of originating and selling primarily servicing retained GSE eligible mortgage loans, akin to Provident Funding (Ba3/stable) along with modest growth in acquiring third party servicing rights and subservicing assignments. Moody's believes Homeward Residential's mortgage banking model has fewer operational risks and is a more sustainable business model versus the company's B1 rated third-party mortgage servicing peers who are currently experiencing explosive growth through the acquisition and transfer of third-party bulk or corporate servicing portfolios. None-the-less, while a number of the largest mortgage originators are reducing their market presence, wholesale/correspondent mortgage banking is a highly competitive, low-margin, cyclical business. The rating outlook is stable, reflecting Moody's expectation that the company will be able to profitably develop its GSE mortgage banking franchise and continue its profitable third-party servicing business. The principal methodology used in this rating was Finance Company Global Rating Methodology published March 2012. Homeward Residential is a specialty finance company headquartered in Coppell, Texas which services and originates residential mortgages. HORIZON PHARMA: Had $23.7 Million Net Loss in 1st Quarter --------------------------------------------------------- Horizon Pharma, Inc., formerly Horizon Therapeutics, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $23.73 million on $2.52 million of sales for the three months ended March 31, 2012, compared with a net loss of $7.67 million on $1.79 million of sales for the same period a year ago. The Company's balance sheet at March 31, 2012, showed $169.65 million in total assets, $87.84 million in total liabilities, and stockholders' equity of $81.81 million. As reported in the TCR on March 29, 2012, PricewaterhouseCoopers LLP, in Chicago, Illinois, expressed substantial doubt about Horizon Pharma'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 a limited commercial operating history and may not be able to comply with certain debt covenants. A complete text of the Form 10-Q is available for free at: http://is.gd/pPuS4m Horizon Pharma, Inc., headquartered in Deerfield, Illinois, is a biopharmaceutical company that is developing and commercializing innovative medicines to target unmet therapeutic needs in arthritis, pain and inflammatory diseases. HOVNANIAN ENTERPRISES: Swaps 3.8MM Class A Shares for $15MM Debt ---------------------------------------------------------------- Pursuant to agreements with bondholders dated July 12, 2012, Hovnanian Enterprises, Inc., issued an aggregate of 3,862,671 shares of the Company's Class A common stock, par value $0.01 per share, in exchange for an aggregate of approximately $15 million of the Company's outstanding indebtedness, consisting of (i) $1,000,000 aggregate principal amount of the Company's outstanding 7.5% Senior Notes due 2016, (ii) $7,775,000 aggregate principal amount of the Company's 6.25% Senior Notes due 2016 and (iii) $6,205,000 aggregate principal amount of the Company's outstanding 8.625% Senior Notes due 2017. The exchanges were effected with existing bondholders and no commission or other remuneration was paid or given directly or indirectly for soliciting those exchanges. Accordingly, the exchanges were effected pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended. About Hovnanian Enterprises Red Bank, New Jersey-based Hovnanian Enterprises, Inc. (NYSE: HOV) -- http://www.khov.com/-- founded in 1959 by Kevork S. Hovnanian, is one of the nation's largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Kentucky, Maryland, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. The Company's homes are marketed and sold under the trade names K. Hovnanian Homes, Matzel & Mumford, Brighton Homes, Parkwood Builders, Town & Country Homes, Oster Homes and CraftBuilt Homes. As the developer of K. Hovnanian's Four Seasons communities, the Company is also one of the nation's largest builders of active adult homes. The Company reported a net loss of $16.46 million on $611.29 million of total revenues for the six months ended April 30, 2012. The Company reported a net loss of $286.08 million for the fiscal year ended Oct. 31, 2011, compared with net income of $2.58 million during the prior fiscal year. The Company's balance sheet at April 30, 2012, showed $1.51 billion in total assets, $1.97 billion in total liabilities, and a $454.78 million total deficit. * * * Hovnanian carries 'Caa2' corporate family and probability of default ratings from Moody's. Moody's said in April 2012 that the Caa2 corporate family rating reflects Hovnanian's elevated debt leverage weak gross margins, continued operating losses, negative cash flow generation, and Moody's expectation that the conditions in the homebuilding industry over the next one to two yeas will provide limited opportunities for improvement in the company's operating and financial metrics. In addition, the ratings consider Hovnanian's negative net worth position, which Moody's anticipates will be further weakened by continuing operating losses and impairment charges. As a result, adjusted debt leverage, currently standing at 149%, is likely to increase further. Hovnanian carries a 'CCC-' credit rating from Standard & Poor's and a 'CCC' issuer default rating from Fitch. HOWREY LLP: Firm's Creditors Share 'Milk Case' Fee -------------------------------------------------- The Washington Post reported that creditors of defunct firm Howrey LLP may recover part of an expected $44.5 million contingency fee. U.S. Bankruptcy Judge Dennis Montali has approved $48.3 million in attorney's fees in an antitrust suit handled by former Howrey lawyers who are now at Baker Hostetler. The case involved the dairy industry and is referred to as "the milk case," the newspaper reported. The milk case resulted in a $145 million settlement between dairy farmers, Dean Foods and dairy industry trade group Southern Marketing Agency, according to the Post. Allan Diamond, the bankruptcy trustee representing the Howrey creditors, said that $44.5 million out of the total $48.3 million approved by the judge will be split between the former Howrey lawyers at Baker Hostetler and the Howrey bankruptcy estate. Mr. Diamond is "currently negotiating with Baker Hostetler management to figure out how the money will be allocated, and they could reach an agreement within 60 days," the Post reported Mr. Diamond as saying. About Howrey LLP Three creditors filed an involuntary Chapter 7 petition (Bankr. N.D. Calif. Case No. 11-31376) on April 11, 2011, against the remnants of the Washington-based law firm Howrey LLP. The filing was in San Francisco, where the firm had an office. The firm previously was known as Howrey & Simon and Howrey Simon Arnold & White LLP. The firm at one time had more than 700 lawyers in 17 offices. The partners voted to dissolve in March 2011. The firm specialized in antitrust and intellectual-property matters. The three creditors filing the involuntary petition together have $36,600 in claims, according to their petition. The involuntary chapter 7 petition was converted to a chapter 11 case in June 2011 at the request of the firm. In its schedules filed in July, the Debtor disclosed assets of $138.7 million and liabilities of $107.0 million. Representing Citibank, the firm's largest creditor, is Kelley Cornish, Esq., a partner at Paul, Weiss, Rifkind, Wharton & Garrison. Representing Howrey is H. Jason Gold, Esq., a partner at Wiley Rein. The Official Committee of Unsecured Creditors is represented in the case by Bradford F. Englander, Esq., at Whiteford, Taylor And Preston LLP. In September 2011, Citibank sought conversion of the Debtor's case to Chapter 7 or, in the alternative, appointment of a Chapter 11 Trustee. The Court entered an order appointing a Chapter 11 Trustee. In October 2011, Allan B. Diamond was named as Trustee. HOWREY LLP: Gets OK to Subpoena 70 Firms That Hired Ex-Partners --------------------------------------------------------------- Maria Chutchian at Bankruptcy Law360 reports that U.S. Bankruptcy Judge Dennis Montali on Wednesday gave Howrey LLP?s bankruptcy trustee the go-ahead to subpoena 70 law firms that hired former Howrey partners, including Jones Day and Latham & Watkins LLP, in order to analyze the defunct firm?s assets. Bankruptcy Law360 relates that Judge Montali ordered the firms to hand over documents outlining their correspondence with former Howrey clients brought to them with former Howrey partners regarding matters that the bankrupt firm once handled, as well as the payments they received in relation to those matters. About Howrey LLP Three creditors filed an involuntary Chapter 7 petition (Bankr. N.D. Calif. Case No. 11-31376) on April 11, 2011, against the remnants of the Washington-based law firm Howrey LLP. The filing was in San Francisco, where the firm had an office. The firm previously was known as Howrey & Simon and Howrey Simon Arnold & White LLP. The firm at one time had more than 700 lawyers in 17 offices. The partners voted to dissolve in March. The firm specialized in antitrust and intellectual-property matters. The three creditors filing the involuntary petition together have $36,600 in claims, according to their petition. The involuntary chapter 7 petition was converted to a chapter 11 case in June at the request of the firm. In its schedules filed in July, the Debtor disclosed assets of $138.7 million and liabilities of $107.0 million. Representing Citibank, the firm's largest creditor, is Kelley Cornish, Esq., a partner at Paul, Weiss, Rifkind, Wharton & Garrison. Representing Howrey is H. Jason Gold, Esq., a partner at Wiley Rein. The Official Committee of Unsecured Creditors is represented in the case by Bradford F. Englander, Esq., at Whiteford, Taylor And Preston LLP. In September 2011, Citibank sought conversion of the Debtor's case to Chapter 7 or, in the alternative, appointment of a Chapter 11 Trustee. The Court entered an order appointing a Chapter 11 Trustee. In October 2011, Allan B. Diamond was named as Trustee. HRK HOLDINGS: Hiring Stichter Riedel as Chapter 11 Counsel ---------------------------------------------------------- HRK Holdings LLC seeks Court permission to employ the law firm Stichter Riedel Blain & Prosser P.A. as counsel to prosecute its Chapter 11 case. Barbara A. Hart, Esq., an attorney at the firm, disclosed that her firm rendered services to HRK Holdings prior to the petition date. Immediately prior to the petition date, the firm received $70,000 from the Debtor on account of the prepetition services and as retainer for postpetition services. Stichter Riedel also represents HRK Industries LLC, an affiliated entity, in its own Chapter 11 case. Ms. Hart says the retainer also applies to the services performed or to be performed on behalf of HRK Industries. Stichter Riedel represented HRK Holdings as a purchaser of real property from the Mulberry Phosphate Company chapter 7 bankruptcy estate, but has not continued to represent Holdings post-closing. A former partner of the firm continued to represent Holdings after leaving Stichter Riedel. About HRK Holdings Based in Palmetto, Florida, HRK Holdings LLC owns real property in Manatee County that accommodates a phosphogypsum stack system, a portion of which is used as an alternate disposal area for the management of dredge materials pursuant to a contract with Port Manatee and as authorized under an administrative agreement with the Florida Department of Environmental Protection. HRK Holdings and its affiliate, HRK Industries, LLC, filed for Chapter 11 protection (Bankr. M.D. Fla. Case Nos. 12-09868 and 12-09869) on June 27, 2012. Judge K. Rodney May oversees the case. HRK Holdings estimated both assets and debts of between $10 million and $50 million. The petitions were signed by William F. Harley, III, managing member. HRK HOLDINGS: Sec. 341 Creditors' Meeting Set for July 30 --------------------------------------------------------- The U.S. Trustee in Tampa, Florida, will convene a Meeting of Creditors under 11 U.S.C. Sec. 341(a) in the Chapter 11 cases of HRK Holdings LLC on July 30, 2012, at 9:30 a.m. at Tampa, FL (861) - Room 100-B, Timberlake Annex, 501 E. Polk Street. Proofs of claim are due in the Debtor's cases by Sept. 10, 2012. About HRK Holdings Based in Palmetto, Florida, HRK Holdings LLC owns real property in Manatee County that accommodates a phosphogypsum stack system, a portion of which is used as an alternate disposal area for the management of dredge materials pursuant to a contract with Port Manatee and as authorized under an administrative agreement with the Florida Department of Environmental Protection. HRK Holdings and its affiliate, HRK Industries, LLC, filed for Chapter 11 protection (Bankr. M.D. Fla. Case Nos. 12-09868 and 12-09869) on June 27, 2012. Judge K. Rodney May oversees the case. Barbara A. Hart, Esq., at Stichter, Riedel, Blain & Prosser, P.A., represents the Debtors. HRK Holdings estimated both assets and debts of between $10 million and $50 million. The petitions were signed by William F. Harley, III, managing member. INDYMAC BANCORP: CEO Dismissed for SEC's Risk-Weighting Claims -------------------------------------------------------------- Lana Birbrair at Bankruptcy Law360 reports that U.S. District Judge Manuel L. Real on Monday agreed to dismiss the U.S. Securities and Exchange Commission's subprime risk-weighting claims against the former CEO of failed mortgage lender IndyMac Bancorp. Inc., leaving only the question of whether he should have disclosed additional details to investors in 2008. About Indymac Bancorp Based in Pasadena, California, IndyMac Bancorp Inc. (NYSE:IMB) -- http://www.indymacbank.com/-- was the holding company for IndyMac Bank FSB, a hybrid thrift/mortgage bank that originated mortgages in all 50 states of the United States. Through its hybrid thrift- mortgage bank business model, IndyMac designed, manufactured, and distributing cost-efficient financing for the acquisition, development, and improvement of single-family homes. IndyMac also provided financing secured by single-family homes to facilitate consumers' personal financial goals and strategically invests in single-family mortgage-related assets. On July 11, 2008, the Office of Thrift Supervision closed IndyMac Bank and appointed FDIC as the bank's receiver. Thacher Proffitt & Wood LLP was engaged as counsel to the FDIC. Indymac Bancorp filed for Chapter 7 bankruptcy protection (Bankr. C.D.Calif., Case No. 08-21752) on July 31, 2008. At the time of the FDIC takeover, IndyMac was the third-largest bank failure in U.S. history. Indymac had about $32.01 billion in assets as of July 11, 2008. In court documents, IndyMac disclosed estimated assets of $50 million to $100 million and estimated debts of $100 million to $500 million. Representing the Debtor are Dean G. Rallis, Jr., Esq., and John C. Weitnauer, Esq. IndyMac's banking operations, now known as OneWest Bank FSB, are under the control of a new ownership group that includes hedge- fund managers John Paulson and George Soros. INNOVATION VENTURES: Moody's Assigns 'B2' CFR/PDR; Outlook Stable ----------------------------------------------------------------- Moody's Investors Service assigned new ratings to Innovation Ventures, LLC, including a B2 corporate family rating (CFR) and B2 Probability of Default Rating (PDR). Moody's rated Innovation's proposed $400 million seven-year senior secured notes at B2. A Speculative Grade Liquidity rating of SGL-2 was also assigned. The rating outlook is stable. The ratings are subject to review of final documentation. Proceeds from the notes issuance will be used to refinance Innovation's existing credit facility and for general corporate purposes, including capital investments in a new manufacturing plant and distribution facility, as well as new product development and international expansion. The following ratings were assigned: Corporate Family Rating at B2 Probability of Default rating at B2 Rating on proposed senior secured notes at B2, LGD-4, 50% Speculative Grade rating at SGL-2 Outlook: Stable Ratings Rationale The B2 corporate family rating incorporates the company's strong growth rate through 2011, strong profit margins and cash flow (before dividends), popular product offering, leading market share (although in a narrow category) and modest leverage at closing. However, these positives are offset by material weaknesses that include: a limited operating history, high business and risk and susceptibility to reputational risk, narrow product offerings, an unproven product innovation track record, weak corporate governance and uncertainty concerning use of funding proceeds for future growth. The company effectively has only one product, 5-hour ENERGY(R), which is sold in several flavors and strengths. While the popularity of the product has been on the rise, Moody's expects that revenue growth in existing markets will slow as the product becomes more saturated in a greater assortment of sales channels, while long-term sustainability of the demand also remains to be seen. The company operates in a competitive space, with other large consumer product companies, some with far greater resources competing for a share of the overall energy beverage marketplace. Moody's expects leverage to be moderate at closing, and at approximately 1.3-1.7 times by the end of fiscal 2012. EBITA margins are robust, and as an LLC, the company does not pay significant taxes, although it has a history of large dividend payouts in part to address the owners' tax liabilities. Ratings are unlikely to be upgraded until the company's strategic direction concerning plans to boost future growth become clear. However, they could be upgraded if the company demonstrates successful execution of expansion and investment plans, improves its geographic diversification, successfully broadens its product offering, sustains solid earnings growth and if profitability remains healthy. Absent these accomplishments, an upgrade could also be considered if the track record of the company as currently configured were to continue, with sustained growth in cash flows, steady margins and if leverage were sustained below 2 times over a prolonged time period. The ratings could be downgraded should the company experience operating difficulties either related to existing operations or challenges from trying to grow the business. Aggressive shareholder returns, negative trends in the energy shots category, or deterioration in cash flow and profitability such that RCF/net debt drops below 8% or EBITA margins below 30% will also cause ratings to be lowered. The principal methodology used in rating Innovation Ventures LLC was the Global Soft Beverage Industry Methodology published in December 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. Innovation Ventures, LLC, headquartered in Farmington Hills, MI is the manufacturer and distributor of 5-hour ENERGY(R), the leading energy shot brand in the United States. Reported 2011 net sales were approximately $604 million. INTERNATIONAL HOME: Court OKs Aquino Cordova as External Auditor ---------------------------------------------------------------- International Home Products, Inc., sought and obtained permission form the U.S. Bankruptcy Court for the District of Puerto Rico to employ Jorge Aquino Barreto and the firm of Aquino, Cordova, Alfaro & Co., LLP, as external auditor. The firm will, among other things: -- audit the financial statements for the year ending Dec. 31, 2011, including balance sheets, statements of operations, retained earning and statements of cash flows; and -- prepare the corporate returns for the year ending Dec. 31, 2011. The total fee of the firm is estimated at $20,100 plus the reimbursement of out-of-pocket expenses. Also the total amount pending for payment related to the audit services as of Dec. 31, 2010, is $4,952. To the best of the Debtor's knowledge, the firm is a "disinterested person" as that term is defined under Section 101(14) of the Bankruptcy Code. 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. INVERSIONES ISLETA: Case Summary & 15 Unsecured Creditors --------------------------------------------------------- Debtor: Inversiones Isleta Marina, Inc. aka Isleta Marina P.O. Box 428 Puerto Real, PR 00740 Bankruptcy Case No.: 12-05592 Chapter 11 Petition Date: July 16, 2012 Court: U.S. Bankruptcy Court District of Puerto Rico (Old San Juan) Debtor's Counsel: Antonio I. Hernandez Santiago, Esq. ANTONIO I. HERNANDEZ SANTIAGO LAW OFFICE P.O. Box 8509 San Juan, PR 00910-0509 Tel: (787) 250-0575 E-mail: ahernandezlaw@yahoo.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 15 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/prb12-05592.pdf The petition was signed by Luis C. Trigo Vela, vice-president. IVANHOE ENERGY: Had $10.7 Million Net Loss in 1st Quarter --------------------------------------------------------- Ivanhoe Energy Inc. filed its quarterly report on Form 10-Q, reporting a net loss of $10.66 million on $7.91 million of revenue for the three months ended March 31, 2012, compared with a net loss of $11.13 million on $8.19 million of revenue for the same period last year. The Company's balance sheet at March 31, 2012, showed $448.08 million in total assets, $143.45 million in total liabilities, and stockholders' equity of $304.63 million. As reported in the TCR on April 16, 2012, Deloitte & Touche LLP, in Calgary, Canada, said that as of Dec. 31, 2011, the Company had an accumulated deficit of $298.5 million, and working capital of $30.7 million, excluding assets held for sale and derivative financial liabilities, and during the year ended Dec. 31, 2011, cash used in operating activities was $26.2 million and the Company expects to incur further losses in the development of its business. "These conditions indicate the existence of a material uncertainty that casts substantial doubt about 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/yua7PI Vancouver, Canada-based Ivanhoe Energy Inc. is an independent international heavy oil development and production company focused on pursuing long term growth in its reserve base and production using advanced technologies, including its HTL(TM) technology. Core operations are in Canada, Ecuador, China and Mongolia, with business development opportunities worldwide. J2 GLOBAL: Moody's Assigns 'B1' Corp. Family Rating --------------------------------------------------- Moody's Investors Service has assigned a first-time B1 Corporate Family Rating (CFR) and a B1 Probability of Default Rating to j2 Global, Inc. Moody's has also assigned B1 (LGD4-56%) ratings to the company's proposed $250 million senior unsecured notes due 2020 and a first-time Speculative Grade Liquidity (SGL) Rating of SGL-1. The proceeds from the note offering will be used for general corporate purposes. The outlook is stable. Rating Actions Issuer: j2 Global, Inc Assignments: Corporate Family Rating, Assigned B1 Probability of Default Rating, Assigned B1 Speculative Grade Liquidity Rating, Assigned SGL-1 US$250M Senior Unsecured Regular Bond/Debenture, Assigned B1 (LGD4, 56%) Rating Rationale j2's B1 corporate family rating reflects its strong credit metrics, market position and stable recurring revenues. The ratings are also supported by j2's very good liquidity as demonstrated by its large cash holdings and free cash flows. j2's revenues are stable and predictable, with 95% of total sales from subscriptions. The company has very low capital intensity, with capital expenditures at approximately 3.5% of revenues. These strengths are offset by j2's modest scale and Moody's doubts about the long-term sustainability of internet fax, which accounts for about 80% of revenues. The internet-fax business has "long-tail" characteristics and is likely to gradually erode although has the potential to sustain positive cash flows for several years. j2 is an active acquirer, having bought 38 companies since 2000 to consolidate market share or complement existing capabilities. Acquisitions are key to j2's sustainability as it reinvests retained earnings for growth. Yet, the majority of acquisitions have been within the internet fax business (29 of 38, including the largest, Protus). Moody's views internet-fax as a non-strategic, commodity-type service that is vulnerable to price competition. Internet-fax has limited pull-through ability for sales of other telecommunications services and, therefore, acquisitions of non-fax businesses offer few synergies with j2's core business upon integration. Moody's believes that j2's return on investment for acquisitions outside of the fax segment are less accretive than buying additional fax assets or returning cash to shareholders. Given its high market share, j2 has few meaningful acquisition targets within the fax business. Therefore, Moody's believes that pressure will build for j2 to more aggressively repurchase stock. The stable outlook is based on Moody's view that the company will continue to produce strong free cash flow even if organic revenues begin to decline. The ratings for the debt instruments reflect both the overall probability of default of j2, to which Moody's has assigned a probability of default rating (PDR) of B1, and individual loss given default assessments. The proposed $250 million senior unsecured notes are rated B1 (LGD4 -- 56%), in line with the CFR as they represent the most of the debt in the capital structure. The company also has a $40 million senior secured revolver which ranks above the unsecured notes and is not rated by Moodys. Moody's expects j2 to have very good liquidity over the next twelve months. Pro forma for the proposed note offering, Moody's projects the company will have approximately $435 million in cash or equivalents and an undrawn $40 million revolving credit facility at the transaction's close. Moody's projects that j2's cash from operations should be more than sufficient to meet its modest capex obligations, and fund its share repurchase and dividend programs. While unlikely, Moody's could consider a ratings upgrade if leverage (Moody's adjusted) were to trend towards 1.0x on a sustainable basis, while free-cash-flow to debt remained above 20%. Downward rating pressure could develop if adjusted leverage increases towards 3.0x or if FCF/Debt falls below 10% on a sustainable basis, which may result from future debt-funded acquisitions, or share buyback and dividend programs. The principal methodology used in rating j2 Global was the Global Telecommunications Industry Methodology published in December 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Based in Los Angeles, Ca, j2 Global, Inc is a provider of internet fax, virutual phone systems, hosted email, email marketing, online backup and customer relationship management services to business customers. For last twelve month ending in March 30, 2012, j2 generated approximately $343 million in revenue. JEDD LLC: Hiring Gullett Sanford as Bankruptcy Counsel ------------------------------------------------------ JEDD LLC seeks Court permission to employ as bankruptcy counsel: Thomas H. Forrester, Esq. G. Rhea Bucy, Esq. D. Hiatt Collins, Esq. GULLETT, SANFORD, ROBINSON & MARTIN, PLLC 150 3rd Ave. South, Suite 1700 Nashville, TN 37201 Tel: (615) 244-4994 Fax: (615) 256-6339 E-mail: rbucy@gsrm.com hcollins@gsrm.com bke@gsrm.com Within one year prior to the bankruptcy filing, the Debtor paid to Gullett Sanford $100,000 for services rendered and to be rendered in and in connection with the case, and agreed to pay (i) additional amounts to the extent that the product of the hours of legal services rendered, multiplied by the customary hourly rates charged from time to time by the firm for comparable services other than in a case under Title 11, exceeds $100,000; and (ii) the amounts of all reimbursable expenses incurred by the firm in the course of rendering such legal services. The firm's customary hourly rates are: Members $350-$450 per hour Associates $150-$275 per hour Paralegals $90-$125 per hour Mr. Forrester, a member of the law firm, attests that Gullett Sanford holds no interest adverse to the estate with respect to the matter of its engagement, and the firm is a disinterested person as that term is defined in 11 U.S.C. Sec. 101(14). However, Scott Derrick, a member of Gullett Sanford, is married to Beth Roberts Derrick, the Assistant United States Trustee in the Middle District of Tennessee. In addition, Mr. Forrester is married to Cynthia N. Sellers, a member of Bass, Berry & Sims, PLC, a creditor of the Debtor. About JEDD LLC JEDD, LLC, filed a bare-bones Chapter 11 petition (Bankr. M.D. Tenn. Case No. 12-05701) on June 20, 2012, in Cookeville, Tennessee. JEDD is generally in the business of developing, marketing and selling real estate in the Big South Fork area near Jamestown, Tennessee. According to http://www.tnrecprop.com/JEDD has activity and developments in Fentress County, including Flat Rock Reserve, Nichol Creek FARMS, Fortune 7 Homes, Island in the Sky, Concierge Services, Hunter's Ridge, River Park and Clear Fork. JEDD has filed schedules disclosing $13,377,782 in total assets and $13,694,539 in total liabilities. Paul "Doug" Gates, a co-founder and VP of operations, signed the Chapter 11 petition. Mr. Gates is also the CEO of Fortune 7 Inc., owner and operator of three engineering firms specializing in electrical, microwave and construction engineering. Judge Keith M. Lundin oversees the case. Lawyers at Gullett Sanford Robinson & Martin, PLLC, serve as the Debtor's counsel. JENNE HILL: Has Plan Settlement With Wells Fargo ------------------------------------------------ Wells Fargo Bank, N.A., owed $9.763 million on a secured loan, saw Jenne Hill Townhomes, L.L.C., filing for bankruptcy in December shortly before the debt was scheduled to mature. Jenne Hill Townhomes filed a proposed plan to pay off Wells Fargo and other creditors in April. But Wells Fargo claimed that the Plan dated April 19, 2012, is not feasible and says that it would get more if the case is liquidated in Chapter 7. Following negotiations, the parties say they have reached a settlement, according to a July 12 court filing. At the behest of Wells Fargo and the Debtor, the bankruptcy judge has continued the hearing to consider confirmation of the Plan until Aug. 18, 2012 at 9:00 a.m. In its objection, Wells Fargo pointed out that the Plan calls for paying all general unsecured claims within 30 days of the Effective Date, i.e., the first business day after the Confirmation Order becomes a final order. In contrast, the Plan proposes 60 monthly payments on Wells Fargo's claims, consisting of blended installments of principal and interest at 5.5% per annum on a 25-year amortization, with all remaining amounts due to be paid on the 61st month. According to Wells Fargo, the interest/discount rate proposed in the Plan is too low to render the stream of payments to Wells Fargo to have a value at least equal to what Wells Fargo would receive in chapter 7. The Plan thus does not satisfy 11 U.S.C. Sec. 1129(a)(7), says the bank. In the joint motion seeking continuance of the July 19 hearing, the parties said that "[t]he Debtor and Wells Fargo have resolved the issues contained in Wells Fargo's objection, contingent on approval by Wells Fargo's loan committee." The bank's loan committee was scheduled to meet July 17 to consider the settlement. The parties said that the continuance will allow, among other things (i) the Debtor and the bank to memorialize the compromise, (ii) allow the Debtor to draft the necessary documents to incorporate the compromise into the Plan, and (iii) allow the Debtor to consult with the U.S. Trustee concerning the compromise. The Debtor did not disclose the terms of the settlement. Wells Fargo is represented by: James S. Cole, Esq. THE WASINGER LAW GROUP, P.C. 1401 S. Brentwood Blvd., Suite 875 St. Louis, MO 63144 Tel: (314) 961-0400 Fax: (314) 961-2726 E-mail: jcole@wasingerlawgroup.com April 19 Plan As reported in the May 24, 2012 edition of the TCR, according to the April 19 Disclosure Statement, payments and distributions under the Plan will be funded by the Debtor's rental income from the Townhome Complex. Under the Plan, Wells Fargo is entitled to interest of $3.27% per annum on the 2008 note and 5.25% on the 2009 note. Wells Fargo's secured claim of $9,607,243 will be amortized over 25 years with interest at 5.5% per annum, which yields a monthly payment of $58,996. General unsecured claims in the aggregate amount of approximately $23,203 will be paid in full in cash within 30 days of the Effective Date of the confirmed Plan. Freedy Spencer, David Atkins, and Russ Anderson, as members of the Debtor, will receive their membership interest in the Debtor upon the confirmation of the Plan. The Debtor, as of July 19, 2012, has not filed a new plan that incorporates the settlement with Wells Fargo. About Jenne Hill Columbia, Missouri-based Jenne Hill Townhomes, L.L.C., is a Missouri limited liability company that owns and operates a complex of high end townhomes in Columbia, Missouri. The Debtor filed for Chapter 11 bankruptcy (Bank. W.D. Mo. Case No.11-22129) on Dec. 22, 2011. In its schedules, the Debtor disclosed $14,131,453 in assets and $9,743,209 in liabilities. The petition was signed by Fredd Spencer, manager. Judge Dennis R. Dow presides over the case. Bryan C. Bacon, Esq., at Van Matre, Harrison, Hollis, and Taylor, P.C., in Columbia, Missouri, serves as the Debtor's counsel. JENNE HILL: Hires Cannon Blaylock & Wise as Appraiser ----------------------------------------------------- Jenne Hill Townhomes, L.L.C., asks for permission from the U.S. Bankruptcy Court to employ Shannon Kaiser of Cannon, Blaylock & Wise as appraiser on behalf of the Debtor's estate. The Debtor owns and operates a group of town homes in Columbia, Missouri. Wells Fargo Bank N.A. holds a perfected security interest in the Real Estate. The Debtor needs to value these properties in order to properly classify Wells Fargo's claim. The Debtor will compensate Shannon Kaiser's services at the rate of $2,250 plus $150 per hour of her testimony as needed. Shannon Kaiser attests that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Jenne Hill Columbia, Missouri-based Jenne Hill Townhomes, L.L.C., is a Missouri limited liability company that owns and operates a complex of high end townhomes in Columbia, Missouri. The Debtor filed for Chapter 11 bankruptcy (Bank. W.D. Mo. Case No.11-22129) on Dec. 22, 2011. In its schedules, the Debtor disclosed $14,131,453 in assets and $9,743,209 in liabilities. The petition was signed by Fredd Spencer, manager. Judge Dennis R. Dow presides over the case. Bryan C. Bacon, Esq., at Van Matre, Harrison, Hollis, and Taylor, P.C., in Columbia, Missouri, serves as the Debtor's counsel. L-3 COMMS: Fitch Assigns 'BB+' Rating on Sr. Subordinated Debt -------------------------------------------------------------- The spin-off of Engility Holdings, Inc. (Engility) completed by L- 3 Communications Corporation (L-3) is credit neutral to L-3's Issuer Default Rating (IDR), according to Fitch Ratings. The Rating Outlook is Stable. Fitch's ratings on L-3 cover approximately $4.1 billion of outstanding debt. L-3's existing ratings are listed at the end of this release. Engility was a part of L-3's Government Services segment representing approximately $1.6 billion of estimated 2012 revenues. Engility's business was expected to account for approximately 8%-10% of L-3's combined EBITDA and FCF in 2012. In connection with the spin-off, L-3 received a one-time dividend from Engility, resulting in net proceeds of approximately $325 million. L-3 announced a plan to utilize a majority of the received cash to redeem $250 million of senior subordinated notes maturing in 2015. The spin-off resulted in increased pro forma leverage (Debt to EBITDA) for L-3; however, the planned redemption somewhat mitigates the deterioration of the leverage ratio. L-3's total debt is expected to decline to approximately $3.9 billion following the redemption of the senior subordinated notes. The repayment of the notes will continue the company's shift away from senior subordinated debt in its capital structure. The senior subordinated ratings remain one notch below L-3's IDR and senior unsecured debt due to contractual subordination. After giving effect to the planed redemption of the notes, Fitch estimates L-3's leverage to be in the 2.2 times (x) to 2.3x range at the end of 2012, up from 2.1x as of Dec. 31, 2011. Despite a slight deterioration in the company's leverage, its credit profile is still solid for the existing 'BBB-' rating. Key factors that support the ratings include L-3's solid credit metrics, liquidity position, and Fitch's expectation of steady operating margins and substantial free cash flow (FCF; cash from operations less capital expenditures and dividends) which totaled $1 billion for the last 12 months (LTM) ended March 30, 2012. Other positive factors include L-3's diverse portfolio of products and services that are in line with the Department of Defense (DoD) requirements and a balanced contract mix. Additionally, some concerns about exposure to declining DoD supplemental budgets were lessened with the spin-off of Engility. Fitch's concerns include L-3's cash deployment strategy, which includes a focus on acquisitions and share repurchases, U.S. government budget deficits and the impact on defense spending after fiscal year (FY) 2012. Fitch's other concerns include the underfunded pension position totaling $967 million (64% funded status) as of Dec. 31, 2011, all of which stayed with L-3 after the spin-off. The longer-term outlook for supplemental DoD budgets related to operations in Iraq and Afghanistan remains a modest concern but is lessened by the related revenues that were part of the spin-off. The company's liquidity as of March 30, 2012 was $1.5 billion, consisting of $996 million of credit facility availability (expiring in Feb. 2017) and $493 million in cash and short-term investments. The company has no debt maturities through 2014. The next material debt maturity is $500 million in 2015, of which $250 million will be redeemed in connection with the spin-off of Engility. L-3 has generated strong FCF through strong operating performance, working capital management, and acquisitions. In the LTM ending March 30, 2012, the company generated $1 billion of FCF. L-3 reported $1.1 billion FCF in 2011, 2010 and 2009. L-3's FCF benefits from low capital expenditures as a percentage of sales; it has averaged 1.3% of sales between 2008 and 2011. Fitch expects 2012 FCF to decline to approximately $800 to $900 million mostly driven by the spin-off of Engility. L-3's rating and Outlook incorporate Fitch's expectations of small- to medium-sized acquisitions and meaningful cash deployment toward shareholders. In the first three months of 2012, L-3 deployed $205 million towards acquisitions, $138 million for share repurchases and $49 million in dividend payments. Fitch expects to see approximately $1 billion and $180 million spent on share repurchases and dividends in 2012, respectively. Over the past four years, L-3 contributed $591 million to its pension plans, with $176 million contributed in 2011. The company expects to contribute approximately $173 million to its pension plans in 2012. U.S. government spending trends are key drivers of L-3's financial performance given that the company generates most of its revenues (82% in 2011) from the U.S. government, with the bulk (75%) coming from the Department of Defense (DoD). U.S. defense spending has been on an upward trend for more than a decade, but the FY2012 and FY2013 budgets represent a turning point, with spending beginning to turn down in FY2013, even excluding war spending, although from very high levels. The FY2012 DOD base budget is up less than one percent compared to FY2011, and the requested base budget for FY2013 is down 1% to $525 billion. FY2013 modernization spending (procurement plus R&D), the most relevant part of the budget for defense contractors, is down 4%, the third consecutive annual decline by Fitch's calculations. The overhang of potential automatic cuts beginning in early 2013 related to the 'sequestration' situation, as well as the presidential election, add to the uncertainty faced by defense contractors in the current environment. The U.S. defense outlook will be uncertain and volatile over the next one to two years, and program details will be needed to evaluate the full effect on L-3's credit profile. Fitch currently rates L-3 as follows: L-3 Communications Holdings, Inc. -- IDR 'BBB-'; -- Contingent convertible subordinated notes 'BB+'. L-3 Communications Corporation -- IDR 'BBB-'; -- Senior unsecured notes 'BBB-'; -- Senior unsecured revolving credit facility 'BBB-'; -- Senior subordinated debt 'BB+'. LEVEL 3: Moody's Rates New $300MM Senior Unsecured Notes 'Caa2' --------------------------------------------------------------- Moody's Investors Service rated Level 3 Communications, Inc.'s new $300 million, 7-year, senior unsecured notes, Caa2. Level 3's corporate family and probability of default ratings remain unchanged at B3 and were affirmed as was its SGL-1 speculative grade liquidity rating. All instrument ratings were also affirmed at their existing levels and the ratings outlook remains stable. Moody's interprets the new notes as a replacement for the company's 15% convertible senior notes which mature in 2013. While, at $300 million, the new notes issue is somewhat larger than the $172 million remaining balance of convertible notes, the incremental amount is less than 1% of the company's $10.1 billion of Moody's adjusted debt and does not materially affect leverage. Indeed, by deferring a debt maturity and modestly augmenting the company's $748 million cash position (at 31 March, 2012), the transaction has some positive features. The following summarizes the rating action as well as Level 3's ratings: Assignments: Senior Unsecured Bond/Debenture, Caa2 (LGD6, 92%) Affirmations: Issuer: Level 3 Communications, Inc. Corporate Family Rating, B3 Probability of Default Rating, B3 Speculative Grade Liquidity Rating, SGL-1 Outlook, Stable Senior Unsecured Bond/Debenture, Caa2 (LGD6, 92%) Issuer: Level 3 Financing, Inc. Senior Secured Bank Credit Facility, Ba3 (LGD2, 11%) Senior Unsecured Regular Bond/Debenture (including debts issued by Level 3 Escrow, Inc. that have been assumed by Level 3 Financing, Inc.), B3 (LGD4, 58%) Ratings Rationale Level 3 has a reasonable business proposition as a facilities- based provider of optical, Internet protocol telecommunications infrastructure and services, however, owing to excess transport capacity, margins are relatively weak and, with the interest carry on the company's sizeable debt burden, there has been little capacity to amortize debt. The company's B3 ratings are based on expectations that net synergies from the recently closed acquisition of Global Crossing Ltd. will reduce expenses sufficiently such that Level 3 will be modestly cash flow positive (on a sustained basis) by late 2013. The rating is also based on the expectation that there is sufficient liquidity to continue to fund investments in synergy-related initiative, and that the company's improving credit profile facilitates repayment and/or roll-over of 2013 and 2014 debt maturities. Rating Outlook The stable ratings outlook is premised on net synergies from the recently closed acquisition of Global Crossing Ltd. will reduce expenses sufficiently such that Level 3 will be modestly cash flow positive (on a sustained basis) by late 2013. What Could Change the Rating - Up As the existing B3 ratings anticipate the benefit of future performance, it is unlikely that the rating would be upgraded over the near term. Once execution risks are substantially addressed and presuming solid industry conditions and solid liquidity arrangements, in the event that Debt/EBITDA declines towards 5.0x and (RCF-CapEx)/Debt advances beyond 5% (in both cases, inclusive of Moody's adjustments and on a sustainable basis), positive ratings actions may be warranted. What Could Change the Rating - Down Whether the result of execution mis-steps or adverse industry conditions, should it appear that the company is not cash flow self-sufficient, or in the event of significant debt-financed acquisition activity, negative ratings activity may be considered. The principal methodology used in rating Level 3 Communications 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. LEVEL 3: S&P Rates $300 Million Senior Notes 'CCC' -------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC' issue-level rating and '6' recovery rating to Broomfield, Colo.-based Level 3 Communications, Inc.'s (Level 3) $300 million senior notes due 2019. "The '6' recovery rating on these unsecured notes reflects our expectation of negligible (0% to 10%) recovery of principal in the event of a default. The notes will be sold under Rule 144A with registration rights, with proceeds for general corporate purposes which may include debt refinancing. Other ratings on Level 3 and subsidiaries, including the 'B-' corporate credit rating and the positive outlook, are not affected by the new notes," S&P said. "Level 3 is facilities-based, global integrated provider of a range of communications services including voice, data, and broadband on its extensive long-haul and metropolitan fiber networks. The company's October 2011 $3 billion acquisition of Global Crossing Ltd. expanded its footprint, especially in Latin America. The positive outlook cites the potential for a one-notch upgrade if Level 3 demonstrates that it is successfully integrating Global Crossing and, further, is on track to realize at least the bulk of what the company projects to ultimately be $300 million in annual operating synergies," S&P said. RATINGS LIST Level 3 Communications Inc. Corporate Credit Rating B-/Stable/-- New Ratings Level 3 Communications Inc. Senior Unsecured $300 mil nts due 2019 CCC Recovery Rating 6 LIBERTY HARBOR: Pays $22 Million to Settle Condemnation Row ----------------------------------------------------------- Martin Bricketto at Bankruptcy Law360 reports a judge overseeing the Chapter 11 of Liberty Harbor Holding LLC and its affiliates, the Jersey City, N.J., development companies with about $370 million in waterfront area properties, on Monday approved a $22.4 million, condemnation-related settlement the debtors said resolves the last major issue impeding their redevelopment work. 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: Judge to Approve $51.4-Mil. DIP Loan ------------------------------------------------------ Carla Main, substituting for Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that LightSquared Inc.'s bankruptcy judge is prepared to approve a loan of as much as $51.4 million that will allow Philip A. Falcone's bankrupt wireless broadband venture to operate while under court protection from creditors. According to the report, U.S. Bankruptcy Judge Shelley Chapman in Manhattan said July 17 she would review changes to the loan and was prepared to approve an agreement allowing the company to borrow $30.6 million immediately. The loan, to LightSquared affiliate One Dot Six Corp., was modified since initial terms were proposed last month, Matthew Barr, a lawyer for the company, told Judge Chapman in court. An initial amount of $30 million was increased to $41.4 million, and the company will have the option to borrow $10 million more under certain conditions, Mr. Barr said. The report relates that the debtor-in-possession loan would be until November. The money would be used for lease payments and building projects, Mr. Barr told Judge Chapman. U.S. Bank NA, an agent to pre-bankruptcy lenders already owed $322.3 million by the company's "Inc." unit, will serve as an agent to the new loan. One Dot Six is among LightSquared affiliates, known as the "Inc. obligors," which need funding to operate in bankruptcy. Another group of "LP" affiliates is using cash set aside as collateral. The group of LP lenders includes Capital Research & Management Co., Appaloosa Management LP and Fortress Investment Group LLC. The report notes that lenders owning $1.1 billion of debt in the LP unit said in court papers that while they didn't object to the new loan, it may trigger a default and LightSquared Inc. might be unable to pay legal, administrative and other reorganization costs. The loan allocates $56 million in reorganization expenses to the LP unit and only $12 million to the Inc. unit, the group said in objections filed to the original agreement. The allocation is inconsistent with the company's view that all of its estates "are wildly solvent," the lenders said. Joseph Checkler at Dow Jones Newswires reports Mr. Barr said $23 million of the loan must be used to make payments on the company's lease of wireless spectrum. The rest will be used to build out its wireless network, pay professional fees associated with its bankruptcy and for "general corporate purposes." Mr. Barr said the next $10.8 million of the loan is earmarked for use starting early next year, with a final $10 million available to the company only at the lenders' discretion. Dow Jones, citing a court filing on July 13, relates that including professional fees related to the Chapter 11 proceeding, the company has lost $81.7 million from the start of its case until the end of June. More than half of that is related to interest expenses. Latham & Watkins Hiring Approved Dow Jones also reports Judge Chapman approved LightSquared's use of a special team of attorneys to work on matters involving the Federal Communications Commission. Earlier this year, the FCC blocked the company from using a 4G wireless network in a blow that ultimately helped force the bankruptcy filing. Latham & Watkins LLP will represent the company in its pursuit of FCC approval to use wireless spectrum. Despite the fact that Latham had already been approved as an "ordinary-course" professional firm in the case, the FCC duties will likely push Latham's fees above the $500,000 cap set for each firm during the Chapter 11 case, Dow Jones quotes LightSquared as saying. Dow Jones says Latham & Watkins's duties would include representing LightSquared in its fight over the FCC's suspension of its network use, as well as in rule-making proceedings in which the FCC is contemplating opening up more wireless spectrum for companies such as LightSquared. 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. LUCID INC: Had $3.4 Million Net Loss in First Quarter ----------------------------------------------------- Lucid, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $3.38 million on $317,809 of total revenue for the three months ended March 31, 2012, compared with a net loss of $1.93 million on $735,366 of total revenue for the same period in 2011. The Company's balance sheet at March 31, 2012, showed $2.82 million in total assets, $5.91 million in total liabilities, and a stockholders' deficit of $3.09 million. As reported in the TCR on April 9, 2012, Deloitte & Touche LLP, in Rochester, New York, expressed substantial doubt about Lucid'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, deficit in equity, and projected need to raise additional capital to fund operations. A copy of the Form 10-Q is available for free at: http://is.gd/YKGibv Rochester, N.Y.-based Lucid, Inc., is a medical device company that designs, manufactures and sells non-invasive cellular imaging devices that assist physicians in the early detection of disease. The Company's VivaScope(R) platform produces rapid noninvasive, high-resolution cellular images for subsequent diagnostic review by physicians, pathologists and other diagnostic readers. MAIN STREET: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Main Street Diagnostic Center, LLC dba Mingus Center For Psychiatric Services Rio De Esperanza c/o Luft 8319 E. Mustang Trail Scottsdale, AZ 85258 Bankruptcy Case No.: 12-15881 Chapter 11 Petition Date: July 16, 2012 Court: U.S. Bankruptcy Court District of Arizona (Phoenix) Judge: Redfield T. Baum PCT Sr. Debtor's Counsel: James F. Kahn, Esq. JAMES F. KAHN, P.C. 301 E. Bethany Home Road, #C-195 Phoenix, AZ 85012 Tel: (602) 266-1717 Fax: (602) 266-2484 E-mail: james.kahn@azbar.org Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Frederick A. Luft, III, manager. MEDIA GENERAL: Incurs $146.3 Million Net Loss in 2nd Quarter ------------------------------------------------------------ Media General, Inc., reported a net loss of $146.29 million on $84.11 million of total revenues for the 13 weeks ending June 24, 2012, compared with a net loss of $15.38 million on $71.72 million of total revenues for the 13 weeks ending June 26, 2011. The Company reported a net loss of $180.72 million on $159.23 million of total revenues for the 36 weeks ending June 24, 2012, compared with a net loss of $41.18 million on $139.01 million of total revenues for the 36 weeks ending June 26, 2011. The Company's balance sheet at June 24, 2012, showed $923.41 million in total assets, $1.05 billion in total liabilities, and a $129.26 million stockholders' deficit. Marshall N. Morton, president and chief executive officer of Media General, said, "We are very pleased with our new focus as a TV broadcaster. Our year-over-year operating improvement was driven by a 17.1% increase in Broadcast revenues. Strong Political revenues were generated by the presidential campaigns, Super PACs, the Massachusetts Senate race, and congressional primaries in Virginia and South Carolina. Core time sales, excluding Political revenues, increased 3.9% overall, mostly driven by higher automotive category spending. Retransmission fees increased 80% as a result of contract renewals that reflected competitive market rates. Media General's stations are by and large the number one or two station in their markets. Top-rated newscasts attract Political advertising and our stations have done an excellent job capitalizing on the event-driven revenue opportunities of this year." A copy of the press release is available for free at: http://is.gd/l5I5Ev About Media General Richmond, Virginia-based Media General Inc. (NYSE: MEG) -- http://www.mediageneral.com/-- is an independent communications company with interests in newspapers, television stations and interactive media in the United States. The Company reported a net loss of $74.32 million for the fiscal year ended Dec. 25, 2011, a net loss of $22.64 million for the fiscal year ended Dec. 26, 2010, and a net loss of $35.76 million for the fiscal year ended Dec. 27, 2009. * * * As reported by the Troubled Company Reporter on April 12, 2012, Moody's Investors Service downgraded, among other things, Media General's Corporate Family Rating (CFR) and Probability of Default Rating (PDR) to Caa1 from B3, concluding the review for downgrade initiated on Feb. 13, 2012. The downgrade reflects the significant increase in interest expense associated with the company's credit facility amend and extend transaction and an assumed issuance of at least $225 million of new notes, which will result in limited free cash flow generation and constrain Media General's capacity to reduce its very high leverage. The weak free cash flow and high leverage create vulnerability to changes in the company's highly cyclical revenue and EBITDA generation. According to the May 23, 2012 edition of the TCR, Standard & Poor's Ratings Services placed its 'CCC+' corporate credit rating on Media General, along with its 'CCC+' issue-level rating on the company's senior secured notes, on CreditWatch with positive implications. "The CreditWatch placement is based on Media General's agreement to sell the majority of its newspaper assets to BH Media Group, a subsidiary of Berkshire Hathaway Inc. The CreditWatch also reflects the announcement that the company will refinance its existing bank debt due in March 2013. It expects to close the refinancing transaction next week and the newspaper sale by June 25, 2012," S&P said. MF GLOBAL: CFTC Files General Creditor Claim -------------------------------------------- The Commodity Futures Trading Commission last month filed a general creditor claim in the liquidation of MF Global, Inc. In a statement on June 1, the Commission said it took this action in relation to the Division of Enforcement's ongoing investigation related to the failure of MF Global. If that investigation results in an enforcement action against MF Global., the Commission could pursue a restitution award for the benefit of commodity customers, which in turn could be the basis for a Commission claim as a general creditor against the MF Global. estate. The Commission's claim as a general creditor would not have priority over customer claims. It has been filed solely to preserve all possible options for recovering funds for the benefit of commodity customers. According to Bill Rochelle, bankruptcy columnist at Bloomberg News, the commission said the claim is an offshoot of the investigation into MF Global's demise and the $1.6 billion shortfall in customer property that should have been segregated. About MF Global New York-based MF Global (NYSE: MF) -- http://www.mfglobal.com/-- was one of the world's leading brokers of commodities and listed derivatives. MF Global provided access to more than 70 exchanges around the world. The firm 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. Louis J. Freeh was named the Chapter 11 Trustee for the bankruptcy cases of MF Global Holdings Ltd. and its affiliates. The Chapter 11 Trustee tapped (i) Freeh Sporkin & Sullivan LLP, as investigative counsel; (ii) FTI Consulting Inc., as restructuring advisors; (iii) Morrison & Foerster LLP, as bankruptcy counsel; and (iv) Pepper Hamilton as special counsel. An Official Committee of Unsecured Creditors has been appointed in the case. The Committee has retained Capstone Advisory Group LLC as financial advisor. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. 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) MF GLOBAL: Trial on $700MM Claim vs. KPMG Set for 2013 ------------------------------------------------------ A bid by MF Global Holdings Ltd.'s brokerage unit bankruptcy trustee to recover about $700 million in disputed assets will be determined in a London trial set for April 2013, according to a statement from the trustee's office, Karin Matussek of Bloomberg News reported. "It is crucial that this intellectual dispute over how property was or should have been handled be urgently resolved" so customers can get the money they're owed, James Giddens, trustee for the liquidation of New York-based MF Global Inc., said in an e-mailed statement after a scheduling hearing, Bloomberg quoted. Mr. Giddens sued KPMG LLP, the U.K. unit's administrator, over MF Global customer funds held in London, saying they should have been protected and belong to American clients, Bloomberg related. KPMG said it wasn't customer money and should be treated as a creditors' claim, the report pointed out. Bloomberg said legal disputes between those winding up MF Global's British and American entities have tied up about $1.1 billion of clients' and creditors' money, which can't be returned until courts decide who controls the assets. The trustee of MF Global's parent company, Louis Freeh, has also filed a London lawsuit against KPMG seeking about $400 million from internal repurchase agreements used to move money around the company, Bloomberg pointed out. About MF Global New York-based MF Global (NYSE: MF) -- http://www.mfglobal.com/-- was one of the world's leading brokers of commodities and listed derivatives. MF Global provided access to more than 70 exchanges around the world. The firm 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. Louis J. Freeh was named the Chapter 11 Trustee for the bankruptcy cases of MF Global Holdings Ltd. and its affiliates. The Chapter 11 Trustee tapped (i) Freeh Sporkin & Sullivan LLP, as investigative counsel; (ii) FTI Consulting Inc., as restructuring advisors; (iii) Morrison & Foerster LLP, as bankruptcy counsel; and (iv) Pepper Hamilton as special counsel. An Official Committee of Unsecured Creditors has been appointed in the case. The Committee has retained Capstone Advisory Group LLC as financial advisor. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. 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) MF GLOBAL: Holdings Amends Schedules of Assets & Debts ------------------------------------------------------ MF Global Holdings Ltd. filed with the Court amended schedules of assets and liabilities, to correct: * total of Schedule B.16 Accounts Receivable to $2,076,091,495, a copy of which is available for free at: http://bankrupt.com/misc/MFGHAmB16AcctsReceivable.pdf * total of affiliate payables under Section F to $138,501,895, a copy of which is available for free at: http://bankrupt.com/misc/MFGHSchedFAffiliatePayables.pdf Accordingly, the Debtor's total scheduled assets now totaled from $3,528,400,554 to $3,715,881,866, and total scheduled liabilities from $3,715,881,866 to $3,716,015,128. In the original schedules, the Debtor disclosed: A. Real Property $0 B. Personal Property B.1 Cash on hand 0 B.2 Bank Accounts JP Morgan Northeast Market Business Checking Acct. No. 7978 356,201 Stock Benefit Account No. 8737 1,308,819 B.9 Interests in insurance policies Undetermined See http://bankrupt.com/misc/MFGHB9InsurancePolicies.pdf B.13 Stock and interests MF Global Finance Europe Limited - Investment in 100% Owned Subsidiary Undetermined MF Global Futures Trust Co. Limited - Investment in 66.67% Owned Subsidiary Undetermined MF Global Holdings Europe Limited - Investment in 100% Owned Subsidiary Undetermined MF Global Holdings Overseas Limited - Investment in 100% Owned Subsidiary Undetermined MF Global Holdings USA Inc - Investment In 100% Owned Subsidiary Undetermined MF Global Intellectual Properties KFT - Investment In 100% Owned Subsidiary Undetermined MF Global Special Investor LLC - Investment In 100% Owned Subsidiary Undetermined MFG Assurance Company Limited - Investment In 100% Owned Subsidiary Undetermined B.14 Interests in partnerships or joint ventures 0 B.15 Government and corporate bonds 1,384,100,222 See http://bankrupt.com/misc/MFGHB15GovtBonds.pdf B.16 Accounts receivable General Receivable Singapore Withholding Tax 363,314 Chicago Mercantile Exchange Advertising Rebate 75,000 Employee T&E Advances 8,813 Affiliate Receivable MF Global Finance USA Inc. 1,887,951,470 MF Global Inc. 53,717,281 MF Global Holdings Overseas Limited 49,654,244 MF Global Holdings USA Inc. 22,191,191 MF Global Intellectual Properties KFT 20,416,582 MF Global Finance Europe Limited 34,536,033 MF Global UK Limited 3,644,691 MF Global Australia Limited 726,225 MF Global SIFY Securities India Private Limited 695,196 MF Global Canada Co. 676,048 MF Global Hong Kong Limited 403,525 MF Global FXA Securities Limited 227,064 MF Global Securities Australia Limited 139,627 MF Global Securities Australia Limited 139,627 MF Global Holdings HK Limited 114,902 MF Global Overseas Limited 87,500 MF Global Holdings Europe Limited 87,500 MF Global FX Clear LLC 76,805 MF Global Mauritius Private Limited 55,443 MF Global India Private Limited 51,246 MF Global Investment Management LLC 20,063 MF Global Middle East DMCC 20,046 MF Global FX LLC 7,000 MF Global Holdings (Switzerland) Limited 6,938 MF Global Commodities India Private Limited 4,337 MF Global Clearing Services Limited 136 B.21 Other contingent and unliquidated claims Internal Revenue Service Undetermined B.22 Patents, Copyrights and Other Intellectual Property Trade marks, trade names and related intellectual property Undetermined B.28 Office equipment, furnishings, and supplies Software - internal 51,146,121 Equipment 2,086,553 Software - external 258,471 Furniture 32,347 B.35 Other personal property Prepaid - insurance 11,977,889 Prepaid - general 1,175,357 Prepaid - market data services 337 TOTAL SCHEDULED ASSETS $3,528,400,554 C. Property Claimed as Exempt N/A D. Creditors Holding Secured Claims MF Global Inc. Repurchasing Financing $1,362,498,596 Associated with Fixed Income Securities E. Creditors Holding Unsecured Priority Claims Bankruptcy Administrator Delaware Division of Revenue Undetermined Internal Revenue Service Undetermined New York State Department of Taxation and Finance Undetermined F. Creditors Holding Unsecured Nonpriority Claims Affiliate Payables 138,368,633 See http://bankrupt.com/misc/MFGHSchedF1AffiliatePayables.pdf Debt 2,201,489,899 See http://bankrupt.com/misc/MFGHSchedF2Debt.pdf Director Fees 87,321 See http://bankrupt.com/misc/MFGHSchedF3DirectorFees.pdf Dividend Payables 5,005,528 See http://bankrupt.com/misc/MFGHSchedF4Dividends.pdf Guarantees Undetermined See http://bankrupt.com/misc/MFGHSchedF5Guarantees.pdf Litigation Undetermined See http://bankrupt.com/misc/MFGHSchedF6Litigation.pdf Vendor and Other Payables 8,431,888 See http://bankrupt.com/misc/MFGHSchedF7VendorPayables.pdf TOTAL SCHEDULED LIABILITIES $3,715,881,866 About MF Global New York-based MF Global (NYSE: MF) -- http://www.mfglobal.com/-- was one of the world's leading brokers of commodities and listed derivatives. MF Global provided access to more than 70 exchanges around the world. The firm 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. Louis J. Freeh was named the Chapter 11 Trustee for the bankruptcy cases of MF Global Holdings Ltd. and its affiliates. The Chapter 11 Trustee tapped (i) Freeh Sporkin & Sullivan LLP, as investigative counsel; (ii) FTI Consulting Inc., as restructuring advisors; (iii) Morrison & Foerster LLP, as bankruptcy counsel; and (iv) Pepper Hamilton as special counsel. An Official Committee of Unsecured Creditors has been appointed in the case. The Committee has retained Capstone Advisory Group LLC as financial advisor. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. 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) MF GLOBAL: Finance USA's Schedules of Assets & Debts ---------------------------------------------------- MF Global Finance USA Inc. filed with the Court its schedules of assets and liabilities disclosing $5,856,971,570 in total assets and $6,991,881,356 in total liabilities. The Debtor also disclosed that it has $1,986,848,635 in accounts receivable, a list of which is available for free at: http://bankrupt.com/misc/MFGFinanceUSA_B16.pdf The Debtor's liabilities are composed of secured claims totaling $3,909,203,645, unsecured non-priority claims from affiliate payables totaling $1,908,109,820 and unsecured non-priority claims from JP Morgan Chase debt totaling $1,174,567,891. A list of the Debtor's executory contracts and unexpired leases is available for free at: http://bankrupt.com/misc/MFGFinanceAmSchedG.pdf The Debtor also reported income from the operation of its business, classified as gross revenues, during the two years immediately preceding the Petition Date: Income Period ------ ------ $21,325,300 04/01/11 to 10/31/11 $26,702,332 04/01/10 to 03/31/11 $31,793,446 04/01/09 to 03/31/10 MF Global Chief Financial Officer Henri J. Steenkamp disclosed that the Debtor made payments to various creditors within 90 days immediately before the Petition Date, a schedule of which is available for free at: http://bankrupt.com/misc/MFGFinanceSofA3b.pdf The Debtor made payments within one year immediately preceding the Petition Date to or for the benefit of creditors who are or were insiders, a schedule of which is available for free at: http://bankrupt.com/misc/MFGFinanceSofA3c.pdf The Debtors also made payments totaling $1,000,000, relating to debt counseling or bankruptcy to these professionals within one year immediately before the Petition Date: Professional Amount Paid ------------ ----------- Skadden, Arps, Slate, Meagher & Flom LLP $500,000 Sullivan & Cromwell LLP $500,000 The Debtor also prepared a list of withdrawals or distributions credited or given to an insider, including compensation in any form, bonuses, loans, stock redemptions, options exercised and any other perquisite during one year immediately preceding the Petition Date. The list is available for free at: http://bankrupt.com/misc/MFGFinanceSofA23.pdf The Debtor contributed to pension funds at any time within six years immediately before the Petition Date, namely: (i) Man Group USA Inc. Retirement Income Plan, which the Debtor terminated on December 31, 2006; and (ii) Supplemental Executive Retirement Plan, which the Debtor terminated on March 31, 2007. About MF Global New York-based MF Global (NYSE: MF) -- http://www.mfglobal.com/-- was one of the world's leading brokers of commodities and listed derivatives. MF Global provided access to more than 70 exchanges around the world. The firm 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. Louis J. Freeh was named the Chapter 11 Trustee for the bankruptcy cases of MF Global Holdings Ltd. and its affiliates. The Chapter 11 Trustee tapped (i) Freeh Sporkin & Sullivan LLP, as investigative counsel; (ii) FTI Consulting Inc., as restructuring advisors; (iii) Morrison & Foerster LLP, as bankruptcy counsel; and (iv) Pepper Hamilton as special counsel. An Official Committee of Unsecured Creditors has been appointed in the case. The Committee has retained Capstone Advisory Group LLC as financial advisor. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. 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) MOMENTIVE PERFORMANCE: Plans to Reduce Workforce by 6% ------------------------------------------------------ The Board of Directors of Momentive Performance Materials Inc. approved plans to realign the Company's businesses globally. These actions are part of Momentive's initiatives to better service its customers and improve its cost position, while continuing to invest in global growth opportunities. As a result of the realignment, the Company expects to reduce its workforce by approximately 6%. In connection with the workforce reductions, Momentive expects to incur one-time pretax charges related to severance and other benefits of approximately $26 million, $14 to $18 million of which is anticipated to be recognized in 2012 with the remainder to be recognized in 2013. Substantially all of these charges will result in cash expenditures. Moreover, the Company's wholly-owned subsidiary, Momentive Performance Materials Quartz, Inc., entered into a Third Extension and Amendment, effective as of June 30, 2012, to the Quartz Sand Products Purchase Agreement, as amended to date, by and between Unimin Corporation and MPM Quartz. The Amendment extends the term of the Supply Agreement from June 30, 2012, to Sept. 30, 2012, subject to the early termination provisions therein. The parties continue to negotiate the terms of a new long-term supply agreement. A copy of the Third Amendment is available at: http://is.gd/RsnWG8 About Momentive Performance Momentive Performance Materials, Inc., is a producer of silicones and silicone derivatives, and is engaged in the development and manufacture of products derived from quartz and specialty ceramics. As of Dec. 31, 2008, the Company had 25 production sites located worldwide, which allows it to produce the majority of its products locally in the Americas, Europe and Asia. Momentive's customers include companies in industries, such as Procter & Gamble, 3M, Goodyear, Unilever, Saint Gobain, Motorola, L'Oreal, BASF, The Home Depot and Lowe's. The Company had a net loss of $140 million in 2011, following a net loss of $63 million in 2010. Net loss in 2009 was $42 million. The Company's balance sheet at March 31, 2012, showed $3.07 billion in total assets, $3.90 billion in total liabilities, and a $832 million total deficit. * * * As reported by the TCR on May 14, 2012, Moody's Investors Service lowered Momentive Performance Materials Inc.'s Corporate Family Rating (CFR) and Probability of Default Rating (PDR) to Caa1 from B3. The action follows the company's weak first quarter results and expectations for a slower than expected recovery in volumes in 2012. In the May 25, 2012, edition of the TCR, Standard & Poor's Ratings Services raised its rating on Momentive Performance Materials and its subsidiaries' senior secured credit facilities to 'B+' from 'B'. "The ratings on MPM reflect the company's 'highly leveraged' financial profile and what we deem to be a 'fair' business risk profile," said Standard & Poor's credit analyst Cynthia Werneth. MONTANA ELECTRIC: Increased Transparency for Co-ops Sought ---------------------------------------------------------- Matthew Brown at the Associated Press reports that members of an interim legislative committee said they want to increase transparency within Montana's rural electric cooperatives after Southern Montana Electric Generation and Transmission Cooperative went bankrupt following the construction of a new power plant. The report notes other cooperatives that were members of Southern Montana say they were denied access to information that would have revealed the plant's financial pitfalls. Sen. Alan Olson, who chairs the Energy and Telecommunications Interim Committee, said the intent is to prevent a recurrence of problems seen at Southern Montana. The report relates legislation being crafted by Sen. Olson's committee would require a two-thirds vote of member co-ops before they take on debt to finance some power generation proposals. Each of those member co-ops would in turn need backing from two- thirds of their board members. The draft legislation also would allow power distribution co-ops to conduct their own studies on rate impacts from the construction of new power projects. Costs for those studies would be shared by the power generation co-ops that proposed the projects, the report adds. Attorneys for Great Falls filed a lawsuit contending that Southern Montana breached its fiduciary duties to the city in its pursuit of the new power plant. The suit also claims Southern Montana representatives undermined the city's electric utility by establishing a separate company, Independent Electricity Supply Service, Inc., that sold power at prices lower than city was able to offer, according to AP. AP says the interim committee's transparency proposal was supported by the Montana Electric Cooperatives Association, which represents 25 Montana cooperatives serving a combined 400,000 people. Southern Montana is not a member. The report further relates representatives of Beartooth Electric of Red Lodge, one of Southern Montana's member co-ops, also backed the bid for more transparency. But Beartooth board members at the committee meeting said the requirement for a two-thirds majority vote on financing proposals would not go far enough to protect the co-op's interests. They said unanimous backing should be required. The report says Sen. Olson's committee will take up the co-op transparency proposal again in September, with plans to introduce it when the Legislature reconvenes next year. About Southern Montana Electric Based in Billings, Montana, Southern Montana Electric Generation and Transmission Cooperative, Inc., was formed to serve five other electric cooperatives. The city of Great Falls later joined as the sixth member. Including the city, the co-op serves a population of 122,000. In addition to Great Falls, the service area includes suburbs of Billings, Montana. Southern Montana filed for Chapter 11 bankruptcy (Bankr. D. Mont. Case No. 11-62031) on Oct. 21, 2011. Southern Montana estimated assets of $100 million to $500 million and estimated debts of $100 million to $500 million. Timothy Gregori signed the petition as general manager. Jon E. Doak, Esq., at Doak & Associates, P.C., in Billings, Montana, serves as the Debtor's counsel. In December 2011, Southern Montana also sought permission to employ the Goodrich Law Firm, P.C., as general co-counsel. The United States Trustee for Region 18 has appointed an Official Committee of Unsecured Creditors in the case. After filing for reorganization in October, the co-op agreed to a request for appointment of a Chapter 11 trustee. Lee A. Freeman was appointed as the Chapter 11 trustee in December 2011. He is represented by Joseph V. Womack, Esq., at Waller & Womack, and John Cardinal Parks, Esq., Bart B. Burnett, Esq., Robert M. Horowitz, Esq., and Kevin S. Neiman, Esq., at Horowitz & Burnett, P.C. MUSCLEPHARM CORP: Sr. Execs. Give Back 2011 Cash & Stock Bonuses ---------------------------------------------------------------- Three of MusclePharm Corporation's senior executives have voluntarily agreed to return stock and cash bonuses received for 2011 and have relinquished 2012 bonus accruals associated with their existing employment agreements. Brad J. Pyatt (Principal Executive Officer), Jeremy DeLuca (President and Chief Marketing Officer) and Cory Gregory (Senior President) are returning 26,357,328 shares of the Company's common stock and giving back cash bonuses of $30,000 or a total for all executive officers of 79,071,084 shares and $90,000. No other executives received or were entitled to any such bonuses. The 2011 bonuses were based in part on revenue growth that the Company determined recently had been incorrectly calculated. In May 2012, the Company revised the methodology for accruing revenues to more accurately portray the Company's operations. Following the revision, gross revenues were restated downward for certain prior periods, including the year ended Dec. 31, 2011. The three executives have volunteered to reduce both the cash and share amounts awarded for 2011 based on the restated revenue amounts, as well giving up those bonuses accrued for 2012. 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. In the auditors' report accompanying the consolidated financial statements 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. NALLS DEVELOPMENT: Files for Chapter 11 in Washington D.C. ---------------------------------------------------------- Nalls Development and Investment, LLC, filed a Chapter 11 petition (Bankr. D.D.C. Case No. 12-00512) on July 18, 2012. The Debtor estimated assets of at least $10 million and liabilities of at least $1 million. The Debtor said that its principal assets are in 200-210 Elmira Street, SW and others in Washington, D.C. The Debtor -- http://nallsdevelopment.com/serves Martin's View apartments, Mount Dome Apartments, Suitland Forest Apartments, and 1900 16th St. Apartments. NALLS DEVELOPMENT: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Nalls Development and Investment, LLC 205 Elmira Street, SW Rental Office Washington, DC 20032 Bankruptcy Case No.: 12-00512 Chapter 11 Petition Date: July 18, 2012 Court: U.S. Bankruptcy Court District of Columbia (Washington, D.C.) Judge: S. Martin Teel, Jr. Debtor's Counsel: Jeffrey C. Tuckfelt, Esq. OBERGH AND BERLIN 1300 Pennsylvania Avenue, NW, Suite 700 Washington, DC 20005 Tel: (202) 347-3520 Fax: (202) 204-2578 E-mail: tuckfelt1@verizon.net Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Arthur Nolls, Jr., managing member. OFFICE PRODUCTS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Office Products, Inc. 233 Lindell Street P.O. Box 558 Martin, TN 38237 Bankruptcy Case No.: 12-11961 Chapter 11 Petition Date: July 16, 2012 Court: U.S. Bankruptcy Court Western District of Tennessee (Jackson) Judge: Paulette J. Delk Debtor's Counsel: Michael T. Tabor, Esq. 203 S. Shannon P.O. Box 2877 Jackson, TN 38302-2877 Tel: (731) 424-3074 E-mail: marissav@bellsouth.net Scheduled Assets: $420,700 Scheduled Liabilities: $1,891,108 A copy of the Company's list of its 20 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/tnwb12-11961.pdf The petition was signed by Tracy McGehee, president and director. PACE UNIVERSITY: Moody's Affirms 'Ba1' Rating on Revenue Bonds -------------------------------------------------------------- Moody's Investors Service has affirmed its Ba1 rating on Pace University's Series 2005A and 2005B Revenue Bonds issued by the Dormitory Authority of the State of New York. The outlook is stable. Summary Rating Rationale The Ba1 rating reflects Pace University's large scale with $304 million Moody's adjusted operating revenue base in FY 2011, uneven enrollment history, thin liquidity and reliance on a drawdown note program for seasonal cash flow, and limited financial resource base. Strengths include expected continuation of momentum in management's effort to improve cash flow performance, student revenue growth and ongoing increases in liquid resources. Challenges * Limited liquidity relative to expense base with FY 2011 monthly liquidity of $23 million covering a very thin 29 days of cash expenses. Pace continues to rely on a Bank of America drawdown note facility on which it had $34 million outstanding as of June 30, 2010 and June 30, 2011. Unrestricted liquidity without the operating funds from the note would be negative as measured on June 30, although reliance on the note for operations has been gradually reducing over time, a trend with decent prospects to continue and during FY 2012 Pace had nothing drawn on the line for 21 weeks. * Very thin financial resource cushion relative to debt and operations. When adjusted for a large post-retirement health benefit liability ($76.1 million as of June 30, 2011) expendable financial resources were less than $1 million. * Limited pricing power especially for undergraduate students (70% of full-time equivalent enrollment) relative to peers as prospective students are likely to remain sensitive to net price increases. Pace faces a significant amount of competition from other private as well as public universities in New York and the northeast. * Sizeable and growing operating lease commitments with indirect debt of $139 million as of FYE 2011. The majority of operating lease expense is related to student housing facilities which generate auxiliary revenue. * Limited revenue diversity with student charges comprising 89.8% of Moody's adjusted operating revenues in FY 2011. Gifts (1.8% of operating revenue) have been declining since 2006 following the university's completion of a comprehensive campaign. * Almost entirely variable rate debt structure dominated by the Series 2005 auction rate bonds. While management reports successful auctions and a weighted average rate of 2.6% during FY 2012 (blend of taxable and tax-exempt debt) Pace remains exposed to interest spikes or failed auctions, with a maximum interest rate of 15% and 20% allowable on the Series 2005A and Series 2005B bonds, respectively. A fixed payer swap with a notional amount of $72 million does help manage a portion of the interest rate risk, but also introduces collateral posting requirements. * Large other post-employment benefit liability (OPEB) depresses net assets of $76 million as of June 30, 2011, resulting in increasingly negative unrestricted financial resources and escalating cash expenses over the coming years. Strengths * As a large comprehensive urban university ($304 million of Moody's adjusted operating revenue in FY 2011) Pace offers a diverse array of undergraduate, graduate, and professional programs, including schools of nursing, business, and law. In fall 2011, the university enrolled 10,344 full-time equivalent (FTE) students, up 5% from the recent low in fall 2007 when various enrollment management missteps drove a decline in enrollment. In order to maintain a stable enrollment base with increasing student quality, Pace is focused on several recruitment and retention initiatives, including attracting community college transfers, increased recruitment of international students, targeting recruiting in US markets with favorable demographics, and growth in high demand programs such as those in the performing arts. * Management reports show continued momentum in student market with 4.8% increase in net tuition revenue in fiscal 2012 (based on unaudited results) as well as increase in deposits for entering students in the fall of 2012. * Management commitment to improved operating performance and building liquidity. Pace's operating cash flow margin of 9.9% in FY 2011 supported debt service coverage 2.3 times as the "stability plan" continued careful expense controls. * Improved oversight of enrollment management with careful tracking of student demand, net revenue targets and financial aid packaging. Outlook Moody's stable outlook reflects expectation of successful enrollment management efforts yielding increasing net tuition revenue, healthy cash flow from operations, careful management of expenses and gradual increases in liquid resources and reduced reliance on the operating notes. What Could Make the Rating Go Up Significant growth and maintenance of unrestricted liquidity coupled with further strengthening of operating performance and student market position combined with reduction in debt structure risks. What Could Make the Rating Go Down Deterioration of unrestricted liquidity; sustained deterioration in operating performance including declining net tuition revenue; additional debt absent growth of revenue available to pay debt service. Methodology The principal methodology used in this rating was U.S. Not-for- Profit Private and Public Higher Education published in August 2011. PATRIOT COAL: UMWA Officials Discuss Bankruptcy Filing ------------------------------------------------------ Chuck Stinnett at Evansville Courier & Press reports that the United Mine Workers of America officials has met with officers of union locals to discuss how the bankruptcy filing by Patriot Coal Corp. might affect the company's 2,000 active union miners -- including more than 300 at the Highland Mine in Union County -- and thousands of retired UMWA miners and their dependents. According to the report, there are more than 2,000 active UMWA members working at Patriot operations at several mining complexes in West Virginia and at the Highland complex in Union County, Kentucky. Also, more than 10,000 retirees receive health care benefits from the company, most of whom worked for Peabody Coal Co. before Peabody Energy Corp. spun off Patriot Coal and its West Virginia and Kentucky mines into a separate company in 2007. The report says, in all, more than 22,000 active and retired UMWA members and their dependents are affected by the Patriot bankruptcy, the union said. More than 100 UMWA local union officers, representing 35 UMWA local unions in five states, met in Charleston, W.Va. The report relates UMWA International President Cecil E. Roberts addressed the union leaders pledging "the UMWA will bring every resource to bear on behalf of our membership as this process unfolds." The report notes Patriot has secured permission from the bankruptcy court to continue paying employees and suppliers during its reorganization. About Patriot Coal St. Louis-based Patriot Coal Corporation (NYSE: PCX) 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. Patriot Coal 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. 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. The case has been assigned to Judge Shelley C. Chapman. PEGASUS RURAL: Xanadoo Units Given More Time to File Plan --------------------------------------------------------- Carla Main, substituting for Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that bankrupt subsidiaries of Xanadoo Co. were granted more time by U.S. Bankruptcy Judge Peter J. Walsh to file a plan of reorganization and solicit support for the plan. The debtors will have until Oct. 4 to file a plan and until Dec. 3 to raise support for it. According to the report, the Xanadoo units said in court papers that while they have obtained a series of orders extending so- called DIP financing, the latest of which expires Aug. 12, they need more time because of the complexity of their business and the assets being sold. "Debtors continue to explore the market for exit financing, or, alternatively, a sale" of technology through investment banker Cantor Fitzgerald & Co., according to a filing. The report relates that the company previously said there is "potential" for distribution to unsecured creditors. The assets to be sold include 23 spectrum licenses that were purchased in 2000 and 2001 for $96 million. 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. PEREGRINE FINANCIAL: CEO Wasendorf Bail Hearing Moved to July 27 ---------------------------------------------------------------- Ian Thoms at Bankruptcy Law360 reports that Wednesday's bail hearing for Peregrine Financial Group Inc. CEO Russell Wasendorf Sr. was postponed to July 27 after he asked for more time to prepare to answer charges he lied to regulators while embezzling at least $100 million from his clients. Bankruptcy Law360 says Mr. Wasendorf, who admitted to the 20-year fraud in a suicide note, requested the delay so he and his newly appointed attorney, public defender Jane Kelly, could prepare for the preliminary hearing. Mr. Wasendorf will remain in custody awaiting the bail hearing. About Peregrine Financial Peregrine Financial Group Inc. on July 10, 2012, filed to liquidate under Chapter 7 of the U.S. Bankruptcy Code (Bankr. N.D. Ill. Case No. 12-27488), disclosing between $500 million and $1 billion of assets, and between $100 million and $500 million of liabilities. Earlier on July 10, at the behest of the U.S. Commodity Futures Trading Commission, a U.S. district judge appointed a receiver and froze the firm's assets. The firm put itself into bankruptcy liquidation in Chicago later the same day. The CFTC had sued Peregrine, saying that more than $200 million of supposedly segregated customer funds had been "misappropriated." The CFTC case is U.S. Commodity Futures Trading Commission v. Peregrine Financial Group Inc., 12-cv-5383, U.S. District Court, Northern District of Illinois (Chicago). Peregrine's Chief Executive Russell R. Wasendorf Sr. unsuccessfully attempted suicide outside a firm office in Cedar Falls, Iowa, on July 9. The bankruptcy petition was signed in his place by Russell R. Wasendorf Jr., the firm's chief operating officer. The resolution stated that Wasendorf Jr. was given a power of attorney on July 3 to exercise if Wasendorf Sr. became incapacitated. Peregrine Financial Group Inc. is the regulated unit of the brokerage PFGBest. At a quickly-convened hearing on July 13, the bankruptcy judge authorized the Chapter 7 trustee to operate Peregrine's business on a "limited basis" through Sept. 13. PEREGRINE FINANCIAL: Only 11 Clients Have Returnable Assets ----------------------------------------------------------- Carla Main, substituting for Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the trustee liquidating Peregrine Financial Group Inc., who is seeking to return "specifically identifiable property" to customers, said only about 11 of 24,000 futures clients have such property eligible to be returned, according to a filing in bankruptcy court. The report relates that the trustee, Ira Bodenstein, said the assets he is seeking to return are defined as securities, warehouse receipts, cash and other assets that are registered in the name of that customer and are not transferable. The 11 eligible customers are mostly holding warehouse receipts for precious metals, he said. Customers of the futures brokerage who have a right to return of property won't necessarily get 100% of their assets, as bankruptcy rules for liquidating the brokerage require him to distribute property pro rata to each class of customer accounts, Mr. Bodenstein said, according to the Bloomberg report. Customers with returnable metals warehouse receipts may have to post a deposit in order to receive the receipts, he said. Notice requirements letting eligible customers know they must request return of property will be sent in writing to those customers, he said. Separately, a bail hearing in Russell R. Wasendorf Sr.'s criminal case scheduled for yesterday was postponed to July 27 after he requested more time to prepare, according to a court filing. About Peregrine Financial Peregrine Financial Group Inc. on July 10, 2012, filed to liquidate under Chapter 7 of the U.S. Bankruptcy Code (Bankr. N.D. Ill. Case No. 12-27488) in Chicago, after a U.S. district judge that day granted the request of the U.S. Commodity Futures Trading Commission to appoint a receiver and freeze the firm's assets. The CFTC had sued Peregrine, saying that more than $200 million of supposedly segregated customer funds had been "misappropriated." The CFTC case is U.S. Commodity Futures Trading Commission v. Peregrine Financial Group Inc., 12-cv-5383, U.S. District Court, Northern District of Illinois (Chicago). In its petition, Peregrine disclosed between $500 million and $1 billion of assets, and between $100 million and $500 million of liabilities. Peregrine's Chief Executive Russell R. Wasendorf Sr. unsuccessfully attempted suicide outside a firm office in Cedar Falls, Iowa, on July 9. Mr. Wasendorf admitted stealing at least $100 million from the firm, according to an FBI affidavit. The bankruptcy petition was signed in his place by Russell R. Wasendorf Jr., the firm's chief operating officer. The resolution stated that Wasendorf Jr. was given a power of attorney on July 3 to exercise if Wasendorf Sr. became incapacitated. Peregrine Financial Group Inc. is the regulated unit of the brokerage PFGBest. At a quickly convened hearing on July 13, the bankruptcy judge authorized the Chapter 7 trustee to operate Peregrine's business on a "limited basis" through Sept. 13. PINNACLE AIRLINES: Ernst & Young OK'd to Audit 2012 Financials -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Pinnacle Airlines Corp., et al., to expand the scope of Ernst & Young LLP's employment pursuant to the terms and conditions of the additional engagement letter dated as of May 9, 2012. As reported in the Troubled Company Reporter on July 12, 2012, EY LLP is expected to provide these additional audit services: -- auditing and reporting on the consolidated financial statements of Pinnacle for the year ending Dec. 31, 2012; -- auditing and reporting on the effectiveness of Pinnacle's internal control over financial reporting as of Dec. 31, 2012; and -- reviewing Pinnacle's unaudited interim financial information before Pinnacle files its Form 10-Q for each quarter of the year ending Dec. 31, 2012. The billing rates of EY LLP's personnel are: Title Hourly Rate ----- ----------- National Office and Specialist Partner $785 Specialist Senior Manager $630 Partner $525 Executive Director $450 Senior Manager $360 Manager $300 Senior $195 Staff $135 To the best of the Debtors' knowledge, EY LLP is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. 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. PINNACLE AIRLINES: Has Until Oct. 28 to Decide on Unexpired Leases ------------------------------------------------------------------ The Hon. Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York extended until Oct. 28, 2012, Pinnacle Airlines Corp., et al.'s time to assume or reject the unexpired leases of nonresidential real property. As reported in the Troubled Company Reporter on July 12, 2012, the Debtors operate a business with operations and financial interests throughout the United States. As part of their operations, the Debtors estimate that, as of the Petition Date, they were party to more than 70 unexpired leases of nonresidential real property, including lease agreements for office space, hanger space and points of presence in airports. The Debtors relate that they have not yet had an opportunity to identify or make final determinations regarding the assumption or rejection of many of the leases. The TCR reported that the Debtors requested for authorization to (i) reject the license agreement dated May 23, 2011, between the Houston Airport System of the City of Houston, Texas, and Colgan Air, Inc. for Hanger S570, located at 17231 John F. Kennedy Blvd., George Bush Intercontinental Airport/Houston; and (ii) the abandonment of certain personal property located on the premises associated with the lease, effective as of July 18, 2012. In a separate order, the Debtors' abandonment of the expendable property to the lessor is approved effective as of July 18. Notice of Rejection of Executory Contracts and Unexpired Leases The Debtors also filed a notice of rejection of executory contracts and unexpired leases and the abandonment of personal property. Pursuant to the terms of the order, unless a written objection is filed with the Court by 4:00 p.m. (prevailing Eastern Time) on July 27, the contracts and leases set forth on the attached Schedule A will be rejected. A copy of the Schedule A is available for free at http://bankrupt.com/misc/PINNACLE_rejectlease.pdf 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. PINNACLE AIRLINES: County of Erie Can Pursue Prepetition Claims --------------------------------------------------------------- The Hon. Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York approved a stipulation modifying the automatic stay in the Chapter 11 cases of Pinnacle Airlines Corp., et al., solely to allow The County of Erie, New York's claim to (i) proceed to final judgment or settlement, and (ii) the claimant attempt to recover any liquidated final judgment or settlement on the claim solely from available coverage, if any; The claimant contends that it has a claim against Colgan Air, Inc. and Pinnacle Airlines Corp., who are or are employed by or otherwise associated with the Debtors arising from a civil action on account of alleged property damage or injury to the claimant. The case was initiated in the Western District of New York and on appeal to the Second Circuit Court of Appeals. As of July 17, 2012, the claimant has not filed a proof of claim in these chapter 11 cases. Pursuant to the stipulation, the claimant agrees to waive any and all claims against the Debtor defendants related to the claim and agrees to seek recovery solely from the insurance coverage, if any. A copy of the stipulation is available for free at http://bankrupt.com/misc/PINNACLE_stay_stipulation.pdf 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. PROELITE INC: Isaac Blech Discloses 71.2% Equity Stake ------------------------------------------------------ In a Schedule 13D filing with the U.S. Securities and Exchange Commission, Isaac Blech disclosed that, as of July 11, 2012, he beneficially owns 165,568,000 shares of common stock of ProElite, Inc., representing 71.2% of the shares outstanding. The 165,568,000 represent shares of common stock that become exercisable by Mr. Blech on Sept. 10, 2012, pursuant to an Option to Purchase Common Stock, dated Jan. 25, 2012, granted to Mr. Blech by Stratus Media Group, Inc. The exercise price of the Option is $0.05 per share. Stratus Media granted the Option to Mr. Blech in connection with the issuance of a promissory note to Mr. Blech. The Note is for an aggregate principal amount of $1,000,000, has an interest rate of 0.19% per annum and matured on May 24, 2012. The initial number of shares of Common Stock underlying the Option was 82,784,000. Pursuant to the terms of the Option, if the amount due under the Note was not paid in full by maturity, the amount of shares underlying the Option increased by 41,392,000 shares of Common Stock, and will continue to increase by an additional 41,392,000 shares of Common Stock every 30 days until the entire amount due and owing under the Note is paid in full. A copy of the filing is available for free at: http://is.gd/GAkFen About ProElite Inc. Los Angeles, Calif.-based ProElite, Inc., is a holding company for entities that (a) organize and promote mixed martial arts matches, and (b) create an internet community for martial arts enthusiasts and practitioners. On Oct. 20, 2008, management, with Board ratification, decided to close or sell all operations and began an extended period of restructuring its balance sheet, divesting itself of certain assets, settlement of contingent liabilities, and attempting to raise additional capital. Effective Oct. 12, 2009, the Company entered into a Strategic Investment Agreement with Stratus Media Group, Inc. ("SMGI") pursuant to which the Company agreed to sell to SMGI, shares of the Company's Series A Preferred Stock (the "Preferred Shares"). The Preferred Shares are convertible into the Common Stock of the Company. This transaction closed on June 14, 2011. Gumbiner Savett Inc., in Santa Monica, Calif., expressed substantial doubt about ProElite's ability to continue as a going concern, following its audit of the Company's financial statements as of and for the years ended Dec. 31, 2008, and 2007. The independent auditors noted that the Company has suffered losses from operations and negative cash flows from operations. The Company reported a net loss of $55.6 million for the fiscal year ended Dec. 31, 2008, compared with a net loss of $27.1 million for the fiscal year ended Dec. 31, 2007. As a result of the decision to discontinue operations, the Company did not have any revenues, cost of revenue, and gross profit for the fiscal years ended Dec. 31, 2008, and 2007. At Dec. 31, 2008, the Company's balance sheet showed $2.3 million in total assets, $11.8 million in total liabilities, and a shareholders' deficit of $9.5 million. ProElite notified the U.S. Securities and Exchange Commission that it requires additional time to complete the financial statements for the fiscal quarter ended Sept. 30, 2011, and cannot, without unreasonable effort and expense, file its Form 10- Q on or before the prescribed filing date. The Company also notified the SEC regarding the late filing of its annual report on Form 10-K for the period ended Dec. 31, 2011. REDPRAIRIE CORP: Moody's Rates New $380MM Credit Facility 'B2' -------------------------------------------------------------- Moody's Investors Service affirmed RedPrairie Corporation's B2 Corporate Family Rating and its B3 Probability of Default Rating, assigned a B2 rating to the company's proposed $380 million of senior secured credit facilities and changed the ratings outlook to stable from positive. The proposed secured credit facilities comprise a $40 million revolving credit facility and a $340 million term loan facility. RedPrairie will use a portion of its cash on hand and net proceeds from the proposed term loans to refinance $225 million of existing debt and fund a one-time dividend of $136 million to shareholders. The change in ratings outlook reflects the increase in the company's financial leverage expected to result from the transaction and the likelihood that the company's financial policies will remain aggressive in the future. Ratings Rationale The affirmation of the B2 Corporate Family Rating (CFR) reflects Moody's expectations that despite the increase in debt related to the proposed one-time dividend, RedPrairie should generate stable free cash flow of about 8% to 10% of adjusted debt in the next 12 to 24 months. Although RedPrairie's debt-to-EBITDA leverage (incorporating Moody's standard analytical adjustments) will increase from 3.6x to 5.1x, Moody's expects leverage to decline towards 4.5x by the end of 2013 through EBITDA growth and mandatory debt repayments. RedPrairie's prospective deleveraging and free cash flow levels afford the company the flexibility to pursue small, tuck-in acquisitions and maintain credit metrics consistent with the B2 CFR. The B2 CFR reflects RedPrairie's high financial leverage and its small scale and narrow product offerings relative to some of its main competitors. The rating also considers RedPrairie's highly competitive supply chain management software market and the company's challenges in sustaining license sales growth amid slowing economic growth in its core markets in the U.S., Northern Europe and the Asia Pacific region. The rating also incorporates RedPrairie's shareholder-oriented financial policies and the potential for increases in debt to finance acquisitions or distributions to shareholders. The B2 rating is supported by RedPrairie's competitive product offerings in the niche warehouse, transportation and workforce management sub-segments of the enterprise software market. The rating is further supported by the recurring nature of RedPrairie's support, subscription and hosting revenues, which comprise about 35% of its revenue. The rating benefits from the high barriers to entry in RedPrairie's markets as a result of the business critical nature of the company's applications and their high switching costs to customers. The stable outlook reflects Moody's expectations that RedPrairie leverage should decline towards 4.5x by the end of 2013, that the company will produce stable free cash flow and that it will maintain good liquidity in the next 12 to 18 months. Moody's could downgrade RedPrairie's ratings if weak business execution, increasing competition or debt-financed acquisitions cause debt-to-EBITDA leverage to increase towards 6.0x or free cash flow falls to the low single digit percentages of total debt. In addition, deterioration in liquidity could also trigger a ratings downgrade. Given RedPrairie's high financial leverage and the shareholder bias of its financial policies, a ratings upgrade is unlikely in the near term. Over time, RedPrairie's ratings could be upgraded if the company demonstrates sustained growth in revenue and cash flow from operations and if Moody's believes that RedPrairie is likely to achieve and maintain Debt/EBITDA leverage of less than 4.0x, incorporating the potential for dividends and acquisitions. Moody's has taken the following ratings actions: Issuer: RedPrairie Corporation Corporate Family Rating -- B2, Affirmed Probability of Default Rating -- B3, Affirmed $40 million new senior secured revolving credit facility due 2017 -- Assigned B2, LGD3 (33) $340 million new senior secured term loan facility due 2018 -- Assigned, B2, LGD3 (33%) $30 million senior secured revolving credit facility -- B2, LGD3 (33%), To be withdrawn $240 million (originally) senior secured term loan facility -- B2, LGD3 (33%), To be withdrawn The principal methodology used in rating RedPrairie was the Global Software Industry Methodology published in May 2009. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Alpharetta, Georgia, RedPrairie provides inventory, transportation and workforce management products and related services to enterprise customers globally. The company generated $382 million in revenues in the twelve months ended March 31, 2012. REDPRAIRIE CORP: S&P Rates $380MM Senior Secured Credit 'B+' ------------------------------------------------------------ Standard & Poor's Ratings Services assigned a 'B+' issue-level rating to Alpharetta, Ga.-based RedPrairie Corp.'s proposed $380 million senior secured credit facility. "We assigned the debt a '3' recovery rating, indicating our expectation of meaningful (50%-70%) recovery in case of default," S&P said. "We also affirmed our 'B+' corporate credit rating on the company. The outlook is stable," S&P said. "Although leverage increases to about 5x from the mid-3x level following the proposed $136 million dividend recap, pro forma leverage remains consistent with its rating. Standard & Poor's did not view prior levels of leverage as likely to be sustained," S&P said. "We will withdraw the issue-level and recovery ratings on the company's existing senior secured debt when the transaction closes," S&P said. "The ratings on RedPrairie reflect the company's 'weak' business risk profile deriving from its niche position within a fragmented and highly competitive market, and its exposure to the cyclical retail industry. The company also has an 'aggressive' financial risk profile marked by an acquisitive growth strategy and an ownership structure we believe precludes sustained de-leveraging," S&P said. "However," explained Standard & Poor's credit analyst Christian Frank, "we expect that the company's revenues will increase modestly given its leading position in the market for supply-chain management software and its diverse and entrenched customer base." "The outlook is stable, reflecting RedPrairie's solid position in the niche market for supply-chain execution software and high customer retention. However, we believe its ownership structure and acquisitive growth strategy preclude sustained de-leveraging, which limits a possible upgrade," S&P said. "We would consider a downgrade if a weakening economy or increased competition caused revenue to decline and margins to deteriorate, or if the company pursued debt-financed acquisitions, resulting in leverage increasing to the mid-5x level on a sustained basis," S&P said. REFCO INC: Judge Tosses Malpractice Claims vs. Schulte ------------------------------------------------------ Carolina Bolado at Bankruptcy Law360 reports that U.S. District Judge Jed S. Rakoff on Wednesday tossed a malpractice suit accusing Schulte Roth & Zabel LLP of improperly drafting documents for hedge fund investors in doomed brokerage firm Refco Inc., despite a special master's recommendation to allow the bulk of the claims to proceed. In a short order filed in the Southern District of New York, U.S. District Judge Jed S. Rakoff said he disagreed with Special Master Daniel J. Capra's report saying Schulte Roth must face most of the allegations brought by the liquidators, Bankruptcy Law360 relates. About Refco Inc. Headquartered in New York, Refco Inc. -- http://www.refco.com/-- was a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries were members of principal U.S. and international exchanges, and were among the most active members of futures exchanges in Chicago, New York, London and Singapore. Refco was also a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco was one of the largest global clearing firms for derivatives. The Company had operations in Bermuda. The Company and 23 of its affiliates filed for Chapter 11 protection on October 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represented the Debtors in their restructuring efforts. Milbank, Tweed, Hadley & McCloy LLP, represented the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and US$16.8 billion in debts to the Bankruptcy Court on the first day of its Chapter 11 cases. The Court confirmed the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its Direct and Indirect Subsidiaries, including Refco Capital Markets, Ltd., and Refco F/X Associates, LLC, on December 15, 2006. That Plan became effective on Dec. 26, 2006. Pursuant to the plan, RJM, LLC, was named plan administrator to reorganized Refco, Inc., and its affiliates, and Marc S. Kirschner as plan administrator to Refco Capital Markets, Ltd. RG STEEL: Wins Court OK of Amended Management Incentive Plan ------------------------------------------------------------ Jamie Santo at Bankruptcy Law360 reports that RG Steel LLC won Delaware court approval Wednesday for an amended management incentive plan that will reward executives based on the revenue realized from the sale of the company's assets, but only those that are sold as going concerns. Bankruptcy Law360 relates that U.S. Bankruptcy Judge Kevin J. Carey signed off on the amended incentive plan, which the debtors submitted Tuesday after both the U.S. Trustee and the official committee of unsecured creditors objected to the plan as originally proposed June 26. Carla Main, substituting for Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the Committee had argued that the "proposed management incentive plan," or MIP, which the company asked the court to consider, "is not well structured" to achieve the desired ends of maximizing the value of the bankruptcy estate. The plan is "substantially in excess" of plans in comparable cases, the committee said. 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: Committee Taps Huron Consulting as Financial Advisor -------------------------------------------------------------- The Official Committee of Unsecured Creditors in the Chapter 11 cases of WP Steel Venture LLC, et al., asks the U.S. Bankruptcy Court for the District of Delaware for permission to retain Huron Consulting Services LLC as its financial advisor. The hourly rates of Huron personnel are: Managing Directors $680 - $750 Directors $535 - $650 Managers $420 - $450 Associates and Analysts $250 - $350 Huron has not received a retainer in this matter. To the best of the Committee's knowledge, Huron is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. An Aug. 15, 2012, hearing at 10 a.m. has been set. Objections, if any, are due July 26. 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. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as its financial advisor. RG STEEL: Committee Seeks OK for Kramer Levin as Counsel -------------------------------------------------------- The Official Committee of Unsecured Creditors in the Chapter 11 cases of WP Steel Venture LLC, et al., asks the U.S. Bankruptcy Court for the District of Delaware for permission to retain Kramer Levin Naftalis & Frankel LLP as its counsel. It is anticipated that Kramer Levin's personnel responsible in representing the Debtors and their hourly rates are: Thomas Moers Mayer, partner and co-chairman of corporate restructuring practice $1,025 Gregory A. Harowitz, partner $865 Joshua K. Brody, partner $770 Partners $675 - $1,025 Associates $375 - $ 765 Mr. Mayer will charge a discounted rate of $990 per hour work for the duration of the cases. To the best of the Committee's knowledge, Kramer Levin is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. 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. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as its financial advisor. RG STEEL: Committee Proposes Saul Ewing as Bankruptcy Co-Counsel ----------------------------------------------------------------- The Official Committee of Unsecured Creditors in the Chapter 11 cases of WP Steel Venture LLC, et al., asks the U.S. Bankruptcy Court for the District of Delaware for permission to retain Saul Ewing LLP as co-counsel. The hourly rate of Saul Ewing's personnel are: Partners $350 - $750 Special Counsel $300 - $495 Associates $245 - $425 Paraprofessionals $160 - $275 To the best of the Committee's knowledge, Saul Ewing does not represent nor hold any interest adverse to the interest of the Debtors' estate. 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. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as its financial advisor. RG STEEL: Morris Nichols Arsht OK'd as Delaware Co-Counsel ---------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized WP Steel Venture LLC, et al., to employ Morris, Nichols, Arsht & Tunnel LLP as Delaware bankruptcy co-counsel. As reported in the Troubled Company Reporter on July 10, 2012, 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. 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. 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. 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. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as its financial advisor. RG STEEL: July 30 Deadline for Schedules and Statements ------------------------------------------------------- WP Steel Venture LLC, et al., asked the U.S. Bankruptcy Court for the District of Delaware to extend their time to file their schedules of assets and liabilities, statement of financial affairs until July 30, 2012. The motion was filed July 12. The Debtors relate that they want to ensure that the schedules and statements are accurate and complete. According to a document attached to the motion, a hearing on Aug. 8, 2012, at 10:00 a.m. has been scheduled to consider the extension. Objections, if any, are due Aug. 1 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. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as its financial advisor. RITZ CAMERA: Wants to Assume Store Closing Sales Agreements ----------------------------------------------------------- Ritz Camera & Image, L.L.C., et al., ask the U.S. Bankruptcy Court for the District of Delaware for authorization to: -- assume a letter of agreement governing inventory disposition dated June 21, 2012, (agency agreement) between the Debtors and a joint venture comprised of Hilco Merchant Resources, LLC and Gordon Brothers Retail Partners, LLC; and -- continue store closing sales pursuant to agency agreement and store closing sale procedures. Prior to the Petition Date, the Debtors determined that its profitability would be improved by a substantial reduction in the number of its retail stores. After discussion with the administrative agent and collateral agent for the Debtors' senior secured lender, Crystal Financial, LLC, which has the first priority lien on the assets of the Debtors, the Debtors formulated a business plan based on closing specific retail stores and conducting store closing sales of the inventory of each of the stores to be closed. In this relation, the Debtors entered into an agency agreement with the agents to manage the sales of the inventory located at the closing stores. The agents began conducting the sale of all inventory at the closing stores on June 21. The sale will be until July 31. Under the agreement, the agents are also authorized to assist the Debtor in selling the furnishing, trade fixtures and equipment owned by the Debtor at the closing stores (FF&E). The closing stores consist of 82 locations. The agents are conducting store closing sales at 59 store locations and the inventory and FF&E of another 23 locations is being transferred to the locations where the sales are being conducted. In consideration of the agents' services, the Debtor agreed to pay a fee equal to 3% of the gross proceeds of the merchandise sold, and imaging sales, at the closing stores. In addition, the Debtor agreed to be responsible for all expenses and agents' other reasonable out of pocket expenses documented with invoices or receipts. The Debtor agreed to pay the agents a commission from the sale of the FF&E equal to 20% of the gross proceeds of the sale of the FF&E. Prior to the Petition Date, the agent received an advance retainer of $100,000. A copy of the agreement is available for free at http://bankrupt.com/misc/RITZCAMERA_sale.pdf A July 30 hearing, at 9:30 a.m., has been set. Objections, if any, are due July 23, at 4 p.m. About Ritz Camera Beltsville, Maryland-based Ritz Camera & Image LLC -- http://www.ritzcamera.com-- sells digital cameras and accessories, and electronic products. It sought Chapter 11 protection (Bankr. D. Del. Case No. 12-11868) on June 22, 2012, to close unprofitable stores. Ritz claims to be the largest camera and image chain the U.S., operating 265 camera stores in 34 states as well as an Internet business. Ritz Camera intends to shut 128 locations and cut its staff in half. Included in the closing are 10 locations in Maryland and 4 in Virginia. Affiliate Ritz Interactive Inc., owner e-commerce Web sites that include RitzCamera.com and BoatersWorld.com, also filed for bankruptcy. RCI's predecessor, Ritz Camera Centers, Inc., sought Chapter 11 protection (Bankr. D. Del. Case No. 09-10617) on Feb. 22, 2009. Ritz generated $40 million by selling all 129 Boater's World Marine Centers. A group that included the company's chief executive officer, David Ritz, formed Ritz Camera & Image to buy at least 163 of the remaining 375 camera stores. The group paid $16.25 million in cash and a $7.8 million note. Later, Ritz sold a $4 million account receivable for $1.5 million to an owner of the company that owed the debt. In the 2009 petition, Ritz disclosed total assets of $277 million and total debts of $172.1 million. Lawyers at Cole, Schotz, Meisel, Forman & Leonard, P.A., served as bankruptcy counsel. Thomas & Libowitz, P.A., served as the Debtor's special corporate counsel and conflicts counsel. Marc S. Seinsweig, at FTI Consulting, Inc., served as the Debtor's chief restructuring officer. Kurtzman Carson Consultants LLC acted as claims and noticing agent. Attorneys at Cooley Godward Kronish LLP and Bifferato LLC represented the official committee of unsecured creditors as counsel. In April 2010, the Court approved a liquidating Chapter 11 plan proposed by the company and the official creditor's committee. Under the Plan, unsecured creditors were to recover 4% to 14% of their claims. In the 2012 petition, RCI estimated total assets and liabilities of $50 million to $100 million. The Debtors owe not less than $16.32 million for term and revolving loans provided by secured lenders led by Crystal Finance LLC, as administrative agent. Attorneys at Cole, Schotz, Meisel, Forman & Leonard, P.A., serve as bankruptcy counsel. Kurtzman Carson Consultants LLC is the claims agent. WeinsweigAdvisors LLC's Marc Weinsweig has been appointed as Ritz's CRO. Mark L. Desgrosseilliers, Esq., and Ericka F. Johnson, Esq., at Womble Carlyle Sandridge & Rice, LLP, represent liquidators Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC. Crystal Finance, the DIP lender, is represented by Morgan, Lewis & Bockius and Young Conaway Stargatt & Taylor LLP. SAN BERNARDINO, CA: City Council Declares Fiscal Emergency ---------------------------------------------------------- San Bernardino City Council on Wednesday declared a fiscal emergency, a legal maneuver that will allow leaders to file for bankruptcy protection without going through months of state- mandated mediation. The report relates the council also voted, 5 to 2, to seek Chapter 9 bankruptcy protection. Los Angeles Times' Phil Willon reports that the council next week will begin the process of crafting a survival budget, until its attorneys can file with the federal Bankruptcy Court. A Chapter 9 petition may be entered in the U.S. Bankruptcy Court in Riverside soon, City Attorney James Penman said after the vote, according to Bloomberg News. Mayor Patrick Morris called the decision the "most difficult one we've ever had to make," but said city leaders had little choice. According to LA Times, the action comes a week after the council voted 4 to 2 to seek Chapter 9 bankruptcy protection. The report notes Interim City Manager Andrea Travis-Miller had warned that the city faced a $45.8-million budget shortfall and might not have enough money to make the August payroll. Deficit According to Bloomberg News, Andrea Travis-Miller, the interim city manager, said July 16 that San Bernardino confronts a deficit that has reached $45.8 million on a general fund of $129.4 million and would probably run out of money before the end of the state- required 60-day negotiation period. The emergency declaration lets the city skip mediation under California law. San Bernardino has depleted its general-fund reserves, lost access to capital markets, has had its credit lines frozen by Wells Fargo & Co. and must pay cash for goods and services, according to Morris and Travis-Miller. Also, the city faces a $3.4 million payment for employee pensions on July 20. LA Times reports that according to city officials, earlier this month, San Bernardino had just $150,000 in its bank accounts. "At greater risk of adjustment" during the legal process are about $48 million in pension-obligation securities, $12.4 million in lease-revenue bonds and $11.5 million in certificates of participation, according to the note from the Concord, Massachusetts-based research company. California Cities Declining tax revenue, growing worker costs, accounting discrepancies and an almost 12 percent unemployment rate in the San Bernardino area helped drive the insolvency of the city of 209,000 about 60 miles (100 kilometers) east of Los Angeles. Bloomberg News notes that San Bernardino would join California's Stockton, an agricultural center of 292,000 east of San Francisco, and Mammoth Lakes, a mountain resort town of 8,200 south of Yosemite National Park, by entering bankruptcy proceedings. LA Times relates the city of Compton in L.A. County also appears to be on the brink of financial collapse, according to city officials. SANTANDER PR: Fitch Lowers Rating on Preferred Stock to 'BB' ------------------------------------------------------------ Fitch Ratings has downgraded the long- and short-term Issuer Default Ratings (IDRs) of Santander Bancorp (SBP) to 'BBB/F2' from 'A-/F1'. The downgrade was a result of Fitch's downgrade of the long-term IDR of SBP's parent company, Banco Santander, on June 11, 2012. SBP's IDRs are correlated to Banco Santander's, and changes in Banco Santander's IDRs result in changes to SBP's. The Rating Outlook for SBP is Negative, which is in line with Banco Santander's Outlook. Fitch affirmed SBP's standalone rating, the Viability Rating (VR), at 'bb+'. The affirmation is supported by the company's sound operating performance and solid capital position while operating in the challenging Puerto Rican market. Similarly to local peers, asset quality has been a challenge given the macro environment in Puerto Rico as evidenced by high unemployment of 16% and continued negative Gross National Product (GNP). Although Fitch is concerned with SBP's elevated levels of non- performing assets (NPAs) at 7.24%, it compares well to local peers with an average NPA of 13.95% at 1Q'12. SBP's loan portfolio exhibits better credit performance due to more conservative underwriting and overall risk management practices (including a relatively low concentration in construction lending). Additionally, the company continues to build its capital base improving its tangible common equity ratio to 8.48% for 1Q'12 compared to 7.41% for 1Q'11 attributed to internal capital generation. Fitch believes there is limited upside to SBP's VR given the concentration in its loan book by product and geography and relatively small franchise. The VR could be negatively affected if loan portfolio quality deteriorates, particularly if significant operating losses emerge and the company's capital position is eroded. SBP's IDRs would be negatively affected if the parent bank's ratings are downgraded or Fitch's view of support changes. Although the Support Rating was downgraded to '2', Fitch believes there is still a high probability of support for SBP by its parent in the event of need. SBP is the third largest bank in Puerto Rico by total assets and by deposits with approximately an 11% share. SBP offers banking and other financial services through its subsidiaries, Banco Santander Puerto Rico, Santander Financial Services, Santander Securities Corporation among other smaller subsidiaries. SBP is wholly owned by Banco Santander following the completion of a tender offer for remaining publicly owned shares in 2010. Fitch has taken the following rating actions: Santander Bancorp -- Long-term IDR downgraded to 'BBB' from 'A-'; Outlook Negative; -- Short-term IDR downgraded to 'F2' from 'F1'; -- Viability Rating affirmed at 'bb+'; -- Support Rating downgraded to '2' from '1'; -- Subordinated debt downgraded to 'BBB-' from 'BBB+'. Banco Santander Puerto Rico -- Long-term IDR downgraded to 'BBB' from 'A-'; Outlook Negative; -- Short-term IDR downgraded to 'F2' from 'F1'; -- Viability Rating affirmed at 'bb+'; -- Support Rating downgraded to '2' from '1'; -- Long-term deposit rating downgraded to 'BBB+' from 'A'; -- Short-term deposit rating downgraded to 'F2 from 'F1'. Santander PR Capital Trust I -- Preferred stock downgraded to 'BB' from 'BB+'. SEDONA DEVELOPMENT: Competing Plan Outlines Hearing Set for Aug. 1 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Arizona will convene a hearing on Aug. 1, 2012, at 1:30 p.m., to consider adequacy of the disclosure statements explaining the competing Chapter 11 Plans for Sedona Development Partners, LLC, and The Club at Seven Canyons, LLC. Objections, if any, are due July 25. As reported in the Troubled Company Reporter on Dec. 9, 2011, Judge Redfield Baum previously vacated the order approving the disclosure statement for the Plan proposed by the Debtors. The judge also denied the disclosure statement for the Chapter 11 Plan proposed by Specialty Financial, Inc. Specialty Mortgage Plan The TCR June 13, 2012, edition reported that Specialty Mortgage, as servicer for Specialty Trust, filed a Second Amended Disclosure Statement in support of its Second Amended Creditor Plan of Liquidation for the Debtors. For purposes of the Liquidating Plan only, the Plan Proponent adopted the valuations asserted by Debtors regarding their real and personal property assets. Under the Liquidating Plan, the various "auction lots" will be separately sold at open auction through a series of 1129(b) auctions. Specialty will provide additional funding, if needed. Under the Plan, secured creditors will receive distributions in payment of their allowed secured claim from the net proceeds of the 1129(b) auction of their collateral. To the extent that the sale of the collateral does not generate net proceeds sufficient to pay Allowed Claim in full, any deficiency will be treated as a Class 4 general unsecured claim; or the creditor will have no deficiency claim. The Plan also provides that Non-Insider Club Members who hold Allowed Claims will have the option of either: (i) opting to have their claims included in, and treated as, Class 4 general unsecured claims; or, (ii) to share pro rata in the proceeds of the retained/assigned causes of action under Section XII of the Liquidating Plan, including, but not limited to, all avoidance actions, fraudulent conveyance actions, preference actions, and other claims and causes of action of every kind and nature whatsoever, including but not limited to all the claims against Debtors' insiders and affiliates. Holders of Allowed General Unsecured Claims will share, pro rata, in a distribution of the Net Unencumbered Proceeds realized from the 1129(b) auction of unencumbered estate assets. Distributions to Allowed Class 4 Claims will be made within 90 days after all 1129(b) auctions are completed. A full-text copy of the Second Amended Disclosure Statement is available for free at: http://bankrupt.com/misc/SEDONA_DEVELOPMENT_ds_2amended.pdf Debtor's Plan Under the Plan proposed by the Debtor, the Debtor's management will be retained and the Debtor will continue to market and sell Villa Intervals on Parcel A through the designated broker, CMC Realty, Inc. The Reorganized Debtor will also continue exploring and implementing opportunities to develop Parcels B and C through existing management. The Plan proposes that allowed secured claims will be paid in full over a period of seven to 10 years. General unsecured claims will share, pro-rata, in a distribution of the sum of $2,000,000 in cash paid by the Reorganized Debtor from a New Value contribution from interest holders, on the 90th day following the Effective Date of the Plan. About Sedona Development Partners Sedona Development Partners owns an 18-hole golf course and related properties, including luxury villas, a practice park, range house, tennis courts and related facilities in Sedona, Arizona, known generally as Seven Canyons. The Club at Seven Canyons, LLC, operates the golf course and related facilities for SDP. SDP is the manager and sole member of the Club. Sedona Development Partners filed for Chapter 11 bankruptcy protection (Bankr. D. Ariz. Case No. 10-16711) on May 27, 2010. The Club At Seven Canyons filed a separate Chapter 11 petition (Bankr. D. Ariz. Case No. 10-16714). John J. Hebert, Esq., Philip R. Rudd, Esq., and Wesley D. Ray, Es., at Polsinelli Shughart PC, in Phoenix, Ariz., assist the Debtors in their restructuring efforts. Lender Specialty Trust is represented by Joseph E. Cotterman, Esq., and Nathan W. Blackburn, Esq., at Gallagher & Kennedy, P.A. Sedona disclosed $29,171,168 in assets and $121,679,994 in liabilities. Sedona Development Partners, LLC, and The Club at Seven Canyons, LLC, filed with the U.S. Bankruptcy Court for the District of Arizona on June 17, 2011, a second amended joint disclosure statement in support of their second amended joint pan of reorganization. The Debtors' disclosure statement was approved on June 28, 2011. SIONIX CORPORATION: Posts $1.3 Million Net Loss in March 31 Qtr. ---------------------------------------------------------------- Sionix Corporation filed its quarterly report on Form 10-Q, reporting a net loss of $1.31 million for the three months ended March 31, 2012, compared with a net loss of $689,580 for the three months ended March 31, 2011. For the six months ended March 31, 2012, the Company reported a net loss of $2.50 million, compared with a net loss of $1.92 million for the six months ended March 31, 2011. Revenues for the three and six months ended March 31, 2012, and 2011, were $0. The Company's balance sheet at March 31, 2012, showed $2.77 million in total assets, $3.60 million in total current liabilities, and a stockholders' deficit of $830,380. As reported in the TCR on Dec. 27, 2011, Kabani & Company, Inc., in Los Angeles, Calif., expressed substantial doubt about Sionix Corporation's ability to continue as a going concern, following the Company's results for the fiscal year ended Sept. 30, 2011. The independent auditors noted that the Company has incurred cumulative losses of $31.9 million. "In addition, the company has had negative cash flow from operations for the period ended Sept. 30, 2011, of $2,187,812." A copy of the Form 10-Q is available for free at: http://is.gd/xCvjtj Los Angeles, Calif.-based Sionix Corporation designs, develops, markets and sells cost-effective water management and treatment solutions intended for use in the oil and gas, agriculture, disaster relief, and municipal (both potable and wastewater) markets. SLS CAPITAL: July 24 Hearing on Chapter 15 Recognition ------------------------------------------------------ Judge Shelley C. Chapman will convene a hearing on July 24 at 10:00 a.m. at Courtroom 610 to consider the petition filed under Chapter 15 of the U.S. Bankruptcy Code seeking recognition of the Luxembourg liquidation proceedings commenced by SLS Capital S.A. The liquidator of Luxembourg-based SLS Capital S.A. filed in Manhattan a petition under Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 12-12707) on June 25, 2012, to seek recognition of proceedings in Luxembourg as "foreign main proceeding". Maitre Yann Baden, the liquidator and foreign representative, estimated SLS Capital to have assets and debts of $100 million to $500 million. The liquidator is represented in the U.S. case by Carollynn H.G. Callari, Esq., at Venable LLP as counsel. SLS was a financial services company whose primary business was the issuance of bonds to persons residing outside the United States. In the operation of its business SLS had counterparties and advisors in the United States and had significant assets held in custodial asset and cash accounts in New York City. The assets held in the United States were the primary collateral for the bonds that SLS issued. On June 4, 2009, the State Prosecutor in Luxembourg filed an application in the District Court of and in Luxembourg (Case Number L-6258/09), to wind up and order the liquidation of SLS, a Luxembourg joint stock company, pursuant to Article 203 of the law of 10 August 1915 of Luxembourg, as subsequently amended. On Oct. 1, 2009, the Luxembourg Court ordered the dissolution of SLS and placed SLS into liquidation "declar[ing] applicable those legal provisions pertaining to the liquidation of a bankruptcy" and "appoint[ing] as magistrate in bankruptcy [Supervising Judge] Mrs. Carole BESCH, judge with the Luxembourg Court, and designat[ing] as liquidator Maitre Yann BADEN, lawyer residing in Luxembourg. . . ." The liquidator says that there is need for U.S. recognition of the Luxembourg proceeding. As part of the process of marshaling SLS's assets and paying SLS's debts, the SLS Liquidator seeks to investigate the disappearance of SLS's assets including assets held in custodial accounts and to pursue such actions as are appropriate in order to recover SLS's assets and/or seek damages from culpable third parties. SMITHFIELD FOODS: Moody's Rates Senior Unsecured Notes 'B1' ----------------------------------------------------------- Moody's Investors Service assigned a B1 rating to the proposed 10- year senior unsecured notes being offered by Smithfield Foods, Inc. In addition, Moody's upgraded ratings on Smithfield's existing senior unsecured debt to B1 from B2 and affirmed its Ba3 Corporate Family Rating and Probability of Default Rating. The rating outlook is stable. Smithfield plans to use the proceeds from the proposed debt issuance along with up to $100 million of borrowings under its $275 million securitization facility to tender for $160 million of outstanding of 7.75% senior unsecured notes due May 2013 and for $598 million of outstanding 10% secured notes due July 2014. Smithfield expects to tender successfully for approximately half of the 2013 notes and for most of the 2014 notes. Any untendered portion of the 2014 secured notes will be retired through a make- whole payment. In connection with the proposed debt offering, Smithfield also expects to amend certain agreements related to $1.2 billion of asset-based revolving credit facilities (consisting of a $925 million inventory-based revolving credit line expiring June 2016 and a $275 million accounts receivable securitization facility expiring June 2014) and a $200 million bank term loan (not rated by Moody's) that will provide material liquidity enhancements. The proposed amendment to the inventory-based revolving credit agreement, subject to review and approval by lenders, will release a second lien on the company's real estate and fixed assets, and a separate proposed amendment will extend the maturity date of the bank term loan to 2018 from 2016. In addition, under the existing credit agreement terms, once the senior secured 2014 notes are retired, the first liens held by the bank term loan lenders on real estate and fixed assets will be released, and the early termination triggers on both of the asset- based facilities will no longer be applicable. Ratings Rationale Smithfield's Ba3 corporate family rating reflects its global dominance in the hog production and pork processing business as well as its single protein focus that leaves it somewhat more vulnerable to commodity price volatility than some of its major protein processor competitors. The company's key growth opportunities include expansion in global export markets, particularly in emerging markets, and further development of its processed and branded meats portfolio, which has greater profit margin potential. The one-notch upgrade of the unsecured debt ratings to B1 anticipates the company's use of proceeds from the newly issued unsecured debt to retire $598 million of secured debt, which will remove a significant amount higher priority claims that are currently ahead of unsecured debt holders. Smithfield Foods, Inc. Ratings assigned: Proposed senior unsecured notes due 2022 at B1 (LGD 5, 75%) Ratings upgraded: Senior unsecured debt ratings to B1 (LGD 5, 75%) from B2 (LGD 5, 81%) Ratings affirmed: Corporate Family Rating at Ba3 Probability of Default Rating at Ba3; Ratings to be withdrawn: Senior secured notes due 2014 at Ba2 (LGD 3, 36%) The rating outlook is stable. The proposed refinancing transaction will provide Smithfield with an improved liquidity profile, greater financial flexibility and lower interest costs. These factors will positively influence the overall ratings profile of Smithfield even as pork industry profits retreats from the peak levels experienced last year. "This debt issuance resolves Smithfield's debt refunding needs for the next several years while leaving a sufficient amount of liquidity to manage through a cyclical decline in operating profits we anticipate in the coming year," said Brian Weddington, a Moody's Senior Credit Officer. Following a year of record profitability last year in both the hog processing and packaged meats businesses driven partially by tight hog supplies, margins have tightened in recent months as increased hog supplies and spiking corn prices have driven down industry profits. Smithfield reports that has protected about half of its corn input costs over the next year through hedging. Nevertheless, Moody's expect that Smithfield's operating margins will eventually retreat closer to its historical range of 3% - 4% from over 7% reported in fiscal 2011. Moody's expects that over the next 12 -- 18 months Smithfield will maintain an overall credit profile that is consistent with its current Ba3 CFR, supported by solid liquidity. Smithfield's debt- to-EBITDA leverage has increased recently to over 3 times due to softening operation performance; however Moody's believes there remains sufficient financial cushion to weather a cyclical downturn without negatively affecting the Ba3 rating. The ratings could be downgraded if Smithfield becomes more aggressive with acquisitions or share repurchases such that credit metrics deteriorate significantly. Other events that could trigger a downgrade may be out of the company's control, including trade disruptions in key export markets, a disease outbreak or a major oversupply condition. Quantitatively, ratings could be lowered if debt to EBITDA is likely to be sustained above 4 times or if EBITA to interest expense is likely to be sustained below 2 times. An upgrade would likely require debt-to-EBITDA leverage to be sustained at or below 3 times. Greater diversification of revenues and cash flow into more value added products would also support an upgrade. The principal methodology used in this rating was Global Food - Protein and Agriculture published in September 2009. Smithfield Foods, Inc., headquartered in Smithfield, Virginia, is the world's largest pork producer and processor. Sales for the twelve months fiscal year ended April 29, 2012 were approximately $13.1 billion. SMITHFIELD FOODS: S&P Rates $650MM Senior Secured Notes 'BB' ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB' issue-level rating to Smithfield, Va.-based Smithfield Foods Inc.'s proposed $650 million senior unsecured notes due 2022, which Smithfield plans to issue off its shelf registration. "The recovery rating on this debt is '3', indicating our expectation for meaningful recovery (50%-70%) in the event of a payment default. While the estimated recovery under the company's capital structure pro forma for this debt offering is well above this recovery range, we cap the recovery rating at '3' according to our criteria for unsecured debt of issuers in the 'BB' category. The rating is based on preliminary terms and conditions. Pro forma for the proposed transaction, total debt outstanding is unchanged at about $2 billion," S&P said. "We believe the company will use proceeds from the notes issue to repay existing debt outstanding and that this transaction will be leverage-neutral, including our estimate of a pro forma debt-to- EBITDA ratio of about 2.5x, compared with a ratio of 2.4x for the fiscal year ended April 29, 2012," S&P said. "The ratings on Smithfield Foods reflect our assessment of the company's 'fair' business risk profile and 'significant' financial risk profile. Key credit factors considered in evaluating Smithfield's business risk profile include its exposure to raw material cost volatility and the possibility of some operating margin compression over the next year. However, we believe Smithfield has reduced its exposure to corn input costs and increased focus on its core business, which will allow it to better manage future price and raw material cost volatility. We also believe the company will maintain its leading market positions in refrigerated and processed pork offerings, given its global operating footprint, and that good export markets will enable the company to expand its geographic reach, given the favorable long-term global demand outlook for pork-based products," S&P said. "The company's significant financial risk profile incorporates the possibility that currently improved credit measures could weaken during periods of weaker operating earnings (currently the outlook for Smithfield in fiscal 2013). It also reflects management's stated financial policy of maintaining a maximum net debt-to- EBITDA target of about 3x (excluding acquisitions)," S&P said. RATINGS LIST Smithfield Foods Inc. Corporate credit rating BB/Stable/-- New Ratings Smithfield Foods Inc. Senior unsecured $650 mil. notes due 2022 BB Recovery rating 3 SOLYNDRA LLC: Feds' $5MM Thompson River Claim May Quell Criticism ----------------------------------------------------------------- Max Stendahl at Bankruptcy Law360 reports that the U.S. Treasury Department's bid earlier this month to recoup over $5 million in stimulus money from Thompson River Power LLC could produce an easy courtroom victory and help stanch criticism over Solyndra LLC's collapse, experts said. Bankruptcy Law360 relates that Thompson River received $6.5 million in 2010 under the American Recovery and Reinvestment Act to convert a Montana coal-fired power plant into a wood-burning plant, a source of renewable power. To the Treasury Department?s chagrin, the company failed to produce either power or jobs. 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. SOMAXON PHARMACEUTICALS: Posts $2.1 Million Net Loss in Q1 2012 --------------------------------------------------------------- Somaxon Pharmaceuticals, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $2.12 million on $$2.74 million of revenue for the three months ended March 31, 2012, compared with a net loss of $17.04 million on $2.32 million of revenue for the same period a year ago. The Company's balance sheet at March 31, 2012, showed $12.35 million in total assets, $7.14 million in total liabilities, and stockholders' equity of $5.21 million. PricewaterhouseCoopers LLP, in San Diego, California, expressed substantial doubt about Somaxon'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 and negative cash flows. A copy of the Form 10-Q is available for free at: http://is.gd/UAu7kM San Diego-Calif.-based Somaxon Pharmaceuticals, Inc., is a specialty pharmaceutical company focused on the in-licensing, development and commercialization of proprietary branded products and product candidates to treat important medical conditions where there is an unmet medical need and/or high-level of patient dissatisfaction, currently in the central nervous system therapeutic area. SUPERVALU: S&P Lowers Corp. Credit Rating to 'B'; Outlook Negative ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on Eden Prairie, Minn.-based grocer and food wholesaler SUPERVALU. "We lowered our corporate credit rating on the company to 'B' from 'B+'. Concurrently, we removed all ratings from CreditWatch with negative implications, where they were placed on July 11, 2012. The outlook is negative," S&P said. "At the same time, we assigned a 'BB-' issue rating and '1' recovery rating to the proposed $850 million secured term loan due 2019, indicating our expectation for very high (90-100%) recovery in the event of a payment default. We also lowered the issue-level rating on the company's unsecured debt to 'B-' from 'B', keeping the recovery rating at '5', indicating our expectation for modest (10%-30%) recovery in the event of payment default," S&P said. "The downgrade reflects our expectations for sales and profitability to erode more than we anticipated in fiscal 2013 and 2014," said Standard & Poor's credit analyst Ana Lai, "due to intense competition and the rollout of SUPERVALU's more aggressive pricing strategy at its supermarket business." "The negative outlook reflects our view that execution risks related to SUPERVALU's new pricing strategy at its supermarkets could result in a greater-than-expected fall in profitability if sales improvement does not materialize; or else a transaction to enhance shareholder value could further erode SUPERVALU's credit protection measures," S&P said. "We could lower the ratings if SUPERVALU's operating results underperform our expectations, leading to adjusted debt to EBITDA rising toward 6.5x. This scenario could occur if SUPERVALU's sales decline by 7% and its gross margin narrows by 80 bps in fiscal 2013 compared to fiscal 2012. A downgrade could also result from potential transactions to enhance shareholder value that could further erode credit protection measures," S&P said. "Although not likely in the near-to-intermediate term, we would need to see meaningful improvement in sales trends as the company implements its new pricing strategy before considering a positive rating action. For example, lease-adjusted debt to EBITDA would need to improve to the 4x area on a sustained basis. This could result from a more moderate-than-anticipated sales decline of about 1% and gross margin decline of 30 bps in fiscal 2013 compared to fiscal 2013. We could also consider an upgrade if SUPERVALU were to pursue asset sales and use the proceeds to reduce debt, if this contributes to an improvement in credit protection measures with debt leverage toward this 4x level," S&P said. TALON THERAPEUTICS: Amends 2006 Employee Stock Purchase Plan ------------------------------------------------------------ The Board of Directors of Talon Therapeutics, Inc., approved an amendment to the Company's 2006 Employee Stock Purchase Plan increasing the number of shares of the Company's common stock available for purchase thereunder by 400,000. The Company had originally reserved 187,500 shares under the Plan when it was initially adopted in 2006 and in July 2011, increased the number of shares available for purchase by an additional 150,000. Moreover, effective July 16, 2012, the Company moved its corporate offices to 400 Oyster Point Boulevard, Suite 200, South San Francisco, California 94080. All Company telephone and facsimile numbers remain unchanged. About Talon Therapeutics Formerly known as Hana Biosciences, Inc., Talon Therapeutics Inc. (TLON.OB.) -- http://www.talontx.com/-- is a biopharmaceutical company dedicated to developing and commercializing new, differentiated cancer therapies designed to improve and enable current standards of care. The company's lead product candidate, Marqibo, potentially treats acute lymphoblastic leukemia and lymphomas. The Company has additional pipeline opportunities some of which, like Marqibo, improve delivery and enhance the therapeutic benefits of well characterized, proven chemotherapies and enable high potency dosing without increased toxicity. Effective Dec. 1, 2010, Hana Biosciences Inc. changed its name to Talon Therapeutics Inc. The name change was effected by merging Talon Therapeutics, Inc., a wholly-owned subsidiary of the Company, with and into the Company, with the Company as the surviving corporation in the merger. The Company reported a net loss of $18.82 million for the year ended Dec. 31, 2011, compared with a net loss of $25.98 million during the prior year. The Company's balance sheet at March 31, 2012, showed $7.77 million in total assets, $62.23 million in total liabilities, $34.66 million in redeemable convertible preferred stock, and a $89.13 million total stockholders' deficit. BDO USA, LLP, in San Jose, California, issued a "going concern" qualification on the financial statements for the year ended Dec. 31, 2011, citing recurring losses from operations and net capital deficiency that raise substantial doubt about the Company's ability to continue as a going concern. TRANSATLANTIC PETROLEUM: Had $4.8-Mil. Net Loss in 1st Quarter -------------------------------------------------------------- TransAtlantic Petroleum Ltd. filed its quarterly report on Form 10-Q, reporting a net loss of US$4.80 million on US$34.94 million of revenues for the three months ended March 31, 2012, compared with a net loss of US$21.15 million on US$29.08 million of revenues for the same period in 2011. The Company's balance sheet at March 31, 2012, showed US$475.84 million in total assets, US$288.97 million in total liabilities, and stockholders' equity of US$186.87 million. As reported in the TCR on March 29, 2012, KPMG LLP, in Calgary, Canada, expressed substantial doubt about TransAtlantic Petroleum'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 and has a working capital deficiency. A complete text of the Form 10-Q is available for free at: http://is.gd/iDuxUH Istanbul, Turkey-based TransAtlantic Petroleum Ltd. is an international oil and natural gas company engaged in acquisition, exploration, development and production. The Company has focused its operations in countries that are net importers of petroleum, have an existing petroleum transportation infrastructure and provide favorable commodity pricing, royalty and tax rates to exploration and production companies. The Company holds interests in developed and undeveloped oil and natural gas properties in Turkey, Bulgaria and Romania. As of March 31, 2012, approximately 40% of the Company's outstanding common shares were beneficially owned by N. Malone Mitchell, 3rd, the chairman of the Company's board of directors and chief executive officer. TRIDENT MICROSYSTEMS: Committee Taps Campbells as Cayman Counsel ---------------------------------------------------------------- The U.S. Bankruptcy Court for District of Delaware authorized the statutory committee of equity security holders in the Chapter 11 cases of Trident Microsystems, Inc., et al., to retain Campbells as Cayman Islands counsel. About Trident Microsystems Sunnyvale, California-based Trident Microsystems, Inc., currently designs, develops, and markets integrated circuits and related software for processing, displaying, and transmitting high quality audio, graphics, and images in home consumer electronics applications such as digital TVs, PC-TV, and analog TVs, and set- top boxes. The Company has research and development facilities in Beijing and Shanghai, China; Freiburg, Germany; Eindhoven and Nijmegen, The Netherlands; Belfast, United Kingdom; Bangalore and Hyderabad, India; Austin, Texas; and Sunnyvale, California. The Company has sales offices in Seoul, South Korea; Tokyo, Japan; Hong Kong and Shenzhen, China; Taipei, Taiwan; San Diego, California; Mumbai, India; and Suresnes, France. The Company also has operations facilities in Taipei and Kaoshiung, Taiwan; and Hong Kong, China. Trident Microsystems and its Cayman subsidiary, Trident Microsystems (Far East) Ltd. filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Lead Case No. 12-10069) on Jan. 4, 2011. Trident said it expects to shortly file for protection in the Cayman Islands. Judge Christopher S. Sontchi presides over the case. Lawyers at DLA Piper LLP (US) serve as the Debtors' counsel. FTI Consulting, Inc., is the financial advisor. Union Square Advisors LLC serves as the Debtors' investment banker. PricewaterhouseCoopers LLP serves as the Debtors' tax advisor and independent auditor. Kurtzman Carson Consultants is the claims and notice agent. Trident had $310 million in assets and $39.6 million in liabilities as of Oct. 31, 2011. The petition was signed by David L. Teichmann, executive VP, general counsel & corporate secretary. Pachulski Stang Ziehl & Jones LLP represents the Official Committee of Unsecured Creditors. The Statutory Committee of Equity Security Holders is represented by Dewey & Leboeuf Quinn and Bayard, P.A.. Quinn Emanuel Urquhart & Sullivan, LLP, serves as conflicts counsel. Alvarez & Marsal North America, LLC, serves as its financial advisors. TRIDENT MICROSYSTEMS: Two New Members in Creditors Committee ------------------------------------------------------------ Roberta A. Deangelis, U.S. Trustee for Region 3, filed an amended list of members of the Official Committee of Unsecured Creditors in the Chapter 11 case of Debtor Trident Microsystems (Far East) Ltd. The Committee now comprises of: 1. United Microelectronics Corporation Attn: Rex Lo 488 De Guigne Drive Sunnyvale, CA 94085 Tel: (408) 523-7800 Fax: (408) 733-8090 2. Cisco Systems, Inc. Attn: William W. Friedman, Esq. 300 East Tasman Drive 10/2 San Jose, CA 95134-1706 Tel: (408) 527-7460 Fax: (408) 413-53651 3. Cadence Design Systems BV (Netherlands) Attn: Michael Williams, Esq. 2655 Seely Ave, Bldg. 5 San Jose, CA 95134 Tel: (408) 894-2430 Fax: (408) 428-50012 Cisco Systems, Inc., and Cadence Design replaced ARM Limited and WIPRO Technologies in the Committee. Former members had voluntarily resigned. About Trident Microsystems Sunnyvale, California-based Trident Microsystems, Inc., currently designs, develops, and markets integrated circuits and related software for processing, displaying, and transmitting high quality audio, graphics, and images in home consumer electronics applications such as digital TVs, PC-TV, and analog TVs, and set- top boxes. The Company has research and development facilities in Beijing and Shanghai, China; Freiburg, Germany; Eindhoven and Nijmegen, The Netherlands; Belfast, United Kingdom; Bangalore and Hyderabad, India; Austin, Texas; and Sunnyvale, California. The Company has sales offices in Seoul, South Korea; Tokyo, Japan; Hong Kong and Shenzhen, China; Taipei, Taiwan; San Diego, California; Mumbai, India; and Suresnes, France. The Company also has operations facilities in Taipei and Kaoshiung, Taiwan; and Hong Kong, China. Trident Microsystems and its Cayman subsidiary, Trident Microsystems (Far East) Ltd. filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Lead Case No. 12-10069) on Jan. 4, 2011. Trident said it expects to shortly file for protection in the Cayman Islands. Judge Christopher S. Sontchi presides over the case. Lawyers at DLA Piper LLP (US) serve as the Debtors' counsel. FTI Consulting, Inc., is the financial advisor. Union Square Advisors LLC serves as the Debtors' investment banker. PricewaterhouseCoopers LLP serves as the Debtors' tax advisor and independent auditor. Kurtzman Carson Consultants is the claims and notice agent. Trident had $310 million in assets and $39.6 million in liabilities as of Oct. 31, 2011. The petition was signed by David L. Teichmann, executive VP, general counsel & corporate secretary. Pachulski Stang Ziehl & Jones LLP represents the Official Committee of Unsecured Creditors. The Statutory Committee of Equity Security Holders is represented by Dewey & Leboeuf Quinn and Bayard, P.A.. Quinn Emanuel Urquhart & Sullivan, LLP, serves as conflicts counsel. Alvarez & Marsal North America, LLC, serves as its financial advisors. U.S. POSTAL: May Default on Future Retirees Fund ------------------------------------------------ Jennifer Levitz, writing for The Wall Street Journal, reports that the U.S. Postal Service repeated on Wednesday that without congressional action, it will default on a legally required annual $5.5 billion payment, due Aug. 1, into a health-benefits fund for future retirees. WSJ says action in Congress isn't likely, as the House prepares to leave for its August recess. According to WSJ, the agency also warned it will default on its 2012 retiree health payment as well -- also roughly $5.5 billion, due Sept. 30 -- if there is no legislative action by then. The report notes a spokesman said the default would be a first in the Postal Service's long history. WSJ relates the Postal Service said a default on the payment, for 2011, wouldn't directly affect service or its ability to pay employees and suppliers. But "these ongoing liquidity issues unnecessarily undermine confidence in the viability of the Postal Service among our customers," said spokesman David Partenheimer. WSJ notes the Postal Service had a loss of $3.2 billion in the second quarter of this fiscal year; it is to report third-quarter results on Aug. 9. The agency blames factors including declining mail volumes and the unusual 2006 mandate by Congress that it annually set aside billions for future retirees. WSJ recounts the senators voted in April, on a bipartisan basis, for legislation that largely shores up the agency's finances by returning an estimated $10.9 billion overpayment made into the federal employee pension system. The legislation limits the agency's ability to close postal branches and stop Saturday delivery. UNITED BANCSHARES: Had $237,800 Net Loss in 1st Quarter ------------------------------------------------------- United Bancshares, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $237,809 on $759,558 of net interest income (before provision for loan losses) for the three months ended March 31, 2012, compared with a net loss of $306,958 on $764,007 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 $69.28 million in total assets, $64.26 million in total liabilities, and stockholders' equity of $5.02 million. "As of March 31, 2012 and Dec. 31, 2011, the Bank's tier one leverage capital ratio was 6.24% and 6.27%, respectively, and its total risk based capital ratio was 12.12% and 12.41%, respectively. These ratios are below the levels required by the Orders. Management believes that the Bank has and will continue to comply with the terms and conditions of the Orders and will continue to operate as a going concern and an independent financial institution for the foreseeable future." As reported in the TCR on April 23, 2012, McGladrey & Pullen, LLP, in Blue Bell, Pennsylvania, expressed substantial doubt about United Bancshares' 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's and the Bank's regulatory capital amounts and ratios are below the required levels stipulated with Consent Orders between the Company and its regulators. "Failure to meet the capital requirements exposes the Company to regulatory sanctions that may include restrictions on operations and growth, mandatory asset disposition, and seizure of the Bank." A copy of the Form 10-Q is available for free at: http://is.gd/3dvZHP Located in Philadelphia, Pennsylvania, United Bancshares, Inc., is an African American controlled and managed bank holding company for United Bank of Philadelphia, a commercial bank chartered in 1992 by the Commonwealth of Pennsylvania, Department of Banking. UROLOGIX INC: Had $968,000 Net Loss in March 31 Quarter ------------------------------------------------------- Urologix, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $968,000 on $4.74 million of sales for the three months ended March 31, 2012, compared with a net loss of $983,000 on $2.98 million of sales for the three months ended March 31, 2011. For the nine months ended March 31, 2012, the Company reported a net loss of $3.47 million on $12.53 million of sales, compared with a net loss of $2.40 million on $9.66 million of sales for the nine months ended March 31, 2011. The Company's balance sheet at March 31, 2012, showed $13.04 million in total assets, $11.29 million in total liabilities, and stockholders' equity of $1.75 million. "As a result of the Company's history of operating losses and negative cash flows from operations, and the licensing fee and transaction expenses related to the Prostiva acquisition, there is substantial doubt about our ability to continue as a going concern. The Company's cash and cash equivalents may not be sufficient to sustain day-to-day operations for the next 12 months and the Company's ability to continue as a going concern is dependent upon improving its liquidity. While its primary goal is to generate capital through cash flow from operations, the Company is also pursuing financing alternatives. On Jan. 11, 2012, the Company entered into a line of credit facility with Silicon Valley Bank to provide additional liquidity. The line of credit allows borrowing by the Company of up to the lesser of $2.0 million or the defined borrowing base consisting of 80% of eligible accounts receivable. As of March 31, 2012, the Company has not borrowed against this facility. T here is no assurance that our cash, cash generated from operations, if any, and available borrowing under our agreement with Silicon Valley Bank will be sufficient to fund our anticipated capital needs and operating expenses, particularly if product sales do not generate revenues in the amounts currently anticipated or if our operating costs are greater than anticipated." "The Company's current plan to improve its cash and liquidity position is to raise capital by incurring additional indebtedness or an offering of its equity securities or both." On April 30, 2012, the Company was notified that it did not meet the requirements for continued listing on the Nasdaq Capital Market because its shareholders' equity was $1,752,000 at March 31, 2012, which is less than the $2.5 million in shareholders' equity required by the Nasdaq Stock Market Listing Rules. Under the Listing Rules, the Company has 45 calendar days to submit a plan to regain compliance with this standard. If the plan is accepted, the Nasdaq Stock Market can grant an extension of up to 180 calendar days from the date of its letter to evidence compliance with the minimum shareholders' equity requirement. Compliance with the minimum shareholders' equity requirement will be achieved only through generating significant income from operations during the timeframe for compliance or by an equity financing in an amount sufficient to restore the Company's shareholders? equity to at least $2.5 million." As reported in the TCR on Sept. 26, 2011, KPMG LLP, in Minneapolis, Minnesota, expressed substantial doubt about Urologix, Inc.'s ability to continue as a going concern, following the Company's for the fiscal year ended June 30, 2011. The independent auditors noted that the Company has suffered recurring losses from operations and negative operating cash flows and has entered into a new licensing agreement. A complete text of the Form 10-Q is available for free at: http://is.gd/MPZR5W Minneapolis, Minn.-based Urologix, Inc., develops, manufactures, and markets non-surgical, therapies that use proprietary technology for the treatment of the symptoms and obstruction resulting from benign prostatic hyperplasia (BPH), a disease that affects more than 23 million men worldwide. UTSTARCOM INC: Himanshu Shah Discloses 12.5% Equity Stake --------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Himanshu H. Shah and his affiliates disclosed that, as of July 11, 2012, they beneficially own 19,004,034 shares of common stock of UTStarcom Holdings Corp. representing 12.56% of the shares outstanding. Shah Capital Management disclosed beneficial ownership of 18,087,612 common shares or 11.95% equity stake as of July 11, 2012. Shah Capital previously reported beneficial ownership of 17,285,551 common shares or a 11.03% equity stake as of Jan. 10, 2012. A copy of the amended filing is available for free at: http://is.gd/GLxGYM About UTStarcom, Inc. UTStarcom, Inc. (Nasdaq: UTSI) -- http://www.utstar.com/-- is a global leader in IP-based, end-to-end networking solutions and international service and support. The Company sells its solutions to operators in both emerging and established telecommunications markets around the world. UTStarcom enables its customers to rapidly deploy revenue-generating access services using their existing infrastructure, while providing a migration path to cost-efficient, end-to-end IP networks. The Company's headquarters are currently in Alameda, California, with its research and design operations primarily in China. The Company reported a net loss of $4.72 million on $46.65 million of net sales for the three months ended March 31, 2012, compared with a net loss of $10.51 million on $61.26 million of net sales for the same period during the prior year. The Company had income of $11.77 million in 2011, following a net loss of $65.29 million in 2010, and a net loss of $225.70 million in 2009. The Company's balance sheet at March 31, 2012, showed $590.27 million in total assets, $328.11 million in total liabilities and $262.16 million in total equity. VELO HOLDINGS: Wants Until Nov. 28 to Propose Chapter 11 Plan ------------------------------------------------------------- Velo Holdings Inc., et al., ask the U.S. Bankruptcy Court for the Southern District of New York to extend their exclusive periods to file and solicit acceptances for the proposed chapter 11 plan until Nov. 28, 2012, Jan. 27, 2013, respectively. The Debtor need additional time to stabilize and operate their businesses and to engage in further coordinated efforts with the Prepetition Lenders, the Official Committee of Unsecured Creditors and other parties-in-interest to reach plan confirmation. There's a hearing on July 25, at 10 a.m. (Eastern Time). Objections, if any, are due July 20, at 4 p.m. 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. Alvarez & Marsal North America, LLC, as restructuring advisor. V2V Holdings LLC disclosed $162,990,423 plus undetermined amount and $643,858,584 in liabilities plus undetermined amount as of the Chapter 11 filing. 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. Cooley LLP represents the Committee. Carl Marks Advisory Group LLC serves as its financial advisor. The Court approved bidding procedures for the sale of substantially all assets of Debtor Neverblue Communications, Inc., and 100% of the equity of 3091224 Nova Scotia Company that is owned by LN, Inc. The auction will take place at 10 a.m. (prevailing Eastern Time) on July 31, 2012, at the offices of Dechert LLP, 1095 Avenue of the Americas, New York City or at later time or other place as the sellers will determine after consultation with their advisors. Qualified bids are due 5 p.m. on July 27. VERMILLION INC: Posts $1.8-Mil. Net Loss in First Quarter --------------------------------------------------------- Vermillion, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $1.78 million on $312,000 of revenue for the three months ended March 31, 2012, compared with a net loss of $4.29 million on $431,000 of revenue for the same period last year. The Company's balance sheet at March 31, 2012, showed $20.54 million in total assets, $11.81 million in total liabilities, and stockholders' equity of $8.73 million. As reported in the TCR on April 2, 2012, PricewaterhouseCoopers LLP, in Austin, Texas, expressed substantial doubt about Vermillion, 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 recurring losses and negative cash flows from operations and has debt outstanding due and payable in October 2012. A copy of the Form 10-Q is available for free at: http://is.gd/UEzuHw Austin, Texas-based Vermillion, Inc. (NASDAQ: VRML) -- http://www.vermillion.com-- is dedicated to the discovery, development and commercialization of novel high-value diagnostic tests that help physicians diagnose, treat and improve outcomes for patients. Vermillion, along with its prestigious scientific collaborators, has diagnostic programs in oncology, cardiology and women's health. VESCOR CAPITAL: TIC Investors Sue Bank, Law Firm Over Ponzi Scheme ------------------------------------------------------------------ Breakwater Equity Partners disclosed that a group of 28 tenant-in- common (TIC) investors who were victims of a Ponzi scheme filed a complaint in Nevada District Court for damages and jury demand against Wells Fargo, Stewart Title Company and Holland & Hart LLP. The complaint alleges several improprieties related to a commercial real estate transaction, including aiding and abetting fraud, legal malpractice and breach of contract. The investors are seeking a judgment of more than $16 million for the recovery of the investment, plus attorneys' fees and lost profits. The legal action involves two properties located in Siena Office Park at 2850 W. Horizon Ridge Parkway, Building 5 and 861 Coronado Center Drive, Building 3 in Henderson, Nev., purchased by the Siena TIC investors in June 2007. The complaint alleges the investors were victimized by a complex financial scheme through which real estate and banking entities conspired to solicit individuals to purchase tenant-in-common interests in the Siena property. The Siena TIC investors claim the transaction was flawed from the start and served little purpose other than to generate fees and other income for the entities involved in its creation. According to the complaint, at the time of the purchase, the investors were unaware the properties were linked to a Ponzi scheme led by Utah businessman Val Southwick and VesCor Capital Corp. The Utah Attorney General was investigating the Ponzi scheme as the Siena transaction was going through the closing process. The Siena TIC investors claim neither the sponsor, Triple Net Properties, nor the lender, Wachovia (now Wells Fargo), disclosed the existence of the Ponzi scheme investigation to the investors. As a result of the investigation, $2.8 million of the investors' money was seized. Recently, a U.S. District Court judge in Utah awarded the investors $2 million of the $2.8 million (case no. 2:09-cv-00595). The allegations against Wachovia (now Wells Fargo) include aiding and abetting fraud in the transaction. The complaint alleges the sponsor intentionally misrepresented or omitted material facts, and that the bank assisted the sponsor. The complaint also states the sponsor failed to notify the investors of the substantial risks associated with purchasing the properties from an entity involved in the VesCor Ponzi scheme. The Siena property was sold by ROCSEV Capital LLC, an entity held by Southwick, a Utah businessman convicted of running the largest financial scheme in the state's history. Southwick defrauded hundreds of investors for more than $100 million over a period of 17 years. In 2008, Southwick pleaded guilty to nine counts of securities fraud and is currently serving nine consecutive 1- to 15-year prison terms in Utah. Breakwater CEO Phil Jemmett believes the deal's sponsor, Triple Net Properties, and the lender, Wachovia (now Wells Fargo), knew the property was part of a Ponzi scheme and did not inform the investors. Jemmett also alleges Grubb & Ellis, the successor to Triple Net Properties, improperly claimed it was the party entitled to the Siena investors' escrow funds, used the TIC investor funds to pay for its legal defense, and hired the law firm Holland & Hart to represent the investors without their approval. "Holland & Hart represented the Siena TIC investors without their consent while also representing Grubb & Ellis," Jemmett said. "We believe that Holland & Hart had a glaring conflict of interest. This unethical arrangement between Grubb & Ellis and Holland & Hart ultimately forced the Siena TIC investors into a settlement with a court-appointed receiver that cost them more than $850,000. This is on top of the hundreds of thousands of dollars that the investors paid to a law firm they never hired. Even worse, the investors had to hire separate legal counsel to battle the law firm that was purportedly representing them. The investors have suffered millions of dollars in damages." The complaint also alleges Stewart Title Company breached its contract with the investors by failing to release $300,000 in litigation funds designed to be used to reimburse the investors for legal fees and other costs associated with the acquisition of the Siena properties. The investors hired Breakwater Equity Partners to restructure the debt on the property, retain and manage litigation counsel, assist in the recovery of the lost investment and other cash outlays, and oversee bankruptcy reorganization, if necessary. "Sadly, this type of situation is becoming increasingly common," said Bart Larsen of Kolesar and Leatham, the attorney representing the investors. "This is yet another example of large companies taking advantage of ordinary investors. The Siena TICs, many of whom invested their retirement funds or other savings in this scheme, cannot afford to lose their investment. We look forward to presenting all of the facts in court." About Vescor Capital Based in Ogden, Utah, Vescor Capital Inc., invests in real estate- based, income-producing projects throughout the western United States. The company filed for chapter 11 protection on May 30, 2007 (Bankr. D. Utah Case No. 07-22435). J. Thomas Beckett, Esq., at Parsons Behle & Latimer, represents the Debtor. When the Debtor filed for protection from its creditors, it disclosed estimated assets and debts between $1 million and $100 million. VITRO SAB: TRO Against Bondholders Extended During Appeal --------------------------------------------------------- Carla Main, substituting for Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Vitro SAB bondholders will remain blocked from seizing assets of the Mexican glassmaker while an appeal over the company's bankruptcy plan is pending, an appeals court decided. The stay that a bankruptcy judge in Dallas imposed last month will "remain in place during the pendency of this appeal or until further order of this court," the U.S. Court of Appeals in New Orleans said July 18. The report recounts that Vitro appealed after U.S. Bankruptcy Judge Harlin DeWayne Hale refused to enforce the company's Mexican reorganization plan in the U.S. last month, saying it was "manifestly contrary" to U.S. public policy. A Mexican court approved the plan in February, after more than a year of legal battles between Vitro and bondholders including Paul Singer's Elliott Management Corp. The company is pleased the appeals court "extended the temporary restraining order, thereby providing important clarity and certainty for Vitro's U.S. customers throughout the appeal process," said Roberto Riva Palacio, a spokesman for Vitro, which is based in San Pedro Garza Garcia, Mexico, according to the Bloomberg report. The case is Vitro SAB v. Ad Hoc Group of Vitro Noteholders, 12-10689, U.S. Court of Appeals for the Fifth Circuit (New Orleans). About Vitro SAB Headquartered in Monterrey, Mexico, Vitro, S.A.B. de C.V. (BMV: VITROA; NYSE: VTO), through its two subsidiaries, Vitro Envases Norteamerica, SA de C.V. and Vimexico, S.A. de C.V., is a global glass producer, serving the construction and automotive glass markets and glass containers needs of the food, beverage, wine, liquor, cosmetics and pharmaceutical industries. Vitro is the largest manufacturer of glass containers and flat glass in Mexico, with consolidated net sales in 2009 of MXN23,991 million (US$1.837 billion). Vitro defaulted on its debt in 2009, and sought to restructure around US$1.5 billion in debt, including US$1.2 billion in notes. Vitro launched an offer to buy back or swap US$1.2 billion in debt from bondholders. The tender offer would be consummated with a bankruptcy filing in Mexico and Chapter 15 filing in the United States. Vitro said noteholders would recover as much as 73% by exchanging existing debt for cash, new debt or convertible bonds. Concurso Mercantil & Chapter 15 Proceedings Vitro SAB on Dec. 13, 2010, filed its voluntary petition for a pre-packaged Concurso Plan in the Federal District Court for Civil and Labor Matters for the State of Nuevo Leon, commencing its voluntary concurso mercantil proceedings -- the Mexican equivalent of a prepackaged Chapter 11 reorganization. Vitro SAB also commenced parallel proceedings under Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-16619) in Manhattan on Dec. 13, 2010, to seek U.S. recognition and deference to its bankruptcy proceedings in Mexico. Early in January 2011, the Mexican Court dismissed the Concurso Mercantil proceedings. But an appellate court in Mexico reinstated the reorganization in April 2011. Following the reinstatement, Vitro SAB on April 14, 2011, re-filed a petition for recognition of its Mexican reorganization in U.S. Bankruptcy Court in Manhattan (Bankr. S.D.N.Y. Case No. 11- 11754). The Vitro parent received sufficient acceptances of its reorganization by using the US$1.9 billion in debt owing to subsidiaries to vote down opposition by bondholders. The holders of US$1.2 billion in defaulted bonds opposed the Mexican reorganization plan because shareholders could retain ownership while bondholders aren't being paid in full. Vitro announced in March 2012 that it has implemented the reorganization plan approved by a judge in Monterrey, Mexico. In the present Chapter 15 case, the Debtor seeks to block any creditor suits in the U.S. pending the reorganization in Mexico. Chapter 11 Proceedings A group of noteholders opposed the exchange -- namely Knighthead Master Fund, L.P., Lord Abbett Bond-Debenture Fund, Inc., Davidson Kempner Distressed Opportunities Fund LP, and Brookville Horizons Fund, L.P. Together, they held US$75 million, or approximately 6% of the outstanding bond debt. The Noteholder group commenced involuntary bankruptcy cases under Chapter 11 of the U.S. Bankruptcy Code against Vitro Asset Corp. (Bankr. N.D. Tex. Case No. 10-47470) and 15 other affiliates on Nov. 17, 2010. Vitro engaged Susman Godfrey, L.L.P. as U.S. special litigation counsel to analyze the potential rights that Vitro may exercise in the United States against the ad hoc group of dissident bondholders and its advisors. A larger group of noteholders, known as the Ad Hoc Group of Vitro Noteholders -- comprised of holders, or investment advisors to holders, which represent approximately US$650 million of the Senior Notes due 2012, 2013 and 2017 issued by Vitro -- was not among the Chapter 11 petitioners, although the group has expressed concerns over the exchange offer. The group says the exchange offer exposes Noteholders who consent to potential adverse consequences that have not been disclosed by Vitro. The group is represented by John Cunningham, Esq., and Richard Kebrdle, Esq. at White & Case LLP. A bankruptcy judge in Fort Worth, Texas, denied involuntary Chapter 11 petitions filed against four U.S. subsidiaries. On April 6, 2011, Vitro SAB agreed to put Vitro units -- Vitro America LLC and three other U.S. subsidiaries -- that were subject to the involuntary petitions into voluntary Chapter 11. The Texas Court on April 21 denied involuntary petitions against the eight U.S. subsidiaries that didn't consent to being in Chapter 11. Kurtzman Carson Consultants is the claims and notice agent to Vitro America, et al. Alvarez & Marsal North America LLC, is the Debtors' operations and financial advisor. The official committee of unsecured creditors appointed in the Chapter 11 cases of Vitro America, et al., has selected Sarah Link Schultz, Esq., at Akin Gump Strauss Hauer & Feld LLP, in Dallas, Texas, and Michael S. Stamer, Esq., Abid Qureshi, Esq., and Alexis Freeman, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, as counsel. Blackstone Advisory Partners L.P. serves as financial advisor to the Committee. The U.S. Vitro companies sold their assets to American Glass Enterprises LLC, an affiliate of Sun Capital Partners Inc., for US$55 million. U.S. subsidiaries of Vitro SAB are having their cases converted to liquidations in Chapter 7, court records in January 2012 show. In December, the U.S. Trustee in Dallas filed a motion to convert the subsidiaries' cases to liquidations in Chapter 7. The Justice Department's bankruptcy watchdog said US$5.1 million in bills were run up in bankruptcy and hadn't been paid. On June 13, 2012, U.S. Bankruptcy Judge Harlin "Cooter" Hale in Dallas entered a ruling that precluded Vitro from enforcing its Mexican reorganization plan in the U.S. The judge ruled that the Mexican reorganization was "manifestly contrary" to U.S. public policy because it bars the bondholders from holding Vitro operating subsidiaries liable to pay on their guarantees of the bonds. The Mexican plan reduced the debt of subsidiaries on $1.2 billion in defaulted bonds even though they weren't in bankruptcy in any country. VORNADO REALTY: Fitch Rates $300MM Series K Preferred Stock 'BB+' ----------------------------------------------------------------- Fitch Ratings has assigned a credit rating of 'BB+' to the $300 million 5.70% series K preferred stock issued by Vornado Realty Trust (NYSE: VNO). Net proceeds from the offering are expected to be used general corporate purposes which may include the redemption of higher dividend preferred stock or units. The issuance will have no impact on VNO's leverage and will result in a negligible improvement in fixed charge coverage assuming the redemption of a similar amount of preferred stock or units. Fitch currently rates VNO and Vornado Realty, L.P. (collectively, Vornado) as follows: Vornado Realty Trust: -- Issuer Default Rating (IDR) at 'BBB'; -- Preferred stock at 'BB+'; Vornado Realty, L.P.: -- IDR at 'BBB'; -- Unsecured revolving credit facility at 'BBB'; - - Senior unsecured notes at 'BBB'. The Rating Outlook is Stable. The ratings reflect Vornado's credit strengths, including its strong access to capital, exceptional unencumbered assets to unsecured debt, and maintenance of leverage appropriate for the rating category, a high-quality portfolio of properties, manageable lease maturities and granular tenant base. These positive rating elements are offset by the likelihood for declining recurring operating EBITDA and higher recurring capital expenditures as the Base Realignment and Closure statute (BRAC) related leases expire resulting in a lower fixed charge coverage ratio. Fitch also notes the company's debt maturity schedule has sizable concentrations of secured debt in 2013 but should be refinanced and not negatively impact liquidity. Fitch will also monitor whether Vornado's future investments deviate from its renewed focus on its core New York and Washington, D.C. office and retail markets. The most recently announced transactions were consistent with Fitch's expectations as the acquisition of prime New York City retail was partially funded by disposition proceeds from multiple non-core assets (primarily Merchandise Mart properties). Vornado's leverage ratio remains consistent with a 'BBB' rating, as the company's net debt to recurring operating EBITDA ratio was 6.4 times (x) for the trailing 12 months (TTM) ended March 31, 2012, down from 6.8x and 7.1x as of Dec. 31, 2010 and 2009, respectively. Leverage including Fitch's estimate of recurring JV distributions (namely dividends from ownership interests in Alexander's Inc. and Lexington Realty Trust) in recurring operating EBITDA lowers leverage to 6.2x for the TTM ended March 31, 2012. Fitch forecasts leverage including JV distributions to remain around the 6.5x level through 2014 and the preferred issuance does not change Fitch's forecast. Fitch defines leverage as net debt divided by recurring operating EBITDA. The company's fixed-charge coverage ratio was 2.0x for the TTM ended March 31, 2012, consistent with 2.0x in 2010 and up from 1.6x in 2009. Fitch expects coverage to decline to 1.8x in 2014 due to BRAC, and be modestly higher than 1.8x when incorporating Fitch's estimate of recurring JV distributions. Fitch defines fixed-charge coverage as recurring operating EBITDA less recurring capital expenditures and straight-line rents, divided by interest incurred and preferred stock and OP unit distributions. The company's portfolio benefits from tenant diversification with the top 30 tenants representing only 27% of total revenue. However, the largest tenant is the United States Government which accounts for 7% of total revenue and the implementation of BRAC for the Department of Defense, coupled with the move by related contractors have caused this exposure to become a temporary credit negative. Offsetting this exposure is the otherwise manageable lease expiration schedule (as measured by annual escalated expiring rent) with no segment's (excluding Merchandise Mart) surpassing 15% annually and averaging 8% going forward. The ratings are further supported by VNO's unencumbered property coverage of unsecured debt, which gives the company significant financial flexibility as a source of contingent liquidity. Consolidated unencumbered asset coverage of net unsecured debt (calculated as annualized first-quarter 2012 unencumbered property EBITDA divided by a blended 7.8% stressed capitalization rate) results in coverage of 4.0x (and surpasses 5.0x pro forma for the April note redemptions). The ratio is strong for the rating, particularly given the unencumbered Manhattan office and retail properties are highly sought after by secured lenders and foreign investors, resulting in stronger contingent liquidity relative to many asset classes. The company's investments in public companies improves coverage by a half-turn after a 50% haircut although they are not captured under Fitch's criteria. The two-notch differential between VNO's IDR and preferred stock rating is consistent with Fitch's criteria for corporate entities with an IDR of 'BBB'. Based on Fitch Research on 'Treatment and Notching of Hybrids in Nonfinancial Corporate and REIT Credit Analysis', these preferred securities are deeply subordinated and have loss absorption elements that would likely result in poor recoveries in the event of a corporate default. The Stable Rating Outlook is driven in part by Fitch's expectation that VNO will maintain appropriate credit metrics in light of the BRAC related earnings erosion, in addition to its average liquidity profile. For the period April 1, 2012 to Dec. 31, 2013, the company's sources of liquidity (cash, availability under the company's unsecured revolving credit facility, and Fitch's expectation of retained cash flows from operating activities after dividends and distributions) covered uses of liquidity (pro rata debt maturities and Fitch's expectation of committed development and recurring capital expenditures) by 1.0x. Although Fitch does not anticipate positive ratings momentum in the near to medium term, the following factors may result in positive momentum on the rating and/or Outlook: -- Net debt to recurring operating EBITDA sustaining below 5.5x (TTM leverage was 6.5x as of March 31, 2012); -- Fixed-charge coverage sustaining above 2.7x (coverage was 2.0x for the TTM ended March 31, 2012). The following factors may result in negative momentum on the rating and Outlook: -- Leverage sustaining above 7.5x; -- Fixed-charge coverage sustaining below 1.8x; -- A sustained liquidity coverage ratio below 1.0x. VS FOX RIDGE: Wants to Employ Parsons Kinghorn as Counsel --------------------------------------------------------- VS Fox Ridge LLC filed papers in Court seeking authority to employ Matthew M. Boley, Esq., and the Salt Lake City law firm of Parsons Kinghorn Harris, PC, as its Chapter 11 counsel at these hourly rates. Matthew M. Boley $275 per hour George B. Hofmann $285 per hour Steven C. Strong $285 per hour Victor Copeland $150 per hour Bonnie Hamp, paralegal $125 per hour Liliana Radon, paralegal $75 per hour Diana Haney, legal assistant and project assistant $65 per hour Parsons has requested a $75,000 initial retainer, including the $25,000 advanced by the Debtor prepetition, plus additional funds once the initial retainer is exhausted. Parsons wants the Debtor to pay the remaining balance in $25,000 installments by July 31 and by Aug. 31. Parsons reserves the right to accelerate the payment dates if it is asked to provide services not coverged by the retainer funds on deposit. Meanwhile, the U.S. Trustee in Salt Lake City was scheduled to convene a Meeting of Creditors under 11 U.S.C. Sec. 341(a) meeting in the Debtor's case on July 17, 2012. Proofs of claim are due by Oct. 15, 2012. Government proof of claim are due by Dec. 17, 2012. About VS Fox Ridge VS Fox Ridge, LLC, filed a bare-bones Chapter 11 petition (Bankr. D. Utah Case No. 12-28001) in Salt Lake City on June 20, 2012. Alpine, Utah-based VS Fox Ridge scheduled $95,600,103 in assets and $27,814,802 in liabilities. Equity owners Stephen and Victoria Christensen simultaneously sought Chapter 11 protection (Case No. 12-28010). Judge Joel T. Marker presides over the case. Matthew M. Boley, Esq., at Parsons Kinghorn Harris, PC, serves as counsel. The petition was signed by Stephen Christensen, manager. WYLDFIRE ENERGY: Sec. 341 Creditors' Meeting Set for Aug. 3 ----------------------------------------------------------- The U.S. Trustee for the Northern District of Texas will convene a Meeting of Creditors under 11 U.S.C. Sec. 341(a) in the Chapter 11 case of Wyldfire Energy, Inc., on Aug. 3, 2012, at 11:00 a.m. at Wichita Falls, Rm 216.B. Proofs of claim are due in the case by Nov. 1, 2012. About Wyldfire Energy Palo Pinto, Texas-based Wyldfire Energy, Inc., filed a bare-bones Chapter 11 petition (Bankr. N.D. Tex. Case No. 12-70239) in Wichita Falls on June 20, 2012. The Debtor disclosed total assets of $15 million and total liabilities of $5.547 million, all unsecured, as of June 20, 2012. Tamara Ford, 100% stockholder, signed the Chapter 11 petition. Judge Harlin DeWayne Hale oversees the case. The Law Offices of Ronald L. Yandell, Esq., serves as the Debtor's counsel. * Filial Piety No Defense in Nondischargeability Suit ----------------------------------------------------- Carla Main, substituting for Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that a district judge in Los Angeles ruled last week that the imperative in Chinese culture that children not disobey their parents isn't a defense to a claim that a willful and malicious injury is nondischargeable in bankruptcy. According to the report, the bankruptcy judge found that all elements of nondischargeability had been met other than to show that the act was "done without just cause or excuse." The bankruptcy judge found "just cause" because the bankrupt person had been obeying parents under the Chinese notion of filial piety. U.S. District Judge A. Howard Matz disagreed and reversed, finding the debt nondischargeable. The report relates that Judge Matz relied on a 1997 case from the U.S. Court of Appeals in San Francisco called In re Bammer for the conclusion that "filial piety cannot constitute just cause or excuse." Citing Bammer, Judge Matz wrote that filial piety is "standardless, unmeasurable, emotional and nonlegal." The case is In re Hom, 11-01260, U.S. District Court, Central District California (Los Angeles). * Mortgages Can't Be Corrected After Chapter 11 Filing ------------------------------------------------------ Carla Main, substituting for Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that a federal district judge in North Carolina ruled last week that a typographical error in a mortgage can't be corrected after bankruptcy. The report relates that an individual filed for Chapter 11 protection owning a home encumbered by a mortgage. The mortgage, according to land records, correctly listed the property's address. The lot number, however, was incorrect. Instead of lot 978, it said lot 979. According to the report, at the behest of the bankrupt owner, the bankruptcy court invalidated the mortgage, and U.S. District Judge Louise W. Flanagan in New Bern, North Carolina, affirmed the decision. She wrote that the mortgage was defective under state law because it failed to identify the property "with certainty." In the description of the property, the lot number is more important than the street address under state law, she wrote. Alternatively, the lender had asked the bankruptcy court to "reform" the mortgage to correct the typographical error. Judge Flanagan said that reformation can be used to correct a mutual or unilateral mistake. Reformation isn't available, Judge Flanagan said, if there is an "intervening lien creditor" without knowledge of the mistake. Explaining her reasoning further, she wrote that the bankrupt's status as a hypothetical lien creditor under Section 544(a)(1) of the Bankruptcy Code made him the intervening lien creditor so that modifying the mortgage wasn't possible. The case is Bank of America v. Meade, 11-501, U.S. District Court, Eastern District of North Carolina (New Bern). * 6 States Face Mounting Budget Crisis, Report Warns ---------------------------------------------------- Jonathan Randles at Bankruptcy Law360 reports six U.S. states are facing long-term budget problems caused by rising health care and pension costs, dwindling tax revenues and cuts in federal funding that may raise the threat of more bankruptcies for local municipalities, according to a report released Tuesday. Carla Main, substituting for Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that a group led by former Federal Reserve Chairman Paul Volcker said that budget cuts in Washington may put added pressure on state governments already strained by employee pensions and rising health-care costs. A report by the private panel of former government officials said that Congress's need to reduce the budget deficit jeopardizes state aid as well as tax breaks, including those for buyers of municipal bonds, which assist state and local governments. The potential cutbacks come just as states are stabilizing from the toll taken by the 18-month recession that ended three years ago. The states face several fiscal challenges, according to the group, including underfunded pension and medical benefits for employees, as well as the oversight of cash-strapped local governments. * Warren Buffett Sees Likely Increase in Municipal Bankruptcies --------------------------------------------------------------- American Bankruptcy Institute reports that billionaire-investor Warren Buffet said on Friday that bankruptcies by three California cities in three weeks are making traditionally objectionable chapter 9 municipal bankruptcy. * U.S. Public-Pension Shortfall $4.6 Trillion, Budget Group Says ---------------------------------------------------------------- Carla Main, substituting for Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that U.S. public pensions are $4.6 trillion short of the amount of assets needed to cover projected liabilities, an advocacy group said, more than twice what Moody's Investors Service estimated this month. The average plan is 41% funded, State Budget Solutions said in a report yesterday. The Alexandria, Virginia, group's partners include the American Legislative Exchange Council, which advocates "conservative public policy solutions," the Freedom Foundation and the State Policy Network, which is composed of "free-market think tanks." State Budget Solutions said that taxpayers must make up the difference between investment performance and promised benefits. The group, using its report to advocate pension cuts, called the gap "a hole that will overtake local and state governments." "Without government actions, states, counties, cities and towns all over America will go bankrupt," said Bob Williams, president of State Budget Solutions, in the release. Moody's, which rates debt in the $3.7 trillion municipal market, said in a July 2 report that unfunded liabilities of state and local pensions are $2 trillion, which it said was three times the total reported by governments. * SEC Fines Huron Consulting for Overstating Income --------------------------------------------------- The Securities and Exchange Commission on July 19 charged Chicago- based consulting firm Huron Consulting Group Inc., and two of its former executives with accounting violations that overstated the company's income for multiple years. The SEC found that Huron, a provider of financial and operational consulting services to clients in various industries, failed to properly record redistributions of sales proceeds by the selling shareholders of four firms acquired by Huron. The selling shareholders redistributed the money to employees at those firms who stayed on to work at Huron as well as other Huron employees and themselves. Because the redistributions were contingent on the employees' continued employment with Huron, based on the achievement of personal performance measures, or not clearly for a purpose other than compensation, Huron should have recorded the redistributions as compensation expense in its financial statements. By failing to do so, Huron overstated its pre-tax income to the public. Former chief financial officer Gary Burge and former controller and chief accounting officer Wayne Lipski oversaw these accounting decisions at Huron. Huron agreed to settle the SEC's charges by paying a $1 million penalty, and Burge and Lipski agreed to pay a total of nearly $300,000 in disgorgement and penalties to settle the charges against them. "Huron's income overstatements obscured the fact that a substantial portion of the money it paid to acquire other consulting firms was being used to retain professional talent at the firm," said Merri Jo Gillette, Director of the SEC's Chicago Regional Office. "Huron, Burge, and Lipski should have known that their flawed accounting gave investors a misleading impression of the profitability of Huron's acquisitions." According to the SEC's order instituting settled cease-and-desist proceedings, Huron's financial statements for 2006, 2007, 2008, and the first quarter of 2009 were materially misstated as a result of these accounting failures. In August 2009, Huron restated those financial statements, thus reducing its net income by approximately $56 million. The SEC's order finds that in January 2008, Huron, Burge and Lipski considered an SEC Staff Accounting Bulletin, which referenced accounting principles applicable to the redistributions, but that they subsequently did not determine the full impact of the accounting principles on the company's financial statements. As a result, Huron publicly overstated its pre-tax income by 3.7% for 2005, 6.09% for 2006, 30.45% for 2007, 68.59% for 2008, and 25.29% for the first quarter of 2009. The SEC's order finds that Huron violated Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 and Rules 12b-20, 13a-1, and 13a-13 thereunder. The order finds that Burge and Lipski caused Huron's violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13, and that they violated Rule 13b2-1. In agreeing to settle the charges without admitting or denying the SEC's findings, Huron consented to the SEC's order imposing a $1 million penalty and requiring the company to cease and desist from committing or causing any violations or any future violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. Burge and Lipski, without admitting or denying the SEC's findings, also consented to the order, which requires Burge to pay disgorgement of $147,763.12, prejudgment interest of $30,338.46, and a penalty of $50,000, and requires Lipski to pay disgorgement of $12,750, prejudgment interest of $3,584.94, and a penalty of $50,000. The order also requires Burge and Lipski to cease and desist from committing or causing any violations and any future violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-13, and 13b2-1. The SEC's investigation was conducted in the Chicago Regional Office by Ruta Dudenas, Rebecca Bernard, Thomas Meier, and Paul Montoya with litigation counsel assistance from Robert Moye. According to reporting by the Troubled Company Reporter, Huron -- -- http://www.huronconsultinggroup.com/-- has been retained to provide consulting services in various Chapter 11 bankruptcy cases, including RG Steel and Hussey Copper Corp. In Hussey, Huron was later replaced by Winter Harbor, LLC. Huron also advised the official committee of unsecured creditors in the 2009 liquidation case of motor parts maker Metaldyne Corp. * BOOK REVIEW: Abraham Zaleznik's Learning Leadership ----------------------------------------------------- Author: Abraham Zaleznik Publisher: Beard Books Hardcover: 548 pages Listprice: $34.95 Review by Henry Berry The lesson in Learning Leadership -- The Abuse of Power in Organizations is to "use power so that substance leads process." This is done, says the author, by keeping the "content of work at the center of communication." The premise of this intriguing book is that many managers, executives, and other business leaders allow "forms of communication [to become] the center of work." As a result, misguided and counterproductive leadership and management practices have settled into many organizations. A culprit is the popular "how-to" leadership manuals that offer simple, superficial principles that only skim the surface of leadership. Zaleznik argues that the primary way to get work done is to put aside personal agendas and deal directly with those who are involved in the work. With this emphasis on substance over process, the concept of leadership lies not in techniques, but personal qualities. The essential personal qualities of leadership are captured by the "three C's" of competence, character, and compassion. The author then delves more deeply into each of these C's. We learn, for example, that the three C's are not learned skills. Competence entails "building one's power base on talent." Character and compassion are the two other qualities of a leader that must be present before there is any talk about methods of operation, lines of communication, definition of goals, structure of a team, and the like. There is more to character that the common definition of the "quality of the person." Character also embraces, says the author, the "code of ethics that prevents the corruption of power." Compassion is defined as a "commitment to use power for the benefit of others, where greed has no place." This concept of a good leader is not idealized or unrealistic. It takes into account human nature and the troubling behavior of many leaders. Of course, any position of leadership brings with it temptations and the potential to abuse power. Effective leaders are those who "take responsibility for [their] own neurotic proclivities," says the author. They do this out of a sense of the true purpose of leadership, which is communal benefit. The power holder will "avoid the treacheries of an unreasonable sense of guilt, while recognizing the omnipresence of unconscious motivation." Zaleznik's definition of the essentials of leadership comes from his study of notable (and sometime notorious) leaders. Some tales are cautionary. The Fashion Shoe Company illustrates the problems that can occur when a leader allows action to overcome thought. The Brandon Corporation illustrates the opposite leadership failing -- allowing thought to inhibit action. Taken together, the two examples suggest that balance is needed for good leadership. Andrew Carnegie exemplifies the struggle between charisma and guilt that affects some leaders. Frederick Winslow Taylor is seen by the author as an obsessed leader. From his behavior in the Sicilian campaign in World War II, General Patton is characterized as a leader who violated the code binding leaders and those they lead. With his training in psychoanalysis and his experience in the business field, Zaleznik's leadership dissections and discussions are instructive. The reader will find Learning Leadership -- The Abuse of Power in Organizations to be an engaging text on the human qualities and frailties of leaders. Abraham Zaleznik is emeritus Konosuke Matsushita Professor of Leadership at the Harvard Business School. He is also a certified psychoanalyst. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers" public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed Chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors" Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine Tumanda, Howard C. Tolentino, Joseph Medel C. Martirez, Denise Marie Varquez, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Sheryl Joy P. Olano, Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2012. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***