/raid1/www/Hosts/bankrupt/TCR_Public/120810.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, August 10, 2012, Vol. 16, No. 221
Headlines
1314 BLONDELL: Voluntary Chapter 11 Case Summary
1946 PROPERTY: Files for Chapter 11 in San Antonio
5 STAR: Case Summary & 4 Largest Unsecured Creditors
AE BIOFUELS: Francis Barton Named to Board of Directors
AGRI-SOURCE: Case Summary & 20 Largest Unsecured Creditors
AMERICAN AIRLINES: PSA Group Oppose Kelly Hart as Labor Counsel
AMERICAN AIRLINES: Retiree Committee Taps Segal as Advisor
AMERICAN AIRLINES: Fee Examiner Wins OK for Bernstein as Counsel
AMERICAN AIRLINES: Fee Examiner Wins OK for Stuart as Advisor
AMERICAN AIRLINES: Wage & Hour Claimants Seek Class Certification
AMG CAPITAL: Fitch Puts 'BB-' Rating on Trust Pref. Securities
AXESSTEL INC: Swings to $895,000 Net Income in Second Quarter
BALL GROUND: Has Court's Nod to Hire Ragsdale Beals as Attorney
BALL GROUND: Files Schedules of Assets and Liabilities
BAROLO LTD: Case Summary & 20 Largest Unsecured Creditors
BERNARD L. MADOFF: Ex-Judge Garrity to Mediate With Atty. General
BLENKO GLASS: Natural Gas Price Drop, Strong Sales Cue Rebound
BLAST ENERGY: Clark Moore Discloses 9.9% Equity Stake
BLAST ENERGY: Frank Ingriselli Discloses 32.6% Equity Stake
BLAST ENERGY: Michael Peterson Discloses 7.2% Equity Stake
BLAST ENERGY: Gregory Galdi Discloses 10.1% Equity Stake
BLAST ENERGY: John Liviakis Discloses 6.8% Equity Stake
BLITZ USA: Hires Analysis Research to Evaluate Claims
BLITZ USA: Okayed to Use Cash Collateral for Wind-down
BLITZ USA: SSG Capital Approved as Investment Banker
BLUEGREEN CORP: Reports $13.3-Mil. Net Income in Second Quarter
CALIFORNIA: Not Tightening Municipal Bankruptcy Law
CAPITOL BANCORP: Michigan Lender Pursues Prepack Chapter 11
CAPITOL BANCORP: Case Summary & 20 Largest Unsecured Creditors
CARITAS HEALTH CARE: Wins Confirmation of 3% Liquidating Plan
CATALYST PAPER: Obtains $175MM ABL and $80MM Exit Commitments
CCO HOLDINGS: Moody's Rates $100MM Senior Unsecured Notes 'B1'
CERIDIAN CORP: Moody's Says Refinancing Plan Credit Positive
CHARTER COMMUNICATIONS: S&P Rates New $1BB Senior Notes 'BB-'
CLEARWIRE CORP: Glenn Dubin Owns 7.4% of Class A Shares
COLUMBIA ENVIRONMENTAL: Chapter 11 Trustee Takes Over
COLUMBIA ENVIRONMENTAL: Files Schedules of Assets and Liabilities
COLUMBIA ENVIRONMENTAL: Files List of Largest Unsecured Creditors
COMMUNITY HEALTH: Fitch Rates $1.25-Bil. Sr. Secured Notes 'BB+'
COMMUNITY HEALTH: Moody's Rates Proposed Sr. Secured Notes 'Ba3'
CONSTELLATION BRANDS: Fitch Rates $650-Mil. Senior Notes 'BB+'
CORNERSTONE HEALTHCARE: Moody's Assigns 'B2' CFR; Outlook Stable
CUI GLOBAL: Incurs $714,885 Net Loss in Second Quarter
DAFFY'S INC: Wins Approval to Hire Liquidators
DBY INVESTMENTS: Case Summary & Largest Unsecured Creditor
DEAN FOODS: Subsidiary's IPO No Effect on Fitch's Ratings
DEAN FOODS: Moody's Reviews 'Ba3' CFR for Downgrade
DEWEY & LEBOEUF: Keightley Approved as Pension Benefits Counsel
DEWEY & LEBOEUF: On-Site OK'd to Assist in Accounts Liquidation
DIAMONDHEAD INNS: Voluntary Chapter 11 Case Summary
DVORKIN HOLDINGS: Files for Chapter 11 in Chicago
EASTMAN KODAK: Apple Tries Again to Oust Bankr. Judge From Suit
EMISPHERE TECHNOLOGIES: Posts $2.76MM Net Income in 2nd Quarter
ENERGY FUTURE: Approves Amendments to Retirement Plans
EP ENERGY: Moody's Assigns 'B2' Rating to $300MM Sr. Unsec. Notes
EXTENDED STAY: Court to Hold Conference on Bid to Replace Trustee
FLETCHER INTERNATIONAL: Injunction Extended on Bermuda Bankruptcy
FRONTIER COMMS: Fitch Rates $500-Mil. Sr. Unsecured Notes at 'BB+'
FRONTIER COMMS: Moody's Rates Proposed $500MM Note Issuance 'Ba2'
FRONTIER COMMS: S&P Rates Proposed $500MM Sr. Notes Due 2023 'BB'
FUSION TELECOMMUNICATIONS: Jack Rosen Joins Board of Directors
GAYLORD ENTERTAINMENT: Share Repurchase No Effect on Moody's CFR
GENERAL MOTORS: Trial Allegedly Threatens Reorganization
GENMAR HOLDINGS: Ozark Waste Management Board to Pay Claim
GLOBAL AVIATION: Decision Describes Who's An Insider
GLOBAL CLEAN: Posts $983,800 Net Loss in Second Quarter
GREEK PEAK: Lender's Demise Prompts Bankruptcy Filing
GAMETECH INTERNAIONAL: Has OK to Hire Kinetic as Financial Advisor
GREENMAN TECHNOLOGIES: Now Known as "American Power Group Corp."
GULF COLORADO: Files Schedules of Assets and Liabilities
GULF COLORADO: Can Operate Railway Pending Appointment of Trustee
HAMPTON ROADS: Incurs $5.6 Million Net Loss in Second Quarter
HEALTHEAST CARE: S&P Raises Rating on Various Bonds From 'BB+'
HMC/CAH CONSOLIDATED: Can Hire CBIZ to Provide Appraisal Services
HMC/CAH CONSOLIDATED: Court Extends Solicitation Period to Oct. 5
HMC/CAH: Can Employ Royal Blue as Capital Investment Consultant
HMC/CAH: Can Obtain Equipment Financing From Fukuda Denshi USA
HSN INC: S&P Withdraws 'BB' CCR After Senior Note Redemption
INDEPENDENCE TAX IV: Reports $1.96-Mil. Net Income in June 30 Qtr.
INFUSYSTEM HOLDINGS: Incurs $828,000 Net Loss in Second Quarter
INTERACTIVE DATA: S&P Raises CCR to 'B+' on Moderating Leverage
ISTAR FINANCIAL: Files Form 10-Q, Incurs $51.MM Net Loss in Q2
JACOBSEN APPLIANCES: Voluntary Chapter 11 Case Summary
K-V PHARMACEUTICAL: Nearing Agreement on Cash Use
KNIGHT CAPITAL: Operations Close to 100%, CEO Says
LEA POWER: Fitch Affirms 'BB+' Rating on $305-Mil. Senior Bonds
LEHMAN BROTHERS: Judge Won't Reinstate Some Claims vs. JPMorgan
LEVEL 3: Subsidiary Completes Offering of $775MM Senior Notes
LIGHTSQUARED INC: Harbinger Calls Lenders' Suits "Nonsense"
LON MORRIS: Files Schedules of Assets and Liabilities
MACROSOLVE INC: Owns 6.8% of DecisionPoint Common Stock
MANAGED HEALTH: Moody's Affirms 'B2' CFR/PDR; Outlook Negative
MARVEST LLC: Case Summary & 4 Unsecured Creditors
MEDFORD VILLAGE: Files for Chapter 11 in Camden
MEDIACOM BROADBAND: Moody's Rates $200MM 1st Lien Term Loan 'Ba3'
MEDIACOM BROADBAND: S&P Rates Proposed $200MM Term Loan G 'BB-'
MEDICAL ALARM: Agrees to Cancel 61.5 Million Warrants
MGM RESORTS: Incurs $145.4 Million Net Loss in Second Quarter
MPG OFFICE: Robert Maguire Equity Stake Down to 1.5%
MPG OFFICE: HG Vora Discloses 6.1% Equity Stake
MICROVISION INC: Posts $5.0-Mil. Net Loss in Second Quarter
MOHEGAN TRIBAL: Casino Deal No Impact on Moody's 'Caa1' Rating
MOMENTIVE PERFORMANCE: Incurs $88 Million Net Loss in Fiscal Q2
MOMENTIVE SPECIALTY: Reports $28-Mil. Net Income in 2nd Quarter
MORGANS HOTEL: To Launch Delano at Mandalay Bay, Las Vegas
MORTGAGE GUARANTY: Moody's Cuts Financial Strength Rating to 'B2'
NEXSTAR BROADCASTING: Reports $8.8 Million Net Income in Q2
NEXTWAVE WIRELESS: Allen Salmasi Discloses 18.1% Equity Stake
MOUNTAIN PROVINCE: Permitting of Gahcho Kue Project on Schedule
OIL STATES: Moody's Affirms 'Ba2' CFR; Outlook Positive
ONE CALL: S&P Gives 'B' Corporate Credit Rating; Outlook Stable
OVERLAND STORAGE: Southwell Partners Discloses 5.5% Equity Stake
OZZIR PROPERTIES: Bankruptcy Filing Blocks Foreclosure Auction
PINNACLE AIRLINES: Moves to Halt Shareholders' Meeting
QIMONDA RICHMOND: Court Rules on Wells Fargo, Macquarie Claim
QUALITY DISTRIBUTION: Reports $28.8MM Net Income in 2nd Quarter
R.R. DONNELLEY: Fitch Affirms 'BB+' IDR; Outlook Negative
RE LOANS: Judge Isgur Discusses Scope of Removal Deadline
REALOGY CORP: Incurs $24 Million Net Loss in Second Quarter
REGAL ENTERTAINMENT: Files Form 10-Q, Posts $37.2MM Income in Q2
RESIDENTIAL CAPITAL: Ruling on $17.8-Mil. Incentive Plan Deferred
RESIDENTIAL CAPITAL: Chapter 11 Examiner Submits Work Plan
RESIDENTIAL CAPITAL: Proposes Nov. 9 Claims Bar Date
RESIDENTIAL CAPITAL: Aug. 16 Hearing on Ally Servicing Pact
RESIDENTIAL CAPITAL: Creditors Committee Opposes Bradley Hiring
RESIDENTIAL CAPITAL: FHFA Wants Access to Loan Files
ROOMSTORE INC: Closes Store Off Durham-Chapel Hill Location
RYAN INTERNATIONAL: Hiring Ex-Frontier CEO Jeff Potter as CRO
RYLAND GROUP: Files Form 10-Q; Posts $6-Mil. Net Income in Q2
SANTA YSABEL: Files Schedules of Assets and Liabilities
SCO GROUP: Administratively Insolvent, Chapter 7 Conversion Sought
SERVICEMASTER CO: Moody's Rates Senior Unsecured Notes 'B3'
SERVICEMASTER CO: S&P Rates New $300MM Senior Notes 'B-'
SHOREBANK CORPORATION: Effective Date of Plan Occurred June 29
SIRIUS XM: Moody's Raises CFR to 'B1'; Rates New Sr. Notes 'B1'
SIRIUS XM: S&P Rates Proposed Sr. Unsecured Notes Due 2022 'BB'
SL GREEN: Fitch Rates $200-Mil. Preferred Stock at 'BB-'
SOUPMAN INC: Extends Forbearance with Penny Hart Until Aug. 2012
STEWART INFORMATION: Fitch Keeps 'BB+' Rating on $65-Mil. Notes
THOMPSON INSURANCE: Case Summary & 4 Largest Unsecured Creditors
TRIUS THERAPEUTICS: Incurs $14.4 Million Net Loss in 2nd Quarter
TROY DOWNTOWN: S&P Lowers Rating on Junior & Senior Bonds to 'CCC'
TRUE BEGINNINGS: May Not Be Able to Pay Debt to Insider
TULE RIVER: Case Summary & 25 Largest Unsecured Creditors
USG CORP: Inks Agreement to Sell European Businesses for $80-Mil.
VERENIUM CORPORATION: Posts $2.5-Mil. Net Loss in Second Quarter
VERISK ANALYTICS: Argus Deal No Impact on Moody's 'Ba1' Rating
VITESSE SEMICONDUCTOR: Posts $4.7-Mil. Net Income in Fiscal Q3
WARNER CHILCOTT: Moody's Rates New Senior Bank Facilities 'Ba3'
WEZBRA DAIRY: Sec. 341 Creditors' Meeting Set for Sept. 20
WHITESTAR DAIRY: Case Summary & 25 Largest Unsecured Creditors
WHITTINGTON LLC: Case Summary & 3 Unsecured Creditors
YNS ENTERPRISE: Schedules and Statement Due Aug. 20
* No Exemption for Equity Created by Defective Mortgage
* Company Officer Has Fiduciary Duties to Creditors
* BOOK REVIEW: Inside Investment Banking, Second Edition
*********
1314 BLONDELL: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: 1314 Blondell Avenue Corp.
1314 Blondell Avenue
Bronx, NY 10481
Bankruptcy Case No.: 12-13386
Chapter 11 Petition Date: August 8, 2012
Court: United States Bankruptcy Court
Southern District of New York (Manhattan)
Judge: Shelley C. Chapman
Debtor's Counsel: Daniel Scott Alter, Esq.
360 Westchester Avenue #316
Port Chester, NY 10573
Tel: (914) 934-2248
E-mail: dsa315@mac.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
The Debtor did not file a list of its largest unsecured creditors
together with its petition.
The petition was signed by Robert Van Zandt, president.
1946 PROPERTY: Files for Chapter 11 in San Antonio
--------------------------------------------------
1946 Property, LLC, filed a bare-bones Chapter 11 petition (Bankr.
W.D. Tex. Case No. 12-52489) in San Antonio. The Debtor, a Single
Asset Real Estate as defined in 11 U.S.C. Sec. 101(51B), owns
property in 1946 Northeast Loop 410, in San Antonio.
5 STAR: Case Summary & 4 Largest Unsecured Creditors
----------------------------------------------------
Debtor: 5 Star Insurance Tax & Property Management Inc.
8179 West University Drive
Apartment 96
Fort Lauderdale, FL 33321
Bankruptcy Case No.: 12-29109
Chapter 11 Petition Date: August 8, 2012
Court: United States Bankruptcy Court
Southern District of Florida (Fort Lauderdale)
Judge: John K. Olson
Debtor's Counsel: Brett A. Elam, Esq.
THE LAW OFFICES OF BRETT A. ELAM, P.A.
105 S Narcissus Ave # 802
West Palm Beach, FL 33401
Tel: (561) 833-1113
E-mail: belam@brettelamlaw.com
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
A copy of the Company's list of its four largest unsecured
creditors filed together with the petition is available for free
at http://bankrupt.com/misc/flsb12-29109.pdf
The petition was signed by Dedrie Thompson, president.
Affiliates that filed separate Chapter 11 petitions:
Petition
Debtor Case No. Date
------ -------- ----
Dedrie Thompson 12-28678 08/01/12
Thompson Insurance Agency, Inc. 12-29106 08/08/12
AE BIOFUELS: Francis Barton Named to Board of Directors
-------------------------------------------------------
The Board of Directors of Aemetis, Inc., formerly known as AE
Biofuels Inc., appointed Francis Barton to the Company's board of
directors.
From 2008 to present, Mr. Barton served as Chief Executive Officer
in the consulting firm Barton Business Consulting LLC. Prior to
this, Mr. Barton served as the Executive Vice President and Chief
Financial Officer of UTStarcom, Inc., from 2005 through 2008 and
as a director from 2006 through 2008. From 2003 to 2005, Mr.
Barton was Executive Vice President and Chief Financial Officer of
Atmel Corporation. From 2001 to 2003, Mr. Barton was Executive
Vice President and Chief Financial Officer of Broadvision Inc.
From 1998 to 2001, Mr. Barton was Senior Vice President and Chief
Financial Officer of Advanced Micro Devices, Inc. From 1996 to
1998, Mr. Barton was Vice President and Chief Financial Officer of
Amdahl Corporation. From 1974 to 1996, Mr. Barton worked at
Digital Equipment Corporation, beginning his career as a financial
analyst and moving his way up through various financial roles to
Vice President and Chief Financial Officer of Digital Equipment
Corporation's Personal Computer Division.
Mr. Barton holds a B.S. in Interdisciplinary Studies with a
concentration in Chemical Engineering from Worcester Polytechnic
Institute and an M.B.A. with a focus in finance from Northeastern
University. Mr. Barton served on the board of directors of ON
Semiconductor from 2008 to 2011. Mr. Barton will also serve as
the Chair of the Audit Committee and as a member of the
Governance, Compensation and Nominating Committee. His experience
as Executive Vice President and Chief Financial Officer as well as
his extensive financial background qualify him for the
appointment.
In connection with his service as a director and subject to the
Company's director compensation policy, Mr. Barton is eligible to
receive the Company's standard non-employee director cash and
equity compensation. Mr. Barton will receive a pro rata portion
of the $75,000 annual retainer for his service as a Board member
and a pro-rated portion of the $20,000 annual retainer for his
service as Chair of the Audit Committee through the remaining
portion of the year ending Dec. 31, 2012. He will receive fees of
$250 per board and committee meeting attended. Pursuant to the
Company's director compensation policy, Mr. Barton is eligible to
receive an initial stock option grant of 100,000 shares of the
Company's common stock pursuant to the Company's Amended and
Restated 2007 Stock Plan. The grant of the foregoing stock option
to Mr. Barton is subject to the Company becoming current with its
periodic filings under the Securities Exchange Act of 1934.
On Aug. 2, 2012, the Board accepted the resignation of Michael L.
Peterson from the Board due to Mr. Peterson's time constraints and
his decision to focus his attention on his work with Pacific
Energy Development Corp. Mr. Peterson served as the Chair of the
Audit Committee and a member of the Governance, Compensation and
Nominating Committee.
About AE Biofuels
AE Biofuels, Inc. (OTC BB: AEBF) -- http://www.aebiofuels.com/--
is a biofuels company based in Cupertino, California, developing
sustainable solutions to address the world's renewable energy
needs. The Company is commercializing its patent-pending next-
generation cellulosic ethanol technology that enables the
production of biofuels from both non-food and traditional
feedstocks. Its wholly-owned Universal Biofuels subsidiary built
and operates a nameplate 50 million gallon per year biodiesel
production facility on the east coast of India.
The Company reported a net loss of $1.72 million on $1.59 million
of sales for the three months ended Sept. 30, 2010, compared with
a net loss of $3.78 million on $4.05 million of sales for the same
period a year earlier.
BDO Seidman, LLP, in San Jose, Calif., expressed substantial doubt
about AE Biofuels' ability to continue as a going concern,
following the Company's 2009 results. The independent auditors
noted that the Company has incurred recurring losses, and has a
working capital deficit and total stockholders' deficit as of
Dec. 31, 2009.
The Company's balance sheet at Sept. 30, 2010, showed
$20.23 million in total assets, $29.03 million in total
liabilities, all current, and a stockholders' deficit of
$8.80 million. The Company has not filed financial reports after
filing its Form 10-Q for the quarter ended Sept. 30, 2010.
AGRI-SOURCE: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Agri-Source Fuels, LLC
120 E. Main St., Suite A
Pensacola, FL 33523
Bankruptcy Case No.: 12-12205
Chapter 11 Petition Date: August 8, 2012
Court: United States Bankruptcy Court
Middle District of Florida (Tampa)
Debtor's Counsel: Edward J. Peterson, III, Esq.
STICHTER, RIEDEL, BLAIN & PROSSER, PA
110 East Madison Street, Suite 200
Tampa, FL 33602
Tel: (813) 229-0144
Fax: (813) 229-1811
E-mail: epeterson@srbp.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $10,000,001 to $50,000,000
A copy of the Company's list of its 20 largest unsecured creditors
is available for free at http://bankrupt.com/misc/flmb12-12205.pdf
The petition was signed by Rodney Sutton, chief executive officer.
AMERICAN AIRLINES: PSA Group Oppose Kelly Hart as Labor Counsel
---------------------------------------------------------------
The Ad Hoc Committee of Passenger Service Agents opposes AMR Corp.
and its affiliates' proposed retention of Kelly Hart & Hallman LLP
as their labor counsel.
The Ad Hoc Committee pointed out that since the Petition Date, the
Debtors had already hired four firms to provide labor law
services. The accumulated legal fees and expenses taxed to the
estate for labor law services is already in the millions of
dollars, the Ad Hoc Committee asserts, and the Debtors, by
proposing to hire Kelly, seek to add further expense.
At a time when the Debtors are cramming drastic cuts in their
basic standards of living down the throats of the PSAs, it is
inappropriate for the estates to simultaneously spend millions of
dollars for lawyers to stop the PSAs from exercising the basic
right to form a labor union, the Ad Hoc Committee argues.
In response, the Debtors clarify that Kelly Hart is already
authorized pursuant to Section 327 of the Bankruptcy Code to
represent the Debtors in labor-related matters pursuant to the
Court's order authorizing the Debtors to employ professionals
used in the ordinary course of business. The Debtors explain
that they filed the application because it appears that Kelly's
fees and expenses will exceed $500,000 over the course of the
Chapter 11 cases.
About American Airlines
AMR Corp. and its subsidiaries including American Airlines, the
third largest airline in the United States, filed for bankruptcy
protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan
on Nov. 29, 2011, after failing to secure cost-cutting labor
agreements.
AMR, previously the world's largest airline prior to mergers by
other airlines, is the last of the so-called U.S. legacy airlines
to seek court protection from creditors.
American Airlines, American Eagle and the AmericanConnection
carrier serve 260 airports in more than 50 countries and
territories with, on average, more than 3,300 daily flights. The
combined network fleet numbers more than 900 aircraft.
The Company reported a net loss of $884 million on $18.02 billion
of total operating revenues for the nine months ended Sept. 30,
2011. AMR recorded a net loss of $471 million in the year 2010, a
net loss of $1.5 billion in 2009, and a net loss of $2.1 billion
in 2008.
AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion
in total assets, $29.55 billion in total liabilities, and a
$4.83 billion stockholders' deficit.
Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the
Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law
Group, Chartered, are on board as special counsel. Rothschild
Inc., is the financial advisor. Garden City Group Inc. is the
claims and notice agent.
Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and
Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP
serve as counsel to the Official Committee of Unsecured Creditors
in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the
co-counsel for conflicts and other matters; Moelis & Company LLC
is the investment banker, and Mesirow Financial Consulting, LLC,
is the financial advisor.
Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by AMR Corp. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
AMERICAN AIRLINES: Retiree Committee Taps Segal as Advisor
----------------------------------------------------------
The committee of American Airlines retired workers has filed an
application seeking Court authority to hire The Segal Company as
its consultant.
As consultant, the firm will assist the retirees committee in its
actuarial analysis of benefit plans and in projecting the cash
flow of AMR's costs related to those plans.
The Segal Company will also assist the retirees committee in
examining any proposed retiree benefit modifications by the
company, participate in meetings and negotiations, and provide
testimony.
The firm will be paid for its services on an hourly basis and
reimbursed of its expenses. The hourly rates range from $440 to
$700 for principals, $325 to $485 for actuaries, $230 to $470 for
benefit consultants, and $230 to $400 for analysts.
The Segal Company does not hold or represent interest adverse to
AMR and its creditors, according to a declaration by Stuart Wohl,
the firm's senior vice-president.
About American Airlines
AMR Corp. and its subsidiaries including American Airlines, the
third largest airline in the United States, filed for bankruptcy
protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan
on Nov. 29, 2011, after failing to secure cost-cutting labor
agreements.
AMR, previously the world's largest airline prior to mergers by
other airlines, is the last of the so-called U.S. legacy airlines
to seek court protection from creditors.
American Airlines, American Eagle and the AmericanConnection
carrier serve 260 airports in more than 50 countries and
territories with, on average, more than 3,300 daily flights. The
combined network fleet numbers more than 900 aircraft.
The Company reported a net loss of $884 million on $18.02 billion
of total operating revenues for the nine months ended Sept. 30,
2011. AMR recorded a net loss of $471 million in the year 2010, a
net loss of $1.5 billion in 2009, and a net loss of $2.1 billion
in 2008.
AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion
in total assets, $29.55 billion in total liabilities, and a
$4.83 billion stockholders' deficit.
Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the
Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law
Group, Chartered, are on board as special counsel. Rothschild
Inc., is the financial advisor. Garden City Group Inc. is the
claims and notice agent.
Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and
Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP
serve as counsel to the Official Committee of Unsecured Creditors
in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the
co-counsel for conflicts and other matters; Moelis & Company LLC
is the investment banker, and Mesirow Financial Consulting, LLC,
is the financial advisor.
Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by AMR Corp. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
AMERICAN AIRLINES: Fee Examiner Wins OK for Bernstein as Counsel
----------------------------------------------------------------
Robert Keach, Esq., the fee examiner appointed in AMR Corp.'s
bankruptcy case, obtained a court order approving the hiring of
Bernstein Shur Sawyer & Nelson, P.A. as his counsel.
As the Fee Examiner's counsel, Bernstein Shur will:
(a) review the fee applications and related invoices for
compliance with the applicable provisions of the
Bankruptcy Code, the Bankruptcy Rules, the U.S. Trustee
Guidelines, and the Local Rules and Orders of the Court;
(b) assist the Fee Examiner in any hearings or other
proceedings before the Court to consider the Fee
Applications including, without limitation, advocating
positions asserted in the reports filed by the Fee
Examiner and on behalf of the Fee Examiner;
(c) assist the Fee Examiner with legal issues raised by
inquiries to and from the Retained Professionals and any
other professional services provider retained by the Fee
Examiner;
(d) where necessary, attend meetings between the Fee
Examiner and the Retained Professionals;
(e) assist the Fee Examiner with the preparation of
preliminary and final reports regarding professional fees
and expenses;
(f) assist the Fee Examiner in developing protocols and making
reports and recommendations; and
(g) provide other services as the Fee Examiner may seek.
Bernstein Shur will be paid according to its professionals'
customary hourly rates that range from $490-330 for shareholders;
$250-$160 for associates; and $140-$110 for paraprofessionals.
The firm will also be reimbursed for expenses incurred. The
specific professionals who will be assigned in this engagement
are:
Name Title Rate per Hour
---- ----- -------------
Robert J. Keach Shareholder $490
Paul McDonald Shareholder $385
Leonard M. Gulino Shareholder $355
Michael A. Fagone Shareholder $340
David S. Anderson Shareholder $340
Jennifer Rood Shareholder $330
Jessica A. Lewis Associate $250
Halliday Moncure Associate $220
Jeremy Fischer Associate $200
Maire B. Corcoran Associate $190
Ellen M. Palminteri Associate $160
Angela Stewart Paralegal $140
Kathleen Sawyer Paralegal $110
Mr. Keach attests Bernstein Shur is a "disinterested person" as
the term is defined in Section 101(14) of the Bankruptcy Code.
About American Airlines
AMR Corp. and its subsidiaries including American Airlines, the
third largest airline in the United States, filed for bankruptcy
protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan
on Nov. 29, 2011, after failing to secure cost-cutting labor
agreements.
AMR, previously the world's largest airline prior to mergers by
other airlines, is the last of the so-called U.S. legacy airlines
to seek court protection from creditors.
American Airlines, American Eagle and the AmericanConnection
carrier serve 260 airports in more than 50 countries and
territories with, on average, more than 3,300 daily flights. The
combined network fleet numbers more than 900 aircraft.
The Company reported a net loss of $884 million on $18.02 billion
of total operating revenues for the nine months ended Sept. 30,
2011. AMR recorded a net loss of $471 million in the year 2010, a
net loss of $1.5 billion in 2009, and a net loss of $2.1 billion
in 2008.
AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion
in total assets, $29.55 billion in total liabilities, and a
$4.83 billion stockholders' deficit.
Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the
Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law
Group, Chartered, are on board as special counsel. Rothschild
Inc., is the financial advisor. Garden City Group Inc. is the
claims and notice agent.
Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and
Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP
serve as counsel to the Official Committee of Unsecured Creditors
in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the
co-counsel for conflicts and other matters; Moelis & Company LLC
is the investment banker, and Mesirow Financial Consulting, LLC,
is the financial advisor.
Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by AMR Corp. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
AMERICAN AIRLINES: Fee Examiner Wins OK for Stuart as Advisor
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized the fee examiner appointed in AMR Corp.'s bankruptcy
case to hire Stuart Maue Mitchell & James, Ltd. as his consultant.
As the Fee Examiner's consultant, Stuart Maue will:
(a) assist the Fee Examiner in analyzing the fee applications
of the retained professionals, to the extent the Fee
Examiner determines such assistance is appropriate, for
compliance with the applicable provisions of the
Bankruptcy Code, the Bankruptcy Rules, the Guidelines, the
Local Rules and any applicable orders of the Court;
(b) assist the Fee Examiner with the preparation of periodic
reports with respect to additional subjects regarding
professional fees and expenses; and
(c) provide other services as the Fee Examiner may seek.
Stuart Maue's professionals will be paid according to their
customary hourly rates ranging from $395 for the lead attorney;
$275 to $375 for legal auditors and senior legal auditors; and
$50 for data control personnel. The Fee Examiner expects that
the bulk of the work done by Stuart Maue will be done by its
lower rate auditors and personnel, and that legal review will be
done largely by the Fee Examiner and professionals employed by
Bernstein, Shur, Sawyer & Nelson, P.A. Stuart Maue will also be
reimbursed for expenses to be incurred.
James P. Quinn, president and chief operating officer of Stuart,
Maue, Mitchell & James, Ltd., declares that his firm is a
"disinterested person" as the term is defined in Section 101(14)
of the Bankruptcy Code.
About American Airlines
AMR Corp. and its subsidiaries including American Airlines, the
third largest airline in the United States, filed for bankruptcy
protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan
on Nov. 29, 2011, after failing to secure cost-cutting labor
agreements.
AMR, previously the world's largest airline prior to mergers by
other airlines, is the last of the so-called U.S. legacy airlines
to seek court protection from creditors.
American Airlines, American Eagle and the AmericanConnection
carrier serve 260 airports in more than 50 countries and
territories with, on average, more than 3,300 daily flights. The
combined network fleet numbers more than 900 aircraft.
The Company reported a net loss of $884 million on $18.02 billion
of total operating revenues for the nine months ended Sept. 30,
2011. AMR recorded a net loss of $471 million in the year 2010, a
net loss of $1.5 billion in 2009, and a net loss of $2.1 billion
in 2008.
AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion
in total assets, $29.55 billion in total liabilities, and a
$4.83 billion stockholders' deficit.
Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the
Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law
Group, Chartered, are on board as special counsel. Rothschild
Inc., is the financial advisor. Garden City Group Inc. is the
claims and notice agent.
Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and
Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP
serve as counsel to the Official Committee of Unsecured Creditors
in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the
co-counsel for conflicts and other matters; Moelis & Company LLC
is the investment banker, and Mesirow Financial Consulting, LLC,
is the financial advisor.
Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by AMR Corp. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
AMERICAN AIRLINES: Wage & Hour Claimants Seek Class Certification
-----------------------------------------------------------------
Two creditors ask the U.S. Bankruptcy Court to certify two
proposed creditor classes of employees of American Airlines, Inc.
The two creditors filed prepetition putative wage-and-hour class
action lawsuits against AA in the Los Angeles Superior Court.
The two putative class action lawsuits are: Case No. BC445119
filed by Lorraine Brown and Case No. BC445997 filed by Margaret
Mooney. The complaints assert claims for the failure to pay
overtime compensation to employees, claims for the failure to
provide proper pay stubs to employees, and claims for unfair
competition.
The creditors seek class certification on the grounds that (i)
the class is so numerous that joinder is impracticable, (ii)
there are questions of law or fact common to the class, (iii)
their claims are typical of the class, and (iv) they will
adequately represent the interests of the class.
Given the stay in the state court actions, the creditors seek to
certify in the Chapter 11 case the classes defined in their wage-
and-hour suits.
The creditors are represented by:
Alan Harris, Esq.
HARRIS & RUBLE
6424 Santa Monica Boulevard
Los Angeles, CA 90038
Tel: (323) 962-3777
Fax: (323) 962-3004
E-mail: aharris@harrisandruble.com
The Debtors objected to the requests, saying the motions are
essentially restatements of arguments for class certification that
were previously denied by a California district court. The
Debtors also argue that the motions fail to request that the
Bankruptcy Court exercise its discretion under Rule 9014 of the
Federal Rules of Bankruptcy Procedure and apply Rule 7023, which
incorporates Rule 23 of the Federal Rules of Civil Procedure
governing class actions, to allow the filing of a class proof of
claim. The motions completely overlook the established precedent
that Rule 7023 does not automatically apply in contested matters
and, instead, requires the commencement of an adversary
proceeding, the Debtors further argue.
The Official Committee of Unsecured Creditors joined in the
Debtors' objection.
About American Airlines
AMR Corp. and its subsidiaries including American Airlines, the
third largest airline in the United States, filed for bankruptcy
protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan
on Nov. 29, 2011, after failing to secure cost-cutting labor
agreements.
AMR, previously the world's largest airline prior to mergers by
other airlines, is the last of the so-called U.S. legacy airlines
to seek court protection from creditors.
American Airlines, American Eagle and the AmericanConnection
carrier serve 260 airports in more than 50 countries and
territories with, on average, more than 3,300 daily flights. The
combined network fleet numbers more than 900 aircraft.
The Company reported a net loss of $884 million on $18.02 billion
of total operating revenues for the nine months ended Sept. 30,
2011. AMR recorded a net loss of $471 million in the year 2010, a
net loss of $1.5 billion in 2009, and a net loss of $2.1 billion
in 2008.
AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion
in total assets, $29.55 billion in total liabilities, and a
$4.83 billion stockholders' deficit.
Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the
Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law
Group, Chartered, are on board as special counsel. Rothschild
Inc., is the financial advisor. Garden City Group Inc. is the
claims and notice agent.
Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and
Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP
serve as counsel to the Official Committee of Unsecured Creditors
in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the
co-counsel for conflicts and other matters; Moelis & Company LLC
is the investment banker, and Mesirow Financial Consulting, LLC,
is the financial advisor.
Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by AMR Corp. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
AMG CAPITAL: Fitch Puts 'BB-' Rating on Trust Pref. Securities
--------------------------------------------------------------
Fitch Ratings has assigned a 'BBB-' rating to Affiliated Managers
Group Inc.'s (AMG) $200 million of senior unsecured retail notes.
The notes have a coupon of 6.375% and will mature on Aug. 15,
2042.
The notes will be callable, in whole or part, at any time on or
after Aug. 15, 2017 at the issuer's option. The notes will rank
equally with AMG's other unsecured debt outstanding. Proceeds from
the issuance will be used to repay borrowings under AMG's
unsecured revolving credit facility, and for general corporate
purposes. As of June 30, 2012, AMG had $195 million outstanding
under its revolving credit facility.
Leverage, measured as gross debt to trailing twelve months (TTM)
adjusted EBITDA, increases moderately to 2.35x at 2Q'12, up from
2.08x at TTM 1Q'12, as AMG borrowed $195 million on its bank
revolver to fund the acquisition of equity interests in Yacktman
Asset Management Co. and Veritable, LP., in 2Q'12. Fitch
calculates AMG's leverage, giving credit for LTM earnings from the
recent acquisitions. Interest coverage, measured as TTM adjusted
EBITDA to interest expense, was 6.76x at 2Q12, a slight decline
from 7.09x at TTM 1Q'12. Both ratios are solidly in line with
AMG's current ratings.
Fitch notes that leverage tends to increase following a large
acquisition, but declines as the integration is completed and the
cash flows are used to reduce debt levels.
Given that a portion of the proceeds from the new issuance will be
used to repay outstanding borrowings under the revolving credit
facility, Fitch does not envision there being a material impact on
the company's leverage levels as a result of the issuance.
Rating Drivers and Sensitivities
AMG's ratings reflects its growing scale in the asset management
space, solid investment performance by its affiliates, strong cash
flow generation, and adequate leverage and interest coverage
ratios. Ratings also factor in the company's inherent exposure to
volatility in broader financial markets.
Improvement in current leverage and interest coverage metrics and
consistent operating and investment performance could lead to
positive rating action. Conversely, aggressive acquisitions
funded by increased debt levels, material deterioration in
leverage or interest coverage ratios, sustained investment
underperformance at major affiliates, significant increase in
equity puts by affiliates leading to liquidity issues, and/or
unexpected operational losses or significant net outflows, could
lead to negative rating action.
Fitch currently rates AMG as follows:
Affiliated Managers Group Inc.
-- Long-term Issuer Default Rating (IDR) 'BBB-';
-- Senior bank credit facility 'BBB-';
-- Senior convertible notes 'BBB-'.
AMG Capital Trust I
AMG Capital Trust II
-- Trust preferred securities 'BB-'.
The Rating Outlook is Stable.
AXESSTEL INC: Swings to $895,000 Net Income in Second Quarter
------------------------------------------------------------
Axesstel Inc. filed its quarterly report on Form 10-Q, reporting
net income of $895,511 on $15.53 million of revenues for the three
months ended June 30, 2012, compared with a net loss of $687,264
on $7.54 million of revenues for the same period last year.
For the six months ended June 30, 2012, the Company reported net
income of $1.37 million on $27.56 million of revenues, compared
with a net loss of $1.23 million on $20.18 million of revenues for
the six months ended June 30, 2011.
The Company's balance sheet at June 30, 2012, showed
$14.96 million in total assets, $25.03 million in total current
liabilities, and a shareholders' equity of $10.07 million.
According to the regulatory filing, the Company is currently past
due in payments to one of our contract manufacturers. "At
June 30, 2012, we owed this manufacturer $8.0 million
($8.8 million at Dec. 31, 2011) which was past due under our open
credit terms. We entered into an arrangement with this
manufacturer for 2011 in which we agreed to pay for products
(along with a premium to bring down the past due amount) within
three days of shipment. We complied with this agreement during
2011, but it has since expired. We are continuing to make
payments to bring down the amount owed to this manufacturer, but
do not have any formal plan or standstill agreement in place. We
do not currently expect to place additional orders for products
with this manufacturer in 2012. A collection action from this
contract manufacturer, or any significant change in credit terms
from our other contract manufacturers, could disrupt our ability
to accept and fulfill purchase orders and negatively impact our
results of operations."
As reported in the TCR on Feb. 23, 2012, Gumbiner Savett Inc., in
Santa Monica, Calif., expressed substantial doubt about Axesstel'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 although the Company generated net income in
2011, the Company has historically incurred substantial losses
from operations and the Company may not have sufficient working
capital or outside financing available to meet its planned
operating activities over the next twelve months. "Additionally,
there is uncertainty as to the impact that the worldwide economic
downturn may have on the Company's operations."
A copy of the Form 10-Q is available for free at:
http://is.gd/kSCGca
Axesstel Inc., based in San Diego, Calif., develops fixed wireless
voice and broadband access solutions for the worldwide
telecommunications market. The Company's product portfolio
includes fixed wireless phones, wire-line replacement terminals,
and 3G and 4G broadband gateway devices used to access voice
calling and high-speed data services.
BALL GROUND: Has Court's Nod to Hire Ragsdale Beals as Attorney
---------------------------------------------------------------
Ball Ground Recycling, LLC, obtained permission from the U.S.
Bankruptcy Court for the Northern District of Georgia to employ
Ragsdale, Beals, Seigler, Patterson & Gray LLP as attorney.
Ragsdale Beals will, among other things, prepare pleadings and
applications and conduct investigations incidental to the
administration of the Debtor's estate, and develop the
relationships of Debtor to its secured creditors, unsecured
creditors and other interested parties.
To the best of the Debtor's knowledge, Ragsdale Beals is a
"disinterested person" as that term is defined Section 101(14) of
the Bankruptcy Code.
About Ball Ground
Based in Canton, Georgia, Ball Ground Recycling, LLC, a wood
recycling company, filed for Chapter 11 protection (Bankr. N.D.
Ga. Case No. 12-63101) on May 25, 2012. Judge Margaret Murphy
presides over the case. The Debtor estimated both assets and
debts of between $10 million and $50 million.
BALL GROUND: Files Schedules of Assets and Liabilities
------------------------------------------------------
Ball Ground Recycling, LLC, filed with the U.S. Bankruptcy Court
for the Northern District of Georgia its schedules of assets and
liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property None
B. Personal Property None
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $0
E. Creditors Holding
Unsecured Priority
Claims $0
F. Creditors Holding
Unsecured Non-priority
Claims $2,422,921
----------- -----------
TOTAL $0 $2,422,921
Ball Ground, a wood recycling company, estimated assets and debts
of $10 million to $50 million in the Chapter 11 petition.
A full text copy of the schedules of assets and liabilities is
available for free at http://bankrupt.com/misc/BALL_GROUND_sal.pdf
About Ball Ground
Based in Canton, Georgia, Ball Ground Recycling, LLC, a wood
recycling company, filed for Chapter 11 protection (Bankr. N.D.
Ga. Case No. 12-63101) on May 25, 2012. Judge Margaret Murphy
presides over the case. Ragsdale, Beals, Seigler, Patterson &
Gray LLP serves as the Debtor's counsel.
BAROLO LTD: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Barolo, Ltd.
398 West Broadway
New York, NY 10012
Bankruptcy Case No.: 12-13389
Chapter 11 Petition Date: August 8, 2012
Court: United States Bankruptcy Court
Southern District of New York (Manhattan)
Judge: Allan L. Gropper
Debtor's Counsel: Randall S. D. Jacobs, Esq.
RANDALL S. D. JACOBS, PLLC
110 Wall Street, 11th Floor
New York, NY 10005
Tel: (212) 709-8116
Fax: (973) 226 8897
E-mail: rsdjacobs@chapter11esq.com
Scheduled Assets: $6,427,398
Scheduled Liabilities: $3,117,991
A copy of the Company's list of its 20 largest unsecured creditors
filed together with the petition is available for free at
http://bankrupt.com/misc/nysb12-13389.pdf
The petition was signed by Paolo Secondo, president.
BERNARD L. MADOFF: Ex-Judge Garrity to Mediate With Atty. General
-----------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that former bankruptcy judge James L. Garrity Jr. was
selected to serve as mediator in a lawsuit where the trustee
liquidating Bernard L. Madoff Investment Securities LLC is
attempting to stop California Attorney General Kamala Harris and
individual plaintiffs from proceeding with four lawsuits against
the estate of Stanley Chais.
According to the report, when the parties were unable to agree on
a mediator, Bankruptcy Judge Burton R. Lifland tapped Mr. Garrity,
who was a bankruptcy judge in Manhattan from 1991 to 1999. It
remains to be seen whether Judge Lifland will call on Mr. Garrity
to serve as mediator in the new lawsuit begun on Aug. 1 by Madoff
trustee Irving Picard against New York Attorney General Eric
Schneiderman.
The report notes Mr. Picard is attempting to stop both attorneys
general, contending they are suing Madoff cohorts Chais and J.
Ezra Merkin on the same claims the trustee is already asserting.
Mr. Picard argues it's improper for the attorneys general to
direct recoveries only to citizens of their states. Mr. Picard
also contends that success by the attorneys general would disable
the Chais estate and Mr. Merkin from paying judgments to benefit
all Madoff victims.
The lawsuit with Attorney General Harris is Picard v. Hall,
12-01001, U.S. Bankruptcy Court, Southern District New York
(Manhattan). With Schneiderman, it's Picard v. Schneiderman,
12-01778, in the same court.
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.
BLENKO GLASS: Natural Gas Price Drop, Strong Sales Cue Rebound
--------------------------------------------------------------
The Associated Press reports that Blenko Glass Co. is rebounding
after seeking Chapter 11 bankruptcy protection in 2011.
According to AP, Blenko Vice President Katie Trippe told the
Sunday Gazette-Mail that the Milton glassmaker has benefited from
a recent drop in natural gas prices and a surge in sales. Ms.
Trippe said the company is making a strong effort to move forward.
Blenko Glass Company filed a Chapter 11 petition (Bankr. S.D.
W.Va. Case No. 11-30332) on May 12, 2011. Steven L. Thomas, Esq.,
at Kay Casto & Chaney PLLC, in Charleston, West Virginia, serves
as counsel. The Debtor estimated up to $1 million in assets and
up to $10 million in liabilities.
BLAST ENERGY: Clark Moore Discloses 9.9% Equity Stake
-----------------------------------------------------
In a Schedule 13D filing with the U.S. Securities and Exchange
Commission, Clark R. Moore disclosed that, as of July 27, 2012, he
beneficially owns 1,955,000 shares of common stock of PEDEVCO
CORP., formerly known as Blast Energy Services, Inc., representing
9.9% of the shares outstanding. A copy of the filing is available
for free at http://is.gd/Qc7mbY
About Blast Energy
Houston, Texas-based Blast Energy Services, Inc., is seeking to
become an independent oil and gas producer with additional revenue
potential from its applied fluid jetting technology. The Company
plans to grow operations initially through the acquisition of oil
producing properties and then eventually, to acquire oil and gas
properties where its applied fluid jetting process could be used
to increase the field production volumes and value of the
properties in which it owns an interest.
In the auditors' report accompanying the financial statements for
year ended Dec. 31, 2011, GBH CPAs, PC, in Houston, Texas,
expressed substantial doubt about Blast Energy Services' ability
to continue as a going concern. The independent auditors noted
that Blast incurred a loss from continuing operations for 2011,
and has an accumulated deficit at Dec. 31, 2011.
The Company reported a net loss of $4.14 million for 2011,
compared with a net loss of $1.51 million for 2010.
The Company's balance sheet at March 31, 2012, showed
$1.86 million in total assets, $3.98 million in total liabilities,
and a $2.11 million total stockholders' deficit.
BLAST ENERGY: Frank Ingriselli Discloses 32.6% Equity Stake
-----------------------------------------------------------
In a Schedule 13D filing with the U.S. Securities and Exchange
Commission, Frank C. Ingriselli disclosed that, as of July 27,
2012, he beneficially owns 6,386,668 shares of common stock of
PEDEVCO CORP., formerly known as Blast Energy Services, Inc.,
representing 32.6% of the shares outstanding. Global Venture
Investments LLC beneficially, a limited liability company owned
and controlled by Mr. Ingriselli, owns 2,386,668 common shares. A
copy of the filing is available for free at http://is.gd/62OEmS
About Blast Energy
Houston, Texas-based Blast Energy Services, Inc. (OTCBB:BESV) is a
U.S. publicly-traded operating oil and gas company engaged in the
exploration and production of petroleum resources in the U.S. and
the development and commercialization of a patented applied fluid
jetting down-hole stimulation technology.
In the auditors' report accompanying the financial statements for
year ended Dec. 31, 2011, GBH CPAs, PC, in Houston, Texas,
expressed substantial doubt about Blast Energy Services' ability
to continue as a going concern. The independent auditors noted
that Blast incurred a loss from continuing operations for 2011,
and has an accumulated deficit at Dec. 31, 2011.
The Company reported a net loss of $4.14 million for 2011,
compared with a net loss of $1.51 million for 2010.
The Company's balance sheet at March 31, 2012, showed $1.86
million in total assets, $3.98 million in total liabilities and a
$2.11 million total stockholders' deficit.
BLAST ENERGY: Michael Peterson Discloses 7.2% Equity Stake
----------------------------------------------------------
In a Schedule 13D filing with the U.S. Securities and Exchange
Commission, Michael L. Peterson disclosed that, as of July 27,
2012, he beneficially owns 1,503,686 shares of common stock of
PEDEVCO CORP., formerly known as Blast Energy Services, Inc.,
representing 7.2% of the shares outstanding. A copy of the filing
is available for free at http://is.gd/XgNjRv
About Blast Energy
Houston, Texas-based Blast Energy Services, Inc. (OTCBB:BESV) is a
U.S. publicly-traded operating oil and gas company engaged in the
exploration and production of petroleum resources in the U.S. and
the development and commercialization of a patented applied fluid
jetting down-hole stimulation technology.
In the auditors' report accompanying the financial statements for
year ended Dec. 31, 2011, GBH CPAs, PC, in Houston, Texas,
expressed substantial doubt about Blast Energy Services' ability
to continue as a going concern. The independent auditors noted
that Blast incurred a loss from continuing operations for 2011,
and has an accumulated deficit at Dec. 31, 2011.
The Company reported a net loss of $4.14 million for 2011,
compared with a net loss of $1.51 million for 2010.
The Company's balance sheet at March 31, 2012, showed $1.86
million in total assets, $3.98 million in total liabilities and a
$2.11 million total stockholders' deficit.
BLAST ENERGY: Gregory Galdi Discloses 10.1% Equity Stake
--------------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, Gregory G. Galdi disclosed that, as of July 27, 2012,
he beneficially owns 2,200,000 shares of common stock of PEDEVCO
CORP., formerly known as Blast Energy Services, Inc., representing
10.1% of the shares outstanding. A copy of the filing is
available for free at http://is.gd/4nithb
About Blast Energy
Houston, Texas-based Blast Energy Services, Inc., is seeking to
become an independent oil and gas producer with additional revenue
potential from its applied fluid jetting technology. The Company
plans to grow operations initially through the acquisition of oil
producing properties and then eventually, to acquire oil and gas
properties where its applied fluid jetting process could be used
to increase the field production volumes and value of the
properties in which it owns an interest.
In the auditors' report accompanying the financial statements for
year ended Dec. 31, 2011, GBH CPAs, PC, in Houston, Texas,
expressed substantial doubt about Blast Energy Services' ability
to continue as a going concern. The independent auditors noted
that Blast incurred a loss from continuing operations for 2011,
and has an accumulated deficit at Dec. 31, 2011.
The Company reported a net loss of $4.14 million for 2011,
compared with a net loss of $1.51 million for 2010.
The Company's balance sheet at March 31, 2012, showed $1.86
million in total assets, $3.98 million in total liabilities and a
$2.11 million total stockholders' deficit.
BLAST ENERGY: John Liviakis Discloses 6.8% Equity Stake
-------------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, John Liviakis disclosed that, as of July 27, 2012, he
beneficially owns 1,333,333 shares of common stock of PEDEVCO
CORP., formerly known as Blast Energy Services, Inc., representing
6.8% of the shares outstanding. A copy of the filing is available
for free at http://is.gd/jrN3wk
About Blast Energy
Houston, Texas-based Blast Energy Services, Inc., is seeking to
become an independent oil and gas producer with additional revenue
potential from its applied fluid jetting technology. The Company
plans to grow operations initially through the acquisition of oil
producing properties and then eventually, to acquire oil and gas
properties where its applied fluid jetting process could be used
to increase the field production volumes and value of the
properties in which it owns an interest.
In the auditors' report accompanying the financial statements for
year ended Dec. 31, 2011, GBH CPAs, PC, in Houston, Texas,
expressed substantial doubt about Blast Energy Services' ability
to continue as a going concern. The independent auditors noted
that Blast incurred a loss from continuing operations for 2011,
and has an accumulated deficit at Dec. 31, 2011.
The Company reported a net loss of $4.14 million for 2011,
compared with a net loss of $1.51 million for 2010.
The Company's balance sheet at March 31, 2012, showed $1.86
million in total assets, $3.98 million in total liabilities and a
$2.11 million total stockholders' deficit.
BLITZ USA: Hires Analysis Research to Evaluate Claims
-----------------------------------------------------
Blitz U.S.A. Inc. and its affiliates ask for permission from the
U.S. Bankruptcy Court to employ Analysis Research Planning
Corporation as claims evaluation consultants.
As of the Petition Date, there are 36 pending personal injury
lawsuits in connection with the portable consumer gasoline
containers (PCGCs) sold and manufactured by the Debtors. The
number of lawsuits is small in comparison to the millions of PCGCs
in circulation.
Due to the weight of the claims made in the PCGC suits, the
Debtors have been unable to obtain financing required to continue
operations or the renewal of products liability insurance. The
Debtors thus decided to cease production and sale of PCGCs by
July 31, when the product liability insurance was set to expire.
The Debtors said the treatment of claims asserted against the
Debtors in connection with the PCGC litigation will be a
significant aspect of any plan discussions in the Chapter 11
cases.
Accordingly the Debtors tapped the services of Analysis Research
to, among other things:
(a) advise the Debtors with respect to matters involving PCGC
Claims against the Debtors;
(b) estimate the number and value of, and producing analysis
with respect to, present and future PCGC Claims against the
Debtors; and
(c) assist the Debtors in negotiations with various parties
regarding the Debtors' PCGC liability.
The firm's hourly rates are:
Professional Rates
------------ -----
President/VP/Principals $350 to $500
Managing Directors $275 to $350
Directors $200 to $275
Senior Consultants $150 to $200
Analysts $95 to $125
The firm's Thomas Vasquez attests that the firm is a
"disinterested person" as the term is defined in Section 101(14)
of the Bankruptcy Code.
A hearing on the employment application is scheduled for Aug. 29.
About Blitz U.S.A.
Blitz U.S.A. Inc., is a Miami, Oklahoma-based manufacturer of
plastic gasoline cans. The company, controlled by Kinderhook
Capital Fund II LP, filed for bankruptcy protection to stanch a
hemorrhage resulting from 36 product-liability lawsuits.
Parent Blitz Acquisition Holdings, Inc., and its affiliates filed
for Chapter 11 protection (Bankr. D. Del. Case Nos. 11-13602 thru
11-13607) on Nov. 9, 2011. The Hon. Peter J. Walsh presides over
the case.
Blitz USA disclosed $36,194,434 in assets and $41,428,577 in
liabilities in its schedules.
Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger,
represents the Debtors in their restructuring efforts. The
Debtors tapped Zolfo Cooper, LLC, as restructuring advisor; and
Kurtzman Carson Consultants LLC serves as notice and claims agent.
Lowenstein Sandler PC from Roseland, New Jersey, represents the
Official Committee of Unsecured Creditors.
The Chapter 11 case is financed with a $5 million secured loan
from Bank of Oklahoma. Bank of Oklahoma, as DIP agent, is
represented by Samuel S. Ory, Esq., at Frederic Dorwart Lawyers in
Tulsa.
In April 2012, Hopkins Manufacturing Corp. acquired the assets of
Blitz USA's unit, F3 Brands LLC, a major manufacturer of oil
drains, drain pans, lifting aids and automotive ramps. Blitz USA
said in court documents the sale netted the Debtors $14.6 million,
which was applied against secured debt.
Blitz announced in June that it is abandoning its efforts to
reorganize and instead is vowing to shut down operations by the
end of July.
BLITZ USA: Okayed to Use Cash Collateral for Wind-down
------------------------------------------------------
Judge Peter J. Walsh has entered a final order allowing Blitz USA
Inc., et al., to use cash collateral to:
* satisfy all ordinary course postpetition administrative
expenses through and including the cessation of the Debtors'
operations on July 31, 2012, regardless of whether the
administrative expense claims are asserted prior to July 31;
and
* satisfy all postpetition administrative claims incurred
subsequent to July 31, 2012 through an extended maturity
date.
The Court-approved stipulation signed with the prepetition lenders
for access to cash collateral provides that the lenders are
entitled to adequate protection in an amount equal to the
diminution in value of their collateral. Adequate protection will
be in the form of allowed superpriority administrative expense
claims, replacement liens, and attorneys fees of not more than
$50,000 per month.
About Blitz U.S.A.
Blitz U.S.A. Inc., is a Miami, Oklahoma-based manufacturer of
plastic gasoline cans. The company, controlled by Kinderhook
Capital Fund II LP, filed for bankruptcy protection to stanch a
hemorrhage resulting from 36 product-liability lawsuits.
Parent Blitz Acquisition Holdings, Inc., and its affiliates filed
for Chapter 11 protection (Bankr. D. Del. Case Nos. 11-13602 thru
11-13607) on Nov. 9, 2011. The Hon. Peter J. Walsh presides over
the case.
Blitz USA disclosed $36,194,434 in assets and $41,428,577 in
liabilities in its schedules.
Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger,
represents the Debtors in their restructuring efforts. The
Debtors tapped Zolfo Cooper, LLC, as restructuring advisor; and
Kurtzman Carson Consultants LLC serves as notice and claims agent.
Lowenstein Sandler PC from Roseland, New Jersey, represents the
Official Committee of Unsecured Creditors.
The Chapter 11 case is financed with a $5 million secured loan
from Bank of Oklahoma. Bank of Oklahoma, as DIP agent, is
represented by Samuel S. Ory, Esq., at Frederic Dorwart Lawyers in
Tulsa.
In April 2012, Hopkins Manufacturing Corp. acquired the assets of
Blitz USA's unit, F3 Brands LLC, a major manufacturer of oil
drains, drain pans, lifting aids and automotive ramps. Blitz USA
said in court documents the sale netted the Debtors $14.6 million,
which was applied against secured debt.
Blitz announced in June that it is abandoning its efforts to
reorganize and instead is vowing to shut down operations by the
end of July.
BLITZ USA: SSG Capital Approved as Investment Banker
----------------------------------------------------
Blitz U.S.A. Inc. and its affiliates have received an order from
the U.S. Bankruptcy Court approving the employment of SSG Capital
Advisors LLC as investment banker. The judge held that the
firm's initial fee, monthly fees and the sale fee are approved
pursuant 11 U.S.C. Sec. 328(a). Amounts paid to SSG will not be
counted against the professional fee cap set forth in the order
approving the DIP financing.
About Blitz U.S.A.
Blitz U.S.A. Inc., is a Miami, Oklahoma-based manufacturer of
plastic gasoline cans. The company, controlled by Kinderhook
Capital Fund II LP, filed for bankruptcy protection to stanch a
hemorrhage resulting from 36 product-liability lawsuits.
Parent Blitz Acquisition Holdings, Inc., and its affiliates filed
for Chapter 11 protection (Bankr. D. Del. Case Nos. 11-13602 thru
11-13607) on Nov. 9, 2011. The Hon. Peter J. Walsh presides over
the case.
Blitz USA disclosed $36,194,434 in assets and $41,428,577 in
liabilities in its schedules.
Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger,
represents the Debtors in their restructuring efforts. The
Debtors tapped Zolfo Cooper, LLC, as restructuring advisor; and
Kurtzman Carson Consultants LLC serves as notice and claims agent.
Lowenstein Sandler PC from Roseland, New Jersey, represents the
Official Committee of Unsecured Creditors.
The Chapter 11 case is financed with a $5 million secured loan
from Bank of Oklahoma. Bank of Oklahoma, as DIP agent, is
represented by Samuel S. Ory, Esq., at Frederic Dorwart Lawyers in
Tulsa.
In April 2012, Hopkins Manufacturing Corp. acquired the assets of
Blitz USA's unit, F3 Brands LLC, a major manufacturer of oil
drains, drain pans, lifting aids and automotive ramps. Blitz USA
said in court documents the sale netted the Debtors $14.6 million,
which was applied against secured debt.
Blitz announced in June that it is abandoning its efforts to
reorganize and instead is vowing to shut down operations by the
end of July.
BLUEGREEN CORP: Reports $13.3-Mil. Net Income in Second Quarter
---------------------------------------------------------------
Bluegreen Corporation filed with the U.S. Securities and Exchange
Commission its quarterly report on Form 10-Q disclosing net income
attributable to the Company of $13.26 million on $117.51 million
of revenue for the three months ended June 30, 2012, compared with
a net loss attributable to the Company of $26.70 million on
$104.27 million of revenue for the same period a year ago.
The Company reported net income attributable to the Company of
$18.91 million on $214.68 million of revenue for the six months
ended June 30, 2012, compared with a net loss attributable to the
Company of $24.16 million on $193.72 million of revenue for the
same period during the prior year.
The Company's balance sheet at June 30, 2012, showed $1.04 billion
in total assets, $716.94 million in total liabilities and $325.75
million in total shareholders' equity.
A copy of the Form 10-Q is available for free at:
http://is.gd/DfjhUW
About Bluegreen Corp.
Bluegreen Corporation -- http://www.bluegreencorp.com/-- provides
places to live and play through its resorts and residential
community businesses.
The Company reported a net loss of $17.25 million in 2011,
compared with a net loss of $43.96 million in 2010.
* * *
In December 2010, Standard & Poor's Rating Services raised its
corporate credit rating on Bluegreen Corp to 'B-' from 'CCC'.
CALIFORNIA: Not Tightening Municipal Bankruptcy Law
---------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that California legislators won't consider tightening a
law that didn't prevent three cities from filing bankruptcies in
the space of six weeks.
San Bernardino, California, filed an emergency petition for
municipal bankruptcy under Chapter 9 of the U.S. Bankruptcy Code
(Bankr. C.D. Calif. Case No. 12-28006) on Aug. 1, 2012. San
Bernardino, a city of about 210,000 residents roughly 65 miles
(104 km) east of Los Angeles, estimated assets and debts of more
than $1 billion in the bare-bones bankruptcy petition.
Two other California cities are also in bankruptcy: 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.
CAPITOL BANCORP: Michigan Lender Pursues Prepack Chapter 11
-----------------------------------------------------------
Capitol Bancorp Ltd., a Lansing, Michigan-based lender, filed for
bankruptcy (Bankr. E.D. Mich. Case No. 12-58409) with a
prepackaged reorganization plan after a proposed out-of-court
restructuring failed to obtain enough support.
Capitol Bancorp disclosed total assets of $112.2 million and debt
of $195.6 million. Its largest unsecured creditors are M&T Trust
Co. of Wilmington, Delaware, with $44.4 million in trust preferred
securities, and US Bank of Boston with $22.5 million of similar
securities.
The Debtors said in a court filing that they have (i) no debtor-
in-possession financing and (ii) very limited sources of their own
cash. The Debtors therefore do not expect the Chapter 11 cases to
be protracted.
Prepack Plan
Capitol Bancorp in June commenced a voluntary restructuring plan
in which debtholders were asked to exchange their debt for
preferred and common stock to facilitate new equity investments.
But conditions for the offer were not met.
Capitol simultaneously solicited votes from all debt and equity
holders for a prepackaged Chapter 11 plan of reorganization to be
commenced in the event the exchange offer was not successful. The
Prepack Plan contemplates the conversion of all current trust
preferred security holders, unsecured senior note holders, current
preferred equity shareholders and current common equity
shareholders into new classes of common stock which will retain
53% of the voting control and value of the restructured company.
Capitol said it has been actively seeking to identify external
capital sources sufficient to restore all affiliate institutions
to "well-capitalized" status in exchange for 47% of the
restructured company. The Plan contemplates an equity infusion of
at least $70 million and up to $115 million, pursuant to a
separate equity commitment agreement to be entered into with
third-party investors.
Capitol said holders of senior notes, trust preferred securities,
Series A preferred and common stock overwhelmingly voted to accept
the Prepack Plan.
According to the Disclosure Statement, under the Plan, general
unsecured creditors are unimpaired under the Plan. They are
deemed to have accepted the Plan.
With respect to other claimants and interest-holders, the
estimated recoveries under the Prepackaged Plan are:
Creditor/ Equity
Interest Holder Instrument Value Recovery
--------------- ---------- ----- --------
Senior Notes Class A Common $7MM $100%
($7 million) Class B Common
Trust Pref. Securities HoldCaps $50MM 33%
($151.3 million) Redeemable
Series A Pref. Stock Class A Common $1MM 20%
($5 million) Class B Common
Common Stock Class A Common $15MM N/A
Class B Common
* Holders of the approximately $7 million outstanding in Senior
Notes would receive $7 million in Standby Plan value
consisting of 1/3 in the form of New Capitol Bancorp Class B
Common and 2/3 in the form of New Capitol Bancorp Class A
Common, representing an estimated recovery of 100%.
* Holders of the $151.3 million outstanding in Trust Preferred
Securities would receive $50 million in Standby Plan value
consisting of New Capitol Bancorp Class C Redeemable Common
Stock, representing an estimated recovery of approximately
33% (based on principal balance and on average, accrued
interest may vary for each holder).
* Holders of the $5 million outstanding with respect to the
Company's Series A Preferred Stock would receive $1,000,000
in Standby Plan value consisting of 2/3 in the form of New
Capitol Bancorp Class A Common and 1/3 in the form of
New Capitol Bancorp Class B Common, representing an
estimated recovery of 20%.
* Holders of the Company's Common Stock would receive $15
million in Standby Plan value consisting of shares, 1/3 in
the form of New Capitol Bancorp Class B Common and 2/3 in
the form of New Capitol Bancorp Class A Common
Capitol's Chairman and CEO, Joseph D. Reid stated, "We are pleased
to announce the results of the voting on the proposed voluntary
restructuring plan, which were overwhelmingly favorable. The
initiatives underlying the Standby Plan will provide resolution of
our trust preferred securities and Capitol's senior debt,
facilitating new equity investments in the Corporation. We are
very optimistic about the plan, which will provide benefits to
Capitol and all of its stakeholders. Additionally, the
restructuring plan will help to restore the Corporation's capital
ratios, as well as the capital ratios of our affiliate banks,
providing a more stable platform for future growth and support.
We are enthusiastic as we enter the next phase of the
restructuring plan, and appreciate the continued support from our
many stakeholders."
A copy of the disclosure statement explaining the terms of the
Plan are:
http://bankrupt.com/misc/Capitol_DS_Amendment1.pdf
http://bankrupt.com/misc/Capitol_Plan_Disclosure.pdf
Business as Usual
Capitol filed "first-day motions" that will allow it to continue
its operations in the ordinary course during the plan confirmation
process, which include requests to continue the payment of wages,
salaries and other employee benefits. Capitol has also filed a
motion with the Court requesting that trading in Capitol's senior
notes, trust preferred securities, preferred stock and common
stock be restricted to preserve certain of Capitol's deferred tax
assets.
Capitol submitted the Chapter 11 petition in Detroit on the day
that it announced a net loss of $10.3 million for the quarter
ended June 30, compared with a net loss of $16.4 million the year
before. Revenue was down to $17.6 million in the recent quarter,
from nearly $20.7 million for the corresponding period in 2011.
"Capitol continues to focus on liquidity to manage its balance
sheet in the face of ongoing economic challenges and regulatory
constraints," the company said in its earnings release.
Significant Losses
The Company has incurred significant losses from operations in
periods since 2007. In addition, the Company has experienced
significant increases in nonperforming loans, foreclosed real
estate, loan losses and other adverse circumstances.
As of March 31, 2012, there were several significant adverse
aspects of the Company's consolidated financial position and
results of operations which led to the Company's serious
consideration of a bankruptcy filing. These factors include, but
are not limited to:
* An equity deficit approximating $121.3 million;
* Regulatory capital classification on a consolidated basis as
less than "adequately capitalized" and related negative
amounts and ratios; and
* Numerous banking subsidiaries with regulatory capital
classification as "undercapitalized," or "significantly-
undercapitalized";
* Certain banking subsidiaries which are generally subject to
formal regulatory agreements have received "prompt
corrective action" notifications and/or directives from the
Federal Deposit Insurance Corp.
About Capitol Bancorp
Capitol Bancorp Limited (OTCQB: CBCR), which was founded in 1988,
is a community banking company that has a network of separately
chartered banks in 10 states and executive offices in Lansing,
Michigan.
Capitol previously announced plans to sell its controlling
interests in several affiliate banks. The sales of two of these
banks were completed in July 2012 and Capitol has also entered
into an agreement to sell its interests in one additional
affiliate in the Northwest region of the country. These three
transactions represent nearly $200 million of assets. The pending
divestiture is anticipated to be completed in 2012, pending
regulatory approval and other contingencies.
CAPITOL BANCORP: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Capitol Bancorp Ltd.
aka Capitol Bancorp Limited
Capitol Bancorp Center
200 N. Washington Square
Lansing, MI 48933
Bankruptcy Case No.: 12-58409
Affiliate that simultaneously filed Chapter 11 petition:
Debtor Case No.
------ --------
Financial Commerce Corporation 12-58406
Type of Business: Capitol Bancorp Limited is a $5.1 billion
national community banking company, with a
network of bank operations in 16 states.
Founded in 1988, Capitol Bancorp Limited has
executive offices in Lansing, Michigan and
Phoenix, Arizona.
Web site: http://www.capitolbancorp.com/
Chapter 11 Petition Date: Aug. 9, 2012
Court: U.S. Bankruptcy Court
Eastern District of Michigan (Detroit)
Debtors'
Counsel: Daniel N. Adams, Esq.
Edward Todd Sable, Esq.
Joseph R. Sgroi, Esq.
Judy B. Calton, Esq.
HONIGMAN MILLER SCHWARTZ & COHN LLP
660 Woodward Avenue
2290 First National Building
Detroit, MI 48226
Tel.: (313) 465-7684
E-mail: dadams@honigman.com
tsable@honigman.com
jsgroi@honigman.com
jcalton@honigman.com
Total Assets: $112,211,793 as of June 30, 2012
Total Liabilities: $195,644,527 as of June 30, 2012
The petitions were signed by Cristin K. Reid, corporate president.
Capitol Bancorp's List of Its 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Capital Trust X Trust Preferred $44,408,037
Joan Wilson Securities
M&T Trust Co. of Delaware
1220 N. Market St, Suite 202
Wilmington, DE 19801
Capital Trust VIII Trust Preferred $22,465,393
Damian Kraft Securities
US Bank
1 Federal Street, 3rd Floor
Boston, MA 02110
Capital Trust XI Trust Preferred $21,492,775
Geoffrey J. Lewis Securities
Wilminton Trust Co.
1100 N. Market Street
Wilmington, DE 19890
Capital Trust I Trust Preferred $17,860,310
Mary Callahan Securities
Bank of N York Mellon Trust Co.
2 N. LaSalle Street, Suite 1020
Chicago, IL 60602
Capital Trust III Trust Preferred $17,310,888
Paul Allen Securities
US Bank
1 Federal Street, 3rd Floor
Boston, MA 02110
Capital Trust II Trust Preferred $14,203,652
Mary Callahan Securities
Bank of N York Mellon Trust Co.
2 N. LaSalle St, Suite 1020
Chicago, IL 60602
Capital Trust VII Trust Preferred $13,160,379
Joan Wilson Securities
M&T Trust Co. of Delaware
1220 N. Market St, Suite 202
Wilmington, DE 19801
Capital Trust IX Trust Preferred $13,119,278
Geoffrey J. Lewis Securities
Wilmington Trust Co.
1100 N. Market Street
Wilmington, DE 19890
Capital Trust VI Trust Preferred $11,449,531
Joan Wilson Securities
M&T Trust Co. of Delaware
1220 N. Market St, Suite 202
Wilmington, DE 19801
Capital Trust XII Trust Preferred $9,638,436
Joan Wilson Securities
M&T Trust Co. of Delaware
1220 N. Market St, Suite 202
Wilmington, DE 19801
Capital Trust IV Trust Preferred $3,440,441
Joan Wilson Securities
M&T Trust Co of Delaware
1220 N. Market St, Suite 202
Wilmington, DE 19801
PB & Co. Senior Note $880,986
George Cichoski
Mike Hallewell SEP IRA
240 E 8th Street
Holland, MI 49423
Barels Charitable Remainder Trust Senior Note $504,717
1321 State Street
Santa Barbara, CA 93101
Spa NV Limited Partnership Senior Note $504,717
c/o Hollander Capital Mgmt. Inc.
2539 Turtle Head Peak Dr
Las Vegas, NV 89135
Woolls, Betty Senior Note $504,717
Woolls, Paul
PO Box 436
Oakville, CA 94562
Cason Family Trust Senior Note $340,622
Jack E. Cason TTEE
3208 Ashby
Las Vegas, NV 89102
Sky Bird Travel & Tour Inc. Senior Note $269,193
24701 Swanson
Southfield, MI 48033
Petznick, Jr., Earl Senior Note $252,358
3311 E Paloverde Dr.
Paradise Valley, AZ 85253
James & Erin Essert, TTEE Senior Note $252,358
Essert Living Trust
333 W Solano Drive
Phoenix, AZ 85013
Walker, Marie D Senior Note $231,887
PO Box 26155
Lansing, MI 48909
CARITAS HEALTH CARE: Wins Confirmation of 3% Liquidating Plan
-------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Caritas Health Care Inc. won the signature of the
bankruptcy judge on an Aug. 3 confirmation order approving a
liquidating Chapter 11 plan.
According to the report, the explanatory disclosure statement
approved in March told unsecured creditors they could expect a
recovery of 1% to 3%.
The Chapter 11 plan implements the distribution of the proceeds of
asset sales to holders of allowed claims, and provides for
liquidation of any remaining assets and a process for recovery of
any causes of action belonging to the Debtors' and their estates.
About Caritas Health Care
Caritas Health Care Inc. was the owner of Mary Immaculate Hospital
and St. John's Queens Hospital. Caritas, created by Wyckoff
Heights Medical Center, purchased the two hospitals in a
bankruptcy sale in early 2007 from St. Vincent Catholic Medical
Centers of New York. St. John's has 227 generate acute-care beds
while Mary Immaculate has 189.
Caritas Health Care, Inc., and eight of its affiliates sought
chapter 11 protection (Bankr. E.D.N.Y., Case No. 09-40901) on
Feb. 6, 2009. Jeffrey W. Levitan, Esq., and Adam T. Berkowitz,
Esq., at Proskauer Rose, LLP, represent the Debtors. Martin G.
Bunin, Esq., and Craig E. Freeman, Esq., at Alston & Bird LLP,
represent the official committee of unsecured creditors.
Caritas sold the hospitals to Joshua Guttman in November 2009 for
$17.7 million.
CATALYST PAPER: Obtains $175MM ABL and $80MM Exit Commitments
-------------------------------------------------------------
Catalyst Paper has entered into a commitment letter with a
Canadian chartered bank for a US$175 million syndicated asset
based loan facility maturing on the earlier of 5 years from date
of closing and 90 days prior to maturity of any significant debt.
The ABL Facility is a pre-condition for Catalyst to exit from
creditor protection and would provide for the refinancing of
existing credit facilities to fund the operations of the Company
on exit from creditor protection and for general corporate
purposes thereafter. The collateral would primarily consist of
all present and future working capital assets of the Company. The
ABL borrowing base would be calculated on balances of eligible
accounts receivable and inventory, less certain reserves.
Customary fees are payable in connection with the ABL Facility.
The ABL Facility is subject to the completion of a credit
agreement, syndication, documentation and certain other
conditions.
Catalyst also entered into a commitment letter with respect to a
secured exit notes facility of up to US$80 million. The Exit
Facility provides Catalyst with backstop financing should
additional funding be required to pay costs and expenses or manage
other contingencies on exit from creditor protection.
The Exit Facility will be provided by certain holders of
Catalyst's First Lien Notes and will be secured by a charge on
certain assets of Catalyst and its subsidiaries ranking senior to
the lien securing the $250 million of new secured notes to be
issued under the Second Amended Plan of Arrangement. Customary
commitment fees for a facility of this nature are payable to the
lenders in connection with the Exit Facility.
The Exit Facility of US$80 million, or a lesser amount at
Catalyst's option, or if Catalyst's liquidity exceeds a specified
amount, is available to Catalyst upon its exit from creditor
protection, has a maturity date of four years from that exit and
can be prepaid in whole or in part at any time for a premium
initially of 3% and declining annually thereafter. The Exit
Facility is subject to the completion of documentation and certain
other conditions.
To provide sufficient time to complete documentation for the ABL
Facility and Exit Facility and to satisfy the other conditions
under the Amended Plan, Catalyst and certain noteholders have
agreed to amend the Restructuring and Support Agreement dated
March 11, 2012, as amended, to extend the deadline for completion
of the Amended Plan to Sept. 14, 2012. The RSA and Amended Plan
previously provided for completion within 45 days of the Canadian
sanction order, which was obtained on June 28, 2012.
About Catalyst Paper
Catalyst Paper Corp. -- http://www.catalystpaper.com/--
manufactures diverse specialty mechanical printing papers,
newsprint and pulp. Its customers include retailers, publishers
and commercial printers in North America, Latin America, the
Pacific Rim and Europe. With four mills, located in British
Columbia and Arizona, Catalyst has a combined annual production
capacity of 1.9 million tons. The Company is headquartered in
Richmond, British Columbia, Canada and its common shares trade on
the Toronto Stock Exchange under the symbol CTL.
Catalyst on Dec. 15, 2011, deferred a US$21 million interest
payment on its outstanding 11.00% Senior Secured Notes due 2016
and Class B 11.00% Senior Secured Notes due 2016 due on Dec. 15,
2011. Catalyst said it was reviewing alternatives to address its
capital structures and it is currently in discussions with
noteholders. Perella Weinberg Partners served as the financial
advisor.
In early January 2012, Catalyst entered into a restructuring
agreement, which will see its bondholders taking control of the
company and includes an exchange of debt for equity. The
agreement said it would slash the company's debt by C$315.4
million ($311 million) and reduce its cash interest expenses.
Catalyst also said it will continue to "operate and satisfy" its
obligations to customers, trade creditors, employees and retirees
in the ordinary course of business during the restructuring
process.
On Jan. 17, 2012, Catalyst applied for and received an initial
court order under the Canada Business Corporations Act (CBCA) to
commence a consensual restructuring process with its noteholders.
Affiliate Catalyst Paper Holdings Inc., filed for creditor
protection under Chapter 15 of the U.S. Bankruptcy Code (Bankr. D.
Del. Case No. 12-10219) on the same day and sought recognition of
the Canadian proceedings.
Catalyst joins a line of paper producers that have succumbed to
higher costs, increased competition from Asia and Europe, and
falling demand as more advertisers and readers move online. In
2011, Cerberus Capital-backed NewPage Corp. filed for bankruptcy
protection, followed by SP Newsprint Co., owned by newsprint
magnate and fine art collector Peter Brant. In December, Wausau
Paper said it will close its Brokaw mill in Wisconsin, cut 450
jobs and exit its print and color business.
The Supreme Court of British Columbia granted Catalyst creditor
protection under the CCAA until April 30, 2012.
As of Dec. 31, 2011, the Company had C$737.6 million in total
assets and C$1.35 million in total liabilities.
As reported by the TCR on July 2, 2012, Catalyst received approval
for its reorganization plan from the Supreme Court of British
Columbia. The Company's second amended plan under the Companies'
Creditors Arrangement Act received 99% support from creditors.
CCO HOLDINGS: Moody's Rates $100MM Senior Unsecured Notes 'B1'
--------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to the proposed
$1000 million issuance of senior unsecured notes of CCO Holdings,
LLC, an indirect intermediate holding company of Charter
Communications, Inc. and Ba3 rated CCH II, LLC (legal entity at
which Moody's houses the benchmark fundamental Corporate Family
Rating). The company plans to use proceeds to help fund the
redemption of the CCH II, LLC 13.5% senior notes due 2016 on or
before November 30, 2012.
Moody's also affirmed existing ratings and adjusted Loss Given
Default (LGD) point estimates as shown below.
CCH II, LLC
Affirmed Ba3 Corporate Family Rating
Affirmed Ba3 Probability of Default Rating
13.5% Senior Unsecured Bonds, Affirmed B2, LGD adjusted
to LGD6, 97% from LGD6, 95%
CCO Holdings, LLC
$1000 million Senior Unsecured Bonds, Assigned B1, LGD5, 72%
$750 million bonds due January 2022, Affirmed B1, LGD
adjusted to LGD5, 72% from LGD4, 68%
$1.5 billion 6.5% Sr Unsec Nts due 2021, affirmed B1, LGD
adjusted to LGD5, 72% from LGD4, 68%
$750 million 7.375% Sr Unsec Nts due 2020, affirmed B1, LGD
adjusted to LGD5, 72% from LGD4, 68%
$700 million of 8.125% Sr Unsec Nts due 2020, affirmed B1,
LGD adjusted to LGD5, 72% from LGD4, 68%
$1,400 million (including add-on) 7% Sr Unsec Nts due 2019,
affirmed B1, LGD adjusted to LGD5, 72% from LGD4, 68%%
$900 million of 7.875% Sr Unsec Nts due 2018, affirmed B1,
LGD adjusted to LGD5, 72% from LGD4, 68%
$1,000 million 7.25% Sr Unsec Nts due 2017, affirmed B1, LGD
adjusted to LGD5, 72% from LGD4, 68%
$350 million Sr Sec 1st Lien (but CCO stock only, so
effectively 3rd Lien) Credit Facility due 2014, Affirmed Ba2,
LGD adjusted to LGD3, 36% from LGD3, 35%
Charter Communications Operating, LLC
Senior Secured First Lien Bank Facility, affirmed Ba1,
LGD2, 16%
Ratings Rationale
The transaction continues Charter's pattern of extending its
maturity profile and addressing high coupon debt. Moody's expects
the company to use proceeds to repay revolver borrowings upon
close of the transaction. However, later in 2012 funding the
repayment of the CCH II notes ($1,146 million outstanding as of
June 2012), including the tender premium, will likely require
incremental revolver borrowings.
Charter's Ba3 corporate family rating continues to reflect its
moderately high financial risk, with leverage of almost 5 times
debt-to-EBITDA. This leverage poses risk considering the pressure
on revenue from its increasingly mature core video offering (which
represents about half of total revenue) and the intensely
competitive environment in which it operates. The company's
substantial scale and Moody's expectations for continued
operational improvements and growth in high speed data and
commercial customers, along with the meaningful perceived asset
value associated with its sizeable (over 5 million) customer base,
support the rating.
The positive outlook continues to reflect Charter's steadily
improving credit profile and expectations that its enhanced
financial flexibility will afford the company greater opportunity
to invest without raising incremental debt, which should increase
asset value and facilitate further balance sheet strengthening
over time.
Moody's would consider an upgrade with continued improvements in
both financial and operating metrics and a commitment to a better
credit profile. Specifically, Moody's could upgrade the CFR based
on expectations for sustained leverage below 4.5 times debt-to-
EBITDA and free cash flow-to-debt in excess of 5%, along with
maintenance of good liquidity. A higher rating would require
clarity on fiscal policy, as well as product penetration levels
more in line with industry averages and growth in revenue per
homes passed.
Given the positive outlook, limited downward ratings pressure
exists over the near term. However, Moody's would likely downgrade
ratings if ongoing basic subscriber losses, declining penetration
rates, and/or a reversion to more aggressive financial policies
contributed to expectations for leverage above 6 times debt-to-
EBITDA and / or low single digit or worse free cash flow-to-debt.
One of the largest domestic cable multiple system operators
serving approximately 4.1 million residential video customers (5.3
million customers in total), Charter Communications, Inc.,
maintains its headquarters in St. Louis, Missouri. Its annual
revenue is approximately $7.3 billion.
The principal methodology used in rating Charter Communications
was the Global Cable Television Industry Methodology published in
July 2009. Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
CERIDIAN CORP: Moody's Says Refinancing Plan Credit Positive
------------------------------------------------------------
Moody's Investors Service said Ceridian Corp.'s refinancing of the
remaining $342 million of the Senior Secured Term Loan B is a
modestly credit positive event, since the refinancing addresses
the remaining 2014 debt maturities.
The principal methodology used in rating Ceridian was the Global
Business and Consumer Service Industry Methodology published in
October 2010. Other methodologies used include Loss Given Default
for Speculative Grade Non-Financial Companies in the U.S., Canada,
and EMEA published in June 2009.
As reported by the Troubled Company Reporter on June 28, 2012,
Moody's assigned a B1 rating to Ceridian's proposed $720 million
of Senior Secured Notes due 2019 ("Secured Notes"). All other
ratings, including the B3 corporate family rating (CFR), and the
stable outlook remain unchanged.
Ceridian Corporation, based in Minneapolis, Minnesota, is a
services and transaction processing company primarily in the human
resource, transportation, and retail markets.
CHARTER COMMUNICATIONS: S&P Rates New $1BB Senior Notes 'BB-'
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' issue-level
rating and '3' recovery rating to St. Louis-based cable-TV
operator Charter Communications Inc.'s proposed $1 billion senior
notes due 2022, to be issued by its subsidiaries CCO Holdings LLC
and CCO Holdings Capital Corp. "The '3' recovery rating indicates
our expectation for meaningful (50% to 70%) recovery in the event
of payment default," S&P said.
"We expect Charter to use most of the net proceeds from these
unsecured, publicly registered notes, along with some borrowings
under its revolving credit facility, to redeem the 13.5% senior
notes due 2016 issued by subsidiary CCH II LLC. There were $1.15
billion of 13.5% notes outstanding as of June 30, 2012," S&P said.
"Our ratings and financial risk assessment on the company are not
affected, since we do not expect a significant change in total
indebtedness, although we expect interest expense to decline
modestly. Ratings on Charter continue to reflect aggressive
leverage, formidable satellite and telephone company competition,
and material basic video subscriber erosion. Charter's business
risk does benefit from favorable cable industry operating
characteristics, including good revenue visibility inherent in its
subscription-based business model and the significant bandwidth
capacity of its fiber/coaxial plant. The company increased its
guidance for 2012 capital expenditures to the $1.5 billion to $1.7
billion range, from the former range of $1.4 billion to $1.5
billion range. We believe the increase supports the company's
strategy to upgrade customers to digital set-top boxes and high-
definition digital video recorders," S&P said.
RATINGS LIST
Charter Communications Inc.
Corporate Credit Rating BB-/Stable/--
New Ratings
CCO Holdings LLC
CCO Holdings Capital Corp.
$1 bil senior notes due 2022 BB-
Recovery Rating 3
CLEARWIRE CORP: Glenn Dubin Owns 7.4% of Class A Shares
-------------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, Glenn Dubin and his affiliates disclosed that, as of
July 27, 2012, they beneficially own 37,225,450 shares of Class A
common stock of Clearwire Corporation representing 7.38% of the
shares outstanding. A copy of the filing is available at:
http://is.gd/MrvJgn
About Clearwire Corporation
Kirkland, Wash.-based Clearwire Corporation (NASDAQ: CLWR)
-- http://www.clearwire.com/-- through its operating
subsidiaries, is a provider of 4G mobile broadband network
services in 68 markets, including New York City, Los Angeles,
Chicago, Dallas, Philadelphia, Houston, Miami, Washington, D.C.,
Atlanta and Boston.
The Company reported a net loss attributable to the Company of
$717.33 million in 2011, a net loss attributable to the Company of
$487.43 million in 2010, and a net loss attributable to the
Company of $325.58 million in 2009.
The Company's balance sheet at June 30, 2012, showed $8.43 billion
in total assets, $5.65 billion in total liabilities, and
$2.78 billion in total stockholders' equity.
* * *
As reported by the TCR on Nov. 25, 2011, Standard & Poor's Ratings
Services lowered its corporate credit and senior secured first-
lien issue-level ratings on Bellevue, Wash.-based wireless
provider Clearwire Corp. to 'CCC' from 'CCC+'.
The ratings on Clearwire continue to reflect its "highly
leveraged" financial risk profile based on its high debt burden
and "weak" liquidity (both terms as defined in S&P's criteria).
"The ratings also reflect our view that Clearwire has a vulnerable
business position as a developmental-stage company with
significant competition from better capitalized wireless carriers,
including AT&T Mobility and Verizon Wireless, which are deploying
their own 4G wireless services," S&P said in January 2012.
"We believe that the company would likely run out of cash in the
late 2012 to early 2013 time frame absent significant asset sales,
since we view the terms in the December 2011 wholesale agreement
with Sprint Nextel as unfavorable in the near term and will likely
constrain cash inflows in 2012 to 2013. We have not assumed
spectrum sales in our liquidity assessment because of the
uncertainty involved in finding a buyer, as well as timing.
However, if the company could secure sufficient funding for
operations through 2013, we could raise the ratings," S&P also
stated.
COLUMBIA ENVIRONMENTAL: Chapter 11 Trustee Takes Over
-----------------------------------------------------
Pamela J. Griffith, Assistant United States Trustee, has appointed
Kenneth S. Eiler as Chapter 11 trustee in the bankruptcy case of
Columbia Environmental, LLC. The trustee's bond will be set at
$25,000.
The U.S. Trustee said it has consulted with parties in interest
regarding the appointment of the trustee, including:
* Robert L. Carlton, Esq., at Sussman Shank LLP, counsel for Ty
Ross;
* Nicholas J. Henderson, Esq., at Motschenbacher & Blatner, LLP,
counsel for Oregon Recycling Systems;
* Sanford R. Landress, Esq., at Greene & Markley, PC, counsel
for KCDK, LLC.
The parties have signed a stipulation on the appointment of the
Chapter 11 trustee.
According to the Court's order, the Trustee will assume immediate
management and control of all of the assets of the Debtor's estate
and hold all of the powers and perform all of the duties set forth
in 11 U.S.C. Sec. 1106.
About Columbia Environmental
On June 1, 2012, a Chapter 11 involuntary petition for Columbia
Environmental, LLC (Bankr. D. Ore. Case No. 2-34343) was signed by
Oregon Recycling Systems Inc. The claimant, allegedly owed
$620,664 for money loaned to the Debtor, is represented by
Nicholas J Henderson, Esq. at Motschenbacher & Blattner, LLP in
Portland.
Columbia Environmental on July 24, 2012, agreed to send itself to
Chapter 11 by filing its own bankruptcy petition. In the
petition, the Debtor estimated assets and debts of less than
$10 million. The petition said that the Debtor is not represented
by attorney. Bryan Engleson, the general manager, signed the
Chapter 11 petition.
COLUMBIA ENVIRONMENTAL: Files Schedules of Assets and Liabilities
-----------------------------------------------------------------
Columbia Environmental, LLC, filed with the Bankruptcy Court for
the District of Oregon its schedules of assets and liabilities,
disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property $3,600,000
B. Personal Property $410,542
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $3,072,670
E. Creditors Holding
Unsecured Priority
Claims $0
F. Creditors Holding
Unsecured Non-priority
Claims $837,595
----------- -----------
TOTAL $4,010,542 $3,910,265
About Columbia Environmental
On June 1, 2012, a Chapter 11 involuntary petition for Columbia
Environmental, LLC (Bankr. D. Ore. Case No. 2-34343) was signed by
Oregon Recycling Systems Inc. The claimant, allegedly owed
$620,664 for money loaned to the Debtor, is represented by
Nicholas J. Henderson, Esq., at Motschenbacher & Blattner, LLP in
Portland.
Columbia Environmental on July 24, 2012, agreed to send itself to
Chapter 11 by filing its own bankruptcy petition. In the
petition, the Debtor estimated assets and debts of less than
$10 million. The petition said the Debtor is not represented by
attorney. Bryan Engleson, the general manager, signed the
Chapter 11 petition.
COLUMBIA ENVIRONMENTAL: Files List of Largest Unsecured Creditors
-----------------------------------------------------------------
Columbia Environmental, LLC, filed with the Bankruptcy Court a
list of its seven largest unsecured creditors, disclosing:
Entity Nature of Claim Claim Amount
------ --------------- -----------
Tyrell and Barbara Ross Loan / Promissory Note $138,823
David McMahon Loan $18,023
John Gilmore dba Design Services performed $4,960
Associates
Oregon DEQ Fees $4,630
Pacific Powervac Services performed $2,132
Ray Salvi Loan $18,000
Richard Cereghino Loan $18,131
Robert Blakemore Service Performed $12,230
About Columbia Environmental
On June 1, 2012, a Chapter 11 involuntary petition for Columbia
Environmental, LLC (Bankr. D. Ore. Case No. 2-34343) was signed by
Oregon Recycling Systems Inc. The claimant, allegedly owed
$620,664 for money loaned to the Debtor, is represented by
Nicholas J Henderson, Esq. at Motschenbacher & Blattner, LLP in
Portland.
Columbia Environmental on July 24, 2012, agreed to send itself to
Chapter 11 by filing its own bankruptcy petition. In the
petition, the Debtor estimated assets and debts of less than
$10 million. The petition said that the Debtor is not represented
by attorney. Bryan Engleson, the general manager, signed the
Chapter 11 petition.
COMMUNITY HEALTH: Fitch Rates $1.25-Bil. Sr. Secured Notes 'BB+'
----------------------------------------------------------------
Fitch Ratings has assigned a 'BB+/RR1' rating to CHS/Community
Health Systems Inc.'s (Community) $1.25 billion proposed senior
secured notes due 2018. In addition, Fitch has assigned a 'B+'
Issuer Default Rating (IDR) to CHS/Community Health Systems Inc;
the Rating Outlook is Stable. The ratings apply to approximately
$9.3 billion of debt at June 30, 2012.
Community plans to use the proceeds of the proposed $1.25 billion
of senior secured notes to retire a portion of its $2.2 billion
credit facility term loan B due 2014. The senior secured notes
are a new security in the capital structure and will be guaranteed
on a secured basis by the same group of operating subsidiaries
that are guarantors of the credit facility. The proposed notes
will be first lien obligations secured by liens with equal rank on
the collateral that secures the credit facility obligations. The
senior unsecured notes rank effectively subordinate to the first
lien obligations to the extent of the collateral securing the
first lien obligations.
The 'B+' IDR primarily reflects the following:
-- Community's financial flexibility has improved in recent
years. Calculated pro forma for its third-quarter 2012
(3Q'12) financing activities, debt-to-EBITDA has dropped to
around 5.0x from 5.8x in 2008, the year immediately following
the $6.9 billion acquisition of Triad Hospitals.
-- Liquidity is solid. The company has made substantial progress
in refinancing its 2014-2015 debt maturities, free cash flow
(FCF) generation is expected to be sustained above $300
million annually and 2012-2013 debt maturities are small.
Fitch expects Community to continue to prioritize hospital
acquisitions as a use of cash.
-- Organic operating trends in the for-profit hospital industry
are weak and Fitch expects them to remain so in the second
half of 2012. In the near term, Community's growth will be
supported by its recent hospital acquisitions.
-- Community's patient admission policies and associated billing
practices are facing heightened regulatory scrutiny and there
is ongoing uncertainty about any potential financial or
operating impact.
Significant Progress Refinancing 2014-2015 Debt Maturities
Fitch had previously noted Community's 2014-2015 debt maturity
wall as the most significant risk to its credit profile.
Following a series of transactions over the past 18 months,
Community has entirely refinanced its $3 billion 2015 notes
maturity (pro forma for the company's planned redemption of the
remaining $295 million 2015 notes on Aug. 18, 2012), and has
reduced its 2014 term loan maturities to $1.2 billion, pro forma
for the $1.25 billion reduction of the outstanding amount using
proceeds of the proposed senior secured notes, from a previous $6
billion.
Fitch believes that Community has adequate flexibility under its
debt agreements and the market access necessary to refinance its
remaining 2014 term loan maturities. An amendment to the credit
facility executed last week enhanced the company's flexibility to
address its remaining 2014 bank term loan maturities, through an
increase in various incremental debt baskets, and a provision
allowing the company to apply the proceeds raised under various of
the baskets solely to reduce its 2014 term loan maturities.
Community's liquidity profile is otherwise solid. Liquidity was
provided by approximately $115 million of cash and marketable
securities at June 30, 2012, availability on the company's $750
million bank revolver ($707 million available at June 30, 2012
reduced for outstanding letters of credit and $5 million drawn on
the facility), and FCF ($348 million for the latest 12 months
(LTM) ended June 30, 2012). Community generates solid cash flow
relative to its operating and reinvestment requirements. Mostly
due to higher capital expenditures, Fitch projects a lower level
of FCF generation for Community in 2012 than in 2011, but expects
that FCF will be sustained above $300 million annually. Debt
maturities for 2012-2013 are small and include about $35 million
and $75 million of required term loan amortization, respectively.
Debt Sustained Around 5.0x EBITDA
Pro forma for the proposed notes issuance and application of the
proceeds to reduce term loan maturities, Fitch calculates total
debt-to-EBITDA of 5.0x, including 2.7x through the bank debt, 3.3x
through the senior secured notes and 5.0x through the senior
unsecured notes. The company has a solid operating cushion under
its bank agreement financial covenants, which require total debt-
to-EBITDA maintained under 5.5x.
While Community has not publicly stated a debt leverage target,
Fitch thinks it is likely that the company is comfortable with
total debt-to-EBITDA sustaining around 5.0x in the current
operating environment. At June 30, 2012, the company's debt level
is slightly above that of its publicly traded group of peer
companies, but its higher debt levels have not hindered the
company in its recent debt financing activities or limited its
hospital acquisition opportunities.
Weak Organic Operating Trends
At June 30, 2012, Community operated 135 hospitals with about
20,200 licensed beds focused on non-urban markets across 29
states. Community is the sole provider in about 59% of its
markets. This confers certain strategic benefits to the company,
including the ability to leverage its controlling market share in
pricing negotiations with commercial health insurers.
At the same time, Community's relatively limited scope of services
means that patients with more acute medical needs typically travel
outside of its markets to tertiary medical facilities in nearby
urban centers. Therefore, the company's patient utilization
trends are susceptible to systemic issues affecting less acute
types of patient services, such as the recent weakness in flu
volumes and obstetrics services.
Community's organic patient volume growth has lagged the broader
for-profit hospital provider industry over the past couple of
years. While Community's volume trends have shown some
improvement in the first half of 2012, the trend continues to be
fairly weak. Community's 2Q'12 same-hospital admissions were down
2% and same-hospital admissions adjusted for outpatient activity
were up 0.5%.
Despite the weak volume trend, the company has not lagged its
peers in top-line and EBITDA growth. Strong pricing and an active
hospital acquisition strategy have supported revenue and EBITDA
growth. Community has managed to achieve consistent incremental
growth in EBITDA in recent periods despite the margin impacts of
integrating less profitable acquired hospitals. The 12.8%
Operating EBITDA margin in 2Q'12 was down about 60 basis points
from the 2Q'11 level.
Community has publicly stated that it plans to acquire four-to-
five hospitals per year. Year to date in 2012, Community has
already met this target, acquiring four hospitals plus a large
physician practice. In addition, Community has an outstanding
letter of intent to purchase a two-hospital system with trailing
revenues of $170 million. Community's 2011-2012 acquisitions will
contribute $1.145 billion of trailing revenue, representing about
9.1% of the company's 2010 net revenues.
Heightened Regulatory Scrutiny
Since early 2011, Community's patient admission policies and
associated billing practices have been the subject of heightened
regulatory scrutiny. There is ongoing uncertainty about the
potential for financial liability with respect to past billing
practices or a reduction in the company's revenues and EBITDA
resulting from changes in admissions practice.
These regulatory issues will take some time to resolve in the
interim period, and there is the concern that a reputational issue
associated with the governmental inquiries could negatively affect
operations. However, this does not appear to be the case in
recent periods. Patient volume trends improved somewhat in the
first half of 2012, the company is showing strong results in
physician recruitment, and its acquisition opportunities have not
diminished.
Potential Rating Triggers
Based on Community's financial and credit metrics, there is
limited upside potential in the ratings. An upgrade to the 'BB'
category would require debt maintained at or below 4.0x EBITDA.
Maintenance of the 'B+' IDR would be consistent with total debt-
to-EBITDA at 5.0x and annual FCF generation of at least $300
million.
A downgrade of the ratings could be the result of event risk
surrounding an acquisition, or any potential financial liability
stemming from the regulatory issues facing the company. Ongoing
deterioration in organic operating trends or difficulties in
integrating acquisitions could weigh on the credit profile if
deterioration in EBITDA leads to debt levels maintained above
5.0x.
The Recovery Ratings (RR) reflect Fitch's expectation that the
enterprise value of Community will be maximized in a restructuring
scenario (going concern), rather than a liquidation. Fitch uses a
6.5x distressed enterprise value (EV) multiple and stresses LTM
EBITDA by 35%, considering post restructuring estimates for
interest and rent expense and maintenance level capital
expenditure as well as debt financial maintenance covenant
requirements. The 6.5x multiple is based on recent acquisition
multiples in the healthcare provider space as well as the recent
trends in the public equity valuations of the for-profit hospital
providers.
Fitch estimates Community's distressed enterprise valuation in
restructuring to be approximately $8 billion. The 'BB+/RR1'
rating for the bank facility and senior secured notes reflects
Fitch's expectations for 100% recovery under a bankruptcy
scenario. The 'B/RR5' rating on the unsecured notes rating
reflects Fitch's expectations for recovery in the 11%-31% range.
Fitch has taken the following rating actions on Community:
Community Health Systems, Inc:
-- IDR affirmed at 'B+'.
CHS/Community Health Systems, Inc.
-- Assigned IDR of 'B+',;
-- Senior secured credit facility affirmed at 'BB+/RR1'';
-- Senior secured notes rated 'BB+/RR1'';
-- Senior unsecured notes affirmed at 'B/RR5'.
The Rating Outlook is Stable.
COMMUNITY HEALTH: Moody's Rates Proposed Sr. Secured Notes 'Ba3'
----------------------------------------------------------------
Moody's Investors Service rated CHS/Community Health Systems,
Inc's. (Community Health) proposed offering of $1.25 billion of
senior secured notes due 2018 Ba3 (LGD 3, 30%). Moody's
understands that the proceeds of the offering will be used to
refinance a portion of the company's senior secured bank debt.
Moody's existing ratings of the company, including the B1
Corporate Family and Probability of Default Ratings, are
unchanged. The proposed issuance will continue to extend the
company's maturity profile and is not expected to meaningfully
affect leverage. The rating outlook remains stable.
Ratings assigned:
Senior secured notes due 2018, Ba3 (LGD 3, 30%)
Senior secured shelf, (P) Ba3
Senior unsecured shelf, (P) B3
Ratings unchanged:
Senior secured revolving credit facility expiring 2016, Ba3 (LGD
3, 30%)
Senior secured term loan A due 2016, Ba3 (LGD 3, 30%)
Senior secured term loan B due 2014, Ba3 (LGD 3, 30%)
Senior secured term loan B due 2017, Ba3 (LGD 3, 30%)
8.875% senior notes due 2015, B3 (LGD 5, 84%)
8.0% senior notes due 2019, B3 (LGD 5, 84%)
7.125% senior notes due 2020, B3 (LGD 5, 84%)
Corporate Family Rating, B1
Probability of Default Rating, B1
Speculative Grade Liquidity Rating, SGL-1
Ratings Rationale
Community Health's B1 Corporate Family Rating reflects Moody's
expectation that leverage will remain high and interest expense
coverage will continue to be modest. Furthermore, Moody's
anticipates that the opportunity to reduce leverage with free cash
flow will be constrained in the near term given the company's
investment in capital spending related to replacement hospitals
and information technology. Moody's also expects the company to
actively pursue acquisitions. However, supporting the rating is
Moody's acknowledgement of Community Health's scale and market
strength, which should help the company weather unfavorable trends
in bad debt expense and weak volumes that continue to affect the
industry as a whole. Moody's anticipates that the company will
continue to see stable margin performance and maintain very good
liquidity.
Moody's could upgrade the ratings if financial leverage is
materially reduced and cash flow coverage of debt metrics improve.
Specifically, if Community Health is able to achieve and sustain
adjusted debt to EBITDA below 4.0 times, Moody's could upgrade the
ratings. This level reflects the need to see additional cushion in
these metrics to absorb potential negative developments given the
absence of further clarity around the outcome of ongoing
litigation and investigations.
A significant debt financed acquisition or adverse developments
related to ongoing investigations or litigation could result in a
downgrade of the ratings. Additionally, the company's inability to
continue to manage headwinds in the industry or Moody's
expectation that debt to EBITDA would be sustained above 5.0 times
could result in a downgrade. This could result from declining
adjusted admission trends and unfavorable reimbursement or pricing
trends impacting net revenue growth, greater than expected
increases in bad debt expense, or aggressive acquisition activity.
The principal methodology used in rating CHS/Community Health
Systems, Inc. was the Global Healthcare Service Providers Industry
Methodology published in December 2011. Other methodologies used
include Loss Given Default for Speculative-Grade Non-Financial
Companies in the U.S., Canada and EMEA published in June 2009.
CHS/Community Health Services, Inc. (Community), headquartered in
Franklin, TN, is an operator of general acute care hospitals in
non-urban and mid-sized markets throughout the US. Through its
subsidiaries, Community owns, leases or operates 135 hospitals. In
addition, through its subsidiary, Quorum Health Resources, LLC,
Community provides management and consulting services to non-
affiliated general acute care hospitals throughout the country.
The company is the largest non-urban hospital company in the US
and the second largest for-profit hospital operating company
overall. Community recognized over $14.0 billion in revenue for
the twelve months ended June 30, 2012.
CONSTELLATION BRANDS: Fitch Rates $650-Mil. Senior Notes 'BB+'
--------------------------------------------------------------
Fitch Ratings has assigned a 'BB+ rating to Constellation Brands,
Inc.'s (STZ) $650 million 4.625% senior unsecured notes due 2023.
STZ had approximately $3.4 billion of debt at May 31, 2012.
Net proceeds from the notes issuance combined with additional
borrowings under the company's senior credit facility and
available cash will be used to finance STZ's acquisition of the
remaining 50% interest in Crown Imports LLC (Crown). The notes
will rank equally to the company's other senior unsecured debt and
are fully and unconditionally guaranteed on a senior basis,
jointly and severally, by the subsidiaries that are guarantors
under the credit facility. The acquisition financing follows
STZ's June 29, 2012 announcement that it had a definitive
agreement with Anheuser Busch InBev (AB InBev) to purchase the
remaining 50% interest in Crown. The consummation of the
acquisition is conditioned on AB InBev completing its acquisition
of Grupo Modelo.
Crown has the exclusive right to import, market and sell primarily
Grupo Modelo's Mexican beer portfolio in the 50 states of the
U.S., the District of Columbia and Guam. The Crown portfolio of
brands includes Corona Extra, and according to the company; it's
the best-selling imported beer and the sixth best-selling beer
overall in the industry and Corona Light is the leading imported
light beer.
Fitch believes there is good strategic rationale for the
transaction, given the importance of Crown's cash flows to
Constellation's credit profile, the growth of imported beer sales
in the U.S., and the strength of the Corona brand. The purchase
price for the remaining 50% interest in Crown is $1.85 billion.
This values the Crown distribution business at approximately 8.5
times(x) Crown's fiscal 2012 EBIT of $431 million. The
transaction, subject to regulatory approval, is expected to close
during the first quarter of calendar 2013.
STZ has fully committed bridge financing in place for the
acquisition. Permanent financing is expected to consist of a
combination of revolver borrowings, a new term loan under the
company's current senior credit facility and the issuance of new
notes. Separately, STZ completed the acquisition of the Mark West
wine brand from Purple Wine Brand Company LLC, on July 16, 2012
for $160 million and utilized it revolver to provide the
financing.
Upon closing, the transaction is expected to increase debt-to-
EBITDA to the mid-4x range when factoring in a full year of the
additional Crown EBITDA. In the first quarter of fiscal 2013,
Constellation completed $383 million of share repurchases under
its $1 billion authorization but has suspended its share
repurchases for the remainder of fiscal 2013 in order to use free
cash flow (FCF) to restore total debt-to-EBITDA back to its
targeted 3x-4x range within 12 months of the acquisition closing.
The company's total debt-to-EBITDA including equity income for the
latest 12 months ended May 31, 2012 was 3.7x and EBITDA-to-
interest expense including equity income was 4.7x. FCF was $572
million for the period. The LTM FCF amount continues to benefit
from onetime lower working capital usage that occurred during the
first nine months of the prior fiscal year.
Fitch believes Constellation can generate annual FCF in excess of
$600 million post the closing of the Crown transaction, based on
the estimated after-tax EBIT and the expectation of minimal
additional capital requirements, and therefore views this level of
deleveraging as achievable. STZ accounted for its current 50%
interest in Crown under the equity method and recognized $215
million of equity earnings in Crown in fiscal 2012. Upon
completion of the transaction STZ plans to consolidate the full
financial results of Crown. Fitch had included equity method
earnings from Crown in STZ EBITDA, since cash distributions were
roughly equivalent and STZ exercises a considerable amount of
control of Crown.
STZ and Crown will control the distribution, marketing and pricing
for all Modelo brands in the U.S., while AB InBev will ensure
continuity of supply, product quality and innovation. The new
importation agreement will be perpetual and provides AB InBev with
the right, but not the obligation, to exercise a call option every
10 years, subject to regulatory approval, at a multiple of 13x
Crown's EBIT from the Modelo brands.
STZ's ratings and Outlook reflect the company's leading global
market positions and well-known portfolio of wine, spirits and
beer brands, as well as its significant FCF. The ratings balance
the general stability of the company's operations, good operating
margins and ample FCF generation with its acquisitive nature and
near-term increase in leverage.
The company generates a substantial amount of FCF as evidenced by
its averaging over $450 million in FCF annually the past five
years. Fitch believes STZ's expectation of producing between $425
million and $475 million in FCF in fiscal 2013 without the
acquisition is achievable. STZ has used a combination of FCF and
divestitures to reduce debt to $3.4 billion from a peak of almost
$5.3 billion at May 31, 2008.
Net sales for Constellation Wines and Spirits were $634.8 million
for first-quarter fiscal 2013, flat with the prior year.
Consolidated operating income increased 4% to $106.1 million for
the period. Net sales for Crown Imports increased 7% to $724.1
million for first-quarter 2013 compared to the prior year period.
The increase resulted primarily from volume growth within the
Crown Imports' Mexican beer portfolio driven largely by increased
advertising spend. Operating income increased 3% to $123 million
for the period. Operating income growth was attributed to volume
growth previously mentioned partially offset by selling, general
and administrative expenses, primarily due to timing of
advertising spend.
Fitch anticipates wine category growth in calendar 2012 will be in
the low single digits and expects STZ's volume growth to be in
line with the industry. Crown Imports is expected to see mid-
single-digit growth of depletions and domestic category depletion
continuing to decline in the low single digits. Fitch forecasts
2012 U.S. beer category growth will be flat to down in the low
single digits and expects Crown Imports' volume also to grow in
the low single digits. Fitch believes this will translate into
modest operating income growth overall.
STZ's liquidity remains adequate. As of May 31, 2012, the
company's liquidity includes approximately $800 million of
availability under its revolving credit facility due in May 2017
and $69.1 million of cash and equivalents. Maturities of long-
term debt in fiscal 2013, 2014, and 2015 were $28.2 million, $36.4
million, and $550 million, respectively, for the remaining nine
months of fiscal 2013. Fitch believes the security of the credit
facility, being equity in subsidiaries rather than hard assets, is
relatively weak and therefore has chosen not to distinguish
between the secured credit facility rating and the senior
unsecured notes at the current rating level. STZ's capital
structure does not provide an advantage structurally to any one
issue. STZ is the issuer of all the company's notes outstanding
and the borrower under its credit agreements for its facilities.
What Could Trigger a Rating Action
Future developments that may, individually or collectively, lead
to a positive rating action include:
-- Given the increase in leverage as a result of the
acquisition, an upgrade of STZ ratings is not anticipated in
the near to intermediate term.
Future developments that may, individually or collectively, lead
to a negative rating action include:
-- Significant and ongoing deterioration in operating results
that inhibits a reduction in leverage back to the 3x-4x range
within 12-18 months.
Fitch currently rate STZ as follows, with a Stable Outlook:
-- Long-term IDR at 'BB+';
-- Secured bank credit facility at 'BB+';
-- Senior unsecured notes at 'BB+'.
CORNERSTONE HEALTHCARE: Moody's Assigns 'B2' CFR; Outlook Stable
----------------------------------------------------------------
Moody's Investors Service assigned B2 Corporate Family and
Probability of Default Ratings to Cornerstone Healthcare Group
Holding, Inc. Moody's also assigned a B2 (LGD 3, 45%) rating to
the company's proposed $150 million senior secured term loan.
Moody's understands that the proceeds of the loan will be used to
refinance a portion of the company's existing debt and for general
corporate purposes. This is the first time Moody's has assigned
ratings to Cornerstone. The outlook for the ratings is stable.
Following is a summary of ratings assigned. Ratings are subject to
Moody's review of final documentation.
$150 million senior secured term loan due 2015, B2 (LGD 3, 45%)
Corporate Family Rating, B2
Probability of Default Rating, B2
Ratings Rationale
Cornerstone's B2 Corporate Family Rating reflects Moody's view of
the risks associated with the company's reliance on the Medicare
program for the majority of its revenue. Additionally,
Cornerstone's relatively small scale makes it more difficult for
the company to absorb potential negative developments in any one
market or at any one facility without detriment to the credit
metrics. Moody's expects that the company will look to add scale
and geographic diversity by aggressively pursuing acquisition and
growth initiatives that will limit debt repayment in the near
term. Finally, the rating incorporates Moody's expectation that
the company will continue to see healthy margins which contribute
to cash flow and provide for good liquidity.
The stable outlook reflects Moody's expectation that the company
will continue to generate stable cash flows that can be used to
fund growth initiatives and acquisition activity. Margins should
remain strong in the near term despite continued pressure on
reimbursement rates. The outlook also reflects Moody's expectation
that free cash flow will be used to fund development projects,
limiting metric improvement in the near term to growth in EBITDA,
and that the company will remain disciplined about the use of
additional debt for acquisitions.
Given the relatively small scale of the company, the expectation
of an aggressive growth strategy and considerable concentration
risk, Moody's does not expect an upgrade of the rating in the near
term. However, if the company can grow the business while lowering
leverage and decreasing the reliance on specific facilities for
revenue and profitability, Moody's could upgrade the ratings.
Moody's would also like to see further clarification of regulatory
concerns around admission criteria for long-term acute care
hospitals.
If the company increases leverage for a significant debt financed
acquisition, Moody's could lower the rating. Additionally, if
metrics were to weaken considerably from negative regulatory or
reimbursement developments or liquidity becomes stressed given the
company's lack of a committed revolver, Moody's could lower the
rating. More specifically, if debt to EBITDA were expected to be
maintained above 5.0 times Moody's could downgrade the ratings.
The principal methodology used in rating Cornerstone was the
Global Healthcare Service Providers Industry Methodology published
in December 2011. Other methodologies used include Loss Given
Default for Speculative-Grade Non-Financial Companies in the U.S.,
Canada and EMEA published in June 2009.
Cornerstone provides post acute healthcare services in sixteen
long-term acute care hospitals in five states. The company focuses
on pulmonary medicine, wound management, medically complex
programs and medical rehabilitation. For the twelve months ended
March 31, 2012 the company recognized revenue of approximately
$239 million. Cornerstone is wholly-owned by funds managed by
Highland Capital Management, L.P. who has executed an operational
turnaround since acquiring the business in an out-of-court
restructuring in 2007.
CUI GLOBAL: Incurs $714,885 Net Loss in Second Quarter
------------------------------------------------------
CUI Global, Inc., filed with the U.S. Securities and Exchange
Commission its quarterly report on Form 10-Q disclosing a net loss
allocable to common stockholders of $714,885 on $10.01 million of
total revenue for the three months ended June 30, 2012, compared
with a net loss allocable to common stockholders of $220,711 on
$9.87 million of total revenue for the same period during the
previous year.
For the six months ended June 30, 2012, the Company reported a net
loss allocable to common stockholders of $1.78 million on $18.48
million of total revenue, compared to a net loss allocable to
common stockholders of $314,234 on $19.41 million of total revenue
for the same period a year ago.
The Company's balance sheet at June 30, 2012, showed
$35.42 million in total assets, $11.28 million in total
liabilities, and $24.13 million in total stockholders' equity.
A copy of the Form 10-Q is available for free at:
http://is.gd/7GAzjQ
About CUI Global
Tualatin, Ore.-based CUI Global, Inc., formerly known as Waytronx,
Inc., is a platform company dedicated to maximizing shareholder
value through the acquisition, development and commercialization
of new, innovative technologies.
CUI Global reported a net loss allocable to common stockholders of
$48,763 in 2011, compared with a net loss allocable to common
stockholders of $7.01 million in 2010.
As reported by the TCR on April 8, 2011, Webb & Company, in
Boynton Beach, Florida, expressed substantial doubt about CUI
Global's ability to continue as a going concern. The independent
auditors noted that the Company has a net loss of $7,015,896, a
working capital deficiency of $675,936 and an accumulated deficit
of $73,596,738 at Dec. 31, 2010. Webb & Company did not include a
"going cocern qualification" in its report on the Company's 2011
financial results.
DAFFY'S INC: Wins Approval to Hire Liquidators
----------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Daffy's Inc. received approval this week to hire
Hilco Merchant Resources LLC and Gordon Brothers Retail Partners
LLC as agents to sell off the merchandise by conducting going-out-
of-business sales.
Prepetition the Debtor sent bid packages to five different
liquidating agents. It selected Great American Group WF, LLC as
stalking horse for an auction July 30. A bid from a joint venture
comprised of Gordon Brothers and Hilco emerged the highest and
best offer.
Gordon/Hilco has guaranteed that that the Debtor would receive
99.5% of the aggregate cost value of the merchandise, which
equates to a minimum recovery for the Debtor of $16.915 million
based on a threshold inventory level of $17 million. After
the sale generates enough to cover expenses, the guarantee, and
the agents' 2.5% fee, Daffy's and the agent will evenly split any
excess. Daffy's will also receive 5% of proceeds from new
inventory the liquidators bring into the sale.
Gordon/Hilco has agreed to commence store closing sale Aug. 11 and
complete the sales and vacate the Debtor's stores no later than
Oct. 14, 2012.
About Daffy's Inc.
Daffy's Inc., the 19-store chain selling discount designer brands
in the U.S. Northeast, will shut the business and has a bankruptcy
plan that would pay off creditors in full.
Daffy's, which has 1,162 employees, filed simultaneously with its
Aug. 1 bankruptcy petition a Chapter 11 plan that would pay all
holders of allowed claims in full, with interest.
An affiliate of JEMB Realty Corporation has agreed to purchase
Daffy's leasehold interests, certain real estate fixtures and
certain intellectual property.
The Debtor estimates that the proceeds received from the
liquidation of its inventory and the sale of its leasehold
interests will exceed at least $60 million to satisfy
approximately $37 million in claims.
The Debtor is represented by Andrea Bernstein, Esq., and Debra A.
Dandeneau, Esq., at Weil, Gotshal & Manges LLP. Donlin, Recano &
Company, Inc., is the claims and notice agent.
DBY INVESTMENTS: Case Summary & Largest Unsecured Creditor
----------------------------------------------------------
Debtor: DBY Investments, LLC
P.O. Box 44426
Denver, CO 80201
Bankruptcy Case No.: 12-26585
Chapter 11 Petition Date: August 8, 2012
Court: United States Bankruptcy Court
District of Colorado (Denver)
Judge: Sidney B. Brooks
Debtor's Counsel: Jeffrey S. Brinen, Esq.
KUTNER MILLER BRINEN, P.C.
303 E. 17th Ave., Suite 500
Denver, CO 80203
Tel: (303) 832-2400
E-mail: jsb@kutnerlaw.com
Estimated Assets: not indicated
Estimated Debts: $1,000,001 to $10,000,000
In its list of 20 largest unsecured creditors, the Company placed
only one entry:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Buchanan Yonushewski Business Debt $1,200
Group LLC
500 E 8th Avenue
Denver, CO 80203
The petition was signed by Gary Sullivan, manager.
DEAN FOODS: Subsidiary's IPO No Effect on Fitch's Ratings
---------------------------------------------------------
The credit ratings and Rating Outlook for Dean Foods Co. (Dean;
NYSE:DF) and Dean Holding Co. will not immediately be affected by
the company's proposed initial public offering (IPO) and tax-free
spin-off of its wholly owned subsidiary -- The WhiteWave Foods Co.
(WhiteWave).
Fitch's current ratings and Outlook are as follows:
Dean Foods Company (Parent)
-- Issuer Default Rating (IDR) 'B';
-- Secured Bank credit facility 'BB/RR1';
-- Senior unsecured debt 'B-/RR5'.
Dean Holding Company (Operating Subsidiary)
-- IDR 'B';
-- Senior unsecured debt 'B-/RR5'.
The Rating Outlook is Positive.
At June 30, 2012, Dean had $3.6 billion of total debt, down from
$3.8 billion at March 31, 2012.
Proposed IPO/Spin-Off of WhiteWave-Alpro:
On Aug. 7, Dean announced its proposed IPO of up to 20% of
WhiteWave and subsequent tax-free spin-off of its remaining
ownership to Dean's shareholders. The IPO could occur by the end
of 2012 but the tax-free spin-off of its remaining ownership
interest will occur no earlier than the expiration or waiver of
the 180-day lock-up period following the closing of the IPO.
WhiteWave intends to list its Class A common shares on The New
York Stock Exchange under the ticker: WWAV.
WhiteWave manufactures, distributes, and sells Dean's branded
plant-based foods and beverages, premium dairy products, and
coffee creamers and beverages under the Silk, Horizon,
International Delight, and Land O Lakes brands in North America
and Alpo and Provamel brands in Europe. Per WhiteWave's S-1
filing on Aug.7, 2012, WhiteWave generated $2.0 billion of sales
and $236.6 billion of EBITDA during 2011. The sale of up to 20%
of Dean's equity in WhiteWave is expected to garner aggregate
gross proceeds of around $300 million.
Net proceeds from the IPO combined with between $800 million and
$925 million of borrowings under a new credit facility at
WhiteWave will be paid to Dean in order to reduce debt.
Management expects Dean's leverage ratio, as defined by its credit
agreements, to decline to approximately 3.5 times (x) from around
4.0x at the latest twelve month (LTM) period ended June 30, 2012
if these transactions close by the end of 2012. If the IPO and
debt raise does not occur by year end, management expects leverage
of about 3.75x by Dec. 31, 2012, an improvement versus previous
guidance, due to stronger than anticipated first half results.
Positive Rating Outlook and Rating Triggers
On May 15, 2012, Fitch upgraded Dean's issue-level ratings and
revised the Outlook on the firm's IDR to Positive from Stable.
The rating action was due to margin improvement at Dean's
traditional dairy operations Fresh Dairy Direct (FDD), Fitch's
expectation that operating fundamentals would remain favorable in
the near-term, continued strength at Dean's other operations, and
management's commitment to utilizing free cash flow (FCF) to
reduce debt. Fitch's base case projection, absent the separation
of WhiteWave, was for total debt-to-operating EBITDA to approach
4.0x by the end of 2012 and fall below 4.0x by 2013.
Fitch has long viewed the separation of WhiteWave as a
possibility, due to management's belief that Dean's equity
valuation did not fully reflect the value of its faster growing
higher margin operations and the firm's history of engaging in
corporate actions to enhance shareholder value. Furthermore,
Fitch has stated that such transformative transactions could
result in rating changes.
Fitch believes Dean's business, absent the cash flow of WhiteWave,
can support leverage in the mid 3.0x range in most years, and
based on management's preliminary leverage estimates, an upgrade
is likely to occur in the near term. Should leverage be sustained
below this level, multiple upgrades are possible. Recovery
prospects for Dean's remaining unsecured debt will also
significantly improve due to over $1 billion of secured debt
paydown in conjunction with the transactions.
Rating Rationale:
Dean's current ratings reflect its relatively high financial
leverage and FDD's mid-single digit operating margin and volatile
earnings profile. Financial and operating risk associated with
these factors have been partially mitigated by the company's
consistent free cash flow, management's focus on debt reduction
and the strong growth profile of WhiteWave-Alpro.
During 2011, FDD represented 74% of the firm's $13.1 billion of
sales and 54% of its $645 million of operating income excluding
corporate expenses. WhiteWave-Alpro represented 16% of sales and
31% of operating income excluding corporate expenses, and
Morningstar represented the remaining 10% and 15%.
Fitch also views Dean's leading market share and national
distribution capabilities as a competitive advantage and expects
continued elimination of fixed costs to better position the firm
to withstand industry volatility. Dean believes it can realize
roughly $100 million of cost reductions annually, after garnering
$300 million under its multi-year productivity initiative
implemented in 2009.
Although raw milk prices, as reflected by the Class I mover,
declined 9% to $16.48/hundredweight during the first half of 2012,
modest increases are expected in the near-term as drought
conditions in parts of the U.S. is resulting in higher animal feed
costs. Fitch expects Dean's continued focus on price realization,
volume performance, and discipline cost management to help the
company manage through higher raw milk input costs.
Potentially negative effects from structural industry challenges
related to excess milk processing capacity and gradual declines in
volumes also remain risks for Dean's FDD business. However, as
long as retailers continue to price milk rationally the risks are
lessened.
The current 'BB/RR1' rating on Dean's secured debt reflects
Fitch's view that recovery prospects for these obligations would
be outstanding at 91% - 100% if the firm filed for bankruptcy. The
debt is secured by a perfected interest in substantially all of
Dean's assets. The current 'B-/RR5' unsecured rating is due to
Fitch's opinion that bondholder recovery would be below average at
11% - 30% in a distressed situation.
As previously mentioned, recovery prospects for Dean's unsecured
debt will improve post the IPO transaction due to the company's
new capital structure. Fitch's assumptions regarding the going-
concern enterprise value of Dean without WhiteWave will also
affect recovery ratings.
For the LTM period ended June 30, 2012, total debt-to-operating
EBITDA was 4.1x, down from 5.3x at Dec. 31, 2010, and operating
EBITDA-to-gross interest expense was 3.6x, up from 3.1x. LTM FCF
was $206.1 million, modestly lower than the company's $260 million
annual average since 2001, excluding the debt-financed $15/share
special dividend in 2007. Dean's FCF is benefiting from improved
operating cash flow, lower inventory related working capital, and
a reduction in capital expenditures. Management now expects
capital expenditures of $250 million - $265 million in 2012, down
from $325 million in 2011.
Liquidity, Maturities, and Financial Covenants:
Fitch views Dean's liquidity as adequate. At June 30, 2012, the
firm had $60.4 million of cash, $1.2 billion available under its
secured revolver, and $185 million under its receivables-backed
facility. Dean's $1.3 billion revolver expires April 2, 2014 and
its $600 million on-balance sheet receivables-backed facility
matures on Sept. 25, 2013.
Scheduled maturities of long-term debt at June 30, 2012 were
$103.5 million in 2012, $376.2 million in 2013, and $1 billion in
2014 and consisted mainly of term loans and balances outstanding
under the revolver and receivables-backed facility. Proceeds from
the IPO and debt incurrence at WhiteWave along with internally
generated cash flow will help Dean repay this debt.
Financial maintenance covenants in Dean's credit facility
currently include maximum total and senior secured leverage
ratios. The calculation excludes up to $100 million of
unrestricted cash and adjusts for charges and non-recurring items
therefore bank leverage ratios are modestly lower than those
calculated by Fitch.
The total leverage covenant is currently 5.5x, stepping down to
5.25x on March 31, 2013 and 4.5x on Sept. 30, 2013. The senior
secured leverage restriction of 3.75x, steps down to 3.5x on March
31, 2013. Dean is also bound by a minimum interest coverage
requirement of 2.75x which steps up to 3.0x on March 31, 2013.
As Fitch anticipated, EBITDA headroom under Dean's financial
maintenance covenants continues to improve due to debt reduction
and operating income growth. Dean reported total leverage and
senior secured leverage, as calculated by its credit agreement, of
3.96x and 2.79x, respectively at June 30, 2012, which indicates
EBITDA cushion in excess of 20%.
Recent Operating Performance and 2012 Outlook:
Dean revised up its 2012 consolidated operating income growth
guidance for the second time this year. The company now expects
mid to high-teens full year operating income growth at FDD versus
low-teens growth previously and continues to expect high-teens
growth for WhiteWave and mid-teens growth at Morningstar.
During the most recent second quarter, consolidated sales declined
5.3% to $3.1 billion and operating income, adjusted non-recurring
litigation settlement expenses during the prior year period,
increased 37% to $157 million. The reduction in revenue was due
mainly to the 11.5% and 0.5% increase in sales at WhiteWave and
Morningstar, respectively, being offset by a 9.6% decline in sales
at FDD. FDD's sales declined due to lower raw milk prices, given
the pass-thru nature of the business, and modestly lower volumes.
WhiteWave and Morningstar both generated double-digit volume
growth.
Higher gross profit at each of Dean's operating segments and lower
selling and distribution costs at FDD drove the increase in
operating income . Cash flow from operations increased 33% to
$238.7 million during the first half of 2012 and FCF increased to
$143.2 million from $60.9 million due to lower capital spending.
What Could Trigger A Rating Action
Future developments that may, individually or collectively, lead
to a positive rating action include:
-- Total debt-to-operating EBITDA in the mid-3.0x range and the
expectation that the company can maintain leverage at this
this level in most years could result in a one-notch upgrade
in Dean's ratings;
-- If Fitch ascertains that leverage can be sustainably
maintained below mid-3.0x, following further review of Dean's
business post the IPO/Spin-off transaction, multiple upgrades
would be possible;
-- On-going FCF generation, continued structural improvement in
Dean's FDD business, and a rational wholesale pricing
environment are also critical factors surrounding future
upgrades in ratings.
Future developments that may, individually or collectively, lead
to a negative rating action include:
-- A sustained period of materially higher than expected
leverage; such that total debt-to-operating EBITDA
consistently above 5.0x, could trigger a downgrade in Dean's
existing ratings;
-- Negative FCF generation, additional step downs in FDD's
profitability due to lower gross profit and/or wholesale
pricing concessions could influence future downgrades in
ratings.
DEAN FOODS: Moody's Reviews 'Ba3' CFR for Downgrade
---------------------------------------------------
Moody's Investors Service placed the ratings of Dean Foods,
Company (Corporate Family Rating at Ba3) on review for downgrade
following the announcement that it will IPO and then spin off its
WhiteWave/ Alpro Division.
Ratings Rationale
Dean Foods announced yesterday that its wholly owned subsidiary,
the WhiteWave Foods Company, has filed a registration statement
with the SEC for an initial public offering. Following the IPO,
Dean will own at least 80% of WhiteWave's common stock, which it
then intends to spin off to its shareholders in a tax free
distribution to occur no earlier than the expiration or waiver of
a 180-day lock-up period after completion of the IPO. Dean Foods
has stated it will use IPO proceeds, as well as new debt that will
be issued at the WhiteWave level, to repay and reduce debt
outstanding under its existing senior secured credit facility,
while at the same time narrowing the focus of the remaining
company to be more reliant on its volatile and low margin
commodity milk business.
Moody's rating review will consider the effects of the IPO and
related debt reduction , along with the subsequent spin-off of
White Wave, one of Dean's most profitable and fastest growing
businesses. The review will consider the post-spin leverage at
Dean Foods which could remain high after taking into account
Moody's adjustments, based on Moody's expectation that most of the
pensions and leases will stay behind with the remaining company as
well as the appropriate instrument ratings in light of the
expected change in capital structure. Moody's will also consider
the strength of Dean's business profile following the spin-off of
one of the company's most attractive assets.
Dean's Ba3 rating reflects its very narrow margins inherent in its
largest, commodity-oriented milk business, high leverage, more
limited product, geographic and customer diversification than
several of its food and agriculture company peers, and the
potential for high earnings volatility due to fluctuating milk
prices and low pricing power. The rating is supported by the
company's leading market share, national scale in the US dairy
industry, and strong distribution network with comprehensive
refrigerated direct store delivery systems. The rating also
reflects the potential for further cost efficiencies/productivity
improvements as management focuses on internal integration,
streamlining of operations and further cost reduction initiatives.
The following ratings were placed on review for downgrade:
Corporate Family Rating of Ba3
Probability of Default Rating of Ba3
Sr Sec Bank Credit facility at Ba3, LGD-3, 42%
Sr Unsecured at B2, LGD5, 88%
The principal methodology used in rating Dean Foods was Moody's
Global Packaged Goods Methodology, published in July, 2009 and
available on www.moodys.com in the Rating Methodologies sub-
directory under the Research & Ratings tab. Other methodologies
and factors that may have been considered in the process of rating
this issuer can also be found in the Rating Methodologies sub-
directory on Moody's website.
Dean Foods is the largest processor and distributor of milk and
various other dairy products in the United States and the largest
producer of soy milk in Europe. The company also markets and sells
a variety of branded dairy and dairy-related products including,
Silk(R) soymilk and almondmilk, Horizon Organic(R) dairy products,
International Delight(R) coffee creamers and beverages, LAND
O'LAKES(R)creamers and fluid dairy products, and cultured dairy
products. Headquartered in Dallas, Texas, Dean Foods had sales of
approximately $13 billion for the latest 12 months ending June 30,
2012.
DEWEY & LEBOEUF: Keightley Approved as Pension Benefits Counsel
---------------------------------------------------------------
The Hon. Martin Glenn U.S. Bankruptcy Court for the Southern
District of New York authorized Dewey & Leboeuf LLP to employ
Keightley & Ashner LLP as special pension benefits counsel.
Keightley & Ashner will provide advice and guidance to the Debtor
relating to employee benefits issues, including advice and
guidance that will allow the Debtor to evaluate the claims filed
by the Pension Benefit Guaranty Corp. and to develop a strategy to
resolve those claims.
Keightley & Ashner's hourly rates are:
$775 to $825 for attorneys,
$600 to $650 for other professionals, and
$225 for paralegals or law clerks.
Harold J. Ashner, Esq., attests that Keightley & Ashner does not
hold or represent any interest adverse to the Debtor or its
estate, and is a "disinterested person" as that term is defined in
Section 101(14) of the Bankruptcy Code, as modified by Section
1107(b) and as required by Section 327(a).
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 US$245
million and assets of US$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 US$6 million. The
Pension benefit Guaranty Corp. took US$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.
U.S. Bankruptcy Judge Martin Glenn on July 31 approved Dewey's
request to extend its funding deadline, which would have July 31,
to Aug. 15.
DEWEY & LEBOEUF: On-Site OK'd to Assist in Accounts Liquidation
---------------------------------------------------------------
The Hon. Martin Glenn U.S. Bankruptcy Court for the Southern
District of New York authorized Dewey & Leboeuf LLP to employ On-
Site Associates, LLC, as its collection agent to assist with the
liquidation of certain of the Debtor's accounts receivable.
On-Site is expected to:
a. provide collection assistance for the receivables,
including, but not limited to, (i) analyzing the receivables
portfolio, organizing and planning the collection process,
and (ii) managing the Debtor's billing and collections team
and providing On-Site professionals to supplement the team;
b. provide collection assistance (similar to that provided for
the receivables) for additional billed and unbilled accounts
receivables as may be later assigned to On-Site by the
Debtor;
c. provide the Debtor with arbitration/litigation preparation
services relating to the receivables and the additional
receivables, as requested by the Debtor; and
d. provide monthly status reports to the Debtor summarizing On-
Site's collection results, and make presentations to the
Debtor, its professionals or other designated persons
regarding the status of collection efforts and results.
On-Site will be compensated for services rendered pursuant to a
commission-based contingent fee arrangement, and be entitled to
reimbursement for its reasonable and necessary travel related
expenses up to $20,000 for the first year of the engagement, with
the parties sharing the cost of certain of On-Site's reasonable
and necessary travel related expenses after the first year.
The Debtor is authorized to provide On-Site with a retainer
advance of $150,000 as minimum compensation for On-Site's
immediate efforts in analyzing the receivables portfolio,
organizing, staffing, planning, manning and commencing the
collection process.
As payment for the retainer, On-Site is authorized to apply the
retainer that it received from the Debtor prior to the Petition
Date in the amount of $122,947, with the balance of the retainer
($27,052) to be paid by the Debtor after entry of the order, the
sums to be applied against the first $150,000 of commissions
invoiced by On-Site.
To the best of the Debtor's knowledge, On-Sited is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
About Dewey & LeBoeuf
New York-based law firm Dewey & LeBoeuf LLP sought Chapter 11
bankruptcy (Bankr. S.D.N.Y. Case No. 12-12321) to complete the
wind-down of its operations. The firm had struggled with high
debt and partner defections. Dewey disclosed debt of US$245
million and assets of US$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 US$6 million. The
Pension benefit Guaranty Corp. took US$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.
U.S. Bankruptcy Judge Martin Glenn on July 31 approved Dewey's
request to extend its funding deadline, which would have July 31,
to Aug. 15.
DIAMONDHEAD INNS: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Diamondhead Inns, Inc.
aka Diamondhead, Inc
441 Yacht Club Dr.
Diamondhead, MS 39525
Bankruptcy Case No.: 12-51673
Chapter 11 Petition Date: August 8, 2012
Court: United States Bankruptcy Court
Southern District of Mississippi
(Gulfport Divisional Office)
Judge: Katharine M. Samson
Debtor's Counsel: David L. Lord, Esq.
DAVID L. LORD AND ASSOCIATES, P.A.
2300 24th Avenue
Gulfport, MS 39501
Tel: (228) 868-5667
Fax: (228) 868-2554
E-mail: lordlawfirm@bellsouth.net
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
The Debtor did not file a list of its largest unsecured creditors
together with its petition.
The petition was signed by Rohit Patel, president.
Affiliate that filed separate Chapter 11 petition:
Petition
Debtor Case No. Date
------ -------- ----
Suresh Amaidas Bhula 11-12469 07/29/11
DVORKIN HOLDINGS: Files for Chapter 11 in Chicago
-------------------------------------------------
Dvorkin Holdings, LLC, filed a bare-bones Chapter 11 petition
(Bankr. N.D. Ill. Case No. 12-31336) in Chicago on Aug. 7. The
Debtor estimated assets of at least $10 million and debts of up to
$10 million.
Michael J. Davis, Esq., at Springer, Brown, Covey, Gaetner &
Davis, in Wheaton, Illinois, serves as counsel. Members of the
firm charge $375 per hour, attorneys $285 per hour and non-
attorneys will bill $125.
EASTMAN KODAK: Apple Tries Again to Oust Bankr. Judge From Suit
---------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Apple Inc. for a second time is asking a U.S.
district judge to remove a lawsuit from bankruptcy court where it
claims ownership of 10 Eastman Kodak Co. patents.
The report recounts that a district judge denied Apple's first
request, allowing the bankruptcy judge to take a first crack at
deciding ownership of the patents. Early this month, the
bankruptcy judge wrote an opinion concluding that Apple was barred
by the statute of limitations or the doctrine of laches from
making claims to two patents. The judge said he wasn't yet able
to rule on the other eight.
The report notes Apple wants the bankruptcy judge to make a formal
ruling which would allow an immediate appeal on the two patents.
The lawsuit in bankruptcy court with Apple is Eastman Kodak Co. v.
Apple Inc., 12-01720, U.S. Bankruptcy Court, Southern District of
New York (Manhattan). Apple's motion to remove the suit from
bankruptcy court is Eastman Kodak Co. v. Apple Inc.,
12-04881, U.S. District Court, Southern District of New York
(Manhattan).
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.
EMISPHERE TECHNOLOGIES: Posts $2.76MM Net Income in 2nd Quarter
---------------------------------------------------------------
Emisphere Technologies, Inc., filed its quarterly report on Form
10-Q, reporting net income of $2.77 million on $nil revenue for
the three months ended June 30, 2012, compared with net income of
$1.84 million on $nil revenue for the same period a year ago.
Other non-operating income for the three months ended June 30,
2012, increased $121,000, or 3%, due primarily to a gain from the
change in fair value of derivative instruments arising from the
decrease in the price of the Company's stock of $532,000, offset
by a $35,000 decrease in other income and a $376,000 increase in
interest expense.
For the six months ended June 30, 2012, the Company reported net
income of $2.03 million on $nil revenue, compared with net income
of $12.84 million on $nil revenue for the comparable period of
2011.
Other non-operating income decreased $11.9 million, or 70%, to
$5.2 million for the six months ended June 30, 2012, in comparison
to other non-operating income of $17.1 million for the six months
ended June 30, 2011, due primarily to a $12.7 million decrease in
the change in fair value of derivative instruments arising from
the relative change in the price of the Company's common stock
during the first half of 2011, compared to the change in the price
of the Company's common stock during the first half of 2012, and a
$738,000 increase in related party interest expense; offset
partially by the receipt of $1.5 million during the first quarter,
2012 from the Technology Business Tax Certificate Transfer
Program, sponsored by the New Jersey Economic Development
Authority.
The Company's balance sheet at June 30, 2012, showed $2.52 million
in total assets, $64.86 million in total liabilities, and a
stockholders' equity of $62.34 million.
McGladrey and Pullen, LLP, in New York City, expressed substantial
doubt about Emisphere'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 its total
liabilities exceed its total assets.
A copy of the Form 10-Q is available for free at:
http://is.gd/nKHZNl
Cedar Knolls, N.J.-based Emisphere Technologies, Inc., is a
biopharmaceutical company that focuses on a unique and improved
delivery of therapeutic molecules or nutritional supplements using
its Eligen(R) Technology. These molecules are currently available
or are under development.
ENERGY FUTURE: Approves Amendments to Retirement Plans
------------------------------------------------------
Energy Future Holdings Corp. approved certain amendments to the
EFH Corp. Retirement Plan, as amended, the EFH Corp. Second
Supplemental Retirement Plan, as amended, the Retirement Income
Restoration Plan of ENSERCH Corporation, as amended, and the EFH
Corp. Salary Deferral Program, as amended. These amendments will
result in:
* the splitting off of assets and liabilities under the
Pension Plan associated with employees of Oncor Electric
Delivery Company LLC and retirees and terminated vested
participants of EFH Corp. and its subsidiaries;
* maintaining assets and liabilities under the Pension Plan
associated with collective bargaining unit employees of EFH
Corp.'s competitive subsidiaries under the current plan;
* the splitting off of assets and liabilities under the
Pension Plan associated with all participants who will not
participate in the New Plan or Union Plan, the freezing of
benefits under the Pension Plan for Affected Participants,
and the vesting of all accrued Pension Plan benefits for
the Affected Participants;
* the termination of, distributions of benefits under, and
settlement of all of EFH Corp.'s liabilities under the
Pension Plan with respect to the Affected Participants; and
* the freezing of benefits under the SRP, Restoration Plan
and SDP for all plan participants.
The Company currently expects that settlement of the Pension Plan
liabilities with respect to the Affected Participants and the
funding of the EFH Corp. competitive business portion of
liabilities under the New Plan will result in additional aggregate
cash contributions by EFH Corp.'s competitive operations of
approximately $200 million, of which approximately $80 million
will be funded by Texas Competitive Electric Holdings Company LLC,
and a charge to earnings of EFH Corp.'s competitive operations of
approximately $150 million ($100 million after-tax), including $35
million at TCEH all in the fourth quarter of 2012. These amounts
are preliminary estimates, and the final amounts could be higher
or lower depending on various factors, including discount rates
and values of the pension trust assets at the settlement date, as
well as the form of settlement.
About Energy Future
Energy Future Holdings Corp., formerly known as TXU Corp., is a
privately held diversified energy holding company with a portfolio
of competitive and regulated energy businesses in Texas. Oncor,
an 80%-owned entity within the EFH group, is the largest regulated
transmission and distribution utility in Texas.
The Company delivers electricity to roughly three million delivery
points in and around Dallas-Fort Worth. EFH Corp. was created in
October 2007 in a $45 billion leverage buyout of Texas power
company TXU in a deal led by private-equity companies Kohlberg
Kravis Roberts & Co. and TPG Inc.
Energy Future had a net loss of $1.91 billion on $7.04 billion of
operating revenues for the year ended Dec. 31, 2011, compared with
a net loss of $2.81 billion on $8.23 billion of operating revenues
during the prior year.
The Company's balance sheet at June 30, 2012, showed $43.44
billion in total assets, $52.17 billion in total liabilities and a
$8.73 billion total deficit.
* * *
In late January 2012, Moody's Investors Service changed the rating
outlook for Energy Future Holdings Corp. (EFH) and its
subsidiaries to negative from stable. Moody's affirmed EFH's Caa2
Corporate Family Rating (CFR), Caa3 Probability of Default Rating
(PDR), SGL-4 Speculative Grade Liquidity Rating and the Baa1
senior secured rating for Oncor.
EFH's Caa2 CFR and Caa3 PDR reflect a financially distressed
company with limited flexibility. EFH's capital structure is
complex and, in our opinion, untenable which calls into question
the sustainability of the business model and expected duration of
the liquidity reserves.
EP ENERGY: Moody's Assigns 'B2' Rating to $300MM Sr. Unsec. Notes
-----------------------------------------------------------------
Moody's assigned a B2 rating to the $300 million of senior
unsecured notes due 2022 for EP Energy LLC and Everest Acquisition
Finance Inc. (EP Energy). The Corporate Family Rating (CFR) of Ba3
and senior secured debt (second lien) rating of Ba3 remain
unchanged. The outlook is stable. The proceeds of the new notes
will be used to reduce the debt outstanding under the company's
senior secured credit facility and for general corporate purposes.
"With investment grade scale and single B leverage metrics, EP
Energy's rating naturally falls somewhere in between," said Stuart
Miller, Moody's Senior Credit Officer. "The Ba3 CFR reflects our
expectation that the company's leverage will remain high as it
will likely borrow to fund a portion of its capital expenditures
over the next few years."
Ratings Rationale
EP Energy is a large and relatively diversified, independent oil
and gas exploration & production (E&P) company. The company is
currently producing about 150,000 Boe per day ranking it as one of
the largest non-investment grade E&P companies Moody's rates.
While historically natural gas focused, the company is migrating
towards more exposure to oil and liquids-rich production. As of
June 30, 2012 , approximately 20% of EP Energy's production was
liquids-oriented and this percentage is projected to double over
the next three to five years. The higher share of liquids
production will create a more balanced cash flow stream and reduce
the exposure to the natural gas market which is expected to remain
depressed for the next few years. Offsetting its large scale, EP
Energy's balance sheet is highly leveraged. As of June 30, 2012,
debt to average daily production was nearly $28,000 per Boe and
debt to proved developed reserves exceeded $12 per Boe. Both of
these metrics are high for its Ba3 CFR and are more typical of
single B rated companies. Over time, Moody's believes these ratios
will improve modestly as the company accelerates the development
of its holdings in the prolific Eagle Ford shale.
The B2 senior unsecured note rating reflects both the overall
probability of default of EP Energy, to which Moody's assigns a
PDR of Ba3, and a loss given default of LGD5-81%. The amount of
the secured debt compared to the amount of senior unsecured debt
results in a two notch differential between the unsecured notes
and the Ba3 CFR using Moody's Loss Given Default Methodology.
However, by using the new senior unsecured notes to reduce a
portion of the senior secured indebtedness, the relative position
of the unsecured notes improves, but not enough to remove the
double notching. Future issuances of unsecured notes could lead to
a one notch upgrade if the proceeds are used to reduce secured
debt.
EP Energy has adequate liquidity. The company is expected to
generate modest amounts of negative free cash flow over the next
12 to 18 months which will be financed by borrowings under the
company's $2 billion senior secured revolving credit facility, or
by opportunistic bond issuances. Availability under the revolving
credit facility is governed by a borrowing base which is currently
set at $2 billion. The revolving credit matures in 2017 and has a
debt to EBITDAX covenant that becomes effective in the third
quarter of 2012. Moody's projects that EP Energy will pass this
covenant by a wide margin allowing for full use of the revolving
credit facility. Alternate liquidity is limited as 80% of EP
Energy's assets are mortgaged under the credit facility.
Moody's has a stable outlook for EP Energy. However, should the
ratio of debt to average daily production exceed $36,000 per Boe
and appear poised to remain at that level, a downgrade will be
considered. Alternatively, if leverage drops below $25,000 per
Boe, it may suggest a change to a more conservative financial
profile which could support an upgrade.
The principal methodology used in rating Everest Acquisition was
the Global Independent Exploration and Production Industry
Methodology published in December 2011. Other methodologies used
include Loss Given Default for Speculative-Grade Non-Financial
Companies in the U.S., Canada and EMEA published in June 2009.
EP Energy LLC is the acquisition vehicle formed by Apollo Global
Management LLC, Riverstone Holdings LLC, Access Industries Inc.,
Korea National Oil Company, and other investors to acquire all of
El Paso Corporation's oil and gas exploration & production assets.
Everest Acquisition Finance Inc. is a co-issuer of the senior
secured notes and the senior unsecured notes and will be renamed
EP Energy Finance Inc. upon closing. EP Energy is an independent
exploration & production company based in Houston, Texas.
EXTENDED STAY: Court to Hold Conference on Bid to Replace Trustee
-----------------------------------------------------------------
Bankruptcy Judge James M. Peck said he is inclined to grant
requests to replace Walker, Truesdell, Roth & Associates, Inc. and
Hobart G. Truesdell as litigation trustee under Extended Stay
Inc.'s confirmed bankruptcy plan. Judge Peck said he needs the
"comfort" of a fully developed record that supports a finding that
an unbiased fiduciary for the Litigation Trust, with knowledge of
the findings of the Examiner's Report in the case, and exercising
sound judgment, would choose not to prosecute causes of action
against the Mezzanine Lenders.
CWCapital Asset Management LLC -- as special servicer for holders
of certain commercial mortgage pass-through certificates -- and
the Official Committee of Unsecured Creditors appointed in the
Chapter 11 Cases Mr. Truesdell as the Initial Trustee.
Ralph R. Mabey, the appointed examiner in the case, filed a report
on April 10, 2010, identifying, among other things, potential
causes of action arising out of prepetition leveraged buyout
transactions involving the Debtors. On June 14 and 15, 2011, the
Initial Trustee commenced five separate actions seeking damages in
relation to the change in control of Extended Stay Hotels that
occurred in June 2007 -- four complaints were filed as adversary
proceedings in Bankruptcy Court, and the fifth was filed in the
New York State Supreme Court, before being removed. On Nov. 1,
2011, the defendants in the adversary proceedings filed motions to
dismiss that have been adjourned on several occasions and are
scheduled for hearing on Sept. 25, 2012.
On July 5, 2012, the Special Servicer, the Creditors' Committee
and the Initial Trustee filed the Joint Motion for Approval of
Separation Agreement, which seeks approval of a Separation
Agreement, dated June 29 among (i) the Initial Trustee, (ii) the
Litigation Trust, (iii) the Creditors' Committee, (iv) the Special
Servicer, and (v) counsel to the Initial Trustee, Baker &
Hostetler LLP and Forman Holt Eliades & Ravin LLC. The Special
Servicer and the Creditors' Committee also filed their Joint
Motion for Approval of Appointment of Successor Litigation Trustee
and Amendment to Litigation Trust Agreement, dated July 5. The
Replacement/Amendment Motion seeks approval of (i) Finbarr
O'Connor of Capstone Advisory Group LLC as Successor Litigation
Trustee and (ii) a proposed Amendment to the Litigation Trust
Agreement.
A number of Trust Beneficiaries have filed statements or joinders
requesting that the Court approve the two motions. On July 17,
2012, Arbor ESH II, LLC, Arbor Commercial Mortgage, LLC, Atmar
Associates, LLC, Gilda One LLC, Ron Invest LLC, ABT-ESI LLC,
Mericash Funding LLC, Princeton ESH LLC, Guy R. Milone, Jr.,
Joseph Chetrit and Joseph Martello -- Arbor Parties -- filed an
objection to the Replacement/Amendment Motion. The Special
Servicer and the Creditors' Committee thereafter filed a Joint
Reply in Further Support of the Replacement/Amendment Motion.
The two companion motions have been structured to resolve issues
in the troubled relationship between the Initial Trustee and the
beneficiaries of the Litigation Trust. The parties have concluded
that this relationship is marked by unproductive and costly
conflict and that change is needed. The Court agrees.
The proposed remedy is to replace the trustee with another trustee
who knows the case well (he currently serves as Plan Administrator
for these Debtors) and will be better able to carry out the
purposes of the Litigation Trust in a manner more closely aligned
with the expectations of the Trust Beneficiaries. A controlling
majority of the Trust Beneficiaries already has predetermined that
the new trustee will discontinue pending litigation brought by the
Initial Trustee against certain mezzanine lender defendants who
are also Trust Beneficiaries. No beneficiary opposes the motions,
although one affiliated group of co-defendants with the Mezzanine
Lenders -- Arbor Parties -- objected that certain of the relief
requested would amount to an improper plan amendment.
The Court overruled the objection.
Judge Peck, however, said, "[T]he solution proposed by the moving
parties, while both permissible from the point of view of the
controlling documents and a pragmatic approach to achieving
predictability as to future activities of the Litigation Trust, is
not yet entirely satisfactory to the Court based on the current
record. What is happening here -- notably the purposeful
curtailing of the authority of the new trustee -- does not look
right given the procedural history of these bankruptcy cases, and
appearances do matter."
While limiting the scope of authority of the Replacement Trustee
is an understandable transactional response to the perceived
litigation excesses of the Initial Trustee, Judge Peck said the
arrangement, as documented, also is susceptible to the negative
perception that the Litigation Trust is being deliberately rigged
to protect a particular class of Trust Beneficiaries. A more
complete record is needed before this arrangement can be blessed.
"The issue here is not what the Court might ultimately decide as
to the merits of claims against the Mezzanine Lenders but rather
how an independent fiduciary, acting without coercion, would view
those claims in practical terms. In short, in consideration of
the many defenses raised by the Mezzanine Lenders, does an
independent fiduciary for estate creditors believe that the claims
in question should be abandoned at this stage of the litigation
for no consideration?," Judge Peck said.
The Court will hold a hearing and conference during the week of
Aug. 20, 2012. The Court directed counsel to make scheduling
arrangements with Chambers by setting up a conference call to
occur during the week of Aug. 13, 2012.
The proposed Replacement Trustee may be reached at:
Finbarr T. O'Connor
Executive Director - Restructuring
CAPSTONE ADVISORY GROUP, LLC
104 West 40th Street, 16th Floor
New York, NY 10018
Tel: 212-782-1403
917-324-8085
E-mail: foconnor@capstoneag.com
A copy of the Court's Aug. 8, 2012 Memorandum Decision is
available at http://is.gd/cvO9yxfrom Leagle.com.
About Extended Stay
Extended Stay is the largest owner and operator of mid-price
extended stay hotels in the United States, holding one of the most
geographically diverse portfolios in the lodging sector with
properties located across 44 states (including 11 hotels located
in New York) and two provinces in Canada. As a result of
acquisitions and mergers, Extended Stay's portfolio has expanded
to encompass over 680 properties, consisting of hotels directly
owned or leased by Extended Stay or one of its affiliates.
Extended Stay currently operates five hotel brands: (i) Crossland
Economy Studios, (ii) Extended Stay America, (iii) Extended Stay
Deluxe, (iv) Homestead Studio Suites, and (v) StudioPLUS Deluxe
Studios.
Extended Stay Inc. and its affiliates filed for Chapter 11 on
June 15, 2009 (Bankr. S.D.N.Y. Case No. 09-13764). Judge James M.
Peck handles the case. Marcia L. Goldstein, Esq., at Weil Gotshal
& Manges LLP, in New York, represents the Debtors. Lazard Freres
& Co. LLC is the Debtors' financial advisors. Kurtzman Carson
Consultants LLC is the claims agent. The Official Committee of
Unsecured Creditors tapped Gilbert Backenroth, Esq., Mark T.
Power, Esq., and Mark S. Indelicato, Esq., at Hahn & Hessen LLP,
in New York, as counsel. Extended Stay had assets of
$7.1 billion and debts of $7.6 billion as of the end of 2008.
Extended Stay Inc. in October successfully emerged from Chapter 11
protection. An investment group including Centerbridge Partners,
L.P., Paulson & Co. Inc. and Blackstone Real Estate Partners VI,
L.P. has purchased 100 percent of the Company for $3.925 billion
in connection with the Plan of Reorganization confirmed by the
Bankruptcy Court in July 2010.
FLETCHER INTERNATIONAL: Injunction Extended on Bermuda Bankruptcy
-----------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that master fund Fletcher International Ltd. won an
extension of an injunction preventing investors in a feeder fund
from having the master fund thrown into an involuntary liquidation
in Bermuda, where the master fund is incorporated.
According to the report, Fletcher International, after seeking
Chapter 11 protection in New York, immediately started a lawsuit
in bankruptcy court to stop the involuntary bankruptcy in Bermuda.
U.S. Bankruptcy Judge Robert E. Gerber signed a temporary
injunction on July 5 stopping liquidators appointed in the Cayman
Islands from proceeding in Bermuda.
The report relates Gerber held another hearing last week where he
extended the injunction until Sept. 25.
About Fletcher International
Fletcher International, Ltd., filed a bare-bones Chapter 11
petition (Bankr. S.D.N.Y. Case No. 12-12796) on June 29, 2012, in
Manhattan. The Bermuda exempted company estimated assets and
debts of $10 million to $50 million. The bankruptcy documents
were signed by its president and director, Floyd Saunders.
David R. Hurst, Esq., at Young Conaway Stargatt & Taylor, LLP, in
New York, serves as counsel.
Fletcher International Ltd. is managed by the investment firm of
Alphonse "Buddy" Fletcher Jr.
Fletcher Asset Management was founded in 1991. During its initial
four years, FAM operated as a broker dealer trading various debt
and equity securities and making long-term equity investments.
Then, in 1995, FAM began creating and managing a family of private
investment funds.
The Debtor is a master fund in the Fletcher Fund structure. As a
master fund, it engages in proprietary trading of various
financial instruments, including complex, long-term, illiquid
investments.
The Debtor is directly owned by Fletcher Income Arbitrage Fund and
Fletcher International Inc., which own roughly 83% and 17% of the
Debtor's common shares, respectively. Arbitrage's direct parent
entities are Fletcher Fixed Income Alpha Fund and FIA Leveraged
Fund, both of which are incorporated in the Cayman Islands and are
subject to liquidation proceedings in that jurisdiction, and which
own roughly 76% and 22% of Arbitrage's common stock, respectively.
The Debtor currently has a single subsidiary, The Aesop Fund Ltd.
FRONTIER COMMS: Fitch Rates $500-Mil. Sr. Unsecured Notes at 'BB+'
------------------------------------------------------------------
Fitch Ratings has assigned a 'BB+' rating to Frontier
Communications Corporation's (Frontier) (NASDAQ: FTR) proposed
offering of $500 million of senior unsecured notes due 2023.
Frontier will use the proceeds for debt reduction or general
corporate purposes. Fitch's Issuer Default Rating (IDR) for
Frontier is 'BB+'. The Rating Outlook is Stable.
Frontier's 'BB+' IDR reflects the meaningful improvement in its
credit profile following the acquisition of access lines in 14
states from Verizon on July 1, 2010. Frontier has articulated a
long-term leverage target of approximately 2.5 times (x). The
company is still above this target as gross debt-to-EBITDA for the
last 12 months ending June 30, 2012 was 3.4x. In 2012, Fitch
expects leverage to improve to 3.3x, pro forma for the repayment
of a $523 million maturity in mid-January 2013.
Fitch believes Frontier's 47% dividend reduction in February 2012
affirms management's commitment to improving its longer-term
leverage metrics. The reduction is expected to save $348 million
on an annual basis.
Ongoing competitive pressures are also factored into the ratings
of Frontier. Its operations are showing a slow and relatively
stable rate of decline due to competitive pressures and
technological substitution; the sluggish economy is also having an
effect. The marketing of additional services -- including high
speed data -- as well as cost controls have been mitigating the
effect of access line losses to cable operators and wireless
providers. Recently announced regulatory reforms are not expected
to have a significant impact on the company in the near term.
Frontier has ample liquidity which is derived from its cash
balances, its $750 million revolving credit facility, and, on a
forward basis, FCF. At June 30, 2012, Frontier had $410 million
in cash and an additional $106 million of restricted cash was
available to fund certain capital expenditures. Over the last 12
months, FCF after dividends was approximately $98 million. FCF in
the period was pressured by the timing of working capital needs
due to the system conversion and broadband buildout as well as
integration and accelerated broadband capital spending.
As a result of the effect of the dividend reduction in 2012, Fitch
expects FCF to improve materially, given the lower dividend will
reduce dividend requirements by $348 million annually. Fitch
expects 2012 FCF to be in a range of $360 million to $400 million
after dividends and integration expenses. FCF expectations
reflect Frontier's capital spending guidance of $725 million to
$775 million plus integration capital spending of $40 million.
Capital spending is expected to decline by $100 million in 2013 as
the broadband expansion is completed.
Liquidity is provided by a $750 million senior unsecured credit
facility, which is in place until Jan. 1, 2014. The $750 million
facility is available for general corporate purposes but may not
be used to fund dividend payments. The main financial covenant in
the revolving credit facility requires the maintenance of a net
debt-to-EBITDA level of 4.5x or less during the entire period.
Net debt is defined as total debt less cash exceeding $50 million.
Frontier has $65 million of principal payments due in 2012, $581
million in 2013 and $258 million in 2014. Fitch expects the
company to use cash balances and FCF to repay the 2013 and 2014
maturities.
The company's $100 million unsecured letter of credit facility
matures Sept. 20, 2012. The facility has no financial ratio
covenants, and other negative covenants are similar to those in
its revolving credit facility. A letter of credit was issued to
the West Virginia Public Service Commission to guarantee capital
expenditure commitments in the state with respect to the
acquisition of the Verizon lines.
What Could Trigger a Rating Action
A positive rating action could occur if:
-- Fitch does not expect a positive rating action to take place
in the next 12 to 18 months. Longer-term leverage would need
to be at or below 2.5x, the dividend payout would need to be
below 55%, and revenues would have to demonstrate sustainable
growth before a positive rating action would be considered.
A negative rating action could occur if:
-- The company's leverage metrics do not improve from year-end
2011 levels of 3.4x after the line integration is completed
and if the company does not show continued progress in
growing revenues from business and data services.
FRONTIER COMMS: Moody's Rates Proposed $500MM Note Issuance 'Ba2'
-----------------------------------------------------------------
Moody's Investors Service has assigned a Ba2 (LGD 4-56%)
instrument rating to Frontier Communications, Inc.'s proposed $500
million note issuance due 2023. The proceeds of the notes will be
used to redeem existing debt and for general corporate purposes.
Following this debt issuance, Frontier will have the ability to
meet all significant maturities through 2014, allowing the company
to focus on its integration and cost cutting efforts.
Ratings Rationale
Frontier's Ba2 corporate family rating reflects its challenged
competitive position versus cable operators, its declining
revenues and the operational complexity associated with assuming
the much larger Verizon operations. The ratings benefit from the
predictability of the Company's cash flow generation and
management's stated commitment to de-lever its balance sheet and
drive credit metrics towards investment grade levels, demonstrated
by its decision to cut its dividend payout in February 2012.
Frontier's financial metrics improved in the recent quarter due to
its success with cost cutting. But, Moody's believes that in order
for the company to materially improve its credit metrics, it will
need to reverse the decline in revenue and begin to recapture
market share in the acquired properties. Frontier's Debt/EBITDA
(Moody's adjusted) is expected to remain in the mid-to-high 3x
range into 2014 despite some modest debt reduction. Given the
potential pressure on future free cash flow from higher cash
taxes, pension contributions and declining USF receipts, Moody's
views Frontier's recently reduced dividend payout as still
unsustainable in the context of its Ba2 corporate family rating
without the expected improvement in margins and capital intensity.
Positive rating momentum could develop if Frontier's financial
profile strengthens as evidenced by margin expansion and topline
improvement. Moody's could upgrade Frontier's rating if the
Company's leverage (total adjusted debt-to-EBITDA) could be
sustained under 3x and its free cash flow increases to mid single
digit percentage of its total debt.
Negative rating pressure could develop if Frontier's operating
performance does not improve which would likelty result in weaker
free cash flow and leverage remaining in the high 3x range. Also
the ratings could be lowered if the Company's liquidity becomes
strained as a result of a continued decline in EBITDA.
The principal methodology used in rating Frontier Communications
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.
FRONTIER COMMS: S&P Rates Proposed $500MM Sr. Notes Due 2023 'BB'
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' issue-level
rating and '3' recovery rating to Stamford, Conn.-based telecom
service provider Frontier Communications Corp.'s proposed $500
million of senior notes due 2023. "The '3' recovery rating
indicates our expectation for meaningful (50%-70%) recovery in
the event of payment default. The company intends to use proceeds
from the notes to repay existing debt," S&P said.
"The 'BB' corporate credit on Frontier is unchanged and the
outlook is negative. The rating reflects a 'weak' business risk
profile and 'significant' financial risk profile. Business risk
factors include significant competitive pressures from wireless
carriers and incumbent cable operators, the latter of which are
bundling telephone with data and video services and are
increasingly targeting smaller business customers. As a result,
the company continues to lose high-margin voice access lines,
which totaled 7.6% in the second quarter of 2012, year over year,"
S&P said.
"Other business risk factors include Standard & Poor's expectation
for declining revenue from federal and state subsidies and the
possibility of continued weak, albeit improving, operating
performance in the acquired Verizon properties. Tempering factors
include the company's position as an incumbent in its territories,
healthy EBITDA margins, and modest growth in data services,
especially in the former Verizon markets, which were underserved
previously. The significant financial risk profile is based on
Frontier's leverage of about 3.7x, pro forma for the new issuance,
and shareholder-oriented financial policy. Despite the company's
intentions to pay down some of its upcoming maturities with cash
and free operating cash flow (FOCF), we expect key credit measures
to weaken over the next few years because of lower EBITDA due to
access-line losses and lower subsidy revenue. Moreover, while
Frontier generates solid FOCF, over 55% is consumed by its common
dividend," S&P said.
RATINGS LIST
Frontier Communications Corp.
Corporate Credit Rating BB/Negative/--
New Ratings
Frontier Communications Corp.
Senior Unsecured
$500 mil nts due 2023 BB
Recovery Rating 3
FUSION TELECOMMUNICATIONS: Jack Rosen Joins Board of Directors
--------------------------------------------------------------
Fusion Telecommunications International, Inc., announced that Jack
Rosen, Chairman of the American Council for World Jewry, Inc.,
current President of the American Jewish Congress, and founder and
Chief Executive Officer of the New York real estate firm, Rosen
Partners LLC, has recognized Fusion by joining its Board of
Directors. In this capacity, Mr. Rosen will provide counsel to
Fusion's management team and advise the company on strategic
issues and relationships.
Active in international government and political affairs,
Mr. Rosen has been a long-time advisor to US presidents and has
received appointments to numerous commissions and councils under
the administrations of both parties. Under President Bill
Clinton, he was a presidential appointee to the United States
Holocaust Memorial Council, as well as a member of the NASA
Advisory Council. Mr. Rosen has also served as a US State
Department delegate to the Organization of American States and is
currently a member of the US Council on Foreign Relations.
In addition to leading Rosen Partners LLC for more than 30 years
in creating residential, commercial and hotel developments
worldwide, Mr. Rosen oversees a wide array of healthcare, cosmetic
and telecommunications business ventures throughout the U.S.,
Europe and Asia. Mr. Rosen currently serves on the Advisory Board
of Altimo, a leading investment company in Russia, the CIS and
Turkey, operating in the field of mobile and fixed-line
communications. Mr. Rosen serves on the Board of Directors of
NextWave Wireless, Inc.
Upon his appointment to the Fusion Board of Directors, Mr. Rosen
commented, "Fusion's IP-based products and services are well
positioned to meet the increasing demands of healthcare and other
vertical markets for fully integrated communications solutions.
Converging voice and data in the cloud drives significant
optimization and cost-saving opportunities for both the public and
private sectors. The combination of Fusion's carrier offering and
cloud services allows Fusion to help organizations better manage
their bottom line, delivering the highest quality solutions at a
lower cost while making communications faster and easier."
Matthew Rosen, chief executive officer of Fusion said, "Jack
Rosen's distinguished career in public policy, telecommunications
and business, along with his long history of service at home and
abroad, are well known and respected at all levels of government,
enterprise and the greater community. His vision for and outreach
to business and organizations that can benefit from Fusion's
offerings is outstanding, and we are absolutely thrilled to have
this dedicated and accomplished gentleman join our team."
The compensation of Mr. Rosen for his service as a director of the
Company will be the same as paid to the Company's other non-
employee directors.
About Fusion Telecommunications
New York City-based Fusion Telecommunications International, Inc.
(OTC BB: FSNN) is a provider of Internet Protocol ("IP") based
digital voice and data communications services to corporations and
carriers worldwide.
In its audit report on the 2011 financial statements, Rothstein,
Kass & Company, P.C., in Roseland, New Jersey, noted that the
Company has had negative working capital balances, incurred
negative cash flows from operations and net losses since
inception, and has limited capital to fund future operations that
raises a substantial doubt about their ability to continue as a
going concern.
The Company reported a net loss of $4.45 million in 2011, compared
with a net loss of $5.79 million in 2010.
The Company's balance sheet at March 31, 2012, showed $3.90
million in total assets, $14.27 million in total liabilities and a
$10.37 million total stockholders' deficit.
GAYLORD ENTERTAINMENT: Share Repurchase No Effect on Moody's CFR
----------------------------------------------------------------
Moody's Investors Service stated that the ratings and rating
outlook for Gaylord Entertainment, Inc. are currently unaffected
by the company's announcement that it entered into an agreement
with TRT Holdings, Inc. pursuant to which Gaylord repurchased five
million shares of Gaylord common stock from TRT for approximately
$185 million. The purchase was funded with borrowings under its
existing $925 million revolving credit facility.
Gaylord's B3 Corporate Family Rating reflects the company's small
number of specialized fixed assets, high fixed cost structure, and
uncertainty with respect to costs, liquidity requirements and
ultimate capital structure that could be in place assuming Gaylord
is successful in converting to a REIT. Despite pro forma credit
metrics that could be characteristic of a higher rating the
uncertainty associated with the company's planned conversion to a
REIT limits any rating improvement at this time. Positive rating
consideration is given to the popularity, location, and brand
awareness of resort properties. Each of the company's four resort
properties are located in a large population centers known for
high levels of visitation.
The stable outlook considers that despite a steady improvement in
Gaylord's operating performance and debt protection metrics to a
level Moody's believes could warrant a higher rating, there is a
uncertainty with respect to costs, liquidity requirements and
ultimate capital structure that will be in place assuming Gaylord
is successful in converting to real estate investment trust.
Gaylord Entertainment Company owns and operates convention centers
and resorts located in Tennessee, Florida, Texas, and Washington,
D.C. Annual revenues are approximately $970 million.
GENERAL MOTORS: Trial Allegedly Threatens Reorganization
--------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that a trial began Aug. 7 in bankruptcy court where new
GM, formally named General Motors Co., contends that success by
creditors of old GM could unravel the sale designed to prevent the
automaker from disintegrating.
According to the report, the trial pits the trust created for
creditors of old General Motors Corp., now formally named Motors
Liquidation Co., against hedge funds that allegedly make a large
profit by purchasing debt of a Nova Scotia subsidiary before
bankruptcy and forcing old GM into a pre-bankruptcy settlement
that paid more than the debt was worth.
The report recounts that Old GM implemented its Chapter 11 plan in
March 2011, distributing stock and warrants received from new GM.
Creditors of old GM split up 10% of the stock of new GM plus
warrants for 15%.
About General Motors
With its global headquarters in Detroit, Michigan, General Motors
Company (NYSE:GM, TSX: GMM) -- http://www.gm.com/-- is one of
the world's largest automakers, traces its roots back to 1908.
GM employs 208,000 people in every major region of the world and
does business in more than 120 countries. GM and its strategic
partners produce cars and trucks in 30 countries, and sell and
service these vehicles through the following brands: Baojun,
Buick, Cadillac, Chevrolet, GMC, Daewoo, Holden, Isuzu, Jiefang,
Opel, Vauxhall, and Wuling. GM's largest national market is
China, followed by the United States, Brazil, the United Kingdom,
Germany, Canada, and Italy. GM's OnStar subsidiary is the
industry leader in vehicle safety, security and information
services.
General Motors Co. was formed to acquire the operations of
General Motors Corp. through a sale under 11 U.S.C. Sec. 363
following Old GM's bankruptcy filing. The U.S. government once
owned as much as 60.8% stake in New GM on account of the
financing it provided to the bankrupt entity. The deal was
closed July 10, 2009, and Old GM changed its name to Motors
Liquidation Co.
General Motors Corp. and three of its affiliates filed for
Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 09-50026) on
June 1, 2009. The Honorable Robert E. Gerber presides over the
Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin,
Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges
LLP, assist the Debtors in their restructuring efforts. Al Koch
at AP Services, LLC, an affiliate of AlixPartners, LLP, serves as
the Chief Executive Officer for Motors Liquidation Company. GM
is also represented by Jenner & Block LLP and Honigman Miller
Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP
is providing legal advice to the GM Board of Directors. GM's
financial advisors are Morgan Stanley, Evercore Partners and the
Blackstone Group LLP. Garden City Group is the claims and notice
agent of the Debtors.
The U.S. Trustee appointed an Official Committee of Unsecured
Creditors and a separate Official Committee of Unsecured
Creditors Holding Asbestos-Related Claims. Lawyers at Kramer
Levin Naftalis & Frankel LLP served as bankruptcy counsel to the
Creditors Committee. Attorneys at Butzel Long served as counsel
on supplier contract matters. FTI Consulting Inc. served as
financial advisors to the Creditors Committee. Elihu Inselbuch,
Esq., at Caplin & Drysdale, Chartered, represented the Asbestos
Committee. Legal Analysis Systems, Inc., served as asbestos
valuation analyst.
The Bankruptcy Court entered an order confirming the Debtors'
Second Amended Joint Chapter 11 Plan on March 29, 2011. The Plan
was declared effect on March 31, 2011.
GENMAR HOLDINGS: Ozark Waste Management Board to Pay Claim
----------------------------------------------------------
Frank Wallis at BaxterBulletin.com reports that the Ozark Mountain
Regional Solid Waste Management District board has agreed to pay a
claim by the bankruptcy trustee for Genmar Holdings Inc. The
bankruptcy trustee sued NABORS Landfill and Hauling Service to
recover $13,000 in waste disposal fees the Court says was paid in
error to NABORS by Genmar. The report relates legal counsel to
NABORS said the claim against the service likely would not prevail
in the courtroom, but the cost of legal representation to fight
the claim filed in Minnesota would probably exceed the amount of
the claim, said NABORS manager Jason Kincade.
About Genmar Holdings
Pulaski, Wisconsin-based Carver Italia, LLC, and its affiliates,
including Genmar Holdings, Inc. -- http://www.genmar.com/-- were
the world's second-largest manufacturer of fiberglass powerboats.
The company generated $460 million in annual revenue making boats
using brand names including Carver, Four Winns, Glastron, Larson,
and Wellcraft.
Genmar and an affiliate filed for Chapter 11 bankruptcy protection
(Bankr. D. Minn. Case No. 09-33773, and 09-43537) on June 1, 2009.
James L. Baillie, Esq., and Ryan Murphy, Esq., at Fredrikson &
Byron, PA, assisted the Debtors in their restructuring efforts.
Carver Italia estimated $10 million to $50 million in assets and
$100 million to $500 million in debts.
Manchester Companies, Inc., was named Chief Restructuring Officer
of Genmar and has been managing the company's restructuring
process since then.
In early 2010, Genmar obtained approval to sell its assets in an
auction. Platinum Equity acquired essentially all of the assets
for $70 million. J&D Acquisitions bought the Carver/Marquis
brands for $6.05 million. MCBC Hydra Boats purchased the Hydra-
Sport business for $1 million.
The case was subsequently converted to Chapter 7 liquidation and
the Office of the U.S. Trustee for Region 12 appointed Charles W.
Ries as Chapter 7 case trustee.
GLOBAL AVIATION: Decision Describes Who's An Insider
----------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Global Aviation Holdings Inc. was authorized last
month to adopt a $137,000 retention bonus program for five
executives not among the company's top officers.
U.S. Bankruptcy Judge Carla E. Craig in Brooklyn wrote a 17-page
opinion giving reasons for rejecting objections from the official
creditors' committee and the U.S. Trustee. The creditors'
committee argued unsuccessfully that the description of workers'
responsibilities placed them within the top echelon of management
so they must be considered "insiders" for whom Congress prohibits
retention bonuses.
The report relates Judge Craig gave a litany of reasons why the
five weren't insiders. She began by saying that the label given
to a person's job by the company isn't dispositive. To be an
insider, the person must be "in the inner circle making the
company's critical financial decisions." according to the report
None of the five, she said, has responsibilities of a corporate
director. None attended board meetings; none reported to the
board, and none were appointed by the board. The workers were not
"persons in control" of the company and didn't have "discretionary
control over substantial budgetary amounts," she said.
Mr. Rochelle notes that last month Judge Craig also recognized a
class to represent workers at a Georgia facility who were fired in
January without the required 60 days' notice. Creation of a class
allows the filing of a class claim so each fired worker isn't put
to the task of pursuing his or her own claim. The lawyers can also
represent the class in negotiating how the claims will be treated
under a Chapter 11 plan.
About Global Aviation Holdings
Global Aviation Holdings Inc., based in Peachtree City, Ga., is
the parent company of North American Airlines and World Airways.
Global is the largest commercial provider of charter air
transportation for the U.S. military, and a major provider of
worldwide commercial global passenger and cargo air transportation
services. North American Airlines, founded in 1989 and based in
Jamaica, N.Y., operates passenger charter flights using B757-200ER
and B767-300ER aircraft. World Airways, founded in 1948 and based
in Peachtree City, Ga., operates cargo and passenger charter
flights using B747-400 and MD-11 aircraft.
Global Aviation, along with affiliates, filed Chapter 11 petitions
(Bankr. E.D.N.Y. Case No. 12-40783) on Feb. 5, 2012.
Global's lead counsel in connection with the restructuring is
Kirkland & Ellis LLP and its financial advisor is Rothschild.
Kurtzman Carson Consultants LLC is the claims agent.
The Debtors disclosed $589.8 million in assets and $493.2 million
in liabilities as of Dec. 31, 2011. Liabilities include $146.5
million on 14% first-lien secured notes and $98.1 million on a
second-lien term loan. Wells Fargo Bank NA is agent for both.
Global said it will use Chapter 11 to shed 16 of 30 aircraft.
In addition, Global said it will use Chapter 11 to negotiate new
collective bargaining agreements with its unions and deal with
liabilities on multi-employer pension plans.
On Feb. 13, 2012, the U.S. Trustee for Region 2 appointed a seven
member official committee of unsecured creditors in the case. The
Committee tapped Lowenstein Sandler PC as its counsel, and
Imperial Capital, LLC as its financial advisor.
The Hon. Carla E. Craig has extended the Debtors' exclusive period
to file a Chapter 11 plan for each Debtor until Oct. 2, 2012, and
the exclusive period to solicit acceptances of a Chapter 11 plan
of each Debtor until Dec. 3, 2012.
GLOBAL CLEAN: Posts $983,800 Net Loss in Second Quarter
-------------------------------------------------------
Global Clean Energy Holdings, Inc., filed its quarterly report on
Form 10-Q, reporting a net loss of $983,852 on $55,501 of total
revenue for the three months ended June 30, 2012, compared with a
net loss of $559,141 on $111,328 of total revenue for the same
period last year.
For the six months ended June 30, 2012, the Company reported a net
loss of $824,938 on $675,022 of total revenue, compared with a net
loss of $1.14 million on $371,552 of total revenue for the
corresponding period of 2011.
The Company's balance sheet at June 30, 2012, showed
$18.68 million in total assets, $13.86 million in total
liabilities, and stockholders' equity of $4.82 million.
As reported in the TCR on March 29, 2012, Hansen, Barnett &
Maxwell, P.C., in Salt Lake City, expressed substantial doubt
about Global Clean's ability to continue as a going concern,
following the Company's results for the fiscal year ended Dec. 31,
2011. The independent auditors noted that the Company has
incurred significant losses from current operations, used a
substantial amount of cash to maintain its operations and has a
large working capital deficit.
A copy of the Form 10-Q is available for free at:
http://is.gd/yiMwIz
Long Beach, Calif.-based Global Clean Energy Holdings, Inc., is an
energy agri-business focused on the development of non-food based
bio-fuel feedstock. GCEH is focusing on the commercialization of
oil and biomass derived from the seeds of Jatropha curcas
("Jatropha") -- a native non-edible plant indigenous to many
tropical and sub-tropical regions of the world, including Mexico,
the Caribbean and Central America. Jatropha oil is high-quality
plant oil used as a direct replacement for fossil fuels or as
feedstock for the production of high quality first and second
generation biofuels like bio-diesel, renewable diesel or bio-jet,
which are direct replacements for diesel fuel and jet fuel.
GREEK PEAK: Lender's Demise Prompts Bankruptcy Filing
-----------------------------------------------------
Matt Hicks at WBNG.com reported that Greek Peak earlier this month
filed for Chapter 11 bankruptcy protection to get more time to
find another lender and develop a new strategy for the resort.
WBNG.com said the bankruptcy filing came a few weeks after the
business announced that 1,000 were at stake due to a loan that
fell through. Because of a winter with minimal snowfall, Greek
Peak had to take out a $1.6 million loan to ensure they'll stay
operational until this winter. But the lender, Tennessee
Commerce, was seized by regulators in January.
WBNG.com said Greek Peak was unsuccessful in negotiating a
reorganization plan with the Federal Deposit Insurance Corp., but
the agency will be providing Greek Peak "Debtor in Possession"
financing to continue and sustain operations.
Jeff Platsky at pressconnects.com reported that the FDIC is
extending $1.6 million in emergency loans to Greek Peak.
WBNG.com said the business will continue as normal and Greek Peak
officials expect to be out from under Chapter 11 by the time ski
season starts.
GAMETECH INTERNAIONAL: Has OK to Hire Kinetic as Financial Advisor
------------------------------------------------------------------
GameTech International, Inc., et al., sought and obtained
permission from the U.S. Bankruptcy Court for the District of
Delaware to employ Kinetic Advisors LLC as financial advisor, nunc
pro tunc to the Petition Date.
Kinetic Advisors will, among other things:
a. analyze cash position;
b. evaluate operations and financial results;
c. assist with fulfillment of Chapter 11 reporting
requirements;
d. identify key stakeholders and critical issues, and
communicate as needed; and
e. assist with cash flow modeling and financial projections.
The Debtors paid Kinetic Advisors $12,500 prior to the Petition
Date, which the firm will maintain as a retainer to be applied
against the success fee.
Kinetic Advisors will be paid a monthly work fee of $100,000 on
the first day of each month for the first two months and $50,000
per month thereafter for the duration of the Chapter 11 case.
Kinetic Advisors will earn and be paid a success fee equal to
$600,000 upon (a) the consummation of the Debtors' plan of
reorganization, or (b) the sale of substantially all of the
Debtors' assets. Kinetic Advisors will seek reimbursement of
actual and necessary expenses incurred by the firm.
To the best of the Debtors' knowledge, Kinetic Advisors is a
"disinterested person" as the term is defined in Section 101(14)
of the Bankruptcy Code.
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.
GREENMAN TECHNOLOGIES: Now Known as "American Power Group Corp."
----------------------------------------------------------------
GreenMan Technologies, Inc., has changed its name to "American
Power Group Corporation" effective Aug. 1, 2012. Effective
Aug. 7, 2012, the Company's common shares will begin trading on
the OTCQB under its new ticker symbol "APGI". The name change is
a reflection of the Company's refined and enhanced business
strategy which began with its acquisition of American Power Group,
Inc., (APG) in 2009 and its focus on providing a cost-effective
patented Turbocharged Natural Gas conversion technology for
aftermarket vehicular and stationary diesel engines and diesel
generators. The shareholders of the Company approved the name
change at the annual meeting held July 23, 2012.
Mr. Lyle Jensen, GreenMan's president and chief executive officer,
commented, "With our acquisition of American Power Group in July
2009, we shifted our Company focus to the commercialization and
marketing of our patented dual fuel technology. Since 2009, we've
made great progress both internationally and domestically to
increase the use of our dual fuel solution for vehicular and
stationary applications and our Company is now one hundred percent
dedicated to capitalizing on the growing demand for dual fuel
options in the marketplace. With the growth of the APG brand, we
thought it made sense to align the corporate name and operations,
to enhance our market presence and customer recognition with the
goal of continuing to build value for our shareholders."
All future business activity will be undertaken using the new
name.
About Greenman Technologies
Lynnfield, Mass.-based GreenMan Technologies, Inc. (OTC QB: GMTI)
through its two alternative energy subsidiaries, American Power
Group, Inc. ("APG") and APG International, Inc. ("APGI"), provides
a cost-effective patented dual fuel conversion technology for
diesel engines and diesel generators.
Schechter Dokken Kanter Andrews & Selcer, Ltd., in Minneapolis,
Minnesota, issued a "going concern" qualification on the
consolidated financial statements for the fiscal year ended
Sept. 31, 2011, indicating that the Company has continued to incur
substantial losses from operations, has not generated positive
cash flows and has insufficient liquidity to fund its ongoing
operations that raise substantial doubt about the Company's
ability to continue as a going concern.
The Company reported a net loss of $6.81 million for the year
ended Sept. 30, 2011, compared with a net loss of $5.64 million
the year before.
The Company's balance sheet at March 31, 2012, showed $4 million
in total assets, $7.92 million in total liabilities, and a
$3.92 million total stockholders' deficit.
GULF COLORADO: Files Schedules of Assets and Liabilities
--------------------------------------------------------
Gulf, Colorado & San Saba Railway Corporation filed with the U.S.
Bankruptcy Court for the Western District of Texas its schedules
of assets and liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property $24,084,350
B. Personal Property $450,514
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $2,343,942
E. Creditors Holding
Unsecured Priority
Claims $9,169
F. Creditors Holding
Unsecured Non-priority
Claims $1,357,261
----------- -----------
TOTAL $24,534,864 $3,710,371
A full text copy of the schedules of assets and liabilities is
available for free at:
http://bankrupt.com/misc/GULF_COLORADO_sal.pdf
Brady, Texas-based Gulf, Colorado & San Saba Railway Corporation,
owner of a railroad in San Saba, Mills, McCulloch and Lampasas
Counties, filed a Chapter 11 petition (Bankr. W.D. Tex. Case No.
12-11531) in Austin on July 3, 2012. Frances A. Smith, Esq., at
Shackelford Melton & McKinley, in Dallas, serves as counsel.
GULF COLORADO: Can Operate Railway Pending Appointment of Trustee
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Texas has
granted Gulf, Colorado & San Saba Railway Corporation permission
to operate its business on an interim basis pending appointment of
a Chapter 11 railroad trustee.
Pursuant to the Court's July 23 Order, the Debtor will be
authorized to continue its possession of its assets, collect its
accounts receivable, carry on normal business operations,
including hiring employees as needed to comply with federal
guidelines, and developing additional customers, and expend funds
only in accordance with an operating budget, and will have
standing and authority to be heard and to seek appropriate relief
from this Court in furtherance of such authority.
The authority granted to the Debtor will automatically expire upon
appointment of a Chapter 11 Trustee in GCSR's case, or Oct. 3,
2012, whichever date is earlier. If a Chapter 11 Trustee is not
appointed by Oct. 3, 2012, the Court will consider alternative
relief, including, but not limited to, a motion by the Debtor or
U.S. Trustee regarding continued operations.
Title 11 U.S.C. Section 1163 requires the Secretary of
Transportation, as soon as practicable after the order for relief,
to submit a list of five disinterested persons who are qualified
and willing to serve as trustee in GCSR's case. As of the filing
of the Motion, no trustee has been appointed.
About GCSR
Gulf, Colorado & San Saba Railway Corporation operates the Gulf,
Colorado and San Saba Railway, a former Atchison, Topeka and Santa
Fe Railway "San Saba branch line." The Railway is a short-line
freight railroad headquartered in Brady, Texas and operates from
an interchange with the BNSF Railway at Lometa, Texas 67.5 miles
west to Brady, Texas. The Railway is located within the counties
of Lampasas, Mills, San Saba and McCulloch, Texas.
The Company filed for Chapter 11 relief (Bankr. W.D. Tex. Case No.
12-11531) on July 3, 2012. Judge H. Christopher Mott presides
over the case. Frances A. Smith, Esq., and Subvet D. West, Esq.,
at Shackelford Melton & McKinley, in Dallas, Tex., represents the
Debtor as counsel. In its petition, the Debtor disclosed assets
of between $10 million and $50 million and debts of between
$1 million and $10 million. The petition was signed by Richard C.
McClure, president and CEO.
HAMPTON ROADS: Incurs $5.6 Million Net Loss in Second Quarter
-------------------------------------------------------------
Hampton Roads Bankshares, Inc., filed with the U.S. Securities and
Exchange Commission reported a net loss attributable to the
Company of $5.66 million on $20.66 million of total interest
income for the three months ended June 30, 2012, compared with a
net loss attributable to the Company of $18.79 million on $26.28
million of total interest income for the same period during the
prior year.
According to the quarterly report on Form 10-Q, the Company had a
net loss attributable to the Company of $13.57 million on
$42.27 million of total interest income for the six months ended
June 30, 2012, compared with a net loss attributable to the
Company of $50.46 million on $53.46 million of total interest
income for the same period a year ago.
The Company reported a net loss of $98 million in 2011, compared
with a net loss of $210.35 million in 2010.
The Company's balance sheet at June 30, 2012, showed $2.07 billion
in total assets, $1.92 billion in total liabilities, and
$149.34 million in total shareholders' equity.
A copy of the Form 10-Q is available for free at:
http://is.gd/aPuw2M
D. Richard Named President
Donna W. Richards has been appointed President of The Bank of
Hampton Roads. She was previously President - Virginia/North
Carolina, with responsibility for all of BHR's branches,
marketing, and the Small Business Banking and Private Banking
units. As President, Richards will retain these responsibilities
and will play an expanded role in developing and executing BHR's
operating strategies going forward.
Douglas J. Glenn, President and Chief Executive Officer of the
Company and BHR, said, "Since Donna's appointment as President -
Virginia/North Carolina last year, she has played a key role in
refining and executing the Company's plan to sharpen our focus on
our core community banking franchise, improve our operating
efficiency and return to profitability. Her appointment as
President reflects the scope of her organizational
responsibilities and the significant contributions she has already
made."
Richards has been with BHR and its predecessor organizations,
Gateway Bank and The Bank of Richmond, since 2005. At Gateway,
she served as Senior Vice President and Senior Banking Executive
and, prior to that, as Charlottesville Market President. Prior to
joining The Bank of Richmond in May 2005, Richards served as Chief
Operating Officer on the management team that opened
Charlottesville-based Sonabank in 2005. Prior to Sonabank, she
was Senior Vice President of Commercial Lending at Northern
Virginia-based Southern Financial Bank and also served nearly ten
years in various positions at Guaranty Bank, finally as Chief
Operating Officer. Her career spans 25 years, with a broad range
of experience that includes retail banking, audit, mortgage
banking, and commercial lending.
About Hampton Roads Bankshares
Hampton Roads Bankshares, Inc. (NASDAQ: HMPR) --
http://www.hamptonroadsbanksharesinc.com/-- is a bank holding
company that was formed in 2001 and is headquartered in Norfolk,
Virginia. The Company's primary subsidiaries are Bank of Hampton
Roads, which opened for business in 1987, and Shore Bank, which
opened in 1961. Currently, Bank of Hampton Roads operates twenty-
eight banking offices in the Hampton Roads region of southeastern
Virginia and twenty-four offices in Virginia and North Carolina
doing business as Gateway Bank & Trust Co. Shore Bank serves the
Eastern Shore of Maryland and Virginia through eight banking
offices and fifteen ATMs.
Effective June 17, 2010, the Company and its banking subsidiary,
Bank of Hampton Roads ("BOHR"), entered into a written agreement
with the Federal Reserve Bank of Richmond and the Bureau of
Financial Institutions of the Virginia State Corporation
Commission. The Company's other banking subsidiary, Shore Bank,
is not a party to the Written Agreement.
Under the terms of the Written Agreement, among other things, BOHR
agreed to develop and submit for approval plans to (a) strengthen
board oversight of management and BOHR's operations, (b)
strengthen credit risk management policies, (c) improve BOHR's
position with respect to loans, relationships, or other assets in
excess of $2.5 million which are now, or may in the future become,
past due more than 90 days, are on BOHR's problem loan list, or
adversely classified in any report of examination of BOHR, (d)
review and revise, as appropriate, current policy and maintain
sound processes for determining, documenting, and recording an
adequate allowance for loan and lease losses, (e) improve
management of BOHR's liquidity position and funds management
policies, (f) provide contingency planning that accounts for
adverse scenarios and identifies and quantifies available sources
of liquidity for each scenario, (g) reduce the Bank's reliance on
brokered deposits, and (h) improve BOHR's earnings and overall
condition.
HEALTHEAST CARE: S&P Raises Rating on Various Bonds From 'BB+'
--------------------------------------------------------------
Standard & Poor's Ratings Services has raised its long-term rating
to 'BBB-' from 'BB+' on various bonds issued by Washington County
Housing & Redevelopment Authority, Minn. and St. Paul Housing &
Redevelopment Authority, Minn. for HealthEast Care System. At the
same time, Standard & Poor's raised its long-term rating to 'BB+'
from 'BB' on St. Paul Port Authority, Minn. series 2005-3A lease
bonds, issued for HealthEast.
"We raised the ratings to reflect our favorable view of
HealthEast's stable patient utilization and leading market share
and steadily improving financial performance, liquidity, and debt
leverage," said Standard & Poor's credit analyst Ken Rodgers. "At
the same time, the system has demonstrated restraint in new debt
issuance and has recently moderated its capital spending," said
Mr. Rodgers.
Additional credit factors assessed by Standard & Poor's include
HealthEast's:
- Slight uptick in the leading east metro (St. Paul) market
share, which is a competitive market;
- Slow and steady improving financial performance;
- Debt service coverage based on maximum annual debt service
that has exceeded 2x for the past two years and shows
increased strength at 2.9x for the nine months ended May 31,
2012;
- Decreased debt leverage and increased liquidity; and
- Decreased capital spending.
"While some credit factors such as financial performance,
liquidity, and debt leverage exhibit improvement and thus warrant
the higher ratings, they are still only adequate to support the
minimum investment-grade rating for the senior debt consistent
with median ratios for Standard & Poor's 'BBB-' rated health care
systems. According to Standard & Poor's, a higher rating would
require HealthEast to demonstrate marked improvement in these
areas in the future. Additional credit factors that cannot be
assessed at this time is a recent change in senior management as
well as the implementation of a new organization structure
effective July 1, 2012," S&P said.
"The stable outlook reflects Standard & Poor's view that
HealthEast's leading market share, stable patient utilization
trend, and improving financial performance and liquidity should
result in credit stability over the next two years. A higher
rating over this period is possible if patient utilization trends
show continued improvement, financial operating and excess margins
increase, days' cash on hand exceeds 100, cash to debt exceeds
65%, and debt leverage shows further improvement. While not
expected, a lower rating over the same horizon is possible if
patient utilization levels decline significantly, financial
performance falters measurably, liquidity declines, or debt
leverage increases," S&P said.
HealthEast is one of the Twin-Cities leading health care systems.
HMC/CAH CONSOLIDATED: Can Hire CBIZ to Provide Appraisal Services
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Missouri has granted
HMC/CAH Consolidated, Inc., et al., permission to employ CBIZ,
Inc., to provide appraisal services nun pro tunc to the date of
the respective engagement letters, dated May 22 and May 2, 2012.
CBIZ's will provide these services:
a. preparation of an estimate of fair market value for certain
real property as identified by the Debtors, and
b. preparation of an estimate of fair market value for specific
assets as identified by the Debtors which may include fixed
assets, inventories, accounts receivable, and vehicles of
various Debtors.
To the best of Debtors' knowledge, CBIZ does not hold or represent
an interest adverse to Debtors' estates and are disinterested, as
that term is defined in Section 101 of the Bankruptcy Code.
The hourly rates of the professionals who will be working as the
Debtors' appraisers are:
-- Valuation of personal property and specified assets.
Director $360
Senior Manager $225
Staff $175
-- Valuation of real property.
Managing Director $355
Senior Manager $285
Analyst $100-$170
About HMC/CAH Consolidated
Kansas City, Missouri-based HMC/CAH Consolidated, Inc., is in the
business of acquiring and operating a system of acute care
hospitals located in rural communities that are certified by The
Centers for Medicare and Medicaid Services as Critical Access
Hospitals or CAHs. The core focus of HMC/CAH's business plan is
to replace the technologically out of date and operationally
inefficient medical facilities of its CAHs with newly constructed
state-of-the art facilities. Since its incorporation, HMC/CAH has
purchased 12 rural hospitals certified as Critical Access
Hospitals. These CAH Hospitals are located in Kansas (3),
Oklahoma (5), Missouri (1), Tennessee (1) and North Carolina (2).
The CAH Hospitals are the lifeline of the communities that they
serve. The CAH Hospitals provide critical health services to
rural residents, including emergency medical services.
HMC/CAH and 12 affiliates filed for Chapter 11 bankruptcy (Bankr.
W.D. Mo. Case Nos. 11-44738 to 11-44750) on Oct. 10, 2011. Judge
Dennis R. Dow presides over the case. Mark T. Benedict, Esq.,
Marshall C. Turner, Esq., and Matthew Gartner, Esq., at Husch
Blackwell LLP, in Kansas City, Mo., represent the Debtors as
counsel. In its petition, the Debtors estimated $10 million to
$50 million in assets and debts. The petition was signed by
Dennis Davis, chief legal officer.
Nancy J. Gargula, U.S. Trustee for Region 13, appointed five
members to serve on the Official Committee of Unsecured Creditors
of HMC/CAH Consolidated, Inc. Kilpatrick Townsend & Stockton LLP
serves as the committee's counsel.
HMC/CAH CONSOLIDATED: Court Extends Solicitation Period to Oct. 5
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Missouri has
extended until Oct. 5, 2012, HMC/CAH Consolidated, Inc., and
affiliated Debtors' exclusive period to solicit acceptances of
their Joint Plan to and including Oct. 5, 2012. Should the Court
postpone, reschedule, continue, or adjourn the hearing to consider
confirmation of the Joint Plan, however, the Solicitation Period,
however, will not be automatically extended.
On June 6, 2012, the Debtors filed their Joint Plan and on July 3,
2012, the Debtors filed a Joint Disclosure Statement for their
Joint Plan.
The Official Committee of Unsecured Creditors had objected to the
motion to extend the exclusive period to solicit acceptances of
the Joint Plan to Oct. 5, 2012, arguing that:
-- The Debtors have not proposed a viable plan.
-- If the Debtors resort to cram-down, the Plan will violate the
Bankruptcy Code's absolute priority rule.
-- The Debtors have not conducted the Plan process in good faith
and are trying to use exclusivity to pressure the the
unsecured creditors to accede to their demands.
-- The Committee does not believe the extension is in the best
interests of the Debtors' estates.
The Committee said that the Court should give creditors the
opportunity to present alternatives to the Plan that are capable
of being confirmed and in any event provide for an alternative
that can provide for a meaningful recovery to unsecured creditors.
About HMC/CAH Consolidated
Kansas City, Missouri-based HMC/CAH Consolidated, Inc., is in the
business of acquiring and operating a system of acute care
hospitals located in rural communities that are certified by The
Centers for Medicare and Medicaid Services as Critical Access
Hospitals or CAHs. The core focus of HMC/CAH's business plan is
to replace the technologically out of date and operationally
inefficient medical facilities of its CAHs with newly constructed
state-of-the art facilities. Since its incorporation, HMC/CAH has
purchased 12 rural hospitals certified as Critical Access
Hospitals. These CAH Hospitals are located in Kansas (3),
Oklahoma (5), Missouri (1), Tennessee (1) and North Carolina (2).
The CAH Hospitals are the lifeline of the communities that they
serve. The CAH Hospitals provide critical health services to
rural residents, including emergency medical services.
HMC/CAH and 12 affiliates filed for Chapter 11 bankruptcy (Bankr.
W.D. Mo. Case Nos. 11-44738 to 11-44750) on Oct. 10, 2011. Judge
Dennis R. Dow presides over the case. Mark T. Benedict, Esq.,
Marshall C. Turner, Esq., and Matthew Gartner, Esq., at Husch
Blackwell LLP, in Kansas City, Mo., represent the Debtors as
counsel. In its petition, the Debtors estimated $10 million to
$50 million in assets and debts. The petition was signed by
Dennis Davis, chief legal officer.
Nancy J. Gargula, U.S. Trustee for Region 13, appointed five
members to serve on the Official Committee of Unsecured Creditors
of HMC/CAH Consolidated, Inc. Kilpatrick Townsend & Stockton LLP
serves as the committee's counsel.
HMC/CAH: Can Employ Royal Blue as Capital Investment Consultant
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Missouri has
authorized HMC/CAH Consolidated, Inc., et al., to employ Royal
Blue Capital, LLC, as capital investment consultant, nunc pro tunc
to Jan. 1, 2012.
RBC will provide a wide variety of capital investment consulting
and advisory services to the Debtors on a contingent fee basis:
If, during the term of the Agreement, (i) RBC introduces to Client
a Pre-Approved Investor or Lender, and (ii) Client closes a
Financial Transaction with such Pre-Approved Investor or Lender
during the term of the Agreement, Client will pay to RBC, as
compensation for Brokerage Services rendered, a fee or fees:
(a) In connection with an Investment Transaction of $10,000,000
or less, a Fee of 3% percent of the Total Consideration
thereof;
(b) In connection with an Investment Transaction of more than
$10,000,000, a Fee of 6% percent of the Total Consideration
thereof;
(c) In connection with a Lending Transaction of $5,000,000 or
less, a Fee of 1% percent on the Total Consideration
thereof;
(d) In connection with a Lending Transaction of more than
$5,000,000, a Fee of two 2% percent on the Total
Consideration thereof.
Client will also pay to RBC in connection with a Financial
Transaction, expenses actually incurred by RBC provided that all
such expenses were agreed to by Client in advance.
About HMC/CAH Consolidated
Kansas City, Missouri-based HMC/CAH Consolidated, Inc., is in the
business of acquiring and operating a system of acute care
hospitals located in rural communities that are certified by The
Centers for Medicare and Medicaid Services as Critical Access
Hospitals or CAHs. The core focus of HMC/CAH's business plan is
to replace the technologically out of date and operationally
inefficient medical facilities of its CAHs with newly constructed
state-of-the art facilities. Since its incorporation, HMC/CAH has
purchased 12 rural hospitals certified as Critical Access
Hospitals. These CAH Hospitals are located in Kansas (3),
Oklahoma (5), Missouri (1), Tennessee (1) and North Carolina (2).
The CAH Hospitals are the lifeline of the communities that they
serve. The CAH Hospitals provide critical health services to
rural residents, including emergency medical services.
HMC/CAH and 12 affiliates filed for Chapter 11 bankruptcy (Bankr.
W.D. Mo. Case Nos. 11-44738 to 11-44750) on Oct. 10, 2011. Judge
Dennis R. Dow presides over the case. Mark T. Benedict, Esq.,
Marshall C. Turner, Esq., and Matthew Gartner, Esq., at Husch
Blackwell LLP, in Kansas City, Mo., represent the Debtors as
counsel. In its petition, the Debtors estimated $10 million to
$50 million in assets and debts. The petition was signed by
Dennis Davis, chief legal officer.
Nancy J. Gargula, U.S. Trustee for Region 13, appointed five
members to serve on the Official Committee of Unsecured Creditors
of HMC/CAH Consolidated, Inc. Kilpatrick Townsend & Stockton LLP
serves as the committee's counsel.
HMC/CAH: Can Obtain Equipment Financing From Fukuda Denshi USA
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Missouri has
authorized HMC/CAH Consolidated, Inc., et al., to obtain secured
postpetition financing in the amount of $61,948 from Fukuda Denshi
USA, Inc., for the purpose of financing the purchase of certain
medical equipment.
As security for the postpetition financing, Fukuda will have
(effective upon the completion of delivery and installation of the
Equipment a valid and perfected purchase money security interest
under Article 9 of the Uniform Commercial Code in, and first
priority, perfected lien upon all of the Debtors' right, title and
interest in, to and under the Collateral.
The lien will be prior and senior to all liens and encumbrances of
all other secured creditors in and to such Collateral granted, or
arising, after the Petition Date (including, without limitation,
liens and security interests, if any, granted in favor of any
federal, state, municipal or other governmental unit, commission,
board or court for any liability of the Debtors).
About HMC/CAH Consolidated
Kansas City, Missouri-based HMC/CAH Consolidated, Inc., is in the
business of acquiring and operating a system of acute care
hospitals located in rural communities that are certified by The
Centers for Medicare and Medicaid Services as Critical Access
Hospitals or CAHs. The core focus of HMC/CAH's business plan is
to replace the technologically out of date and operationally
inefficient medical facilities of its CAHs with newly constructed
state-of-the art facilities. Since its incorporation, HMC/CAH has
purchased 12 rural hospitals certified as Critical Access
Hospitals. These CAH Hospitals are located in Kansas (3),
Oklahoma (5), Missouri (1), Tennessee (1) and North Carolina (2).
The CAH Hospitals are the lifeline of the communities that they
serve. The CAH Hospitals provide critical health services to
rural residents, including emergency medical services.
HMC/CAH and 12 affiliates filed for Chapter 11 bankruptcy (Bankr.
W.D. Mo. Case Nos. 11-44738 to 11-44750) on Oct. 10, 2011. Judge
Dennis R. Dow presides over the case. Mark T. Benedict, Esq.,
Marshall C. Turner, Esq., and Matthew Gartner, Esq., at Husch
Blackwell LLP, in Kansas City, Mo., represent the Debtors as
counsel. In its petition, the Debtors estimated $10 million to
$50 million in assets and debts. The petition was signed by
Dennis Davis, chief legal officer.
Nancy J. Gargula, U.S. Trustee for Region 13, appointed five
members to serve on the Official Committee of Unsecured Creditors
of HMC/CAH Consolidated, Inc. Kilpatrick Townsend & Stockton LLP
serves as the committee's counsel.
HSN INC: S&P Withdraws 'BB' CCR After Senior Note Redemption
------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its ratings (including
the 'BB' corporate credit rating) on HSN Inc. following the
redemption of the company's $240 million 11.25% senior notes due
2016. HSN funded the redemption through its $250 million delayed-
draw term loan and some cash on hand.
INDEPENDENCE TAX IV: Reports $1.96-Mil. Net Income in June 30 Qtr.
------------------------------------------------------------------
Independence Tax Credit Plus L.P. IV filed its quarterly report on
Form 10-Q, reporting net income of $1.96 million on $1.14 million
of total revenues for the three months ended June 30, 2012,
compared with a net loss of $324,152 on $1.09 million of total
revenues for the three months ended June 30, 2011.
The Company's balance sheet at June 30, 2012, showed
$17.93 million in total assets, $32.86 million in total
liabilities, and a partners' deficit of $14.93 million.
"At June 30, 2012, the Partnership's liabilities exceeded assets
by $14,933,693 and for the three months ended June 30, 2012, had
net income of $1,958,617, including gain on sale of properties of
$2,125,079. These factors raise substantial doubt about the
Partnership's ability to continue as a going concern."
A copy of the Form 10-Q is available for free at:
http://is.gd/F1Arj9
Independence Tax Credit Plus L.P. IV is a limited partnership
which was formed under the laws of the State of Delaware on
Feb. 22, 1995. The general partner of the Partnership is Related
Independence L.L.C., a Delaware limited liability company (the
"General Partner"), which is managed by an affiliate of Centerline
Holding Company, the ultimate parent of the manager of the general
partner of the General Partner.
The Partnership's initial business was to invest in other
partnerships owning leveraged apartment complexes that are
eligible for the low-income housing tax credit enacted in the Tax
Reform Act of 1986, some of which may also be eligible for the
historic rehabilitation tax credit.
The Partnership is currently in the process of developing a plan
to dispose of all of its investments. It is anticipated that this
process will continue to take a number of years.
INFUSYSTEM HOLDINGS: Incurs $828,000 Net Loss in Second Quarter
---------------------------------------------------------------
InfuSystem Holdings, Inc., reported a net loss of $828,000 on
$14.07 million of net revenues for the three months ended June 30,
2012, compared with a net loss of $27.88 million on $13.13 million
of net revenues for the same period during the prior year.
The Company reported a net loss of $1.74 million on $28.42 million
of net revenues for the six months ended June 30, 2012, compared
with a net loss of $28.05 million on $26.09 million of net
revenues for the same period a year ago.
The Company's balance sheet at June 30, 2012, showed $74.72
million in total assets, $35.52 million in total liabilities and
$39.20 million in total stockholders' equity.
"We have made important financial and operational progress," said
Interim Chief Executive Officer Dilip Singh. "Eliminating
unnecessary management positions and reducing board cash
compensation contributed significantly to the $1 million-plus in
annual savings. We expect to see additional cost-saving
initiatives introduced in the third quarter. At the same time,
our management team and employees are focused on revenue growth."
A copy of the press release is available for free at:
http://is.gd/9aGhqM
About InfuSystem Holdings
InfuSystem Holdings, Inc., operates through operating
subsidiaries, including InfuSystem, Inc., and First Biomedical,
Inc. InfuSystem provides infusion pumps and related services.
InfuSystem provides services to hospitals, oncology practices and
facilities and other alternate site healthcare providers.
Headquartered in Madison Heights, Michigan, InfuSystem delivers
local, field-based customer support, and also operates pump
service and repair Centers of Excellence in Michigan, Kansas,
California, and Ontario, Canada.
After auditing the Company's 2011 financial statements, Deloitte &
Touche LLP, in Detroit, Michigan, said that the possibility of a
change in the majority representation of the Board and consequent
event of default under the Credit Facility, which would allow the
lenders to cause the debt of $24.0 million to become immediately
due and payable, raises substantial doubt about the Company's
ability to continue as a going concern.
The Company reported a net loss of $45.44 million in 2011,
compared with a net loss of $1.85 million in 2010.
INTERACTIVE DATA: S&P Raises CCR to 'B+' on Moderating Leverage
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on Bedford, Mass.-based Interactive Data Corp. (IDCO) to
'B+' from 'B'. The rating outlook is stable.
"At the same time, we raised our issue-level ratings on the
company's bank debt to 'BB-' from 'B+' and its senior unsecured
notes to 'B' from 'B-'. The recovery ratings on the company's debt
remain unchanged," S&P said.
"The upgrade reflects IDCO's stable operating performance, despite
economic weakness and corporate budgetary pressures," said
Standard & Poor's credit analyst Jeanne Shoesmith. "The corporate
credit rating reflects our expectation that IDCO's debt leverage
will remain high, but subside to around 6x over the next year,
aided by low-single-digit percentage organic revenue growth and
debt repayment. We regard IDCO as having a 'satisfactory' business
risk profile (based on our criteria), characterized by its leading
position in securities pricing data and analytics, benefiting from
somewhat high barriers to entry and a diversified client base. We
assess the company's financial risk profile as 'highly leveraged'
because of our expectation that leverage will remain in the low-
to mid-6x area over the near term," S&P said.
ISTAR FINANCIAL: Files Form 10-Q, Incurs $51.MM Net Loss in Q2
--------------------------------------------------------------
iStar Financial Inc. filed with the U.S. Securities and Exchange
Commission its quarterly report on Form 10-Q disclosing a net loss
of $51.12 million on $96.72 million of total revenues for the
three months ended June 30, 2012, compared with a net loss of
$26.02 million on $125.42 million of total revenues for the same
period during the prior year.
The Company reported a net loss of $97.17 million on $188.69
million of total revenues for the six months ended June 30, 2012,
compared with net income of $57.88 million on $232.98 million of
total revenues for the same period a year ago.
The Company's balance sheet at June 30, 2012, showed $7.18 billion
in total assets, $5.71 billion in total liabilitieas and $1.47
billion in total equity.
A copy of the Form 10-Q is available for free at:
http://is.gd/dOEMtN
About iStar Financial
New York-based iStar Financial Inc. (NYSE: SFI) provides custom-
tailored investment capital to high-end private and corporate
owners of real estate, including senior and mezzanine real estate
debt, senior and mezzanine corporate capital, as well as corporate
net lease financing and equity. The Company, which is taxed as a
real estate investment trust, provides innovative and value added
financing solutions to its customers.
The Company reported a net loss of $25.69 million in 2011,
compared with net income of $80.20 million in 2010.
* * *
In March 2012, Fitch affirmed the company's 'B-' issuer default
rating. The IDR affirmation is based on a manageable debt
maturity profile of the company, pro forma for the recently-
consummated secured financing that extends certain of the
company's debt maturities, relieving the overhang of significant
unsecured debt maturities in 2012 and 2013. While this 2012
financing does not reduce the amount of total debt outstanding,
the company's debt maturity profile is more manageable over the
next two years, with only 48% of debt maturing pro forma, down
from 61%. Given the mild improvement in commercial real estate
fundamentals and value stabilization, the company's loan and real
estate owned portfolio performance will likely improve going
forward, which should increase the company's ability to repay
upcoming indebtedness.
JACOBSEN APPLIANCES: Voluntary Chapter 11 Case Summary
------------------------------------------------------
Debtor: Jacobsen Appliances, Inc.
713 S. Jefferson
Lebanon, MO 65536
Bankruptcy Case No.: 12-61499
Chapter 11 Petition Date: August 8, 2012
Court: United States Bankruptcy Court
Western District of Missouri (Springfield)
Judge: Arthur B. Federman
Debtor's Counsel: David E. Schroeder, Esq.
DAVID SCHROEDER LAW OFFICES, PC
1524 East Primrose St., Suite A
Springfield, MO 65804-7915
Tel: (417) 890-1000
Fax: (417) 886-8563
E-mail: bk1@dschroederlaw.com
Scheduled Assets: $517,957
Scheduled Liabilities: $1,557,772
The Debtor did not file a list of its largest unsecured creditors
together with its petition.
The petition was signed by Larry Jacobsen, president.
K-V PHARMACEUTICAL: Nearing Agreement on Cash Use
-------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that K-V Pharmaceutical Co. said it's close to an
agreement with lenders on an arrangement for use of incoming cash.
KV Pharmaceutical Company (NYSE: KVa/KVb) --
http://www.kvpharmaceutical.com/-- is a specialty branded
pharmaceutical company with a primary focus in the area of women's
healthcare. The Company's single-most valuable product is
Makena(R) (hydroxyprogesterone caproate injection), the first and
only FDA-approved drug that reduces the risk of preterm birth for
pregnant women who have a history of singleton spontaneous preterm
birth.
K-V Pharmaceutical Company and certain domestic subsidiaries on
Aug. 4 filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Lead
Case No. 12-13346, under K-V Discovery Solutions Inc.) to
restructure their financial obligations.
K-V Pharmaceutical filed for Chapter 11 on the day that a
$45 million payment was due to be paid to Cytyc Prepnatal Products
Corp. and Hologic Inc. K-V bought the worldwide rights to FDA-
approved drug Makena from Hologic in 2011. K-V has paid a total
of $104.5 million but payments of $95 million, plus certain
royalties, remain outstanding.
In addition, the Debtor as of the Petition Date had an aggregate
principal balance of approximately $455.6 million of outstanding
long-term indebtedness. The Debtor also owes $3 million to trade
vendors.
K-V has retained the services of Willkie Farr & Gallagher LLP as
bankruptcy counsel, Williams & Connolly LLP as special litigation
counsel, and SNR Denton as special litigation counsel. In
addition, K-V has retained Jefferies & Co., Inc., as financial
advisor and investment banker. Epiq Bankruptcy Solutions LLC is
the claims and notice agent.
K-V Pharmaceutical said it continues to operate during the
reorganization.
KNIGHT CAPITAL: Operations Close to 100%, CEO Says
--------------------------------------------------
Jacob Bunge, writing for The Wall Street Journal, reports that
Knight Capital Group Inc.'s chief executive said the brokerage
firm expects to reclaim nearly all lost business by the end of
next week, a swift rebound from the Aug. 1 trading glitches that
threatened its survival.
WSJ relates that, according to data from Thomson Reuters Corp.,
Knight on Wednesday retook market-leading positions in the trading
of shares included in the Russell 2000 index and exchange-traded
funds, though its presence in blue-chip stocks remained below
typical levels.
"I think we'll be close to 100% within a week," Knight Chief
Executive Thomas Joyce said Thursday, according to WSJ. "Given
what our clients have witnessed over the past week, we're
unbelievably encouraged by how quickly they're coming back."
According to WSJ, Mr. Joyce said that market-making -- Knight's
core business of buying and selling shares directly with customers
and on exchanges -- as of Thursday is "85% to 95%" back to levels
seen ahead of the Aug. 1 trading incident. Knight's institutional
sales and trading division, which includes bonds and currencies,
is now at 65% to 70% of its normal strength, he said.
A bug in new trading software installed at Knight last week
erroneously unleashed millions of shares of orders onto U.S.
exchanges, saddling the firm with a $440 million loss. Knight
asked customers, including retail brokerages and financial
institutions, to take business elsewhere until the matter was
addressed.
Over the weekend, Knight negotiated a $400 million loan with a
group of six firms that include Jefferies Group Inc., and Knight
customers TD Ameritrade Holding Corp., and Stifel Financial Corp.
LEA POWER: Fitch Affirms 'BB+' Rating on $305-Mil. Senior Bonds
---------------------------------------------------------------
Fitch Ratings has affirmed the rating of Lea Power Partners, LLC's
(LPP) $305.4 million senior secured bonds due 2033 at 'BB+'. The
Rating Outlook remains stable.
Key Rating Drivers
-- Stable Revenue Profile: The project is supported by a tolling
agreement with Southwestern Public Service (SPS) that
constitutes 100% of revenues and under which SPS covers fuel
expense. The tolling nature of the power purchase agreement
(PPA) mitigates revenue risk and cost risk to the project.
SPS is rated 'BBB' with a Negative Outlook by Fitch.
-- Increased Cost Certainty: Historical expenses exceeded
original projections by almost 100% during the first two
years of operation. Following several major overhauls to
reduce expenses in combination with contractual revisions,
the cost profile is expected to remain stable going forward,
albeit at an elevated level. Fitch notes that the project is
no longer vulnerable to increased dispatch as a result of a
contractual revision under the operations & maintenance
agreements, which helps to further secure cash flow going
forward.
-- Strong Operating History: The project has maintained high
availability since completion, strengthening already
contracted revenues through the generation of dispatch
availability revenues. The solid operating history of the
project helps to maintain cash flows at the current rating
level with an average debt service coverage ratio (DSCR) of
1.32x over the life of the debt in the Fitch rating case.
What Could Trigger A Rating Action
-- Cost profile changes: Increased operating costs would erode
cash flow beyond current projections while further cost
reductions could help to support project cash flow,
especially in a stressed operating environment.
-- Operating performance shortfall: A significant and sustained
change to the operating performance of the project could
reduce financial cushion.
Security
Pari passu with other senior secured obligations, the bondholders
have a first-priority security interest in all real and personal
property, tangible and intangible assets, revenues, accounts,
project documents and ownership interests in LPP.
Credit Update
Operationally, 2011 and year-to-date 2012 performance have met
Fitch's expectations under the rating case with DSCR of 1.31x for
2011 and 1.30x budgeted for 2012. The project has been dispatched
at roughly 65% for both 2011 and year-to-date 2012. The project
underwent routine maintenance in April 2012 for turbine and
generator inspections resulting in reduced dispatch for the month
and availability of 94%. The project was returned to service and
has maintained an average year-to-date availability factor of
98.81%.
LPP is still in the process of appealing the property tax
assessment of the project. The appeal for the 2010 tax year was
scheduled for hearing on July 26, 2012 but a continuance was
granted and the hearing is now scheduled for November. The
estimated potential cost savings of $1.4 million going forward
from this appeal is not contemplated in Fitch's rating. A
favorable resolution to the property tax case would provide
additional cash cushion to absorb any potential operational issues
that may arise in the long term.
Fitch confirmed the rating following a Dec. 5, 2011 purchase and
sale agreement between ArcLight's subsidiary Alerion III and IV,
LLC and FREIF North America to sell 100% of the indirect equity
interest in the project to FREIF. The confirmation was based on
FREIF's similar experience in the energy industry and the lack of
any substantial changes at the project. The purchase and sale
agreement closed on March 29, 2012, with Consolidated Asset
Management Services, LLC remaining as the operator of the
facility.
The project consists of a 604-megawatt natural gas fired,
combined-cycle electric generating facility selling energy and
capacity under a 25-year PPA with SPS. SPS purchases capacity at
a fixed price and obtains full dispatch rights over the facility.
LPP is reimbursed for non-fuel variable operating costs through a
separate fixed-price energy payment. The PPA is structured as a
tolling agreement, and SPS is responsible for providing natural
gas fuel. SPS is a fully integrated, investor-owned electric
utility serving New Mexico and parts of Texas.
LEHMAN BROTHERS: Judge Won't Reinstate Some Claims vs. JPMorgan
---------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Lehman Brothers Holdings Inc. failed to persuade the
bankruptcy judge to retract part of his April 19 opinion
dismissing portions of the $8.6 billion lawsuit against JPMorgan
Chase Bank NA. U.S. Bankruptcy Judge James M. Peck formally
denied a motion for reconsideration Aug. 8, 2012.
According to the report, in the reconsideration motion, Lehman
wanted Judge Peck to revive claims related to guarantees given to
JPMorgan in August and September 2008, just before bankruptcy.
The report recounts that in the April ruling, Judge Peck dismissed
Lehman's claims for recovery of preferential transfers and so-
called constructively fraudulent transfers. The judge said New
York-based JPMorgan was protected from those claims by the so-
called safe harbor in bankruptcy where transactions in securities
can't be set aside. In his opinion in April, Judge Peck said the
guarantees weren't protected by the safe harbor because they were
obligations, not transfers. He dismissed them nonetheless because
they would eventually lead to transfers that were protected by
safe harbor. Lehman argued, unsuccessfully, that dismissal was a
mistake because the guarantees themselves will be relied upon by
JPMorgan to assert unsecured claims if Lehman wins on the other
claims that weren't dismissed. By throwing out the guarantees,
JPMorgan won't have any claim at all should Lehman win on other
theories, so the argument went.
The report relays Lehman won in April to the extent that Judge
Peck is allowing the former investment bank to proceed with claims
alleging actual fraud and 25 other theories intended to force
JPMorgan to disgorge payments taken from Lehman in the days before
bankruptcy.
Lehman's suit is based on allegations that the bank "abused the
power of its position to improperly extract billions in
incremental collateral and other concessions" according to the
report before Lehman's bankruptcy in September 2008. The Lehman
holding company and the brokerage subsidiary began their
bankruptcies in New York in September 2008.
The lawsuit between the Lehman parent and JPMorgan is Lehman
Brothers Holdings Inc. v. JPMorgan Chase Bank NA (In re Lehman
Brothers Holdings Inc.), 10-03266, U.S. Bankruptcy Court, Southern
District New York (Manhattan).
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was
the fourth largest investment bank in the United States. For
more than 150 years, Lehman Brothers has been a leader in the
global financial markets by serving the financial needs of
corporations, governmental units, institutional clients and
individuals worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008
(Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy
petition disclosed US$639 billion in assets and US$613 billion in
debts, effectively making the firm's bankruptcy filing the
largest in U.S. history. Several other affiliates followed
thereafter.
Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset
LLC sought for bankruptcy protection in December 2009.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at
Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell,
Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve
as counsel to the Official Committee of Unsecured Creditors.
Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's
investment banker.
On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S.
District Court for the Southern District of New York, entered an
order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI.
The Bankruptcy Court approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for US$1.75
billion. Nomura Holdings Inc., the largest brokerage house in
Japan, purchased LBHI's operations in Europe for US$2 plus the
retention of most of employees. Nomura also bought Lehman's
operations in the Asia Pacific for US$225 million.
Lehman emerged from bankruptcy protection on March 6, 2012, more
than three years after it filed the largest bankruptcy in U.S.
history. Lehman is set to make its first payment to creditors
under its $65 billion payout plan on April 17, 2012.
LEVEL 3: Subsidiary Completes Offering of $775MM Senior Notes
-------------------------------------------------------------
Level 3 Communications, Inc., announced that its subsidiary, Level
3 Financing, Inc., plans to offer $400 million aggregate principal
amount of senior notes that will mature in 2020 and will bear
interest at a fixed rate in a proposed private offering to
"qualified institutional buyers," as defined in Rule 144A under
the Securities Act of 1933, as amended, and non-U.S. persons
outside the United States under Regulation S under the Securities
Act of 1933. Level 3 Financing's obligations under the notes will
be fully and unconditionally guaranteed on an unsecured basis by
Level 3 Communications.
Meanwhile, Level 3 Financing has completed its offering of $775
million aggregate principal amount of its 7% Senior Notes due 2020
in a private offering to "qualified institutional buyers."
The notes will mature on June 1, 2020. Level 3 Financing, Inc.'s
obligations under the 7% Senior Notes will be fully and
unconditionally guaranteed on an unsecured basis by Level 3
Communications.
The net proceeds from the offering, together with cash on hand,
will be used to redeem all of Level 3 Financing's outstanding
8.75% Senior Notes due 2017, including accrued interest,
applicable premiums and expenses, and to satisfy and discharge the
indenture governing those notes.
The notice of redemption was distributed to holders of Level 3
Financing's 8.75% Senior Notes. The redemption of all the
outstanding 8.75% Senior Notes is scheduled to occur on Sept. 5,
2012. Also today, Level 3 Financing, Inc. satisfied and
discharged the indenture governing the 8.75% Senior Notes.
About Level 3 Communications
Headquartered in Broomfield, Colorado, Level 3 Communications,
Inc., is a publicly traded international communications company
with one of the world's largest communications and Internet
backbones.
The Company reported a net loss of $756 million in 2011, a net
loss of $622 million in 2010, and a net loss of $618 million in
2009.
The Company's balance sheet at June 30, 2012, showed $12.94
billion in total assets, $11.73 billion in total liabilities and
$1.21 billion in total stockholders' equity.
* * *
As reported by the TCR on April 2, 2012, Fitch Ratings upgraded
Level-3 Communications' Issuer Default Rating to 'B' from 'B-' on
Oct. 4, 2011, and assigned a Positive Outlook. The rating action
followed LVLT's announcement that the company closed on its
previously announced agreement to acquire Global Crossing Limited
(GLBC) in a tax-free, stock-for-stock transaction.
In the July 20, 2012, edition of the TCR, Moody's Investors
Service affirmed Level 3 Communications, Inc.'s corporate family
and probability of default ratings at B3. 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.
Level 3 carries a 'B-' corporate credit rating from Standard &
Poor's Ratings Services.
LIGHTSQUARED INC: Harbinger Calls Lenders' Suits "Nonsense"
-----------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Harbinger Capital Partners LLC, the controlling
shareholder of LightSquared Inc., says that lawsuits allegedly
discovered by a group of secured lenders are "utter nonsense
comprised of baseless and disingenuous allegations or flat out
misstatements."
According to the report, Harbinger's contentions were made in
advance of an Aug. 14 hearing where the lenders will ask the U.S.
bankruptcy judge in Manhattan to compel Harbinger to turn over
documents and other information to lay the foundation for a
lawsuit.
The report relates the lenders contended that LightSquared "made
preferential transfers to or for the benefit of Harbinger" within
one year of bankruptcy. The group also argues that unsecured debt
was converted to secured debt, without consideration being
provided by Harbinger in return. Harbinger responded by saying
that the claims for preference, re-characterization and equitable
subordination will bring lenders no additional recovery, based on
a belief creditors will be paid in full.
For its part, LightSquared wants the judge to limit the scope of
discovery because the company is obligated to reimburse Harbinger
for legal expenses.
About LightSquared Inc.
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.
The Office of the U.S. Trustee has not appointed a statutory
committee of unsecured creditors.
LON MORRIS: Files Schedules of Assets and Liabilities
-----------------------------------------------------
Lon Morris College filed with the U.S. Bankruptcy Court for the
Eastern District of Texas its schedules of assets and liabilities,
disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property $20,468,617
B. Personal Property $9,488,871
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $11,654,616
E. Creditors Holding
Unsecured Priority
Claims $697,168
F. Creditors Holding
Unsecured Non-priority
Claims $3,647,273
----------- -----------
TOTAL $29,957,488 $15,999,058
A full text copy of the schedules of assets and liabilities is
available for free at http://bankrupt.com/misc/LON_MORRIS_sal.pdf
About Lon Morris College
Lon Morris College was founded in 1854 as a not-for-profit
religiously affiliated two-year degree granting institution. Over
the past 158 years, the College has impacted the lives of
countless members of the local Jacksonville community in Texas.
Lon Morris College filed a Chapter 11 petition (Bankr. E.D. Tex.
Case No. 12-60557) in Tyler, on July 2, 2012, after lacking enough
endowments to pay teachers, vendors and creditors. In May 2012,
the Debtor missed two payrolls and vendor payables, utilities, and
long term debt were also past due. From a headcount of 1,070 in
2010, enrolments have been down to 547 in 2012. The president of
the College has resigned, as have members of the board of
trustees.
Judge Bill Parker oversees the case. Bridgepoint Consulting LLC's
Dawn Ragan took over management of the College as chief
restructuring officer. Attorneys at McKool Smith P.C., and Webb
and Associates serve as counsel to the Debtor.
According to its books, on April 30, 2012, the College had roughly
$35 million in assets, including $11 million in endowments and
restricted funds, and $18 million in funded debt and $2 million in
trade and other liabilities.
Amegy Bank is represented in the case by James Matthew Vaughn,
Esq., at Porter Hedges LLP.
MACROSOLVE INC: Owns 6.8% of DecisionPoint Common Stock
-------------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, MacroSolve, Inc., disclosed that, as of July 31, 2012,
it beneficially owns 617,284 shares of common stock of
DecisionPoint Systems, Inc., representing 6.88% of the shares
outstanding. A copy of the filing is available for free at:
http://is.gd/5buWac
About MacroSolve, Inc.
Tulsa, Okla.-based MacroSolve, Inc. (OTC BB: MCVE)
-- http://www.macrosolve.com/-- is a technology and services
company that develops mobile solutions for businesses and
government. A mobile solution is typically the combination of
mobile handheld devices, wireless connectivity, and software that
streamlines business operations resulting in improved efficiencies
and cost savings.
The Company reported a net loss of $2.53 million in 2011, compared
with a net loss of $1.92 million during the prior year.
The Company's balance sheet at March 31, 2012, showed $2.58
million in total assets, $3.18 million in total liabilities and a
$598,195 total stockholders' deficit.
In its report on the Company's 2011 financial results, Hood Sutton
Robinson & Freeman CPAs, P.C., in Tulsa, Oklahoma, expressed
substantial doubt about the Company's ability to continue as a
going concern. The independent auditors noted that the Company
has suffered recurring losses from operations and has a net
capital deficiency.
MANAGED HEALTH: Moody's Affirms 'B2' CFR/PDR; Outlook Negative
--------------------------------------------------------------
Moody's Investors Service affirmed Managed Health Care Associates,
Inc.'s ("MHA") B2 corporate family and probability of default
ratings and raised the instrument ratings on the company's $202
million first lien credit facilities to Ba2 and $95 million second
lien term loan to B2. At the same time, the ratings outlook was
changed to negative from stable.
The change in the outlook to negative from stable reflects the
company's move toward a more aggressive financial policy as
evidenced by a leveraged dividend payment at the holding company
level (DCMH Group Holdings, Inc.) as well as debt financed
acquisitions at the operating company level. Total adjusted debt
of $450 million at March 31, 2012, includes a $165 million DCMH
term loan that was primarily used to finance the dividend payment,
a recent $42 million increase in MHA's first lien debt with
proceeds going toward acquisitions, and operating leases. Moody's
projects pro forma 2012 adjusted debt leverage of close to 6 times
as compared to its previous expectation of below 4.5 times.
Moody' raised its ratings on the credit facilities that reside at
the operating company to reflect changes in the debt capital
structure, namely the addition of the $165 million DCMH term loan
(not rated) that is structurally subordinated to the operating
company debt and as a result provides first loss absorption to
MHA's credit facilities.
The follow rating actions were taken:
Corporate family rating, affirmed at B2;
Probability of default rating, affirmed at B2;
$15 million senior secured revolving credit facility, due August
2013, upgraded to Ba2 (LGD2, 18%) from Ba3 (LGD3, 31%);
$187 million senior secured first lien term loan, due August 2014
upgraded to Ba2 (LGD2, 18%) from Ba3 (LGD3, 31%);
$95 million senior secured second lien term loan, due February
2015, upgraded to B2 (LGD4, 56%) from Caa1 (LGD5, 85%).
Ratings Rationale
MHA's B2 corporate family rating reflects the company's small
scale and large debt balance. The rating also incorporates
anticipated top line pressure of between $15-$18 million from
branded drugs becoming generic including Seroquel in 2012.
However, the rating assumes the revenue loss will be most likely
mitigated by new contracts and acquisitions in the long-term care
end market. Even though Moody's doesn't expect MHA to reduce debt
levels, EBITDA contributions from acquisitions and increasing
provider reliance on GPOs will help the company to maintain
financial metrics that are within the B2 rating category. For
2013, Moody's projects MHA's adjusted debt-to-EBITDA and adjusted
(EBITDA-CAPEX)-to-interest expense to improve to approximately 5.5
times and 2.2 times respectively. The B2 rating is also supported
by MHA's good liquidity profile.
MHA's negative outlook considers the company's heightened debt
leverage resulting from its aggressive financial policy.
Stabilization of the outlook would require the company's adjusted
debt leverage to decline and be sustained below 5.5 times.
The ratings could face downward pressure if MHA's adjusted
(EBITDA-CAPEX)-to-interest expense declines below 2.0 times,
including interest expense on holding company debt. In addition,
if adjusted retained cash flow-to-debt declines below 5.0% and
debt leverage is at or above 6 times, the rating could be
downgraded. Further, if MHA pursues additional debt funded
acquisitions that are not de-leveraging or shareholder friendly
initiatives, the ratings could be downgraded.
Moody's would upgrade the ratings if adjusted debt-to-EBITDA
decreases and is sustained below 3 times and the company continues
to have a good liquidity profile. In addition, MHA's revenue base
would have to increase meaningfully before an upgrade would be
considered.
The principal methodology used in rating MHA was the Global
Business & Consumer Service Industry Methodology published in
October 2010. Other methodologies used include Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
Headquartered in Florham Park, New Jersey, Managed Health Care
Associates ("MHA") is a group purchasing organization ("GPO") for
long-term care ("LTC") pharmacies and other classes of trade. The
company also offers a variety of services to pharmaceutical
manufacturers selling to the LTC industry, including contract
administration, marketing, and continuing education. For the
trailing twelve months ("TTM") ended March 31, 2012, MHA generated
revenues of approximately $141 million.
MARVEST LLC: Case Summary & 4 Unsecured Creditors
-------------------------------------------------
Debtor: Marvest LLC
1019 8th St.
Ste. 200
Golden, CO 80401
Bankruptcy Case No.: 12-26555
Chapter 11 Petition Date: August 8, 2012
Court: United States Bankruptcy Court
District of Colorado (Denver)
Judge: Howard R. Tallman
Debtor's Counsel: Aaron J. Conrardy, Esq.
Harvey Sender, Esq.
SENDER & WASSERMAN, P.C.
1660 Lincoln St., Suite 2200
Denver, CO 80264
Tel: (303) 296-1999
Fax: (303) 296-7600
E-mail: aconrardy@sendwass.com
Sendertrustee@sendwass.com
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
A copy of the Company's list of its four unsecured creditors is
available for free at http://bankrupt.com/misc/cob12-26555.pdf
The petition was signed by John Schneider, managing member.
MEDFORD VILLAGE: Files for Chapter 11 in Camden
-----------------------------------------------
Medford Village East Associates, LLC, filed a Chapter 11 petition
(Bankr. D.N.J. Case No. 12-29693) in Camden on Aug. 8.
The Debtor estimated assets of at least $50 million and
liabilities of just under $10 million. The Debtor owns properties
in Medford Township, Mt. Laurel Township, Borough of Clayton,
Borough of Barrington, Voorhees Township and the Midwest.
According the resolution authorizing the bankruptcy filing,
Medford "is unable to pay its debts as they mature, and it is
necessary for the Company to reorganize."
According to the case docket, the Chapter 11 Plan and the
Disclosure Statement are due Dec. 6, 2012. The schedules of
assets and liabilities and the statement of financial affairs are
due Aug. 22.
The Debtor filed applications to employ Maschmeyer Karalis P.C. as
counsel and Hyland Levin, LLP as special counsel.
MEDIACOM BROADBAND: Moody's Rates $200MM 1st Lien Term Loan 'Ba3'
-----------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to the $200
million proposed first lien term loan of Mediacom Broadband
(Broadband), a wholly owned operating subsidiary of Mediacom
Communications Corporation (Mediacom). The company expects to use
proceeds to repay outstanding borrowings under its revolver ($129
million as of June 30), to increase balance sheet cash, and to
fund fees and expenses.
Moody's also affirmed other ratings and updated Loss Given Default
(LGD) point estimates as shown below.
Mediacom Broadband LLC
Senior Secured $200 million First Lien Term Loan, Assigned
Ba3 LGD3 -35%
Senior Secured First Lien Revolver, affirmed Ba3, LGD
adjusted to LGD3 - 35% from LGD3 - 34%
Senior Secured First Lien Term Loan due 2015, affirmed Ba3,
LGD adjusted to LGD3 - 35% from LGD3 - 34%
Senior Secured First Lien Term Loan due 2017, affirmed Ba3,
LGD adjusted to LGD3 - 35% from LGD3 - 34%
Senior Unsecured Bonds, affirmed B3, LGD adjusted to LGD5 -
88% from LGD5 -87 %
Mediacom LLC
Senior Secured Bank Credit Facility, affirmed Ba3, LGD
adjusted to LGD3 - 35% from LGD3 - 34%
Senior Unsecured Bonds, affirmed B3, LGD adjusted to LGD5 -
88% from LGD5 -87 %
The transaction increases gross debt and reduces borrowings under
the revolver, which the company had been using as a vehicle to
repay debt with free cash flow, but does not materially impact net
debt. Over the next year, Moody's expects Mediacom to continue to
reduce absolute debt levels and to continue its pattern of
achieving lower leverage through a combination of debt reduction
and modest EBITDA growth, key to maintaining its B1 corporate
family rating.
Mediacom's leverage of slightly below 6 times debt-to-EBITDA
leverage (based on trailing twelve months through March 31, 2012),
combined with weaker than peers operating trends, constrain its B1
corporate family rating. The company continues to underperform
most of its peers in terms of subscriber additions. However,
despite intense competition for all products and the maturity of
the core video product, Moody's believe the commercial and high
speed data business present good growth prospects for Mediacom,
and the company has improved its subscriber trends on a sequential
basis relative to its own historic performance over the past
several quarters. The relative stability of the cable TV business
also supports the rating, and recent investments in customer
service and improving the video offering could stem video
subscriber losses. Mediacom's good liquidity affords it the time
and flexibility to invest in its operations and to improve its
credit profile, and revenue and EBITDA have grown despite weak
subscriber trends. However, Moody's remains concerned about the
company's inability to offset losses in video customers with gains
in high speed data and voice customers, as well as the erosion of
video penetration to below 40%.
The stable outlook assumes that Mediacom will utilize the bulk of
its free cash flow to repay debt over the next 12 to 18 months,
will refrain from additional leveraging activities during this
time frame, and that subscriber trends will improve. The outlook
also incorporates expectations for modest revenue and EBITDA
growth, which, combined with the debt repayment, should enable the
company to sustain leverage below 6 times, as well as maintenance
of good liquidity.
A material weakening of operating performance due to either
escalating competitive pressure or technological changes, or
deterioration of the liquidity profile could pressure the rating
down. Any material use of cash outside of debt reduction or
increase in leverage over the next 12 to 18 months would also
likely result in a negative rating action.
The potential for shareholder rewards based on the new ownership
structure and the relatively weak subscriber trends constrain the
rating. Moody's would consider a positive rating action with
expectations for sustained debt-to-EBITDA below 5 times and
sustained free cash flow in excess of 5% of debt.
With its headquarters in Middletown, New York, Mediacom
Communications Corporation (Mediacom) offers traditional and
advanced video services such as digital television, video-on-
demand, digital video recorders, and high-definition television,
as well as high-speed Internet access and phone service. The
company operates through two wholly owned subsidiaries, Mediacom
Broadband and Mediacom LLC, and primarily serves smaller cities in
the midwestern and southeastern United States. Its annual revenue
is approximately $1.6 billion.
The principal methodology used in rating Mediacom Broadband LLC
was the Global Cable Television Industry Methodology published in
July 2009. Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
MEDIACOM BROADBAND: S&P Rates Proposed $200MM Term Loan G 'BB-'
---------------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned its
'BB-' issue-level rating and '2' recovery rating to Mediacom
Broadband Group's proposed $200 million term loan G due 2020. The
'2' recovery rating indicates our expectation for substantial
(70%-90%) recovery in the event of a payment default. "Based on
the proposed debt issuance, our recovery estimates on the
company's secured debt falls to the low end of the 70%-90% range.
As a result, we believe any future addition of secured debt would
most likely lead to a downward revision of the recovery assessment
and lowering of the issue-level rating on the secured debt," S&P
said.
"Mediacom Broadband Group is a subsidiary of Middletown, N.Y.-
based cable-TV operator Mediacom Communications Corp. (Mediacom).
The company intends to use proceeds from the new term loan to
repay borrowings under its revolving credit facility due 2016,
which had $129 million outstanding as of June 30, 2012, and add to
cash balances. Assuming the company repays the full amount
outstanding under the revolver, consolidated leverage (adjusted
for operating leases and accrued interest) increases minimally, to
5.6x (as of June 30, 2012) from 5.5x. Over the intermediate term,
we expect the company to maintain leverage below our 7.0x
threshold for the current rating, barring a shift toward a more
aggressive financial policy," S&P said.
"The ratings on Mediacom reflect a 'highly leveraged' financial
risk profile, a mature core video business with modest revenue
growth prospects, below-industry-average video, high-speed data
(HSD), and telephony penetration, and competitive pressures on
both the video customer base from direct-to-home satellite-TV
providers and HSD customers from telephone companies. Partly
tempering these factors are the company's position as the
leading provider of pay-TV services in its markets and
expectations for limited video competition from the local
telephone operators," S&P said.
RATINGS LIST
Mediacom Communications Corp.
Corporate Credit Rating B+/Stable/--
New Ratings
Mediacom Broadband Group
$200 mil term loan G due 2020 BB-
Recovery Rating 2
MEDICAL ALARM: Agrees to Cancel 61.5 Million Warrants
-----------------------------------------------------
Medical Alarm Concepts Holding, Inc., has reached an agreement
with various investors who held certain rights to buy common stock
in the Corporation. The Warrant Holders and the Company agreed
that it is in their best interests to cancel a total of 61.5
million warrants. All of these warrants had strike prices that
were above the closing bid price on the day before the agreement
was reached, thus were considered "in the money" warrants. No
compensation of any type was given to Warrant Holders who canceled
their warrant positions.
On Aug. 6, 2012, the Company issued comments in a press release
discussing the customer upgrade rate at its large retail partner,
the largest warehouse club store chain in the United States.
Management indicated that the customer upgrade rate had now
climbed to in excess of 75%, providing the Company with additional
high-margin revenue. The Company also commented that this same
retail partner had given the Company an estimate of between 1,500
and 2,500 units for a significant promotion the retailer plans for
early Fall of 2012. Additionally, the Company disclosed that it
had sold approximately 4,000 MediPendant units during the June
quarter and expects to exceed this amount for the September
quarter.
About Medical Alarm
Plymouth Meeting, Pa.-based Medical Alarm Concepts Holding, Inc.,
utilizes new technology in the medical alarm industry to provide
24-hour personal response monitoring services and related products
to subscribers with medical or age-related conditions.
The Company's balance sheet at March 31, 2011, showed
$1.40 million in total assets, $3.41 million in total liabilities,
and a $2 million total stockholders' deficit. As of March 31,
2011, the Company had $0 in cash.
The Company said in its quarterly report for the period ended
March 31, 2012, that "We believe we cannot satisfy our cash
requirements for the next twelve months with our current cash and,
unless we receive additional financing, we may be unable to
proceed with our plan of operations. We do not anticipate the
purchase or sale of any significant equipment. We also do not
expect any significant additions to the number of our employees.
The foregoing represents our best estimate of our cash needs based
on current planning and business conditions. Additional funds are
required, and unless we receive proceeds from financing, we may
not be able to proceed with our business plan for the development
and marketing of our core services. Should this occur, we will
suspend or cease operations."
"We anticipate incurring operating losses in the foreseeable
future. Therefore, our auditors have raised substantial doubt
about our ability to continue as a going concern."
MGM RESORTS: Incurs $145.4 Million Net Loss in Second Quarter
-------------------------------------------------------------
MGM Resorts International reported a net loss of $145.45 million
on $2.32 billion of revenue for the three months ended June 30,
2012, compared with net income of $3.44 billion on $1.80 billion
of revenue for the same period during the prior year.
The Company reported a net loss attributable to the Company of
$362.70 million on $4.61 billion of revenue for the six months
ended June 30, 2012, compared with net income attributable to the
Company of $3.35 billion on $3.31 billion of revenue for the same
period a year ago.
The Company's balance sheet at June 30, 2012, showed $27.26
billion in total assets, $17.85 billion in total liabilities and
$9.41 billion in total stockholders' equity.
"Our wholly owned domestic resorts Adjusted Property EBITDA grew
4% year over year and we achieved record quarters for both MGM
China and CityCenter," said Jim Murren, MGM Resorts International
Chairman and CEO. "We continue to focus on maximizing
profitability by managing costs, improving our customer
relationships via M life and social media outlets such as myVEGAS,
as well as exploring growth opportunities in key strategic regions
across the U.S. and internationally."
A copy of the press release is available for free at:
http://is.gd/E7SODo
About MGM Resorts
MGM Resorts International (NYSE: MGM) --
http://www.mgmresorts.com/-- has significant holdings in gaming,
hospitality and entertainment, owns and operates 15 properties
located in Nevada, Mississippi and Michigan, and has 50%
investments in four other properties in Nevada, Illinois and
Macau.
The Company reported net income of $3.23 billion in 2011 and a net
loss of $1.43 billion in 2010.
Bankruptcy Warning
In the Form 10-K for the year ended Dec. 31, 2011, the Company
said that any default under the senior credit facility or the
indentures governing the Company's other debt could adversely
affect its growth, its financial condition, its results of
operations and its ability to make payments on its debt, and could
force the Company to seek protection under the bankruptcy laws.
* * *
As reported by the TCR on Nov. 14, 2011, Standard & Poor's Ratings
Services raised its corporate credit rating on MGM Resorts
International to 'B-' from 'CCC+'. In March 2012, S&P revised
the outlook to positive from stable.
"The revision of our rating outlook to positive reflects strong
performance in 2011 and our expectation that MGM will continue to
benefit from the improving performance trends on the Las Vegas
Strip," S&P said.
In March 2012, Moody's Investors Service affirmed its B2 corporate
family rating and probability of default rating. The affirmation
of MGM's B2 Corporate Family Rating reflects Moody's view that
positive lodging trends in Las Vegas will continue through 2012
which will help improve MGM's leverage and coverage metrics,
albeit modestly. Additionally, the company's declaration of a $400
million dividend ($204 million to MGM) from its 51% owned Macau
joint venture due to be paid shortly will also improve the
company's liquidity profile. The ratings also consider MGM's
recent bank amendment that resulted in about 50% of its
$3.5 billion senior credit facility being extended one year from
2014 to 2015.
MPG OFFICE: Robert Maguire Equity Stake Down to 1.5%
----------------------------------------------------
In an amended Schedule 13D filing with the U.S. Securities and
Exchange Commission, Robert F. Maguire III disclosed that, as of
May 18, 2012, he beneficially owns 792,031 shares of common stock
of MPG Office Trust, Inc., representing 1.5% of the shares
outstanding. On May 18, 2012, July 23, 2012, and July 25, 2012,
Mr. Maguire disposed of 518,513 shares of common stock and
5,024,469 OP Units in private transactions with a third-party.
Mr. Maguire previously reported beneficial ownership of 5,216,946
common shares or a 9.8% equity stake as of March 31, 2010.
A copy of the filing is available for free at http://is.gd/5L6U71
About MPG Office Trust
MPG Office Trust, Inc., fka Maguire Properties Inc. --
http://www.mpgoffice.com/-- is the largest owner and operator of
Class A office properties in the Los Angeles central business
district and is primarily focused on owning and operating high-
quality office properties in the Southern California market. MPG
Office Trust is a full-service real estate company with
substantial in-house expertise and resources in property
management, marketing, leasing, acquisitions, development and
financing.
The Company has been focused on reducing debt, eliminating
repayment and debt service guarantees, extending debt maturities
and disposing of properties with negative cash flow. The first
phase of the Company's restructuring efforts is substantially
complete and resulted in the resolution of 18 assets, relieving
the Company of approximately $2.0 billion of debt obligations and
potential guaranties of approximately $150 million.
The Company reported net income of $98.22 million in 2011,
compared with a net loss of $197.93 million in 2010.
The Company's balance sheet at June 30, 2012, showed $2.06 billion
in total assets, $2.88 billion in total liabilities, and a
$827.88 million total deficit.
MPG OFFICE: HG Vora Discloses 6.1% Equity Stake
-----------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, HG Vora Special Opportunities Master Fund, Ltd., HG
Vora Capital Management, LLC, and Parag Vora disclosed that, as of
Aug. 6, 2012, they beneficially own 3,089,700 shares of common
stock of MPG Office Trust, Inc., representing 6.09% of the shares
outstanding. A copy of the filing is available for free at:
http://is.gd/Xh83JL
About MPG Office Trust
MPG Office Trust, Inc., fka Maguire Properties Inc. --
http://www.mpgoffice.com/-- is the largest owner and operator of
Class A office properties in the Los Angeles central business
district and is primarily focused on owning and operating high-
quality office properties in the Southern California market. MPG
Office Trust is a full-service real estate company with
substantial in-house expertise and resources in property
management, marketing, leasing, acquisitions, development and
financing.
The Company has been focused on reducing debt, eliminating
repayment and debt service guarantees, extending debt maturities
and disposing of properties with negative cash flow. The first
phase of the Company's restructuring efforts is substantially
complete and resulted in the resolution of 18 assets, relieving
the Company of approximately $2.0 billion of debt obligations and
potential guaranties of approximately $150 million.
The Company reported net income of $98.22 million in 2011,
compared with a net loss of $197.93 million in 2010.
The Company's balance sheet at June 30, 2012, showed $2.06 billion
in total assets, $2.88 billion in total liabilities, and a
$827.88 million total deficit.
MICROVISION INC: Posts $5.0-Mil. Net Loss in Second Quarter
-----------------------------------------------------------
MicroVision, Inc., filed its quarterly report on Form 10-Q,
reporting a net loss of $4.97 million on $1.29 million of total
revenue for the three months ended June 30, 2012, compared with a
net loss of $9.17 million on $1.15 million of total revenue for
the same period last year.
For the six months ended June 30, 2012, the Company reported a net
loss of $14.77 million on $3.02 million of total revenue, compared
with a net loss of $18.21 million on $2.27 million of total
revenue for the same period of 2011.
The Company's balance sheet at June 30, 2012, showed
$20.77 million in total assets, $9.23 million in total
liabilities, and stockholders' equity of $11.54 million.
PricewaterhouseCoopers LLP, in Seattle, Washington, expressed
substantial doubt about MicroVision'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
net capital deficiency.
A copy of the Form 10-Q is available for free at:
http://is.gd/J315HV
Redmond, Washington-based MicroVision, Inc., provides the PicoP(R)
display technology platform designed to enable next-generation
display and imaging products for consumer devices, vehicle
displays and wearable displays. The Company's patented PicoP
display technology combines a Micro-Electrical Mechanical Systems
(MEMS) scanning mirror with highly efficient laser light sources
to create vivid images with high contrast and brightness.
MOHEGAN TRIBAL: Casino Deal No Impact on Moody's 'Caa1' Rating
--------------------------------------------------------------
Moody's Investors Service said that Mohegan Tribal Gaming
Authority's ("MTGA") announcement that it will be entering into a
management agreement with Resorts Casino Hotel, Atlantic City
("Resorts") is a credit positive. To the extent MTGA (Caa1,
stable) is able to improve the performance at Resorts (not rated)
and develop a successful track record in a challenging market like
Atlantic City, then that could result in additional management
contract opportunities being offered to MTGA.
The principal methodology used in rating Mohegan tribal Gaming
Authority was the Global Gaming 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.
Mohegan Tribal Gaming Authority owns and operates a gaming and
entertainment complex located near Uncasville, Connecticut, known
as Mohegan Sun, and a gaming and entertainment facility offering
slot machines and harness racing in Plains Township, Pennsylvania,
known as Mohegan Sun at Pocono Downs.
MOMENTIVE PERFORMANCE: Incurs $88 Million Net Loss in Fiscal Q2
---------------------------------------------------------------
Momentive Performance Materials Inc. reported a net loss of $88
million on $627 million of net sales for the fiscal three-month
ended June 30, 2012, compared with a net loss of $10 million on
$728 million of net sales for the fiscal three-month period ended
July 3, 2011.
The Company reported a net loss of $153 million on $1.22 billion
of net sales for the fiscal six-month period ended June 30, 2012,
compared with a net loss of $13 million on $1.38 billion of net
sales for the fiscal six-month period ended July 3, 2011.
The Company's balance sheet at June 30, 2012, showed $3.02 billion
in total assets, $3.92 billion in total liabilities and a $901
million total deficit.
"We demonstrated sequential improvement in volumes of 14 percent
and Combined Adjusted EBTIDA excluding all pro forma savings of 25
percent in the second quarter of 2012 compared to the first
quarter of 2012," said Craig O. Morrison, Chairman, President and
CEO. "Our results, however, were impacted on a year-over-year
basis by softer volumes and negative mix as we experienced lower
sales of some of our higher-margin products serving the
electronics, semiconductor and commercial construction markets.
We also experienced softer market conditions in Europe and the
Asia Pacific region, while demand was more resilient in the United
States."
A copy of the press release is available for free at:
http://is.gd/TeYXBR
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.
* * *
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.
MOMENTIVE SPECIALTY: Reports $28-Mil. Net Income in 2nd Quarter
---------------------------------------------------------------
Momentive Specialty Chemicals Inc. reported net income of $28
million on $1.25 billion of net sales for the three months ended
June 30, 2012, compared with net income of $63 million on $1.43
billion of net sales for the same period during the prior year.
The Company reported net income of $12 million on $2.49 billion of
net sales for the six months ended June 30, 2012, compared with
net income of $126 million on $2.73 billion of net sales for the
same period a year ago.
The Company's balance sheet at June 30, 2012, showed $3.11 billion
in total assets, $4.88 billion in total liabilities and a $1.76
billion total deficit.
"Our broad product portfolio and geographic diversity continued to
help in offsetting some of the global economic volatility we
experienced in the second quarter of 2012," said Craig O.
Morrison, Chairman, President and CEO. "While our results lagged
year-over-year in our base epoxy, specialty epoxy and oilfield
resins businesses, we saw strong improvement in our Versatic Acids
and Derivatives, North American forest products resins and our
Latin America forest products businesses. In addition, we
continued our focus on cost control as we achieved $12 million in
savings under the shared services agreement with Momentive
Performance Materials Inc. (MPM) in the first half of 2012."
"We also continued to make significant progress in our long-term
growth initiatives, such as increasing our manufacturing presence
in the Asia Pacific region. We were pleased to begin operations
of our new Versatic Acids and Derivatives joint venture in China
during the second quarter of 2012."
A copy of the press release is available for free at:
http://is.gd/BcJuvu
About Momentive Specialty
Momentive Specialty Chemicals, Inc., headquartered in Columbus,
Ohio, is a leading producer of thermoset resins (epoxy,
formaldehyde and acrylic). The company is also a supplier of
specialty resins for inks and specialty coatings sold to a diverse
customer base as well as a producer of commodities such as
formaldehyde, bisphenol A, epichlorohydrin, versatic acid and
related derivatives.
The Company had a net loss of $16 million on $1.23 billion of net
sales for the three months ended March 31, 2012, compared with net
income of $63 million on $1.24 billion of net sales for the same
period during the prior year. It reported net income of $118
million on $5.20 billion of net sales in 2011, compared with net
income of $214 million on $4.59 billion of net sales in 2010.
* * *
Momentive Specialty carries a 'B-' issuer credit rating from
Standard & Poor's Ratings Services. It has 'B3' corporate family
and probability of default ratings from Moody's Investors Service.
corporate credit rating from Standard & Poor's.
As reported in the Oct. 27, 2010 edition of TCR, Moody's Investors
Service assigned a 'Caa1' rating to the guaranteed senior secured
second lien notes due 2020 of Momentive Specialty (formerly known
as Hexion Specialty Chemicals Inc.). Proceeds from the notes were
allocated for the repayment of $533 million of guaranteed senior
secured second lien notes due 2014. "With this refinancing Hexion
will have refinanced or extended the maturities on the vast
majority of the debt that was originally slated to mature prior to
2015. There is less than $600 million of this debt remaining,
which should be much easier to for the company to refinance as its
credit metrics improve further," stated John Rogers, Senior Vice
President at Moody's.
MORGANS HOTEL: To Launch Delano at Mandalay Bay, Las Vegas
----------------------------------------------------------
MGM Resorts International and Morgans Hotel Group entered into a
brand partnership for Delano Las Vegas, an all-suite hotel at
Mandalay Bay. After completing a property redesign, Morgans Hotel
Group's signature luxury brand will come to life in place of
THEhotel in late 2013.
Delano Las Vegas will be managed by MGM Resorts under a long-term
licensing agreement with Morgans Hotel Group.
"In keeping with our commitment to create superior experiences for
our guests, transforming THEhotel into Delano Las Vegas will add a
new dimension of energy and excitement to the Las Vegas Strip,"
said Chuck Bowling, president and COO of Mandalay Bay. "The
Delano South Beach experience is very special and loved worldwide,
most notably in key Latin American and European markets which we
have strategically identified for future growth potential."
As Delano's second outpost in the United States, Delano Las Vegas
will transport the iconic brand from the shores of South Beach to
the Las Vegas Strip. Once completed, guests will experience the
Delano lifestyle, and its unique blend of effortless luxury and
impeccable service at the world-renowned Mandalay Bay.
In addition, Morgans Hotel Group plans to introduce several new
food and beverage concepts at Mandalay Bay to be managed by The
Light Group. Venues will include a casual American bistro by Chef
Brian Massie, a Japanese dining destination by celebrity chef
Akira Back and a new vision for Red Square. The Light Group will
once again reinvent Las Vegas nightlife with a revolutionary
nightclub. All venues are scheduled to open in 2013.
Michael Gross, Morgans Hotel Group CEO said "MGM Resorts
International is the market leader in Las Vegas and we could think
of no better partner to operate Delano. We've had our eye on Las
Vegas for many years, and have finally found the right location
and opportunity. Delano as a brand evokes luxury with an
unexpected touch of individuality. This enables our guests to
easily discern between mere travel and the unparalleled experience
at Delano. We can see no better market and partner to help us
launch our largest property to date."
Built on an ideology centered around unique guest experiences and
the feelings those experiences conjure, no two Delano properties
will ever be the same. Each location will adapt to its
surroundings, providing exclusive experiences that combine
superior service with high-energy night and daylife, as well as an
unmatched standard of fine dining. Delano enthusiasts from around
the globe can expect the same attention-to-detail, premier service
and quality experience at Delano Las Vegas as its iconic South
Beach predecessor.
Each of the property's 1,100 all-suite accommodations will be
redesigned in keeping with the Delano personality. Rounding out
the Las Vegas experience will be the transformation of the
destination's public spaces including bars, lounges, spa, and
restaurants, with additional details to be released in the coming
months.
About Morgans Hotel Group
Based in New York, Morgans Hotel Group Co. (Nasdaq: MHGC) --
http://www.morganshotelgroup.com/-- is widely credited as the
creator of the first "boutique" hotel and a continuing leader of
the hotel industry's boutique sector. Morgans Hotel Group
operates and owns, or has an ownership interest in, Morgans,
Royalton and Hudson in New York, Delano and Shore Club in South
Beach, Mondrian in Los Angeles and South Beach, Clift in San
Francisco, Ames in Boston, and Sanderson and St Martins Lane in
London. Morgans Hotel Group and an equity partner also own the
Hard Rock Hotel & Casino in Las Vegas and related assets. Morgans
Hotel Group also manages hotels in Isla Verde, Puerto Rico and
Playa del Carmen, Mexico. Morgans Hotel Group has other property
transactions in various stages of completion, including projects
in SoHo, New York and Palm Springs, California.
The Company reported a net loss of $87.95 million in 2011, a net
loss of $83.64 million in 2010, and a net loss of $101.60 million
in 2009.
The Company's balance sheet at June 30, 2012, showed $545.86
million in total assets, $655.93 million in total liabilities,
$6.12 million in redeemable noncontrolling interest and a $116.19
million total deficit.
MORTGAGE GUARANTY: Moody's Cuts Financial Strength Rating to 'B2'
-----------------------------------------------------------------
Moody's Investors Service has downgraded the insurance financial
strength (IFS) rating of Mortgage Guaranty Insurance Corporation
(MGIC) to B2 from B1, due to the continued deterioration of the
insurer's regulatory capital position and to reflect the possible
adverse credit implications of its ongoing dispute with Freddie
Mac, one of its largest counterparties. At the same time, Moody's
has downgraded the senior debt rating of MGIC's parent company,
MGIC Investment Corporation (MTG), to Caa3 from Caa2. All the
ratings are on review for further downgrade.
Rating Rationale
As part of its second-quarter earnings release, MTG disclosed that
the statutory capital position of its lead insurer, MGIC, had
fallen $211 million below the minimum required by its regulator,
the Wisconsin Office of the Commissioner of Insurance (WI-OCI), as
a result of continued reserve strengthening on primarily 2005-08
vintage loans affected by the financial crisis. The WI-OCI had
however previously issued an order waiving the minimum capital
requirement for MGIC through 31 December 2013, allowing the
company to continue writing business in Wisconsin and in states
without minimum capital requirements. MTG further mentioned that
it had obtained waivers in five of the 15 other states that
enforce minimum capital requirements and that waiver requests had
been denied or likely will be denied in three of those
jurisdictions, while the outcome for the remaining seven is not
yet known. MGIC intends to write business out of MGIC Indemnity
Corporation (MIC), a wholly owned subsidiary, in states that did
or do not grant the waiver.
The relationship between MGIC and Freddie Mac has been strained
due to an ongoing dispute on pool insurance policies, and took a
negative turn for MGIC, in Moody's opinion, when Freddie Mac set
conditions for its temporary approval of MIC writing insurance
business in states that did not waive the capital requirements.
These were set out in a recent letter disclosed by MTG, and
include that MTG i) downstream $200 million of holding company
resources to MGIC before 30 September 2012, ii) settle the pool
insurance policy dispute before 31 October 2012, and iii) obtain
written confirmation from the WI-OCI that MIC capital will be
available to pay MGIC claims before 31 December 2012.
The pool insurance policies MGIC issued to Freddie Mac were
subject to a single aggregate loss limit. According to MGIC,
Freddie Mac's view is that the limit should remain constant over
the life of the policies, while MGIC believes the initial
aggregate loss limit should decrease as coverage under each policy
is terminated. Freddie Mac interprets the aggregate loss limit to
be approximately $535 million higher than does MGIC, according to
MGIC. In May 2012 MGIC filed a lawsuit against Freddie Mac and its
regulator, the Federal Housing Finance Administration, regarding
the dispute.
The review for downgrade reflects the risks to the group of not
reaching an agreement with Freddie Mac. Moody's stated that unless
MGIC and Freddie Mac reach an agreement, new insurance production
could meaningfully drop as lenders react to MGIC's narrower
eligibility with Freddie Mac, which would reduce the company's
earnings from high-quality new production and increase the
likelihood of a runoff. Moody's further commented that the
conditions set by Freddie Mac, if executed, would substantially
reduce MTG's liquidity profile and adversely affects MIC's credit
standing. The holding company's direct financial resources of $411
million as of 30 June 2012 are meaningfully lower than its
outstanding debt obligations, which consists of $100 million of
senior debt due in 2015, $345 million of senior debt due in 2017
and $390 million of subordinated debt due in 2063 with annual
interest payments of $58 million, including the $35 million
deferrable subordinated debt coupon. An additional investment of
$200 million in MGIC would weaken the holding company's liquidity
and could reduce the recovery values of the debt instruments.
Allowing the use of MIC's financial resources to pay claims at
MGIC would hurt MIC's credit profile. As of 31 March 2012, MIC had
$ 438 million of statutory capital and about $0.2 million of net
risk in force. Moody's also noted, however, that the net effect of
such actions on MGIC's credit profile would also depend on the
terms of the settlement.
During its review, the rating agency will focus on the effects on
MGIC and its affiliates of the two possible scenarios: i) a
failure to settle with Freddie Mac, and ii) a settlement with
Freddie Mac that involves the transfer of resources among the
group and a large payment to Freddie Mac. Moody's will also assess
the potential effects of each scenario on counterparty and
regulatory forbearance.
The following ratings have been downgraded and placed on review
for further downgrade:
Mortgage Guaranty Insurance Corporation -- insurance financial
strength rating to B2, from B1;
MGIC Investment Corporation -- senior unsecured debt to Caa3,
from Caa2.
The following ratings have been placed on review for downgrade:
MGIC Indemnity Corporation -- insurance financial strength
rating of Ba3,
MGIC Investment Corporation -- junior subordinated debt of Ca
(hyb).
MGIC Investment Corporation (NYSE: MTG), headquartered in
Milwaukee, Wisconsin is the holding company for Mortgage Guaranty
Insurance Company (MGIC), one of the largest US mortgage insurers,
with $167 billion of primary insurance in force as of 30 June
2012. Mortgage Indemnity Corporation, a mortgage insurance
subsidiary of MGIC, was recently recapitalized to write insurance
in states that would not waive MGIC's regulatory capital
requirements.
The principal methodology used in this rating was Moody's Global
Rating Methodology for the Mortgage Insurance Industry published
in February 2007.
NEXSTAR BROADCASTING: Reports $8.8 Million Net Income in Q2
-----------------------------------------------------------
Nexstar Broadcasting Group, Inc., reported net income of $8.81
million on $88.86 million of net revenue for the three months
ended June 30, 2012, compared with a net loss of $2.58 million on
$75.50 million of net revenue for the same period during the prior
year.
The Company reported net income of $11.83 million on $172.50
million of net revenue for the six months ended June 30, 2012,
compared with a net loss of $8.89 million on $145.45 million of
net revenue for the same period a year ago.
Perry A. Sook, Chairman, president and chief executive officer of
Nexstar Broadcasting Group, Inc., commented, "Nexstar's corporate
and operating teams are generating strong returns from our
existing base of operations with another quarter of record
operating results including net revenue, EBITDA, free cash flow
and margins. Of significance to our shareholders, last month
Nexstar and Mission announced the accretive acquisition of twelve
additional stations which will expand our operating base and lead
to substantial free cash flow growth without materially affecting
our leverage profile. With expectations for free cash flow
accretion in the first year of ownership of the new stations
approximately 45% over the levels expected to be generated by
Nexstar's and Mission's existing operations, we are highly
confident that the Company will be positioned to aggressively
address outstanding debt while potentially deploying free cash
flow for shareholder enhancing actions."
A copy of the press release is available for free at:
http://is.gd/Y4phT7
About Nexstar Broadcasting Group
Irving, Texas-based Nexstar Broadcasting Group Inc. currently
owns, operates, programs or provides sales and other services to
62 television stations in 34 markets in the states of Illinois,
Indiana, Maryland, Missouri, Montana, Texas, Pennsylvania,
Louisiana, Arkansas, Alabama, New York, Rhode Island, Utah and
Florida. Nexstar's television station group includes affiliates
of NBC, CBS, ABC, FOX, MyNetworkTV and The CW and reaches
approximately 13 million viewers or approximately 11.5% of all
U.S. television households.
The Company reported a net loss of $11.89 million in 2011, a net
loss of $1.81 million in 2010, and a net loss of $12.61 million
in 2009.
The Company's balance sheet at March 31, 2012, showed $578.20
million in total assets, $758.09 million in total liabilities and,
a $179.89 million total stockholders' deficit.
* * *
As reported by the Troubled Company Reporter on Aug. 30, 2010,
Standard & Poor's Ratings Services raised its corporate credit
rating on Nexstar Broadcasting Group to 'B' from 'B-'. The rating
outlook is stable.
"The 'B' corporate credit rating reflects S&P's expectation that
Nexstar's core ad revenue will continue growing modestly in 2010
and 2011," said Standard & Poor's credit analyst Deborah Kinzer.
The EBITDA growth resulting from the rebound in core advertising,
combined with political ad revenue from the 2010 midterm
elections, should, in S&P's view, enable Nexstar to reduce its
leverage significantly by the end of the year.
NEXTWAVE WIRELESS: Allen Salmasi Discloses 18.1% Equity Stake
-------------------------------------------------------------
In an amended Schedule 13D filing with the U.S. Securities and
Exchange Commission, Allen Salmasi and his affiliates disclosed
that, as of Aug. 1, 2012, they beneficially own 4,793,368 shares
of common stock of NextWave Wireless Inc. representing 18.1% of
the shares outstanding. A copy of the filing is available for
free at http://is.gd/SOf8V0
About Nextwave Wireless
NextWave Wireless Inc. (PINK: WAVE) is a holding company for
holding company for a significant wireless spectrum portfolio.
Its continuing operations are focused on the management of ikts
wireless spectrum interests. Total domestic spectrum holdings
consist of approximately 3.9 billion MHz POPs. Its international
spectrum included in continuing operations include 2.3 GHz
licenses in Canada with 15 million POPs covered by 30 MHz of
spectrum.
The Company disclosed total assets of $457.139 million, total
current liabilities of $1,064.058 million, deferred income tax
liabilities of $84.148 million and long-term obligations, net of
current portion of $14.854 million, and total stockholders'
deficit of $705.921 million.
In its report on the Company's annual report for year ended
Dec. 31, 2011, Ernst & Young, said, "The Company has incurred
recurring operating losses and has a working capital
deficiency, primarily comprised of the current portion of long
term obligations of $142.0 million at December 31, 2011 that is
associated with the maturity dates of its debt. The Company
currently does not have the ability to repay this debt at
maturity. These conditions raise substantial doubt about the
Company's ability to continue as a going concern."
MOUNTAIN PROVINCE: Permitting of Gahcho Kue Project on Schedule
---------------------------------------------------------------
Mountain Province Diamonds Inc. has confirmed that joint venture
operating partner, De Beers Canada Inc., has reported that the
permitting of the Gahcho Kue diamond project is progressing on
schedule. The 24-month environmental review is nearing completion
with the final hearing scheduled in approximately four months.
Commenting, Mountain Province President and CEO, Patrick Evans,
said: "Excellent progress is being made. All the participants in
the environmental review have been focused on ensuring that the
Gahcho Kue diamond mine meets the highest possible social and
environmental standard."
The Gahcho Kue project, which is the world's largest and richest
new diamond mine, is currently the subject of an environmental
impact review (EIR) being managed by the Mackenzie Valley
Environmental Impact Review Board based in Yellowknife, Northwest
Territories.
Mountain Province also announced that preparations for development
under the Advance Program are also progressing on schedule. The
Gahcho Kue joint venture partners approved an initial capital
allocation of C$31.3M in June, 2012, for:
1. Construction and operating permit applications;
2. Front-end engineering and design (FEED);
3. Preparations and procurement for the 2013 winter road;
4. Detailed engineering;
5. Purchase of critical long-lead equipment; and
6. Feasibility study update.
Mountain Province also said that good progress is being made with
the arrangement of the Company's 49 percent share of the Gahcho
Kue capital budget, which is estimated at approximately C$300M,
inclusive of working capital. Mountain Province has received
multiple proposals for project financing, off-take financing and a
variety of other instruments which, if successfully concluded,
would enable to the Company to substantially meet its capital
requirements.
Mr. Evans commented: "We are gratified by the strong interest we
have received from major participants in global mining finance.
This reflects the robust economics of Gahcho Kue as well as the
strength and experience of our operating partner; majority owned
by Anglo American, one of the world's largest diversified mining
companies. As we consider the financing options available to us
we will be keenly focused on minimizing shareholder dilution which
could result from conventional equity issues. The interests of
our longstanding shareholders will be paramount as we continue to
explore financing options".
About Mountain Province
Headquartered in Toronto, Canada, Mountain Province Diamonds Inc.
(TSX: MPV, NYSE AMEX: MDM) -- http://www.mountainprovince.com/--
is a Canadian resource company in the process of permitting and
developing a diamond deposit known as the "Gahcho Kue Project"
located in the Northwest Territories of Canada. The Company's
primary asset is its 49% interest in the Gahcho Kue Project.
The Company's balance sheet at March 31, 2012, showed
C$66.84 million in total assets, C$13.13 million in total
liabilities, and C$53.70 million in total shareholders' equity.
The Company reported a net loss of C$11.53 million for the year
ended Dec. 31, 2011, compared with a net loss of C$14.53 million
during the prior year.
After auditing the financial statements for the year ended Dec.
31, 2011, KPMG LLP, in Toronto, Canada, noted that the Company has
incurred a net loss in 2011 and expects to require additional
capital resources to meet planned expenditures in 2012 that raise
substantial doubt about the Company's ability to continue as a
going concern.
OIL STATES: Moody's Affirms 'Ba2' CFR; Outlook Positive
-------------------------------------------------------
Moody's Investors Service changed the rating outlook of Oil States
International, Inc. (OIS) to positive from stable and
simultaneously affirmed the company's Ba2 Corporate Family Rating
(CFR) and Ba3 senior unsecured note rating. The Speculative Grade
Liquidity rating was changed to SGL-2 from SGL-3, indicating good
liquidity through the end of 2013.
"Strong growth in the high-margin accommodations segment since
mid-2011 and the corresponding improvements in operating cash flow
and leverage are the primary drivers for the positive outlook,"
said Sajjad Alam, Moody's Analyst. "These favorable trends will
remain firmly entrenched as long as high commodity prices continue
to support development of long-life Canadian oil sands and
Australian mining and LNG projects."
Ratings Rationale
OIS' Ba2 CFR reflects its large scale integrated accommodation
service operations in Canada and Australia that generate stable
revenues under long-term contracts, diversified service offerings
to the oil and gas industry, global scope of its growing offshore
services business serving the more durable deeper water markets,
and solid leverage. The rating also considers the anticipated
aggressive growth in the accommodations segment through 2013 and
the associated capital spending and execution risks, the inherent
volatility in the North American drilling capex cycle, as well as
the exposure to the boom-and-bust nature of the Canadian oil sands
and Australian mining industries.
Based on projected operating cash flows and capital expenditures,
OIS should have good liquidity through 2013 which is captured in
the revised SGL-2 rating. At June 30, 2012, OIS had $114 million
of cash and $474 million available under its combined $750 million
US and Canadian revolving credit facilities. The vast majority of
the cash balance is held at foreign subsidiaries and will likely
be used for growth initiatives outside of the US. OIS also has an
A$150 million Australian credit facility to cover liquidity needs
in that country, which had A$114 million available at June 30. Any
potential negative free cash flow can be fully addressed with
these revolvers. OIS should remain well within financial covenant
limits governing the credit agreements and have full access to its
bank lines. There are no material debt maturities until December
2015, when OIS' US and Canadian credit facilities mature.
The rating could be upgraded to Ba1 if OIS appears able to manage
its aggressive growth plans mostly within operating cash flow,
continue its conservative financial policies and maintain the
debt/EBITDA ratio below 1.5x.
The rating could be lowered if leverage (Debt / EBITDA) remains
elevated above 3.0x over an extended period.
The principal methodology used in rating OIS was the Global
Oilfield Services 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.
Oil States International, Inc., headquartered in Houston, Texas,
manufactures, owns, and operates housing accommodations for the
oil and gas and mining industries, provides oilfield services for
North American onshore exploration and production companies, and
manufactures and services products used in offshore oil and gas
exploration and production.
ONE CALL: S&P Gives 'B' Corporate Credit Rating; Outlook Stable
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' long-term
corporate credit rating to One Call Medical Inc. "We also assigned
our 'B+' issue-level rating (one notch above the corporate credit
rating) and '2' recovery rating to the company's proposed $50
million revolving credit facility and $415 million senior-secured
term loan," S&P said.
"Our rating on One Call Medical reflects our assessment of the
company's business risk profile as 'weak,' and our assessment of
its financial risk profile as 'highly leveraged,' as our criteria
define the terms," said Standard & Poor's credit analyst James
Sung.
"Our main credit concerns with One Call Medical are the high debt
load it will be taking on in this transaction and the associated
pressure this will put on its ability to integrate its largest
acquisition to date. The transaction's integration risk, however,
is somewhat tempered by the complementary nature of the company's
product portfolios, the relatively reasonable cost synergies being
contemplated (about $10 million per year), and the positive track
records of both management teams with respect to acquisition
integration. The new management team will consist of a combination
from both companies, with Mr. Don Duford from One Call Medical as
CEO, and Mr. Joseph Delaney from MSC as President," S&P said.
"For 2012, we expect One Call Medical to generate revenues of $720
million-$730 million and EBITDA of $100 million-$110 million
(including the company's targeted $10 million in cost synergies).
We expect the following year-end 2012 credit ratios: debt leverage
of 5.4x-5.6x; total debt-to-capital of 75%; adjusted EBITDA
coverage of 2.1x; and FFO-to-debt of 9%-11%. Beyond 2012, we
expect continued credit ratio improvement. However, this is
tempered by our view that the company's highly acquisitive nature
and private equity ownership structure are not conducive to long-
term sustained deleveraging," S&P said.
"Our stable outlook reflects our expectation that One Call's
credit profile will remain largely unchanged during the next 12-18
months. The company will likely benefit from double-digit revenue
and earnings growth during the next 12-18 months, and we expect
2012 revenues of $720 million-$730 million and EBITDA of $100
million-$110 million. This will support the company's debt
repayment plans, which call for debt leverage to be brought down
to 5.4-5.6x by year-end 2012 and less than 5x by year-end 2013. We
also expect the FFO-to-debt ratio to improve to 9%-11% in 2012 and
10%-12% in 2013; adjusted EBITDA interest coverage to improve to
2.1x in 2012 and 2.4x in 2013; and debt-to-capital to improve very
slightly to 75% by year-end 2012 and 70%-75% by year-end 2013,"
S&P said.
"Although unlikely, we would consider raising our rating if One
Call can sustainably improve its key credit ratios to levels
supportive of an 'aggressive' financial risk profile (an
improvement from 'highly leveraged'). These general credit ratio
ranges include debt leverage of 3.0x-4.5x, debt-to-capital of 45%-
55%, and FFO-to-debt of 15%-30%. Conversely, we would consider a
downgrade if One Call experiences significant adverse revenue
and/or earnings deterioration, indicating weakened competitive
positioning or cost-structure issues, and this leads to weakened
credit ratios. Factors that could lead to such a scenario could
include an inability to cross-sell products and/or increase
product penetration as planned; an inability to improve operating
margins as planned; other integration issues; or increasing
pricing pressure from payors or provider/vendors," S&P said.
OVERLAND STORAGE: Southwell Partners Discloses 5.5% Equity Stake
----------------------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, Southwell Partners, L.P., and its affiliates disclosed
that, as of June 21, 2012, they beneficially own 1,531,662 shares
of common stock of Overland Storage, Inc., representing 5.5% of
the shares outstanding. A copy of the filing is available for
free at http://is.gd/s7ksRX
About Overland Storage
San Diego, Calif.-based Overland Storage, Inc. (Nasdaq: OVRL) --
http://www.overlandstorage.com/-- is a global provider of unified
data management and data protection solutions designed to enable
small and medium enterprises (SMEs), corporate departments and
small and medium businesses (SMBs) to anticipate and respond to
change.
The Company reported a net loss of $14.50 million on $70.19
million of net revenue for the fiscal year ended June 30, 2011,
compared with a net loss of $12.96 million on $77.66 million of
net revenue during the prior fiscal year.
The Company's balance sheet at March 31, 2012, showed
$41.32 million in total assets, $37.30 million in total
liabilities and $4.01 million in total shareholders' equity.
In its report accompanying the fiscal 2011 financial statements
Moss Adams LLP, in San Diego, California, noted that the Company's
recurring losses and negative operating cash flows raise
substantial doubt about the Company's ability to continue as a
going concern.
OZZIR PROPERTIES: Bankruptcy Filing Blocks Foreclosure Auction
--------------------------------------------------------------
Doug Ireland at Eagle-Tribune reports that Vincent Rizzo,
developer of a proposed $100 million shopping plaza and retirement
community, filed for Chapter 11 bankruptcy, delaying an auction of
the Route 111 property scheduled for Aug. 2. Mr. Rizzo is the
owner of Ozzir Properties.
The report relates James R. St. Jean Auctioneers said the auction
of the 36-acre property has been rescheduled for Sept. 27 at 11
a.m. Mr. Rizzo said he hopes to reach an agreement with People's
United Bank, which recently announced it was foreclosing on the
property and putting it up for sale to the highest bidder.
The report adds Ozzir Properties was close to receiving final town
approval for the shopping plaza and retirement plaza, and hoped to
begin construction this year.
The report says the 50,000-square-foot Crown Plaza proposal called
for construction of a restaurant and lounge, a midsize grocery
store, dry cleaner shop, Chinese takeout restaurant, pharmacy, a
gas station and convenience store. The town Planning Board
granted conditional approval for the plaza in September 2011.
According to the report, the board's unanimous decision came only
weeks after it also granted conditional approval to The Royal
Crest of Danville, an adjacent continuing care retirement
community, expected to serve more than 200 people.
The report adds Mr. Rizzo said he owed about $1.3 million and the
bank wanted immediate payment.
Based in Plaistow, New Hampshire, Ozzir Properties, LLC, filed for
Chapter 11 protection on July 30, 2012 (Bankr. D. N.H. Case No.
12-12415). Judge J. Michael Deasy presides over the case. The
Law Office of Joel Jay Rogge, represents the Debtor. The Debtor
listed assets of $217,647, and liabilities of $1,725,578.
PINNACLE AIRLINES: Moves to Halt Shareholders' Meeting
------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Pinnacle Airlines Corp., is asking the U.S.
Bankruptcy Judge to stop a lawsuit in Delaware state court that
could force the company to hold a shareholders' meeting.
According to the report, Pinnacle contends that some "absolutely
out-of-the-money equity holders" hope to replace some of the board
so they can undertake a "risky gamble to obtain value for"
shareholders. The Company argued that the shareholders "have
consistently opposed the debtors' restructuring plans and
consistently failed to offer any viable alternative."
As evidence of the shareholders' destructive tendencies, Pinnacle
pointed to their opposition to the only source of financing that
was essential for the company's survival.
Shareholders Meson Capital Partners LP and Wayne King commenced
suit on Aug. 1 in Delaware Chancery Court seeking an order
compelling the company to hold a shareholders' meeting. Five days
later, Pinnacle filed a lawsuit in bankruptcy court asking U.S.
Bankruptcy Judge Robert E. Gerber to halt the Delaware suit.
Judge Gerber will hold a hearing on Sept. 5 to decide whether the
Delaware suit can continue.
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.
QIMONDA RICHMOND: Court Rules on Wells Fargo, Macquarie Claim
-------------------------------------------------------------
Bankruptcy Judge Mary F. Walrath sustained, in part, the objection
of Qimonda Richmond, LLC, to the proofs of claim filed by Wells
Fargo Bank, Northwest, N.A., and by Macquarie Electronics USA,
Inc., for damages allegedly due as a result of the rejection by
the Debtor of an equipment lease agreement.
The Debtor is a U.S. subsidiary of an international company,
Qimonda AG, that designed, developed, manufactured, and sold
memory chip modules. On Aug. 19, 2009, Wells Fargo and Macquarie
filed proofs of claim in the amount of $191,443,873 and
$191,478,085, respectively. The Debtor filed objections to the
two proofs of claim to which the claimants responded. After
confirmation of its plan of reorganization, the Debtor's
successor, the QR Liquidating Trust, filed a motion for summary
judgment on the issues raised by the objections to the proofs of
claim.
According to Judge Walrath, the Debtor's objection to the claims
of Wells Fargo and Macquarie will be sustained in part to the
extent that the claims seek indemnification for the lost value of
the equipment resulting from the Debtor's rejection of the
equipment lease, for attorneys' fees arising from litigation with
the Debtor, and for the costs expended by Macquarie after it
bought the Equipment at the foreclosure sale. The Court will,
however, overrule the objection to the extent it relates to the
claim of Macquarie for indemnification of the cost incurred by it
($32.5 million) in buying the Equipment at the foreclosure sale.
Judge Walrath said, "The cost incurred by Macquarie in purchasing
the Equipment at foreclosure is indemnifiable. These were actual
funds expended by Macquarie as a result of the Debtor's default of
the Lease. Further, the price paid to the Indenture Trustee by
Macquarie for the Equipment ($32.5 million) reduced the Indenture
Trustee's claim against the Debtor under the Lease."
A copy of the Court's Aug. 8, 2012 Opinion is available at
http://is.gd/IOAAUDfrom Leagle.com.
About Qimonda AG
Qimonda AG (NYSE: QI) -- http://www.qimonda.com/-- was a global
memory supplier with a diversified DRAM product portfolio. The
Company generated net sales of EUR1.79 billion in financial year
2008 and had -- prior to its announcement of a repositioning of
its business -- roughly 12,200 employees worldwide, of which
1,400 were in Munich, 3,200 in Dresden and 2,800 in Richmond, Va.
Qimonda AG commenced insolvency proceedings in a local court in
Munich, Germany, on Jan. 23, 2009. On June 15, 2009, QAG filed
a petition (Bankr. E.D. Va. Case No. 09-14766) for relief under
Chapter 15 of the U.S. Bankruptcy Code.
Qimonda North America Corp., an indirect and wholly owned
subsidiary of QAG, is the North American sales and marketing
subsidiary of QAG. QNA is also the parent company of Qimonda
Richmond LLC. QNA and QR sought Chapter 11 protection (Bankr.
D. Del. Case No. 09-10589) on Feb. 20, 2009. Mark D. Collins,
Esq., Michael J. Merchant, Esq., and Lee E. Kaufman, Esq., at
Richards Layton & Finger PA, in Wilmington Delaware; and Mark
Thompson, Esq., Morris J. Massel, Esq., and Terry Sanders, Esq.,
at Simpson Thacher & Bartlett LLP, in New York City, represented
the Debtors as counsel.
Roberta A. DeAngelis, the United States Trustee for Region 3,
appointed seven creditors to serve on an official committee of
unsecured creditors. Jones Day and Ashby & Geddes represented the
Committee.
In its bankruptcy petition, Qimonda Richmond, LLC, estimated more
than US$1 billion in assets and debts. The information, the
Chapter 11 Debtors said, was based on QR's financial records which
are maintained on a consolidated basis with QNA.
In September 2011, the Chapter 11 Debtors won confirmation of
their liquidation plan which projects that unsecured creditors
with claims between US$33 million and US$35 million would have a
recovery between 6.1% and 11.1%. No secured claims of
significance remained.
QUALITY DISTRIBUTION: Reports $28.8MM Net Income in 2nd Quarter
---------------------------------------------------------------
Quality Distribution, Inc., reported net income of $28.80 million
on $212.73 million of total operating revenues for the three
months ended June 30, 2012, compared with net income of $9.04
million on $189.99 million of total operating revenue for the same
period a year ago.
The Company reported net income of $35.50 million on $404.64
million of total operating revenues for the six months ended
June 30, 2012, compared with net income of $11.76 million on
$367.90 million of total operating revenues for the same period
during the prior year.
The Company's balance sheet at June 30, 2012, showed $454.49
million in total assets, $484.24 million in total liabilities and
a $29.75 million total shareholders' deficit.
"Second quarter earnings and year-to-date performance improved
from last year, and we anticipate improvement in the second half
of the year as we realize further benefits from our recent
acquisitions, improve utilization of start-up energy assets, and
stabilize our chemical segment volumes via driver additions," said
Gary Enzor, chief executive officer.
A copy of the press release is available for free at:
http://is.gd/Kmguz9
About Quality Distribution
Quality Distribution, LLC, and its parent holding company, Quality
Distribution, Inc., are headquartered in Tampa, Florida. The
company is a transporter of bulk liquid and dry bulk chemicals.
The company's 2010 revenues are approximately $686 million.
Apollo Management, L.P., owns roughly 30% of the common stock of
Quality Distribution, Inc.
The Company reported net income of $23.43 million in 2011,
compared with a net loss of $7.40 million in 2010.
Bankruptcy Warning
In its Form 10-K for 2011, the Company noted that it had
consolidated indebtedness and capital lease obligations, including
current maturities, of $307.1 million as of Dec. 31, 2011. The
Company must make regular payments under the New ABL Facility and
its capital leases and semi-annual interest payments under its
2018 Notes.
The New ABL Facility matures August 2016. However, the maturity
date of the New ABL Facility may be accelerated if the Company
defaults on its obligations. If the maturity of the New ABL
Facility or such other debt is accelerated, the Company does not
believe that it will have sufficient cash on hand to repay the New
ABL Facility or such other debt or, unless conditions in the
credit markets improve significantly, that the Company will be
able to refinance the New ABL Facility or such other debt on
acceptable terms, or at all. The failure to repay or refinance
the New ABL Facility or such other debt at maturity will have a
material adverse effect on the Company's business and financial
condition, would cause substantial liquidity problems and may
result in the bankruptcy of the Company or its subsidiaries. Any
actual or potential bankruptcy or liquidity crisis may materially
harm the Company's relationships with its customers, suppliers and
independent affiliates.
R.R. DONNELLEY: Fitch Affirms 'BB+' IDR; Outlook Negative
---------------------------------------------------------
Fitch Ratings has affirmed R.R. Donnelley & Sons Company's (RRD)
Issuer Default Rating (IDR) at 'BB+' and revised the Rating
Outlook to Negative from Stable.
The Outlook revision reflects the limited headroom within the
ratings for the company to underperform Fitch's expectations,
including Fitch's FCF generation and absolute debt reduction
expectations. In Fitch's previous press release, Fitch had stated
its concern that revenue declines in the low to mid-single digits
could pressure cash flows and slow down absolute debt reduction
and thereby lead to an Outlook revision or rating change.
RRD revised guidance for 2012 revenues to $10.4 to $10.5 billion,
which includes $160 million related to the unfavorable impact of
foreign exchange and pass through paper revenues. RRD's previous
guidance for revenues was to be flat to slightly up from 2011
revenues of $10.6 billion, excluding the impact of foreign
exchange and pass through papers. While the guidance change in
absolute terms is de minimis, Fitch is concerned organic revenue
growth will continue to be challenged and given the limited
headroom within the ratings, any unexpected weakness in the
economy or in RRD's operating performance could reduce the level
of cash generated, slowing the pace of absolute debt reduction.
Fitch notes that RRD affirmed its guidance of approximately $300
million in FCF (after dividends). Fitch believes this is
achievable. While Fitch now expects revenues to be down in the
low single digits, Fitch expects EBITDA to remain unchanged
relative to 2011 EBITDA of $1.2 billion.
As of June 30, 2012, RRD had total debt of $3.8 billion. Fitch
calculates unadjusted gross leverage (without adding back
restructuring charges) at 3.2 times (x). The ratings reflect the
company's intention to reduce absolute levels of debt . Given
RRD's cash flow generation, Fitch believes that the company can
meet its pension funding requirements and reduce debt balances in
order to get closer to the lower end of RRD's stated leverage
target of 2.5x - 3.0x, which Fitch believes is appropriate for the
ratings at this time. As with ratings on any business facing
secular challenges, Fitch may continue to tighten the targeted
leverage metric for a given rating category as business risk
increases.
Fitch believes that debt reduction will need to be a primary use
of free cash flow (FCF) going forward in order to maintain current
ratings. Given the secular challenges facing the company,
deleveraging will primarily be driven through debt level
reductions. There is no tolerance in the ratings for material
share buy backs and/or increases in the current dividend level.
Rating Drivers:
Ratings may be stabilized if the company executes on its intention
to reduce absolute levels of debt and is able to demonstrate
organic revenue growth.
Sustained revenue declines and/or heightened concerns regarding
secular challenges would likely result in a one notch rating
downgrade.
Liquidity:
Fitch calculates RRD's FCF (after dividends) for the last 12
months ended June 30, 2012 at $381 million. Fitch expects FCF to
be approximately $300 million in 2012. RRD's pension was $1
billion underfunded at the end of 2011. The company intends to
contribute $205 million to its various retirement funds, including
its pension, in 2012. The 2012 contribution is reflected in
Fitch's FCF expectations. The updated contributions reflect the
passing of the Surface Transportation Extension Act of 2012, which
provided pension funding relief.
As of June 30, 2012, liquidity was supported by $369 million in
cash ($338 million located outside of the U.S.) and $1 billion
available under its $1.75 billion revolver that matures in
December 2013.
As of June 30, 2012, there is approximately $325 million in
revolver debt balance outstanding, reflecting seasonal working
capital balances and borrowing used to fund the January 2012 $160
million maturity. After the revolver balance has been repaid,
Fitch expects the company to continue to reduce debt through
repurchases of notes in the open market or via tender offers.
RRD's next bond maturity is its $258 million 4.95% notes due in
April 2014, $300 million 5.5% notes due in May 2015 and its $347
million 8.6% notes due in August 2016.
Covenants:
Fitch notes that liens are not permitted under the existing bonds,
unless a pari passu lien is granted to the notes. There is also a
general lien basket that limits liens (and sale-leaseback
transactions) to 15% of net tangible assets (there is a 10% limit
for the notes maturing in 2021, 2029, and 2031).
While the company's credit facility contains a 4.0x maximum
leverage covenant, current bondholders do not benefit from any
material unsecured debt or unsecured subsidiary guarantee
restrictive covenants. Fitch notes that in the event that the
credit facility became guaranteed by the operating subsidiaries of
RRD (noting that the revolver does not expire until Dec. 17,
2013), depending on the terms and structure, Fitch may notch up
the credit facility and maintain the current notching, relative to
the IDR, for the unsecured notes. The one notch up lift for a
guaranteed facility would reflect is position in the capital
structure and expectations for higher recoveries, relative to the
unsecured and unguaranteed notes.
The ratings also reflect:
-- RRD's scale and diverse product offering as the largest
commercial printer in the U.S. and worldwide. The U.S.
commercial printing market size is approximately $140
billion. RRD is one of few well-capitalized competitors in
this highly fragmented and sizeable industry. The
significant addressable market share that RRD could capture
from rivals may provide some offset to secular pressures.
-- In Fitch's view, more than 50% of RRD's revenues face some
degree of secular headwinds (catalogs, magazines, books,
directories, variable, commercial and financial print).
Certain sub-segments may not recover or exhibit positive
growth characteristics going forward. Fitch believes that
continued pricing and volume pressure, will challenge RRD's
ability to drive GDP-level organic revenue growth. Fitch's
base case model assumes that pressures in the Books and
Directories segment accelerate and revenues in this business
line declines in the mid-teens starting in 2013.
Fitch has affirmed R.R. Donnelley's ratings as follows:
-- IDR at 'BB+';
-- Senior unsecured revolving credit facility at 'BB+';
-- Senior unsecured notes and debentures at 'BB+'.
RE LOANS: Judge Isgur Discusses Scope of Removal Deadline
---------------------------------------------------------
Bankruptcy Judge Marvin Isgur denied the request of South Texas
Funding Group, L.P. to remand an adversary proceeding, which
argued that the 180-day deadline in Fed.R.Bankr.P. 9027 precluded
the removal of the proceeding. Judge Isgur said R.E. Loans LLC
was not time-barred from removing the state court lawsuit.
On July 6, 2010, South Texas Funding sued Mortgage Fund '08; R.E.
Loans, LLC; and other defendants in state court in Cameron County,
Texas. R.E. Loans filed for bankruptcy on Sept. 13, 2011, in the
Northern District of Texas.
R.E. Loans removed the state court lawsuit to the Bankruptcy Court
on May 17, 2012. South Texas Funding filed a motion to transfer
on May 17, seeking to have the adversary proceeding transferred to
the Northern District of Texas. South Texas Funding also filed a
motion to remand on May 31, arguing that the state court lawsuit
was not a core proceeding, that the notice of removal was not
timely filed, and that the doctrine of laches precluded removal.
At a hearing on July 16, the Court stated that the mere assertion
that the lawsuit was not a core proceeding was insufficient to
justify remand and that there were no facts to support the
doctrine of laches. Counsel for South Texas Funding argued that
the phrase "but not later than 180 days after the order for
relief" in Rule 9027(a)(2)(C) modifies the deadlines in clause
(A), clause (B), and clause (C) of Rule 9027, establishing an
absolute 180-day bar for removal. The Court requested additional
briefing on this issue, ruling that if the removal was timely,
there was insufficient basis either for remand or for transfer.
Fed.R.Bankr.P. 9027(a)(2) provides time limits for the removal of
civil actions initiated in state court before the commencement of
a bankruptcy case. Under Rule 9027(a),
"[A] notice of removal may be filed only within the longest of (A)
90 days after the order for relief in the case under the Code, (B)
30 days after the entry of an order terminating a stay, if the
claim or cause of action in a civil action has been stayed under ?
362 of the Code, or (C) 30 days after a trustee qualifies in a
chapter 11 reorganization case but not later than 180 days after
the order for relief."
The rule provides three independent measures for the deadline,
with the longest measure governing. South Texas Funding argues
that the phrase "but not later than 180 days after the order for
relief" modifies clause (A), clause (B), and clause (C),
establishing an outer limit for the removal period.
Judge Isgur said the "not later than 180 days" limitation applies
only to the deadline under clause (C). The Court applies the rule
of the last antecedent. Under the rule of the last antecedent, "a
limiting clause or phrase . . . should ordinarily be read as
modifying only the noun or phrase that it immediately follows."
United States v. Hayes, 555 U.S. 415, 425 (2009) (quoting Barnhart
v. Thomas, 540 U.S. 20, 26 (2003)).
The punctuation of the rule indicates that the limitation applies
only to clause (C). The rule of the last antecedent applies when
the modifying phrase is not separated from the immediately
preceding noun or phrase by a comma. Judge Isgur cited In re Tyco
Int'l, Ltd. Multidistrict Litig., 322 F.Supp.2d 116, 119 (D.N.H.
2004) (recognizing "exception to the rule of the last antecedent
which applies when a comma is placed between the last antecedent
and the qualifying phrase"); In re Tudor, 342 B.R. 540, 554
(Bankr. S.D. Ohio 2005) (quoting In re Monro, 282 B.R. 841, 844
(Bankr. N.D. Ohio 2002)) ("[T]he effect of a modifying clause on
the preceding phrase(s) is generally dependent on the presence or
lack of a separating comma. . . . [T]he lack of a comma will, in
most instances, involve the application of the principle of
statutory construction known as the rule of the last
antecedent[.]").
According to Judge Isgur, Clauses (A), (B), and (C) are set off
from one another by commas, while the "180 days" phrase is not
separated by a comma from the rest of clause (C). The rule of the
last antecedent therefore applies to limit the application of the
"180 days" phrase to clause (C). The rule of the last antecedent
is "not absolute and can assuredly be overcome by other indicia of
meaning." Hayes, 555 U.S. at 425. In Rule 9027(a)(2), however,
there are no "other indicia of meaning" to indicate that the "180
days" phrase applies to clauses (A) and (B) as well as clause (C).
The "180 days" phrase does not modify the time limit under clause
(B).
South Texas Funding additionally argues that the time limit under
Rule 9027(a)(2)(B) is inapplicable because there has never been an
order lifting the automatic stay. The Court disagrees.
By its terms, according to Judge Isgur, clause (B) applies "if the
claim or cause of action in a civil action has been stayed under
Sec. 362 of the Code." The 30-day limit begins to run "after entry
of an order terminating the stay." The phrase "after entry of an
order terminating the stay" does not state when clause (B)
applies; it states how the time limit is calculated under clause
(B). Judge Isgur cited In re Thomson McKinnon, Inc., 130 B.R.
721, 724 (Bankr. S.D.N.Y. 1991) (holding that subsection (a)(2)(B)
applied because "the stay continues in effect. In these
circumstances, the 90-day limitation in Bankruptcy Rule 9027(a)(2)
does not apply because the longer period would be the date, if
any, when relief from the stay is granted"). The purpose of
clause (B) is to allow an exception to the time limits for actions
that are stayed.
The Advisory Committee Note accompanying Rule 9027(a)(2) states:
"As long as the stay remains in effect there is no reason to
impose a time limit for removal to the bankruptcy court and,
therefore, clause (B) of subdivision (a)(2) provides that a
removal application may be filed within 30 days of entry of an
order terminating the stay. Parties to stayed litigation will not
be required to act immediately on commencement of a case under the
Code to protect their right to remove."
The Advisory Committee Note thus explains that there is no time
limit for removal while the stay remains in effect. This result
would not occur if clause (B) did not apply until after the stay
was terminated.
Under South Texas Funding's reading, clause (B) would apply only
to removal within the 30-day window after an order terminating the
stay. Removal could be time-barred and then become unbarred upon
the entry of an order terminating the stay. This result is
inconsistent with the language and purpose of the rule, Judge
Isgur said.
In light of the language of the rule and the purpose set out by
the advisory committee, the Court does not read clause (B) as
applying only after the stay has been lifted. The Court instead
reads clause (B) to allow removal at any time until 30 days after
the entry of an order terminating the stay.
The lawsuit is SOUTH TEXAS FUNDING GROUP, L.P. Plaintiff, v.
MORTGAGE FUND '08 LLC, et al., Defendant(s), Adv. Proc. No.
12-1004 (Bankr. S.D. Tex.). A copy of the Court's Aug. 8, 2012
Memorandum Opinion is available at http://is.gd/WH4N8ufrom
Leagle.com.
About R.E. Loans
R.E. Loans, LLC, was, for many years, in the business of providing
financing to home builders and developers of real property. R.E.
Future LLC and Capital Salvage own the real property obtained
following foreclosure proceedings initiated by R.E. Loans against
its borrowers. R.E. Loans is the sole shareholder of Capital
Salvage and the sole member of R.E. Future. B-4 Partners LLC is
the sole member of R.E. Loans. As a result of the multiple
defaults by R.E. Loans' borrowers, R.E. Loans has transitioned
from being a lender to becoming a property management company.
Lafayette, California-based R.E. Loans, R.E. Future and Capital
Salvage filed for Chapter 11 bankruptcy (Bankr. N.D. Tex. Case
Nos. 11-35865, 11-35868 and 11-35869) on Sept. 13, 2011. Judge
Barbara J. Houser presides over the case. Stutman, Treister &
Glatt Professional Corporation, in Los Angeles, and Gardere, Wynne
Sewell LLP, in Dallas, represent the Debtors as counsel. James A.
Weissenborn at Mackinac serves as R.E. Loans' chief restructuring
officer. The Debtors tapped Hines Smith Carder as their
litigation and outside general counsel. The Debtors tapped
Alixpartners, LLP as noticing agent, and Latham & Watkins LLP as
special counsel in real estate matters. R.E. Loans disclosed
$713.6 million in assets and $886.0 million in liabilities as of
the Chapter 11 filing.
Akin Gump Strauss Hauer & Feld LLP, in Dallas, represents
the Official Committee of Noteholders.
On June 26, 2012, the Bankruptcy Court confirmed the Modified
Fourth Amended Joint Chapter 11 Plan of Reorganization, Dated
June 1, 2012, filed by R.E. Loans LLC, R.E. Future LLC, and
Capital Salvage. The Plan was negotiated at arm's-length among
the Debtors, the Official Committee of Noteholders, Wells Fargo
Capital Finance, and the Debtors' largest unsecured creditor, the
Liquidating Trust for Mortgage Fund '08 LLC, Development
Specialists, Inc., and their advisors. The Court also approved
the Debtors' entry into an exit credit facility with Wells Fargo.
The Debtors' Plan provides that the rights of the Noteholders and
the Holders of General Unsecured Claims will depend on whether the
Noteholders vote to accept the Plan and implement the Plan
Compromise. No payments will be made by the Reorganized Debtors
on account of any Allowed Claims (other than Secured Tax Claims)
until the Wells Fargo Exit Facility is indefeasibly paid in full
in Cash.
REALOGY CORP: Incurs $24 Million Net Loss in Second Quarter
-----------------------------------------------------------
Realogy Corporation reported a net loss of $24 million on $1.30
billion of net revenues for the three months ended June 30, 2012,
compared with a net loss of $21 million on $1.17 billion of net
revenues for the same period during the prior year.
According to the Form 10-Q filed with the U.S. Securities and
Exchange Commission, Realogy had a net loss of $216 million on
$2.18 billion of net revenues for the six months ended June 30,
2012, compared with a net loss of $258 million on $2.01 billion of
net revenues for the same period a year ago.
The Company's balance sheet at June 30, 2012, showed $7.82 billion
in total assets, $9.54 billion in total liabilities, and a
$1.72 billion total deficit.
"We believe that the U.S. residential real estate market is
continuing to experience the beginnings of the recovery that we
reported in the first quarter of 2012," said Richard A. Smith,
Realogy's chairman, chief executive officer and president. "We
expected to see the continued improvement in both home sale units
and average sales price, with price increases in most major
markets being heavily influenced by reduced inventory. Those
expectations were realized in our second quarter results, which
support our forecasted early-stage recovery."
A copy of the Form 10-Q is available for free at:
http://is.gd/nFKa0B
About Realogy Corp.
Realogy Corp. -- http://www.realogy.com/-- a global provider of
real estate and relocation services with a diversified business
model that includes real estate franchising, brokerage, relocation
and title services. Realogy's world-renowned brands and business
units include Better Homes and Gardens Real Estate, CENTURY 21,
Coldwell Banker, Coldwell Banker Commercial, The Corcoran Group,
ERA, Sotheby's International Realty, NRT LLC, Cartus and Title
Resource Group. Collectively, Realogy's franchise systems have
around 15,000 offices and 270,000 sales associates doing business
in 92 countries around the world.
Headquartered in Parsippany, N.J., Realogy is owned by affiliates
of Apollo Management, L.P., a leading private equity and capital
markets investor. Realogy fully supports the principles of the
Fair Housing Act.
The Company reported a net loss of $439 million in 2011, a net
loss of $97 million in 2010, and a net loss of $260 million in
2009.
* * *
Realogy has 'Caa2' corporate family rating and 'Caa3' probability
of default rating, with positive outlook, from Moody's. The
rating outlook is positive. Moody's said in January 2011 that the
'Caa2' CFR and 'Caa3' PDR reflects very high leverage, negative
free cash flow and uncertainty regarding the timing and strength
of a recovery of the residential housing market in the U.S.
Moody's expects Debt to EBITDA of about 14 times for the 2010
calendar year. Despite the recently completed and proposed
improvements to the debt maturity profile, the Caa2 CFR continues
to reflect Moody's view that current debt levels are unsustainable
and that a substantial reduction in debt levels will be required
to stabilize the capital structure.
In February, Standard & Poor's Ratings Services raised its
corporate credit rating on Realogy Corp. to 'CCC' from 'CC'. The
rating outlook is positive.
REGAL ENTERTAINMENT: Files Form 10-Q, Posts $37.2MM Income in Q2
----------------------------------------------------------------
Regal Entertainment Group filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
net income of $37.2 million on $723.3 million of total revenues
for the quarter ended June 28, 2012, compared with net income of
$34.8 million on $753.3 million of total revenues for the quarter
ended June 30, 2011.
The Company reported net income of $83.5 million on $1.40 billion
of total revenues for the two quarters ended June 28, 2012,
compared with net income of $11.1 million on $1.32 billion of
total revenues for the two quarters ended June 30, 2011.
The Company's balance sheet at June 28, 2012, showed $2.30 billion
in total assets, $2.84 billion in total liabilities, and a
$542.3 million total deficit.
A copy of the Form 10-Q is available for free at:
http://is.gd/mxtgGi
About Regal Entertainment Group
Based in Knoxville, Tennessee, Regal Entertainment Group (NYSE:
RGC) -- http://www.REGmovies.com/-- is the largest motion picture
exhibitor in the world. Regal's theatre circuit, comprising Regal
Cinemas, United Artists Theatres and Edwards Theatres, operates
6,739 screens in 545 locations in 38 states and the District of
Columbia. Regal operates theatres in 43 of the top 50 U.S.
designated market areas.
* * *
This concludes the Troubled Company Reporter's coverage of Regal
Entertainment until facts and circumstances, if any, emerge that
demonstrate financial or operational strain or difficulty at a
level sufficient to warrant renewed coverage.
RESIDENTIAL CAPITAL: Ruling on $17.8-Mil. Incentive Plan Deferred
-----------------------------------------------------------------
Bankruptcy Judge Martin Glenn declined to rule on Residential
Capital LLC's request for approval of the key employee incentive
plan and key employee retention plan, and instead asked the
Debtors for more information about a portion of the plan that
would reward insiders, Lisa Uhlman of Bankruptcy Law360 reported.
As reported by Residential Capital Bankruptcy News, the Debtors
have sought permission from the bankruptcy judge to pay up to
$17.8 million in bonuses to boost the morale of nearly 200 key
employees. The bonus payments come in two forms:
(1) The Key Employee Incentive Plan, which provides 17 senior
executives with incentives totaling $4.1 million.
Incentives are tied to both the sale of the Debtors'
businesses and the achievement of certain financial and
operational goals. There is a potential payout of $7.0
million in the KEIP if the final sale proceeds exceeds
anticipated sale proceeds by 3% or greater. A list of the
KEIP Participants will be provided to the Court, the U.S.
Trustee, and the Official Committee of Unsecured
Creditors. The KEIP Participants do not include the
Debtors' Chief Executive Officer, President and Chief
Capital Markets Officer.
(2) The Key Employee Retention Plan, which intends to provide
financial incentives totaling $10.8 million to 174 of the
Debtors' more than 3,625 employees. The Key Employees are
necessary to execute the Debtors' business plan, maintain
operational stability throughout the sale process, and
transition the Debtors' business as a going concern.
But Tracy Hope Davis, the United States Trustee for Region 2,
opposes the proposal. Ms. Davis contends that the Debtors'
request is not permitted by Section 503(c) of the Bankruptcy Code.
The U.S. Trustee says the KEIP is a disguised retention plan, not
an incentive plan, because it sets a low performance bar for
employees to earn the proposed bonuses. It does not provide real
incentives for the employees to improve their performance, work
harder, and achieve results greater than in the past, the U.S.
Trustee complains. Thus, as a true retention plan, the KEIP is
subject to the stringent requirements of Section 503(c)(1). The
Debtors, therefore, must prove three elements before the KEIP may
be approved: (1) each of the 17 insiders had bona fide job offers
at the same or greater compensation; (2) each of the 17 insider's
services are essential to the business's survival; and (3) the
proposed payments fall within the strict pay limits of Section
503(c)(1)(C). If Bankruptcy Judge Martin Glenn approves the KEIP
as proposed, the Debtors would pay bonuses to insiders in
violation of the Bankruptcy Code's rigorous requirements, the U.S.
Trustee says.
The U.S. Trustee also asserts that the Key Employee Retention
Program is similarly inappropriate. "To be approved, the bonuses
must be an actual and necessary cost of preserving the estate,
applicable to any administrative expense claim. Moreover, the
Debtors must satisfy the sound business judgment standard and
show, among other criteria, a reasonable relationship between the
proposal and the results to be obtained, that the cost and scope
of the plan is reasonable, that the plan is consistent with
industry standards, and that the Debtors conducted reasonable due
diligence in establishing the plan. The Debtors have not
sustained their burden to prove each of these elements and to
prove that the bonuses are justified by the facts and
circumstances of the case.
Ally Backs Bonus Plan
Ally Financial Inc. reiterated to the Debtors the need for the
proposed plans to comply with the limitations on employee
compensation imposed by the Troubled Asset Relief Program on AFI
and the Debtors. Following these discussions, the Debtors agreed
in principle to a number of revisions to be incorporated into the
form of a proposed final order for the KEIP/KERP Motion that
ensure AFI's and the Debtors' continued compliance with TARP.
Accordingly, based on the agreed terms to be set forth in the
proposed final order, AFI said it has no issue with the Court's
approval of the KEIP/KERP Motion.
AFI also provided a summary update regarding the status of
negotiations between AFI and the Debtors regarding ResCap's
prepetition and postpetition employee compensation practices.
Specifically, AFI and the Debtors have reached a tentative
agreement as to which entity will remit payment on account of
compensation related to TARP issued to employees of the Debtors
prior to and after the Petition Date. Upon finalizing the terms
of the tentative agreement, AFI understands the Debtors will
promptly file a motion to provide additional disclosure and
obtain the requisite Court approvals.
The principal terms of the Tentative Agreement provide that AFI
will pay:
(i) approximately $25.3 million on account of Employee
Compensation issued prior to the Petition Date to
employees of the Debtors who were employed by ResCap at
the time the TARP Compensation was issued;
(ii) approximately $1.2 million on account of Employee
Compensation issued prior to the Petition Date to persons
who were employed by the Debtors at the time the TARP
Compensation was issued but were terminated prepetition by
ResCap; and
(iii) approximately $22.5 million on account of Employee
Compensation issued prior to the Petition Date to
employees of the Debtors who were employed by AFI at the
time the TARP Compensation was issued.
The Debtors, in turn, agree that they will, after obtaining Court
approval, reimburse AFI from an escrow account for approximately
$9 million in payments to be made on account of TARP Compensation
issued to certain top executives of the Debtors on or following
the Petition Date.
AFI has previewed the Tentative Agreement with the official
committee of unsecured creditors, and will engage in further
discussions with the committee, and the Office of the United
States Trustee, upon its completion. AFI also has been advised by
the Debtors that they are conducting similar discussions.
Subject to finalizing the Tentative Agreement, full disclosure of
its terms, and Court approval of the motion to be filed by the
Debtors, AFI supports the payment of the TARP Compensation to the
Debtors' employees.
ResCap Defends Plan
The Court should approve the KEIP and the KERP to ensure that the
Debtors will have the vital human resources to maximize their
ability to continue operating as a going concern, while
concurrently attempting to sell and transition their businesses
to the purchasers that will result in creditors receiving maximum
value for the assets, counsel to ResCap, Gary S. Lee, Esq., at
Morrison & Foerster LLP, in New York, asserts.
The Debtors contend that the U.S. Trustee's objection does not
properly recognize the substantial risks they are seeking to
mitigate through the KEIP and KERP plans; the relative difficulty
and benefits of earning an award under the plan; and the critical
importance of retaining the identified key employees.
Contrary to the U.S. Trustee's arguments, the KEIP and KERP are
reasonable and justified based upon the unprecedented complexity
of the Debtors' cases, Mr. Lee argues. The Debtors continue to
operate their businesses thereby avoiding the fate of many others
in the financial services industry that were forced to seek
bankruptcy protection -- piecemeal liquidation, Mr. Lee adds.
The Debtors also point out that it is important to note that the
Official Committee of Unsecured Creditors believes the relief
sought in the motion is designed to incentivize the KEIP
participants to maximize the value of the Debtors' estates for
the benefits of all stakeholders.
Ronald Greenspan, senior managing director in the Corporate
Finance/Restructuring practice of FTI Consulting, Inc., maintains
that the KEIP milestones are challenging and incentivizing and
that the KEIP participants and key employees provided distinct
and necessary services to the Debtors' businesses. A full-text
copy of Mr. Greenspan's declaration is available for free at:
http://bankrupt.com/misc/rescapgreenspandecl.pdf
About Residential Capital
Residential Capital LLC, the unprofitable mortgage subsidiary of
Ally Financial Inc., filed for bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012.
Neither Ally Financial nor Ally Bank is included in the bankruptcy
filings.
ResCap, one of the country's largest mortgage originators and
servicers, was sent to Chapter 11 with 50 subsidiaries amid
"continuing industry challenges, rising litigation costs and
claims, and regulatory uncertainty," according to a company
statement.
ResCap disclosed $15.68 billion in assets and $15.28 billion in
liabilities as of March 31, 2012.
Centerview Partners LLC and FTI Consulting are acting as financial
advisers to ResCap. Morrison & Foerster LLP is acting as legal
adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is
the conflicts counsel. Rubenstein Associates, Inc., is the public
relations consultants to the Company in the Chapter 11 case.
Morrison Cohen LLP is advising ResCap's independent directors.
Kurtzman Carson Consultants LLP is the claims and notice agent.
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves
as counsel to Ally Financial.
ResCap is selling its mortgage origination and servicing
businesses and its legacy portfolio, consisting mainly of mortgage
loans and other residual financial assets. At the onset of the
bankruptcy case, ResCap struck a deal with Nationstar Mortgage LLC
for the mortgage origination and servicing businesses, and with
Ally Financial for the legacy portfolio. Together, the asset
sales are expected to generate roughly $4 billion in proceeds.
According to Bloomberg News, following a hearing in June, the
bankruptcy judge scheduled auctions for Oct. 23. A hearing to
approve the sales was set for Nov. 5. Fortress Investment Group
LLC will make the first bid for the mortgage-servicing business,
while Berkshire Hathaway Inc. will serve as stalking-horse bidder
for the remaining portfolio of mortgages.
Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Residential Capital LLC and its
affiliates (http://bankrupt.com/newsstand/or 215/945-7000).
RESIDENTIAL CAPITAL: Chapter 11 Examiner Submits Work Plan
----------------------------------------------------------
Former bankruptcy judge Arthur J. Gonzalez, the court-appointed
examiner for Residential Capital LLC and its affiliates, delivered
to Court his work plan with regards to his investigation into the
Debtors' business operations and transactions.
The Chapter 11 Examiner believes a realistic time frame for the
preparation of a report on his findings regarding the
investigation is six months, subject to adjustment if after
meaningful due diligence a different time period appears to be
more reasonable.
The Examiner's work plan for the investigation includes, but is
not limited to, information gathering and verification, witness
interviews and potential depositions, maintaining open lines of
communications, monitoring of bankruptcy cases, retention of
professionals, and preparation of Examiner's report,
The Examiner has sought court's authority to retain as counsel
the firm of Chadbourne & Parke LLP. In addition, the Examiner
has determined that he cannot adequately conduct the
Investigation without advice from an independent financial
advisor. After interviewing a number of well-qualified
candidates, the Examiner has decided upon the retention of
Mesirow Financial Consulting as his financial advisor.
In order to facilitate the Examiner's ability to timely and
efficiently complete a comprehensive investigation and fulfill
his duties, the Examiner will file a motion seeking authority
from the Court to issue subpoenas for the production of documents
and the examination of persons and entities determined by the
Examiner to have information relevant to the Investigation, (ii)
establishing procedures governing responses to those subpoenas.
The Examiner said he is not yet able to assess the full scope of
the efforts he will need to undertake, making it difficult to
develop an accurate budget at present. The Examiner, however,
currently estimates the total fees for himself and his advisors
will range from $29 million to $36 million, assuming timely
cooperation is provided and the report can be timely filed as a
result.
About Residential Capital
Residential Capital LLC, the unprofitable mortgage subsidiary of
Ally Financial Inc., filed for bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012.
Neither Ally Financial nor Ally Bank is included in the bankruptcy
filings.
ResCap, one of the country's largest mortgage originators and
servicers, was sent to Chapter 11 with 50 subsidiaries amid
"continuing industry challenges, rising litigation costs and
claims, and regulatory uncertainty," according to a company
statement.
ResCap disclosed $15.68 billion in assets and $15.28 billion in
liabilities as of March 31, 2012.
Centerview Partners LLC and FTI Consulting are acting as financial
advisers to ResCap. Morrison & Foerster LLP is acting as legal
adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is
the conflicts counsel. Rubenstein Associates, Inc., is the public
relations consultants to the Company in the Chapter 11 case.
Morrison Cohen LLP is advising ResCap's independent directors.
Kurtzman Carson Consultants LLP is the claims and notice agent.
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves
as counsel to Ally Financial.
ResCap is selling its mortgage origination and servicing
businesses and its legacy portfolio, consisting mainly of mortgage
loans and other residual financial assets. At the onset of the
bankruptcy case, ResCap struck a deal with Nationstar Mortgage LLC
for the mortgage origination and servicing businesses, and with
Ally Financial for the legacy portfolio. Together, the asset
sales are expected to generate roughly $4 billion in proceeds.
According to Bloomberg News, following a hearing in June, the
bankruptcy judge scheduled auctions for Oct. 23. A hearing to
approve the sales was set for Nov. 5. Fortress Investment Group
LLC will make the first bid for the mortgage-servicing business,
while Berkshire Hathaway Inc. will serve as stalking-horse bidder
for the remaining portfolio of mortgages.
Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Residential Capital LLC and its
affiliates (http://bankrupt.com/newsstand/or 215/945-7000).
RESIDENTIAL CAPITAL: Proposes Nov. 9 Claims Bar Date
----------------------------------------------------
Residential Capital LLC and its affiliates seek the Court's
authority to establish November 9, 2012, at 5:00 p.m. (Prevailing
Eastern Time) as the deadline for each person or entity
(including, without limitation, individuals, partnerships,
corporations, joint ventures, and trusts) to file a proof of claim
in respect of a prepetition claim, as defined in Section 101(5) of
the Bankruptcy Code, including secured claims and priority claims,
as well as claims under Section 503(b)(9) against any of the
Debtors.
The Debtors also seek the Court's authority to establish
November 30, 2012, at 5:00 p.m. (Prevailing Eastern Time) as the
deadline for governmental units to file a Proof of Claim in
respect of a prepetition claim against any of the Debtors.
Original, written proofs of claim must be mailed (or delivered by
overnight courier) to:
ResCap Claims Processing Center
c/o KCC
2335 Alaska Ave, El Segundo, CA 90245
or hand delivered to:
ResCap Claims Processing Center
c/o KCC
2335 Alaska Ave, El Segundo, CA 90245
-- or --
U.S. Bankruptcy Court, Southern District of New York
One Bowling Green, Room 534
New York, NY 10004
These persons or entities are not required to file a proof of
claim on or before the General Bar Date:
(a) Any person or entity that has already properly filed a
proof of claim;
(b) Any person or entity whose claim is listed on the Debtors'
Schedules, provided that: (i) the claim is not scheduled
as "disputed," "contingent" or "unliquidated," and (ii)
the claimant agrees with the amount, nature and priority
of the claim as set forth in the Schedules, and (iii) the
claimant agrees that the claim is an obligation of the
specific Debtor against which the claim is listed on the
Schedules (other than a holder of a claim under Section
503(b)(9));
(c) Any person or entity that holds a claim that has been
allowed by an order of the Court entered on or before the
applicable Bar Date;
(d) Any person or entity whose claim has been paid in full by
any of the Debtors;
(e) Any person or entity that holds a claim for which specific
deadlines have been fixed by an order of the Court entered
on or before the General Bar Date;
(f) A person or entity that holds a claim allowable under
Sections 503(b) and 507(a)(2) as an expense of
administration (other than any claim allowable under
Section 503(b)(9));
(g) Any Debtor having a claim against another Debtor or any of
the non-debtor subsidiaries of ResCap having a claim
against any of the Debtors;
(h) Any person or entity that holds an interest in any of the
Debtors, which interest is based exclusively upon the
ownership of common stock, membership interests,
partnership interests, or warrants or rights to purchase,
sell or subscribe to such a security or interest;
provided, however, that interest holders that wish to
assert claims (as opposed to ownership interests) against
any of the Debtors that arise out of or relate to the
ownership or purchase of an interest, including claims
arising out of or relating to the sale, issuance, or
distribution of the interest, must file Proofs of Claim on
or before the applicable Bar Date, unless another
exception identified herein applies;
(i) Any person or entity whose claim is limited exclusively to
the repayment of principal, interest, and/or other
applicable fees and charges (a "Debt Claim") on or under
any bond or note issued or guaranteed by the Debtors
pursuant to an indenture (the "Debt Instruments");
provided, however, that (i) the exclusion shall not apply
to the Indenture Trustee under the applicable Debt
Instruments (an "Indenture Trustee"), (ii) the Indenture
Trustee shall be required to file one Proof of Claim, on
or before the General Bar Date, with respect to all of the
Debt Claims on or under each of the applicable Debt
Instruments, and (iii) any holder of a Debt Claim wishing
to assert a claim, other than a Debt Claim, arising out of
or relating to a Debt Instrument shall be required to file
a Proof of Claim on or before the Bar Date, unless another
exception in this paragraph applies; or
(j) Any person or entity holding a claim for principal,
interest and other fees and expenses under the Debtors'
secured financing facilities (the "Financing Facilities")
to the extent of, and only for those claims relating to
the Financing Facilities.
Any person or entity that holds a claim that arises from the
rejection of an executory contract or unexpired lease must file a
proof of claim based on that rejection by the later of (a) the
General Bar Date and (b) 30 days after the date of entry of an
order of rejection (unless the order of rejection provides
otherwise).
About Residential Capital
Residential Capital LLC, the unprofitable mortgage subsidiary of
Ally Financial Inc., filed for bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012.
Neither Ally Financial nor Ally Bank is included in the bankruptcy
filings.
ResCap, one of the country's largest mortgage originators and
servicers, was sent to Chapter 11 with 50 subsidiaries amid
"continuing industry challenges, rising litigation costs and
claims, and regulatory uncertainty," according to a company
statement.
ResCap disclosed $15.68 billion in assets and $15.28 billion in
liabilities as of March 31, 2012.
Centerview Partners LLC and FTI Consulting are acting as financial
advisers to ResCap. Morrison & Foerster LLP is acting as legal
adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is
the conflicts counsel. Rubenstein Associates, Inc., is the public
relations consultants to the Company in the Chapter 11 case.
Morrison Cohen LLP is advising ResCap's independent directors.
Kurtzman Carson Consultants LLP is the claims and notice agent.
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves
as counsel to Ally Financial.
ResCap is selling its mortgage origination and servicing
businesses and its legacy portfolio, consisting mainly of mortgage
loans and other residual financial assets. At the onset of the
bankruptcy case, ResCap struck a deal with Nationstar Mortgage LLC
for the mortgage origination and servicing businesses, and with
Ally Financial for the legacy portfolio. Together, the asset
sales are expected to generate roughly $4 billion in proceeds.
According to Bloomberg News, following a hearing in June, the
bankruptcy judge scheduled auctions for Oct. 23. A hearing to
approve the sales was set for Nov. 5. Fortress Investment Group
LLC will make the first bid for the mortgage-servicing business,
while Berkshire Hathaway Inc. will serve as stalking-horse bidder
for the remaining portfolio of mortgages.
Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Residential Capital LLC and its
affiliates (http://bankrupt.com/newsstand/or 215/945-7000).
RESIDENTIAL CAPITAL: Aug. 16 Hearing on Ally Servicing Pact
-----------------------------------------------------------
The Bankruptcy Court will hold an evidentiary hearing Aug. 16,
2012 at 8:30 a.m. (prevailing Eastern Time) on debtor GMAC
Mortgage, LLC's motion to continue to perform under a servicing
agreement with non-debtor affiliate, Ally Bank. If necessary, the
evidentiary hearing will continue on Aug. 17, 2012 at 8:30 a.m.
(prevailing Eastern Time).
GMAC Mortgage early in the Chapter 11 case obtained interim Court
permission to continue to perform under the servicing agreement,
pending a final hearing on the request.
In connection with mortgage loans it originates or purchases,
Ally Bank frequently retains the right to service these loans. As
of March 31, 2012, the Ally Bank mortgage servicing rights or MSRs
were comprised of approximately 690,000 mortgage loans with an
aggregate unpaid principal balance of $140.8 billion. GMAC
Mortgage has been servicing these loans pursuant to a prior
servicing agreement, dated Aug. 21, 2001, between GMAC Mortgage
and Ally Bank.
About Residential Capital
Residential Capital LLC, the unprofitable mortgage subsidiary of
Ally Financial Inc., filed for bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012.
Neither Ally Financial nor Ally Bank is included in the bankruptcy
filings.
ResCap, one of the country's largest mortgage originators and
servicers, was sent to Chapter 11 with 50 subsidiaries amid
"continuing industry challenges, rising litigation costs and
claims, and regulatory uncertainty," according to a company
statement.
ResCap disclosed $15.68 billion in assets and $15.28 billion in
liabilities as of March 31, 2012.
Centerview Partners LLC and FTI Consulting are acting as financial
advisers to ResCap. Morrison & Foerster LLP is acting as legal
adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is
the conflicts counsel. Rubenstein Associates, Inc., is the public
relations consultants to the Company in the Chapter 11 case.
Morrison Cohen LLP is advising ResCap's independent directors.
Kurtzman Carson Consultants LLP is the claims and notice agent.
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves
as counsel to Ally Financial.
ResCap is selling its mortgage origination and servicing
businesses and its legacy portfolio, consisting mainly of mortgage
loans and other residual financial assets. At the onset of the
bankruptcy case, ResCap struck a deal with Nationstar Mortgage LLC
for the mortgage origination and servicing businesses, and with
Ally Financial for the legacy portfolio. Together, the asset
sales are expected to generate roughly $4 billion in proceeds.
According to Bloomberg News, following a hearing in June, the
bankruptcy judge scheduled auctions for Oct. 23. A hearing to
approve the sales was set for Nov. 5. Fortress Investment Group
LLC will make the first bid for the mortgage-servicing business,
while Berkshire Hathaway Inc. will serve as stalking-horse bidder
for the remaining portfolio of mortgages.
Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Residential Capital LLC and its
affiliates (http://bankrupt.com/newsstand/or 215/945-7000).
RESIDENTIAL CAPITAL: Creditors Committee Opposes Bradley Hiring
---------------------------------------------------------------
The Official Committee of Unsecured Creditors in Residential
Capital LLC's Chapter 11 cases are opposing ResCap's request to
employ Bradley Arant Boult Cummings LLP as their special
litigation and compliance counsel, nunc pro tunc to May 14.
The Creditors Committee notes that an issue permeating these
Chapter 11 cases and, indeed, the focus of ongoing investigations
by the Committee and the Chapter 11 Examiner, is the relationship
between the Debtors and their non-Debtor parent company, Ally
Financial Inc. "It is therefore critical that the ongoing
allegiance of any retained professional be exclusively to the
Debtors, not AFI."
Historically, the Committee relates, Bradley Arant jointly
represented AFI, Ally Bank, GMACM and ResCap in a year-long
negotiation that culminated in a settlement with almost all of the
state attorneys general, the Department of Justice and the Federal
Deposit Insurance Corporation. Bradley Arant confirmed to the
Committee that they dealt with AFI, Ally Bank, GMACM and ResCap as
a single entity, as they shared potential joint and several
liability to the various government agencies in connection with
allegations of wrongdoing. Notwithstanding, AFI and Ally Bank
engaged H. Rodgin Cohen of Sullivan & Cromwell LLP to represent
them in the same negotiations surrounding the Consent Order and
the Consent Judgment with the state attorneys general and the DOJ.
ResCap and GMACM (each a Debtor entity) did not engage separate
counsel; instead relying solely on the advice of Bradley Arant in
connection with the negotiations and documentation of the Consent
Order and Consent Judgment.
The Committee submits the continuance of the joint representation
of the Debtors and their non-Debtor affiliates in the same matter
in which the parties are adverse presents an actual conflict of
interest. Any retained professional must be working solely for
the benefit of the Debtors, and not its parent company where the
Debtor and its parent have conflicting interests. Thus, the
Committee objects to Bradley Arant's retention to the extent the
firm continues to represent AFI and Ally Bank.
The Committee has had extensive discussions with Bradley Arant
regarding their continued representation of the Debtors and the
Committee has expressed their concerns regarding the conflict of
interest. The Committee made clear to Bradley Arant it would
oppose their retention absent Bradley Arant agreeing to (i)
terminate its representation of AFI and Ally Bank, and (ii)
consult with the Committee's counsel on any matters that involve
AFI or Ally Bank. The Committee understands that the proposal is
still under consideration.
Maddox 2nd Supplemental Declaration
Robert R. Maddox, Esq., a partner at Bradley Arant Boult Cummings
LLP, disclosed that his firm has conferred with representatives of
the Debtors and of Ally and was informed that Ally consents to
BABC immediately withdrawing from its representation of Ally on
all matters in which Bradley Arant has been representing Ally
which relate to the Debtors or their businesses, with the
exception of certain discrete litigation matters that Bradley
Arant has been handling. The Debtors wish to continue to employ
Bradley Arant to represent their interests, as well as the
interests of Ally, in the Residential Mortgage Litigation Matters.
Most of the Residential Mortgage Litigation Matters are lawsuits
relating to residential mortgages serviced by the Debtors which
lawsuits the Debtors are obligated to defend and in which lawsuits
Ally has been named as a defendant. Bradley Arant has discussed
with counsel for the Committee the scope and nature of the firm's
representation of the Debtors and Ally in the Residential Mortgage
Litigation Matters.
According to Mr. Maddox, Ally has asked Bradley Arant to continue
to represent it in certain Class Action Matters. The Debtors have
consented to Bradley Arant's representation of Ally in these Class
Action Matters. The interests of the Debtors and Ally with
respect to the Class Action Matters are mutual and aligned. These
Class Action Matters include:
(a) Brown v. Mortgage Electronic Registration System, Inc. et
al., Case No 6:11-CV-06070, Western District of Arkansas.
(b) LaFitte v. Ally Financial, Inc., et al., Case No. 3:10-cv-
02820-MBS, U.S. District Court for District of South
Carolina.
(c) Chatman, et al., v. GMAC Mortgage Corp., et al., Case No.
CV-2008-900015, Circuit Court of Barbour County, Alabama.
(d) Donaldson, et al., v. GMAC Mortgage, LLC, et al., Case No.
SU-09-CV3359D, Superior Court of Muscogee County, Georgia.
(e) Robinson v. Homecomings Financial LLC, f/k/a Homecomings
Financial Network, Inc., Case No. CV-2008-900007.00,
Circuit Court of Barbour County, Alabama.
Mr. Maddox relates Bradley Arant is concerned that the Committee,
in seeking its "consultation condition" to the firm's employment,
is seeking to compromise the firm's ethical obligations to its
client. Bradley Arant understands that, if its employment is
approved, its clients will be the Debtors, and the firm will
represent the Debtors' interests diligently and zealously and, of
course, will consult with the Debtors about the matters upon which
Bradley Arant is engaged, whether they involve Ally or not.
Bradley Arant is not opposed to conferring with the Committee so
long as the firm's client, the Debtors, authorize such
communications. Bradley Arant does not see how it ethically could
agree that it "must consult" with someone that is not its client
without its client's consent. To the extent that the Committee
seeks to compel Bradley Arant to violate its ethical duties to its
clients, the Committee's "consultation requirement" is
unreasonable.
As to Patrick Hopper's objection, Mr. Maddox says Mr. Hopper is
simply trying to obstruct the Debtors' efforts to obtain the
relief they are pursuing in the Foreclosure Proceeding and to try
to extract a more favorable result for himself at the Debtors'
expense.
Debtors Respond to Objections
The Debtors insist that Bradley Arant's concurrent representation
of the Debtors and Ally in the Residential Mortgage Litigation
Matters and the Class Action Matters does not preclude the firm
from being retained pursuant to Section 327(e) of the Bankruptcy
Code as special counsel to the Debtors. The literal language of
section 327(e), the Debtors argue, states that an attorney can be
retained "if such attorney does not represent or hold any interest
adverse to the debtor or to the estate with respect to the matter
on which such attorney is to be employed." Thus, the standard for
retention under section 327(e) is whether the attorney holds an
adverse interest with respect to the services being performed by
the attorney. The Debtors point out that the Committee has not
produced any evidence to indicate that Bradley Arant holds any
interest adverse to the Debtors regarding the Residential Mortgage
Litigation Matters and the Class Action Matters.
The Debtors also note that while Ally has consented to Bradley
Arant's continued representation of the Debtors, Ally has not
consented to the firm's disclosure of confidential information
relating to its representation of Ally. Therefore, the
Consultation Request is unreasonable because the Committee seeks
to compel Bradley Arant to violate its ethical duties to its
clients. Moreover, such a consultation requirement is intrusive
on the Debtors' ability to request and receive legal advice from
its selected attorneys.
Thus, the Debtors ask the Court to overrule the Committee's
Objection.
As to Mr. Hopper, the Debtors tell the Court that he is currently
a defendant in a litigious foreclosure action initiated by GMACM
in Florida in December 2009, in which GMACM is represented by
Bradley Arant. "Mr. Hopper has filed several affirmative defenses
and counterclaims in the Foreclosure Proceeding, and has now filed
the Hopper Objection, which is a convoluted and unfounded
objection to the BABC Application based on such Foreclosure
Proceeding."
The Debtors also ask the Court to overrule the Hopper Objection.
About Residential Capital
Residential Capital LLC, the unprofitable mortgage subsidiary of
Ally Financial Inc., filed for bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012.
Neither Ally Financial nor Ally Bank is included in the bankruptcy
filings.
ResCap, one of the country's largest mortgage originators and
servicers, was sent to Chapter 11 with 50 subsidiaries amid
"continuing industry challenges, rising litigation costs and
claims, and regulatory uncertainty," according to a company
statement.
ResCap disclosed $15.68 billion in assets and $15.28 billion in
liabilities as of March 31, 2012.
Centerview Partners LLC and FTI Consulting are acting as financial
advisers to ResCap. Morrison & Foerster LLP is acting as legal
adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is
the conflicts counsel. Rubenstein Associates, Inc., is the public
relations consultants to the Company in the Chapter 11 case.
Morrison Cohen LLP is advising ResCap's independent directors.
Kurtzman Carson Consultants LLP is the claims and notice agent.
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves
as counsel to Ally Financial.
ResCap is selling its mortgage origination and servicing
businesses and its legacy portfolio, consisting mainly of mortgage
loans and other residual financial assets. At the onset of the
bankruptcy case, ResCap struck a deal with Nationstar Mortgage LLC
for the mortgage origination and servicing businesses, and with
Ally Financial for the legacy portfolio. Together, the asset
sales are expected to generate roughly $4 billion in proceeds.
According to Bloomberg News, following a hearing in June, the
bankruptcy judge scheduled auctions for Oct. 23. A hearing to
approve the sales was set for Nov. 5. Fortress Investment Group
LLC will make the first bid for the mortgage-servicing business,
while Berkshire Hathaway Inc. will serve as stalking-horse bidder
for the remaining portfolio of mortgages.
Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Residential Capital LLC and its
affiliates (http://bankrupt.com/newsstand/or 215/945-7000).
RESIDENTIAL CAPITAL: FHFA Wants Access to Loan Files
----------------------------------------------------
The Federal Housing Finance Agency, as Conservator for the
Federal Home Loan Mortgage Corporation, asks the Bankruptcy Court
to permit FHFA to obtain loan files relevant to the action styled
Federal Housing Finance Agency, as Conservator for the Federal
Home Loan Mortgage Corporation v. Ally Financial Inc. f/k/a GMAC,
LLC et al. pending in the United States District Court for the
Southern District of New York as Case No. 11- Civ. 7010.
The Loan Files comprise (i) loan origination files, or files that
are aggregated and maintained in the course of originating,
underwriting, approving, and funding the loan, including any
documents or materials relevant to these processes but received
post-funding and (ii) loan servicing files, or files that are
compiled and used in the course of servicing the loan.
Andrew K. Glenn, Esq., at Kasowitz, Benson, Torres & Friedman
LLP, in New York, says the legal bases for FHFA to obtain access
to the Loan Files are the same as those articulated with respect
to the loan tapes and originator information. Mr. Glenn contends
that the automatic stay does not apply to third-party discovery
sought from a debtor. "Even if the automatic stay does apply to
FHFA's request to obtain the Loan Files from the Debtors, cause
exists to grant FHFA relief from stay. Judge Cote made several
findings that are instructive on this point when, at the July 17
Conference, she rejected the Debtors' argument that allowing
discovery against the Non-Debtor Affiliates would harm the
Debtors. Judge Cote also found that requiring the Debtors to
participate in the subject discovery would not interfere with the
Debtors' restructuring process."
Debtors Object
The Debtors are seeking to block the FHFA's request, saying they
will incur millions of dollars in expenses, and employees
necessary for the restructuring and preservation of estate assets
will be distracted during this critical period, Joel C. Haims,
Esq., at Morrison & Foerster LLP, in New York, argues in court
papers.
All of this expense and interference with the Debtors will not
benefit them or any other creditor, and the sought discovery will
most certainly be used against the Debtors and their interests by
FHFA, Mr. Haims adds.
In essence, FHFA is seeking to do nothing more than put itself
ahead of all other creditors by demanding the production of
documents at the expense of the estates so that it can pursue
claims against Debtors' corporate affiliates, and ultimately the
Debtors, Mr. Haims further argues.
About Residential Capital
Residential Capital LLC, the unprofitable mortgage subsidiary of
Ally Financial Inc., filed for bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012.
Neither Ally Financial nor Ally Bank is included in the bankruptcy
filings.
ResCap, one of the country's largest mortgage originators and
servicers, was sent to Chapter 11 with 50 subsidiaries amid
"continuing industry challenges, rising litigation costs and
claims, and regulatory uncertainty," according to a company
statement.
ResCap disclosed $15.68 billion in assets and $15.28 billion in
liabilities as of March 31, 2012.
Centerview Partners LLC and FTI Consulting are acting as financial
advisers to ResCap. Morrison & Foerster LLP is acting as legal
adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is
the conflicts counsel. Rubenstein Associates, Inc., is the public
relations consultants to the Company in the Chapter 11 case.
Morrison Cohen LLP is advising ResCap's independent directors.
Kurtzman Carson Consultants LLP is the claims and notice agent.
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves
as counsel to Ally Financial.
ResCap is selling its mortgage origination and servicing
businesses and its legacy portfolio, consisting mainly of mortgage
loans and other residual financial assets. At the onset of the
bankruptcy case, ResCap struck a deal with Nationstar Mortgage LLC
for the mortgage origination and servicing businesses, and with
Ally Financial for the legacy portfolio. Together, the asset
sales are expected to generate roughly $4 billion in proceeds.
According to Bloomberg News, following a hearing in June, the
bankruptcy judge scheduled auctions for Oct. 23. A hearing to
approve the sales was set for Nov. 5. Fortress Investment Group
LLC will make the first bid for the mortgage-servicing business,
while Berkshire Hathaway Inc. will serve as stalking-horse bidder
for the remaining portfolio of mortgages.
Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Residential Capital LLC and its
affiliates (http://bankrupt.com/newsstand/or 215/945-7000).
ROOMSTORE INC: Closes Store Off Durham-Chapel Hill Location
-----------------------------------------------------------
The Herald-Sun reports the RoomStore furniture store location off
Durham-Chapel Hill Boulevard in Durham has closed as a result of
the bankruptcy filing. According to the report, Troy Gordon, a
leasing agent for Mark Properties Inc., the real estate management
and investment company that is the managing partner of the company
that owns the property, said the store in Durham closed in late
July. It had opened in January 2006, he said.
About RoomStore Inc.
With more than $300 million in net sales for its fiscal year
ending 2010, Richmond, Virginia-based RoomStore, Inc., was one of
the 30 largest furniture retailers in the United States.
RoomStore also offers its home furnishings through Furniture.com,
a provider of Internet-based sales opportunities for regional
furniture retailers.
RoomStore filed for Chapter 11 bankruptcy (Bankr. E.D. Va. Case
No. 11-37790) on Dec. 12, 2011, following store-closing sales at
four of its retail stores, located in Hoover, Alabama;
Fayetteville, North Carolina; Tallahassee, Florida; and Baltimore,
Maryland. At the time of the filing, the Company operated a chain
of 64 retail furniture stores, including both large-format stores
and clearance centers in eight states: Pennsylvania, Maryland,
Virginia, North Carolina, South Carolina, Florida, Alabama, and
Texas. It also had five warehouses and distribution centers
located in Maryland, North Carolina, and Texas that service the
Retail Stores.
RoomStore also owns 65% of Mattress Discounters Group LLC, which
operates 80 mattress stores (as of Nov. 30, 2011) in the states of
Delaware, Maryland and Virginia and in the District of Columbia.
RoomStore acquired the MDG stake after MDG's second bankruptcy in
2008. MDG sought Chapter 11 relief on Sept. 10, 2008 (Bankr. D.
Md. Case Nos. 08-21642 and 08-21644). It filed the first Chapter
11 bankruptcy on Oct. 23, 2002 (Bankr. D. Md. Case No. 02-22330),
and emerged on March 14, 2003.
Judge Douglas O. Tice, Jr., presides over RoomStore's case.
Lawyers at Lowenstein Sandler PC serve as the Debtor's bankruptcy
counsel. Kaplan & Frank, PLC, serves as local counsel. FTI
Consulting, Inc., serves as the Debtor's financial advisors and
consultants. American Legal Claims Services, LLC, serves as its
notice and claims agent. Lucy L. Thomson of Alexandria, Virginia,
was appointed as consumer privacy ombudsman.
RoomStore filed a plan of liquidation in June 2012 that provides
for the sale of inventory and remaining assets to generate
sufficient cash to pay secured and unsecured creditors in full.
RoomStore's balance sheet at Nov. 30, 2011, showed $59.57 million
in total assets, $57.75 million in total liabilities, and
stockholders' equity of $1.82 million. The Debtor disclosed
$44,624,007 in assets and $34,746,919 in liabilities as of the
Chapter 11 filing. The petition was signed by Stephen Girodano,
president and chief executive officer.
Liquidator Hilco Merchant Resources, Inc., is represented in the
case by Gregg M. Galardi, Esq., at DLA Piper LLP (US); and Robert
S. Westermann, Esq., and Sheila de la Cruz, Esq., at Hirschler
Fleischer, P.C.
The U.S. Trustee for Region 4 named seven members to the official
committee of unsecured creditors in the case. The Creditors
Committee tapped Hunton & Williams LLP as its counsel.
RYAN INTERNATIONAL: Hiring Ex-Frontier CEO Jeff Potter as CRO
-------------------------------------------------------------
Brian Leaf at Rockford Register Star reports that Ryan
International Airlines has asked permission from a bankruptcy
judge to hire the former president and CEO of Frontier Holdings
Inc. as its chief restructuring officer for $50,000 a month.
According to the report, Jeff S. Potter of Boyd Group
International, who ran the parent company of Frontier Airlines
from 2002-2007, would act as president and CEO of Ryan, replacing
Mike McCabe. He would be empowered to make all decisions on
behalf of Ryan, according to bankruptcy court filings.
The report notes a hearing on the request was scheduled for
Aug. 8, 2012, before Bankruptcy Judge Manuel Barbosa.
The report relates Mark Robinson, a Ryan director, said hiring Mr.
Potter will help the airline emerge from Chapter 11 more quickly
and reposition the company. Mr. Potter has been involved in the
aviation business most of his 31-year career. In a court filing
Potter said he has "extensive experience working with airlines
with significant financial, operational, legal and regulatory
difficulties."
The report adds Mr. Potter said he'll work with Ryan management to
increase income, especially on the commercial side of the
business.
About Ryan International
Ryan International Airlines, Inc., filed for Chapter 11 protection
(Bankr. N.D. Ill. Case No. 12-80802) in its hometown in Rockford,
Illinois, on March 6, 2012. Ryan International, which filed for
bankruptcy along with 10 affiliates, estimated assets and debts of
up to $100 million.
Ryan and its affiliates -- http://www.flyryan.com/-- provide
commercial air charter services, to a diverse mix of customers
including U.S., Canadian and British military entities, the
Department of Homeland Security, the U.S. Marwill Service,
leisure travelers, professional and college sports teams and an ad
hoc charter services. Ryan has 460 employees, with the cockpit
crew, flight attendants and dispatchers are represented by labor
unions.
Judge Manuel Barbosa presides over the case. Thomas J. Lester,
Esq., at Hinshaw & Culbertson LLP, serves as the Debtors' counsel.
Silverman Consulting serves as financial advisor. The petition
was signed by Mark A. Robertson, executive vice president.
INTRUST Bank, the prepetition lender owed $53.2 million, is
represented by Thomas P. Sandquist, Esq., of WilliamsMcCarthy LLP;
and Edward J. Nazar, Esq., at Redmond & Nazar LLP.
The Bankruptcy Court later dismissed the Chapter 11 proceeding of
Ryan 763K, a debtor-affiliate of Ryan International.
RYLAND GROUP: Files Form 10-Q; Posts $6-Mil. Net Income in Q2
-------------------------------------------------------------
The Ryland Group, Inc., filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
net income of $6.27 million on $293.76 million of total revenues
for the three months ended June 30, 2012, compared with a net loss
of $10.71 million on $211.84 million of total revenues for the
same period during the prior year.
The Company reported net income of $1.16 million on $509.63
million of total revenues for the six months ended June 30, 2012,
compared with a net loss of $30.24 million on $379.52 million of
total revenues for the same period a year ago.
The Company's balance sheet at June 30, 2012, showed $1.80 billion
in total assets, $1.32 billion in total liabilities and $485.67
million in total equity.
A copy of the Form 10-Q is available for free at:
http://is.gd/KeJKUZ
About Ryland Group
Headquartered in Calabasas, California, The Ryland Group, Inc.
(NYSE: RYL) -- http://www.ryland.com/-- is one of the nation's
largest homebuilders and a leading mortgage-finance company.
Since its founding in 1967, Ryland has built more than 285,000
homes and financed more than 240,000 mortgages. The Company
currently operates in 15 states and 19 homebuilding divisions
across the country and is listed on the New York Stock Exchange
under the symbol "RYL."
The Company reported a net loss of $50.75 million in 2011, a net
loss of $85.14 million in 2010, and a net loss of $162.47 million
in 2009.
* * *
Ryland Group carries 'B1' corporate family and probability of
default ratings, with stable outlook, from Moody's. It has 'BB-'
issuer credit ratings, with stable outlook, from Standard &
Poor's.
SANTA YSABEL: Files Schedules of Assets and Liabilities
-------------------------------------------------------
Santa Ysabel Resort and Casino filed with the U.S. Bankruptcy
Court for the Southern District of California its schedules of
assets and liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property $0
B. Personal Property $1,480,615
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $53,128,670
E. Creditors Holding
Unsecured Priority
Claims $396,307
F. Creditors Holding
Unsecured Non-priority
Claims $1,301,718
----------- -----------
TOTAL $1,480,615 $54,826,695
A full text copy of the schedules of assets and liabilities is
available for free at:
http://bankrupt.com/misc/SANTA_YSABEL_sal.pdf
About Santa Ysabel Resort and Casino
Santa Ysabel Resort & Casino -- http://www.santaysabelcasino.com/
-- operates a casino located off of Highway 79 in North San Diego
County overlooking Lake Henshaw on tribal Indian reservation land
in Santa Ysabel, California. The Casino is housed in a one-story,
37,000 square-foot building with 349 class III slot machines, four
poker tables, six table games, and a restaurant and bar with 200-
person seating capacity. The Casino employs roughly 120 people
and is the largest employer in Santa Ysabel. The Casino is owned
by the Iipay Nation of Santa Ysabel, formerly known as the Santa
Ysabel Band of Mission (Diegueno) Indians, a federally recognized
Indian tribe. The Casino is operated pursuant to the Indian
Gaming Regulatory Act under title 25 of the United States Code.
The Casino was funded with a primary loan from JP Morgan in the
amount of roughly $26,000,000 and a secondary loan from the
Yavapai Apache Nation in the amount of $7,000,000. In 2009 the
YAN purchased the JP Morgan Debt. The Casino also has $1.3
million in unsecured trade debt.
The Iipay Nation of Santa Ysabel, a federally recognized Indian
Tribe, filed a resolution authorizing the Chapter 11 bankruptcy
filing of Santa Ysabel Resort and Casino (Bankr. S.D. Calif. Case
No. 12-09415) in San Diego on July 2, 2012.
Judge Hon. Peter W. Bowie presides over the case. Ron Bender,
Esq., at Levene, Neale, Bender, Yoo & Brill LLP, in Los Angeles,
serves as counsel. Virgil Perez, the Santa Ysabel tribal
Chairman, signed the Chapter 11 petition.
SCO GROUP: Administratively Insolvent, Chapter 7 Conversion Sought
------------------------------------------------------------------
Edward N. Cahn, Esq., the Chapter 11 Trustee for TSG Group Inc.,
fka SCO Group, and its debtor-affiliates, asks the Bankruptcy
Court to convert the Debtors' cases from chapter 11 of the
Bankruptcy Code to chapter 7.
On April 11, 2011, the Debtors sold and conveyed to UnXis, Inc.
the UNIX(R) system software product and related services business.
The Chapter 11 Trustee said there are no other assets in the
Debtors' estates other than certain unfair competition and
tortious interference claims asserted by the Debtors' estates
against International Business Machines Corporation in an action
currently pending in Utah District Court. The Chapter 11 Trustee
does not believe the Debtors will be able to propose or confirm a
plan because the Debtors' estates are administratively insolvent
and continue to incur administrative expenses.
The Chapter 11 Trustee noted that in the May 2012 monthly
operating report, filed on Aug. 1, 2012, the Debtors' estates
report $3,721,181 in unpaid postpetition debts and only $145,352
cash on hand.
The Chapter 11 Trustee believes that it is in the best interests
of the Debtors' estates and its creditors to continue the
prosecution of the District Court Action.
The Chapter 11 Trustee also said he is best qualified to serve as
the chapter 7 trustee for the Converted Cases given his
familiarity with the District Court Action and the law firm
representing the Debtors' estates in the matter, Boies Schiller &
Flexner LLP.
A hearing on the Chapter 11 Trustee's request is set for Aug. 28,
2012, at 10:00 a.m. (Eastern Time). Objections, if any, are due
Aug. 21, 2012, at 4:00 p.m. (Eastern Time).
About SCO Group
The SCO Group (SCOXQ.PK) -- http://www.sco.com/-- was a provider
of UNIX(R) software technology. Headquartered in Lindon, Utah,
SCO had a worldwide network of resellers and developers.
The Company and its affiliate, SCO Operations Inc., filed for
Chapter 11 protection (Bankr. D. Del. Lead Case No. 07-11337) on
Sept. 14, 2007.
Paul Steven Singerman, Esq., and Arthur Spector, Esq., at Berger
Singerman P.A., represented the Debtors in their restructuring
efforts. James O'Neill, Esq., and Laura Davis Jones, Esq., at
Pachulski Stang Ziehl & Jones LLP, served as the Debtors' Delaware
and conflicts counsel. Epiq Bankruptcy Solutions LLC acted as the
Debtors' claims and noticing agent. As of Jan. 31, 2009, the
Company had $8.78 million in total assets, $13.30 million in total
liabilities, and $4.52 million in stockholders' deficit.
On Aug. 25, 2009, the Court approved the appointment of Edward N.
Cahn, Esq., as Chapter 11 Trustee. No official committee of
unsecured creditors has been appointed to date. Bonnie Glantz
Fatell, Esq., and Stanley B. Tarr, Esq., at Blank Rome LLP, serve
as counsel to the Chapter 11 Trustee.
SERVICEMASTER CO: Moody's Rates Senior Unsecured Notes 'B3'
-----------------------------------------------------------
Moody's Investors Service assigned a B3 rating to The
ServiceMaster Company's proposed senior unsecured guaranteed
notes. All other ratings, including the Caa1 rating on the un-
guaranteed senior unsecured notes, B2 Corporate Family Rating and
Probability of Default ratings, the B1 rating on the secured debt
and the SGL-2 Speculative Grade Liquidity Rating were affirmed.
The ratings outlook remains stable.
Rating assigned (LGD assessments):
Senior guaranteed notes due 2020, B3 (LGD5, 73%)
Ratings affirmed (LGD assessments revised):
$1.1 billion 10.75%/11.50% guaranteed toggle notes due 2015, B3
(LGD 5, 73%)
$600 million 8% senior guaranteed notes due 2020, B3(LGD5, 73%)
Senior Secured Bank Credit Facility, B1 (LGD3, 34%)
$79 million senior unsecured notes due 2018, Caa1 (LGD 6, 95%)
$195 million senior unsecured notes due 2027, Caa1 (LGD 6, 95%)
$83 million senior unsecured notes due 2038, Caa1 (LGD 6, 95%)
Corporate Family Rating, B2
Probability of Default Rating, B2
Speculative Grade Liquidity Rating, SGL-2
Rating Rationale
ServiceMaster's B2 Corporate Family Rating reflects high financial
leverage, with debt to EBITDA expected to fall to around 6 times
over the coming year and interest coverage less than 2.0 times,
which are weak metrics compared to other companies at the B2
rating level. Moody's expects some improvement by 2013, with
increasing customer service focus and further efficiency gains,
better price realization, growth in commercial accounts and
product line extensions in the home warranty business. While
adjusted EBITDA should grow by a mid single digit rate to around
$730 million given these expectations, risks remain that new
account growth will remain weak as ServiceMaster business units
are highly exposed to the US economy. Nonetheless, the ratings are
supported by solid market positions and scale in key business
segments and a record of steady revenue and EBITDA growth over the
last two years (excluding LandCare).
The B3 rating on senior guaranteed notes (Notes) reflects the
subordinated position of the Notes relative to the secured debt in
priority of claim of obligations, as well as the seniority of the
Notes relative to unguaranteed unsecured debt which rank below the
Notes.
The stable rating outlook reflects Moody's expectation for mid-
single digit EBITDA growth and improving financial strength
metrics in the next 12-18 months. The ratings could be downgraded
if ServiceMaster fails to make steady progress reducing debt to
EBITDA to under 6.0 times. The ratings could be upgraded if
ServiceMaster demonstrates steady revenue and profitability growth
and improves credit metrics such that Debt to EBITDA and free cash
flow to debt are sustained at less than 5 times and above 5%,
respectively. Based on a potential pro-forma debt structure after
which ServiceMaster reduces the amount of secured debt relative to
the unsecured debt, the expected loss given default of the secured
debt would be reduced which could result in a higher rating for
the secured debt.
The principal methodology used in rating ServiceMaster was the
Global Business & Consumer Service Industry Methodology published
in October 2010. Other methodologies used include Loss Given
Default for Speculative-Grade Non-Financial Companies in the U.S.,
Canada and EMEA published in June 2009.
SERVICEMASTER CO: S&P Rates New $300MM Senior Notes 'B-'
--------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' senior
unsecured debt rating to Memphis, Tenn.-based The ServiceMaster
Co.'s proposed $300 million unsecured senior notes due 2020. "The
recovery rating on the unsecured notes is '5', indicating our
expectation of modest recovery (10%-30%) to noteholders in the
event of a default," S&P said.
"We expect the company to use proceeds from the unsecured note
issuance to repay outstanding debt. The company may use proceeds
to repay borrowings under its $2.5 billion term loan facility or
redeem outstanding 10.75% senior notes due 2015. As such, we
expect the company's debt to EBITDA leverage to remain unchanged
at about 6.5x for the 12 months ended June 30, 2012. The company
had approximately $3.9 billion of reported debt outstanding as of
June 30, 2012," S&P said.
"The ratings on ServiceMaster Co. reflect our view that the
company's financial profile continues to be 'highly leveraged,'
particularly since the company's balance sheet remains highly
leveraged and we expect cash flow protection measures to continue
to be weak. In addition, we continue to consider ServiceMaster's
business risk profile to be 'fair,' reflecting our view that
the company's business will remain sensitive to still weak
economic conditions and consumer spending, as well as seasonal
weather conditions. Still, ServiceMaster benefits from its
business positions in its fragmented and competitive end markets,
which have historically translated into good cash flow generation
from a fairly diverse portfolio of services," S&P said.
RATINGS LIST
The ServiceMaster Co.
Corporate credit rating B/Stable/--
Ratings Assigned
The ServiceMaster Co. Senior unsecured
$300 mil. notes due 2020 B-
Recovery rating 5
SHOREBANK CORPORATION: Effective Date of Plan Occurred June 29
---------------------------------------------------------------
The U.S. Bankruptcy court for the Northern District of Illinois
confirmed, on June 13, 2012, the Amended Joint Plan of Liquidation
of The ShoreBank Corporation and its affiliated debtors.
On June 29, 2012, the Effective Date of the Plan occurred.
A copy of the amended Joint Plan of Liquidation (as modified
June 12, 2012) is available for free at:
http://bankrupt.com/misc/shorebank.doc153.pdf
About ShoreBank
Organized in 1973 and incorporated under the state of Illinois,
The ShoreBank Corporation was America's first and leading
community development and environmental bank holding company. SBK
was a registered bank holding company for, among others, its
subsidiary, ShoreBank in Chicago, a state chartered non-member
bank. The Bank was subject to oversight and regulation by its
primary regulator, the Illinois Department of Financial and
Professional Regulation.
On Aug. 20, 2010, the Bank was closed by the IDFPR, and the
Federal Deposit Insurance Corp. was named receiver. The FDIC sold
substantially all of the Bank's assets to Urban Partnership Bank.
SBK's principal asset and source of income was its investment in
the Bank. The Bank Closure has had a significant adverse affect
on SBK's liquidity, capital resources, and financial condition.
On Jan. 9, 2012, SBK and 11 affiliates commenced Chapter 11 cases
(Bankr. N.D. Ill. Lead Case No. 12-00581) to liquidate their
remaining assets and wind down their estates.
The case was initially assigned to Judge Jacqueline P. Cox. On
Jan. 10, she recused herself and the case was sent to Judge A.
Benjamin Goldgar's chambers.
George Panagakis, Esq., leads a team of lawyers at Skadden, Arps,
Slate, Meagher & Flom LLP, who represent the Debtors. Garden City
Group Inc. serves as the Debtors' claims agent. The petition was
signed by George P. Surgeon, president and CEO.
On June 12, 2012, Shorebank Corp. filed an Amended Joint Plan of
Liquidation. On June 13, 2012, the Bankruptcy Court confirmed the
Plan.
As reported in the TCR on June 19, 2012, the disclosure statement
explaining the Plan stated that unsecured creditors should have a
20% recovery on their $3.9 million in claims. ShoreBank used
bankruptcy to implement an agreement worked out in advance where
the Federal Deposit Insurance Corp. receives $8.5 million from a
$10.7 million tax refund. The bank holding company expects there
will eventually be $11 million for distribution to creditors.
Because holders of subordinated notes are to receive nothing for
their $37.6 million in claims, senior creditors with claims
totaling $12.3 million are predicted to have an 83% recovery.
SIRIUS XM: Moody's Raises CFR to 'B1'; Rates New Sr. Notes 'B1'
---------------------------------------------------------------
Moody's Investors Service upgraded Sirius XM Radio Inc.'s
("Sirius") Corporate Family Rating (CFR) to B1 from B2 and
Probability-of-Default Rating (PDR) to Ba3 from B1. Moody's also
assigned a B1, LGD4-60% rating to the company's proposed $400
million of new senior notes. Associated debt ratings were upgraded
as detailed below. The upgrades reflect Moody's expectations for
improved operating performance and credit metrics, including
subscriber growth above previously indicated levels and enhanced
financial flexibility due to its proposed refinancing resulting in
near term debt reduction, extended maturities, and stronger
coverage ratios. The speculative-grade liquidity rating is
unchanged at SGL-2 and the rating outlook is stable.
Upgrades:
Issuer: Sirius XM Radio Inc.
Corporate Family Rating, upgraded to B1 from B2
Probability of Default Rating, to Ba3 from B1
$186 million 9.75% Sr Secured Notes due 2015, upgraded to
Ba1, LGD2 - 10% from Ba2, LGD2 - 10%
$800 million 8.75% Sr Notes due 2015, upgraded to B1, LGD4-
60% from B2, LGD4 - 63%
$700 million 7.625% Sr Notes due 2018, upgraded to B1, LGD4 -
60% from B2, LGD4 - 63%
$682 million 13% Sr Notes due 2013, upgraded to B1, LGD4 -
60% from B2, LGD4 - 63% (to be withdrawn upon completion of
redemption)
Assignment:
Issuer: Sirius XM Radio Inc.
NEW Senior Notes, assigned B1, LGD4 - 60%
Unchanged:
Speculative Grade Liquidity Rating, SGL-2
Outlook:
Outlook changed to stable from positive
Ratings Rationale
Sirius' B1 corporate family rating is forward looking and reflects
Moody's expectation that debt-to-EBITDA ratios will improve to
less than 3.75x over the rating horizon, compared to 4.4x as of
March 31, 2012 (including Moody's standard adjustments), due to
EBITDA growth in combination with proposed debt repayments.
Management announced plans to redeem the company's 13% senior
notes ($682 million outstanding) with proceeds from the issuance
of $400 million of new senior notes plus cash. The proposed
refinancing will extend near term maturities with new notes that
are likely to be priced well below 13% and will reduce debt
balances by roughly $282 million resulting in more than $60
million of annual interest expense savings. In addition to
reiterating its plan to bring reported debt-to-EBITDA ratios to
3.0x (or roughly 3.5x including Moody's standard adjustments),
management also raised its guidance for subscriber growth and,
based on its updated forecast, Moody's expects free cash flow will
increase to more than 20% of debt balances driven by net
subscriber additions as the economy and automotive sales improve
accompanied by reduced capital spending in the years leading up to
the next satellite launch cycle. Growth in the subscriber base
will support improving leverage and free cash flow-to-debt ratios,
and position the company to fund the next cycle of significant
expenditures related to construction and launching replacement
satellites beginning as early as 2016.
Moody's upgraded ratings due in part to management's confirmation
of its leverage target and plans to apply net proceeds from the
new senior notes plus excess cash to redeem its 13% senior notes,
despite uncertainties related to the timing or the final form of
the company's eventual corporate structure including a controlling
position by its largest shareholder, Liberty Media, or a potential
tax free spin-off. "Moody's believes the additional financial
flexibility provided by Sirius' proposed refinancing and debt
reduction will support a financial profile that is consistent with
the B1 rating category through economic cycles and provides a
sufficient buffer to acceptable levels of share repurchases or
dividends likely to occur after FYE2012," stated Carl Salas,
Moody's Vice President and Senior Analyst.
The stable outlook reflects Moody's view that Sirius will achieve
its revenue and EBITDA plan for 2012 resulting in leverage and
free cash flow ratios improving to levels that are in line with
management's 3.0x target for debt-to-EBITDA ratios (company
defined, or an estimated 3.5x including Moody's standard
adjustments). The outlook also incorporates Sirius maintaining
good liquidity, even during periods of satellite construction, and
the likelihood of share repurchases or dividends funded from a
portion of free cash flow. The outlook does not incorporate
leveraging transactions or significant shareholder distributions
that would negatively impact debt-to-EBITDA ratios or liquidity.
Event risk related to developments in the final ownership
structure creates uncertainty. The stable outlook assumes that
changes in the corporate structure will not adversely impact the
company's operating strategy, credit metrics, or financial
policies.
Ratings could be downgraded if debt-to-EBITDA ratios are sustained
above 4.25x after FYE2012 (including Moody's standard adjustments)
or if free cash flow generation falls below targeted levels as a
result of subscriber losses due to a potentially weak economy or
migration to competing media services, functional problems with
satellite operations, or unplanned capital investments. A
weakening of Sirius' liquidity position below expected levels as a
result of dividends, share repurchases, capital spending, or a
significant acquisition could also lead to a downgrade. Ratings
could be upgraded if management demonstrates a commitment to
balance debt holder returns with those of its shareholders.
Moody's would also need assurances that the company will operate
in a financially prudent manner consistent with a higher rating
including sustaining debt -to-EBITDA ratios comfortably below 3.5x
(including Moody's standard adjustments) and free cash flow-to-
debt ratios above 15% even during periods of satellite
construction.
The principal methodology used in rating Sirius XM was the Global
Broadcast and Advertising Related Industries Methodology published
in May 2012. Other methodologies used include Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
Sirius XM Radio Inc., headquartered in New York, NY, provides
satellite radio services in the United States and Canada. The
company offers a programming lineup of more than 135 channels of
commercial-free music, sports, news, talk, entertainment, traffic,
weather, and data services. Sirius also provides music channels
that offer genres ranging from rock, pop and hip-hop to country,
dance, jazz, Latin, and classical; sports channels; talk and
entertainment channels; comedy channels; national, international,
and financial news channels; and religious channels. Sirius XM is
publicly traded with Liberty Media Corporation recently increasing
its potential ownership interest to 46.2%. Sirius had 22.9 million
subscribers as of June 30, 2012 and generated revenue of $3.2
billion for the trailing 12 months ended June 30, 2012.
SIRIUS XM: S&P Rates Proposed Sr. Unsecured Notes Due 2022 'BB'
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned New York City-based
satellite radio company Sirius XM Radio Inc.'s proposed issuance
of senior notes due 2022 its 'BB' issue-level rating and '3'
recovery rating. "The '3' recovery rating reflects our
expectations for meaningful (50% to 70%) recovery in the event of
a payment default. Sirius plans to use the net proceeds for
general corporate purposes, including refinancing its 13% senior
notes due 2013 ($681 million outstanding as of June 30, 2012),"
S&P said.
"The rating on Sirius incorporates our expectation that debt
levels will remain relatively stable, but that the company will
continue to reduce gross debt to EBITDA (adjusted for operating
leases and purchase price accounting adjustments) to the mid-3x
area by the end of 2012 through EBITDA growth. We assess the
company's business risk profile as 'fair' (based on our criteria),
reflecting its relative stability, its dependence on U.S. auto
sales and consumer discretionary spending for growth, and its
longer-term exposure to competition from alternative media. We
view Sirius XM's financial risk as 'significant' because of
recurring periods of capital intensity and the absence of a
revolving credit facility for back-up liquidity," S&P said.
"The outlook is stable, reflecting our view that a continued
recovery in auto sales, together with the January 2012 price
increase, should spur growth and maintain credit measures
appropriate for the current rating over the next year," S&P said.
RATINGS LIST
Sirius XM Radio Inc.
Corporate Credit Rating BB/Stable/--
New Ratings
Sirius XM Radio Inc.
Senior unsecured notes due 2022 BB
Recovery Rating 3
SL GREEN: Fitch Rates $200-Mil. Preferred Stock at 'BB-'
--------------------------------------------------------
Fitch Ratings has assigned a 'BB-' rating to the $200 million
6.50% Series I cumulative redeemable preferred stock issued by SL
Green Realty Corp. (NYSE: SLG). SLG expects to use the net
proceeds from the offering to redeem Series C preferred stock and
may also repay indebtedness or use the capital for general
corporate purposes.
Fitch currently rates SLG and its subsidiaries as follows:
SL Green Realty Corp.
-- Issuer Default Rating (IDR) 'BB+';
-- Perpetual preferred stock 'BB-'.
SL Green Operating Partnership, L.P.
-- IDR 'BB+';
-- Unsecured revolving credit facility 'BB+';
-- Exchangeable senior notes 'BB+';
-- Junior subordinated notes 'BB'.
Reckson Operating Partnership, L.P.
-- IDR at 'BB+';
-- Senior unsecured notes 'BB+';
-- Exchangeable senior debentures 'BB+'.
The Rating Outlook is Stable.
The ratings reflect the company's credit strengths, including its
manageable lease maturity and debt expiration schedules, granular
tenant base, good contingent liquidity in the form of unencumbered
assets and the company's maintenance of leverage appropriate for
the rating category.
These positive rating elements are balanced by a low fixed charge
coverage ratio and broader concerns regarding the midtown
Manhattan leasing environment, which remains somewhat dependent on
the growth of large financial institutions and supporting
industries such as law and accounting firms.
SLG's leverage, while high, remains consistent with a 'BB+' IDR
given the good location and quality of the company's assets. The
company's net debt to trailing 12 months (TTM) ended June 30, 2012
recurring operating EBITDA ratio was 8.6x, down from 8.8x as of
Dec. 31, 2011, and 9.2x as of Dec. 31, 2010. Fitch defines
leverage as net debt divided by recurring operating EBITDA. Fitch
expects leverage will decline to the low- to mid-8.0x range over
the next two years, a level that would remain appropriate for the
'BB+' IDR.
Leverage had been negatively affected in recent periods by the
company's acquisition of some assets with vacancy, with the
strategy of incurring capital expenditures to improve the quality
of the space in order to generate higher rents. As a result of SLG
leasing up of this space, leverage has declined modestly.
SLG's fixed-charge coverage ratio was 1.4x for the 12 months ended
June 30, 2012, consistent with 1.4x for the year ended 2011, and
down from 1.6x for the year ended 2010. Coverage is slightly low
for the rating. Fixed-charge coverage has been weighed down by
capitalized improvements to real estate. Fitch defines fixed-
charge coverage as recurring operating EBITDA less recurring
capital expenditures and straight-line rents, divided by interest
incurred and preferred stock distributions. Fitch expects that
coverage will improve over the next two years to the mid-1.0x's, a
level that would remain appropriate for the 'BB+' IDR.
The company's portfolio benefits from tenant diversification, with
the top 10 tenants representing only 31% of annual base rent, and
the largest tenant Citigroup, N.A. (rated with an IDR of 'A' with
a Stable Outlook by Fitch) making up 7.4% of SLG's share of annual
base rent. Pro forma for the company's July 2012 sale of One
Court Square, Viacom Inc. (IDR of 'BBB+' with a Stable Outlook) is
now the company's largest tenant.
The company has a manageable lease expiration schedule with only
29% of consolidated Manhattan rents expiring through 2016.
Approximately 64% of SLG's consolidated suburban property rents
expire through 2016, although the suburban portfolio represents
only 10% of cash rent.
Further supporting the ratings is the company's manageable debt
maturity schedule. Over the next five years, 2016 is the largest
year of debt maturities with 22% of debt expiring, with no other
year greater than 8%.
The ratings are further supported by SLG's unencumbered asset
coverage of unsecured debt, which gives the company financial
flexibility as a source of contingent liquidity. Consolidated
unencumbered asset coverage of net unsecured debt (calculated as
annualized first-half 2012 unencumbered property net operating
income divided by a 7% capitalization rate) results in coverage of
2.3x. This ratio is strong for the current rating, particularly
given that Midtown Manhattan assets are highly sought after by
secured lenders and foreign investors, resulting in stronger
contingent liquidity relative to many other asset classes.
The ratings also point to the strength of SLG's management team,
and its ability to maintain occupancy and liquidity throughout the
downturn. Further, the company's high degree of knowledge of the
midtown Manhattan office market is a competitive advantage with
regard to acquisition and structured finance opportunities.
In addition, the company's ratios under its unsecured credit
facilities' financial covenants do not hinder its financial
flexibility.
Offsetting these strengths are Fitch's concerns regarding the
uncertain midtown Manhattan leasing environment. The New York
City office leasing environment has moderated over the last year,
and SLG continues to incur significant costs in the form of tenant
improvements and leasing commissions as tenant inducements, which
continue to place pressure on the company's fixed charge coverage.
In addition, a downturn in space demands from the financial
services industry, which accounts for 38% of SLG's share of base
rental revenue, may result in reduced cash flows or values of
SLG's properties.
The two-notch differential between SLG's IDR and preferred stock
rating is consistent with Fitch's hybrids criteria for corporate
entities with an IDR of 'BB+'. 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 SLG's good
liquidity profile. For the period from July 1, 2012 to Dec. 31,
2014, 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 recurring capital
expenditures) by 1.5x.
This stressed liquidity analysis assumes that SLG raises no
additional capital to repay obligations and, in addition, SLG has
demonstrated good access to a variety of capital sources over
time. If maturing secured debt were refinanced at an 80% rate,
liquidity coverage would improve to 3.1x. The company's liquidity
is also strengthened by its conservative common dividend policy,
which enables it to retain substantial operating cash flow.
The following factors may result in positive momentum in the
ratings and/or Rating Outlook:
-- Fitch's expectation of leverage sustaining below 7.5x for
several quarters (leverage was 8.6x as of June 30, 2012);
-- Fitch's expectation of fixed charge coverage sustaining above
1.8x for several quarters (coverage was 1.4x for the TTM
ended June 30, 2012).
The following factors may result in negative momentum in the
ratings and/or Rating Outlook:
-- Leverage sustaining above 8.5x for several quarters;
-- Fixed charge coverage sustaining below 1.5x for several
quarters;
-- A liquidity shortfall (base case liquidity coverage was 1.5x
for the period from July 1, 2012 to Dec. 31, 2014).
SOUPMAN INC: Extends Forbearance with Penny Hart Until Aug. 2012
----------------------------------------------------------------
Soupman, Inc., entered into an amendment to the forbearance
agreement, dated May 20, 2011, with Penny Fern Hart relating to
approximately $1,500,000 in principal amount of secured debt
guaranteed by the Company's subsidiary The Original Soupman, Inc.
The Amendment provides that:
(i) all prior defaults by the Company under the Forbearance
Agreement are waived;
(ii) the forbearance period is extended until Aug. 31, 2013;
and
(iii) payments of interest only in respect of Ms. Hart's debt
will commence on Nov. 1, 2012.
In consideration of this forbearance, the Company issued Ms. Hart
550,000 restricted shares of the Company's common stock which may
not be assigned, sold or pledged for a period of six months. In
addition, the Company agreed that if this debt is not repaid in
full to Ms. Hart by the Aug. 31, 2013 forbearance termination
date, the Company will issue to her, as a default penalty, an
amount of shares of common stock equal to 1.5% of the then issued
and outstanding shares.
A copy of the Amended Forbearance is available for free at:
http://is.gd/F4ZpRs
About Soupman Inc.
Staten Island, New York-based Soupman, Inc., currently
manufactures and sells soup to grocery chains and other outlets
and to its franchised restaurants under the brand name "The
Original Soupman".
After auditing the financial statements for fiscal year ended
Aug. 31, 2011, Berman & Company, P.A., in Boca Raton, Florida,
expressed substantial doubt about Soupman's ability to continue as
a going concern. The independent auditors noted that the Company
has a net loss of $6.21 million and net cash used in operations of
$2.11 million for the year ended Aug. 31, 2011; and has a working
capital deficit of $5.47 million, and a stockholders' deficit of
$4.68 million at Aug. 31, 2011.
The Company's balance sheet at May 31, 2012, showed $902,004 in
total assets, $7.88 million in total liabilities, all current, and
a $6.98 million total stockholders' deficit.
STEWART INFORMATION: Fitch Keeps 'BB+' Rating on $65-Mil. Notes
---------------------------------------------------------------
Fitch Ratings has affirmed the 'BBB-' Issuer Default Rating (IDR)
and 'BB+' senior unsecured debt rating of Stewart Information
Services Corp. (Stewart). Fitch has also affirmed the 'BBB+'
Insurer Financial Strength (IFS) ratings of Stewart's insurance
subsidiaries and the 'BBB' IFS rating of Stewart Title Limited
(STL). The Rating Outlook is Stable.
Stewart's ratings reflect improved operating results, solid
capitalization, a conservative investment portfolio and modest
financial leverage. However, performance continues to trail its
rated peer group, as defined as Fidelity National Financial, Inc.,
First American Financial Corp., and Old Republic Title Group.
Stewart reported net earnings of $12.8 million through June 30,
2012, compared with a net loss of $4.4 million in the prior year
period. The improvement was driven by significantly better
results in its title insurance operations and continued solid
earnings in its growing real estate information (REI) operations.
Through June 30, 2012, Stewart's pretax profit margins lagged the
title operations of Fitch's rated universe by approximately five
percentage points, when adjusted for segment reporting
differences. Specifically, 'Corporate and Other' expenses were
included with title operations for peer companies to be consistent
with Stewart.
Stewart reported a modest operating profit in its title insurance
segment through the first half of 2012, which can be attributed to
rate increases, expense efficiencies through back-office
centralization, and the cancellation of unprofitable agents.
The company's higher-margin REI segment provides support to the
title operations with continued solid earnings. Profit margins
declined (31% through six months 2012 compared with 50% in prior
year period) due to a shift in business mix to mortgage servicing
and real estate owned (REO)-related services from higher-margin
loan modification services. Management anticipates pretax margins
in the REI segment to stabilize to a sustainable level of 25%-30%,
which Fitch views as a favorable offset to title margins (4% for
second quarter 2012). Stewart's REI segment currently makes up 8%
of total revenues but is expected to become a larger contributor
over the next several years.
Fitch believes reserve adequacy remains uncertain, although recent
policy years are showing signs of stability.
Stewart's capitalization remains adequate with a risk-adjusted
capital (RAC) ratio of 157% at year-end 2011, flat with the prior
year. On a non-risk-adjusted basis (measured as net written
premiums to surplus) the company's capitalization is also
reasonable at 3.4x.
Stewart's debt to capital remains modest at 12.9%, excluding
unrealized investment gains, as of June 30, 2012. When goodwill
is excluded, financial leverage is 21.7%.
The affirmation of STL's rating and its Stable Outlook reflect the
company's continued improving performance with significant premium
and earnings growth.
Key rating drivers that could lead to a downgrade include:
-- Failure to sustain operating profitability;
-- Capital deterioration whereby Stewart's RAC ratio drops below
140% and/or net written premiums to surplus increases
significantly above current levels;
-- A large reserve charge that exceeds 5% of prior year surplus;
-- Debt to tangible capital, excluding FAS 115, above 30%.
Key rating drivers that could lead to an upgrade include:
-- Sustained profitability, as measured by combined ratio with
consideration for business mix, in line with higher rated
peers;
-- Consistently stronger risk-based capital levels, such as a
RAC ratio above 175%.
Fitch has affirmed the following ratings with a Stable Outlook:
Stewart Information Services Corp.
-- IDR at 'BBB-';
-- $65 million 6% senior convertible notes due 2014 at 'BB+'.
Stewart Title Guaranty
-- IFS at 'BBB+'.
Stewart Title Insurance Company
-- IFS at 'BBB+'.
Stewart Title Limited
-- IFS at 'BBB'.
THOMPSON INSURANCE: Case Summary & 4 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Thompson Insurance Agency, Inc.
8182 North University Drive
Fort Lauderdale, FL 33321
Bankruptcy Case No.: 12-29106
Chapter 11 Petition Date: August 8, 2012
Court: United States Bankruptcy Court
Southern District of Florida (Fort Lauderdale)
Judge: John K. Olson
Debtor's Counsel: Brett A. Elam, Esq.
THE LAW OFFICES OF BRETT A. ELAM, P.A.
105 S Narcissus Ave # 802
West Palm Beach, FL 33401
Tel: (561) 833-1113
E-mail: belam@brettelamlaw.com
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
A copy of the Company's list of its four largest unsecured
creditors filed together with the petition is available for free
at http://bankrupt.com/misc/flsb12-29106.pdf
The petition was signed by Dedrie Thompson, president.
Affiliate that filed separate Chapter 11 petition:
Petition
Debtor Case No. Date
------ -------- ----
Dedrie Thompson 12-28678 08/01/12
TRIUS THERAPEUTICS: Incurs $14.4 Million Net Loss in 2nd Quarter
----------------------------------------------------------------
Trius Therapeutics, Inc., filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
a net loss of $14.41 million on $6.22 million of total revenues
for the three months ended June 30, 2012, compared with a net loss
of $9.98 million on $2.85 million of total revenues for the same
period during the prior year.
The Company reported a net loss of $22.01 million on $16.05
million of total revenues for the six months ended June 30, 2012,
compared with a net loss of $20.05 million on $5.57 million of
total revenues for the same period a year ago.
The Company's balance sheet at June 30, 2012, showed $94.76
million in total assets, $16.56 million in total liabilities and
$78.20 million in total stockholders' equity.
A copy of the Form 10-Q is available for free at:
http://is.gd/hWDy6V
About Trius Therapeutics
San Diego, Calif.-based Trius Therapeutics, Inc. (Nasdaq: TSRX) --
http://www.triusrx.com/-- is a biopharmaceutical company focused
on the discovery, development and commercialization of innovative
antibiotics for serious, life-threatening infections. The
Company's first product candidate, torezolid phosphate, is an IV
and orally administered second generation oxazolidinone being
developed for the treatment of serious gram-positive infections,
including those caused by MRSA. In addition to the company's
torezolid phosphate clinical program, it is currently conducting
two preclinical programs using its proprietary discovery platform
to develop antibiotics to treat infections caused by gram-negative
bacteria.
In the Form 10-K for the year ended Dec. 31, 2011, the Company
said it has incurred losses since its inception and it anticipates
that it will continue to incur losses for the foreseeable future.
As of December 31, 2011, the Company had an accumulated deficit of
$95.4 million. The Company has funded, and plan to continue to
fund, its operations from the sale of securities, through research
funding and from collaboration and license payments, including
payments under the Bayer collaboration. However, the Company has
generated no revenues from product sales to date.
The Company reported a net loss of $18.25 million in 2011, a net
loss of $23.86 million in 2010, and a net loss of
$22.68 million in 2009.
TROY DOWNTOWN: S&P Lowers Rating on Junior & Senior Bonds to 'CCC'
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term rating to
'CCC' from 'BB' on Troy Downtown Development Authority (DDA),
Mich.'s series 2001 and 2002 senior lien and series 2003 junior
lien tax increment revenue bonds. The outlook is negative.
"The lowered rating primarily reflects our view that the DDA's
falling assessed values have significantly lowered tax increment
revenues such that they produce pledged revenue well below that
needed to pay debt service," said Standard & Poor's credit analyst
Helen Samuelson. "Currently, the DDA is using non-pledged cash
assets in addition to tax increment revenues to cover debt service
payments. We believe the DDA has sufficient resources to cover
debt service in fiscal year 2013 and at least partially in 2014,"
added Ms. Samuelson.
"Officials tell Standard & Poor's they collected just more than $1
million in tax increment revenues in 2012, a 54% year-over-year
decline. For fiscal year 2013, the DDA expects to collect only
$503,000 in tax increment revenue, another 50% drop in revenue,"
S&P said.
TRUE BEGINNINGS: May Not Be Able to Pay Debt to Insider
-------------------------------------------------------
Jeff Bounds, senior staff writer at Dallas Business Journal,
reported that an attorney for Herb Vest said his online dating
site, True Beginnings LLC dba True.com, may not be able to pay its
debt to Mr. Vest.
"True owes substantial monies to Vest, however, there is little
likelihood True will be able to make payment to Vest," the report
quotes Mr. Vest's attorney, Eric Liepins, as stating. True "has
approximately 155 non-insider unsecured creditors who are owed
(about) $11 million."
Denton, Texas-based True Beginnings, LLC, doing business as
True.com, filed a bare-bones Chapter 11 petition (Bankr. S.D. Tex.
Case No. 12-42061) on Aug. 1, 2012, in Sherman, Texas. True
estimated under $50,000 in assets and liabilities in excess of
$50 million, owed to between 100 and 199 creditors.
Dallas Business Journal reports Mr. Vest is True's largest
creditor, owed $61.5 million via convertible notes plus interest,
bankruptcy filings show. Mr. owns 85% of the company.
Mr. Vest filed a separate bankruptcy petition. He listed assets
of up to $50,000 and debts of $1 million to $10 million, owed to
up to 49 creditors.
Founded by Mr. Vest, True.com provides site visitors "a safer,
smarter way" to find their soul mates. "Through a unique blend of
science, technology and personalized attention, we'll guide you
through the process of finding and keeping lasting love," the Web
site says.
"As a result of increased competition and the downturn in the
economy, (True) fell (behind) on its payments to vendors and was
forced to file this proceeding," the report quotes the company as
saying.
TULE RIVER: Case Summary & 25 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Tule River Ranch, Inc.
P.O. Box 6700
Visalia, CA 93290
Bankruptcy Case No.: 12-16879
Chapter 11 Petition Date: August 8, 2012
Court: United States Bankruptcy Court
Eastern District of California (Fresno)
Judge: Fredrick E. Clement
Debtor's Counsel: Riley C. Walter, Esq.
WALTER & WILHELM LAW GROUP
205 E. River Park Circle, Ste. 410
Fresno, CA 93720
Tel: (559) 435-9800
Fax: (559) 435-9868
E-mail: rileywalter@W2LG.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $10,000,001 to $50,000,000
A copy of the Company's list of its 25 largest unsecured creditors
filed together with the petition is available for free at
http://bankrupt.com/misc/caeb12-16879.pdf
The petition was signed by William Vander Poel, Sr., chief
executive officer.
Affiliates that filed separate Chapter 11 petitions:
Petition
Debtor Case No. Date
------ -------- ----
Whitestar Dairy, Inc. 12-16877 8/08/12
William Vander Poel, Sr. 12-16876 8/08/12
USG CORP: Inks Agreement to Sell European Businesses for $80-Mil.
-----------------------------------------------------------------
USG Corporation has entered into a definitive agreement for the
sale of its wholly-owned European business operations to
affiliates of Gebr. Knauf Verwaltungsgesellschaft KG for
approximately $80 million. That amount is subject to adjustment
based on working capital and net debt levels at closing.
The businesses being sold include the manufacture and distribution
of Donn brand ceiling grid and SHEETROCK brand finishing compounds
throughout Europe, Russia and Turkey. "While USG's European
operations have been performing well, we prefer to focus our
investment in higher growth markets," said James S. Metcalf,
Chairman, President and CEO. "We contacted more than 60
potentially interested parties, including both strategic buyers
and private equity firms, and decided to sell the businesses
following a thorough evaluation that produced strong interest.
We're pleased with the value we are receiving for this group of
assets."
Closing of the sale is subject to receipt of necessary
governmental approvals and other customary closing conditions.
Assuming receipt of the necessary approvals and satisfaction of
these closing conditions, closing is expected to take place in the
fourth quarter of this year.
About USG Corporation
Based in Chicago, Ill., USG Corporation -- http://www.usg.com/--
through its subsidiaries, manufactures and distributes building
materials producing a wide range of products for use in new
residential, new nonresidential and repair and remodel
construction, as well as products used in certain industrial
processes.
The company filed for Chapter 11 protection on June 25, 2001
(Bankr. Del. Case No. 01-02094). When the Debtors filed for
protection from their creditors, they disclosed $3.252 billion in
assets and $2.739 billion in liabilities. The Debtors emerged
from bankruptcy protection on June 20, 2006.
The Company reported a net loss of $390 million in 2011 and a net
loss of $405 million in 2010.
The Company's balance sheet at June 30, 2012, showed $3.64 billion
in total assets, $3.51 billion in total liabilities and $131
million in total stockholders' equity including noncontrolling
interest.
* * *
As reported by the TCR on Aug. 15, 2011, Standard & Poor's Ratings
Services lowered its corporate credit rating on USG Corp. to 'B'
from 'B+'.
"The downgrade reflects our expectation that USG's operating
results and cash flow are likely to be strained over the next year
due to the ongoing depressed level of housing starts and still-
weak commercial construction activity," said Standard & Poor's
credit analyst Thomas Nadramia. "It is now more likely, in
our view, that any meaningful recovery in housing starts may be
deferred until late 2012 or into 2013. As a result, the risk that
USG's liquidity in the next 12 to 24 months will continue to erode
(and be less than we incorporated into our prior ratings) has
increased. The ratings previously incorporated a greater
improvement in housing starts, which would have enabled USG to
reduce its negative operating cash flow in 2012 and achieve
breakeven cash flow or better by 2013."
In the Sept. 14, 2011, edition of the TCR, Fitch Ratings has
downgraded USG Corporation's Issuer Default Rating (IDR) to 'B-'
from 'B'. The Rating Outlook remains Negative.
The ratings downgrade and the Negative Outlook reflect Fitch's
belief that underlying demand for the company's products will
remain weak through at least 2012 and the company's liquidity
position is likely to deteriorate in the next 18 months. With the
recent softening in the economy and lowered economic growth
expectations for 2011 and 2012, the environment may at best
support a relatively modest recovery in housing metrics over the
next year and a half. Fitch had previously forecast a slightly
more robust housing environment in 2011 and 2012. Moreover, new
commercial construction is expected to decline further this year
and may only grow moderately next year.
VERENIUM CORPORATION: Posts $2.5-Mil. Net Loss in Second Quarter
----------------------------------------------------------------
Verenium Corporation filed its quarterly report on Form 10-Q,
reporting a net loss of $2.48 million on $15.70 million of total
revenue for the three months ended June 30, 2012, compared with a
net loss of $1.47 million on $15.13 million of total revenue for
the same period a year earlier.
For the six months ended June 30, 2012, the Company reported net
income of $27.64 million on $32.93 million of total revenue,
compared with net income of $2.35 million on $28.53 million of
revenue for the same period of 2011.
Excluding the one-time gain on sale of the oilseed processing
business ($31.28 million), the Company generated an operating loss
of $1.72 million during the six months ended June 30, 2012. The
operating loss was $5.95 million during the six months ended June
30, 2011.
The Company's balance sheet at June 30, 2012, showed
$52.31 million in total assets, $13.83 million in total
liabilities, and shareholders' equity of $38.48 million.
Bankruptcy Warning
"Based on our current cash resources and 2012 operating plan, our
existing cash resources may not be sufficient to meet the cash
requirements to fund our planned operating expenses, capital
expenditures and working capital requirements beyond Dec. 31,
2012, without additional sources of cash. If we are unable to
raise additional capital, we will need to defer, reduce or
eliminate significant planned expenditures, restructure or
significantly curtail our operations, sell some or all our assets,
file for bankruptcy or cease operations."
Going Concern
Ernst & Young LLP, in San Diego, California, expressed substantial
doubt about Verenium's ability to continue as a going concern,
following the Company's results for the fiscal year ended Dec. 31,
2011. The independent auditors noted that the Company has
incurred recurring operating losses, has a working capital deficit
of $637,000 and has an accumulated deficit of $600.8 million at
Dec. 31, 2011.
A copy of the Form 10-Q is available for free at:
http://is.gd/gj9Bvs
San Diego, Calif.-based Verenium Corporation is an industrial
biotechnology company that develops and commercializes high
performance enzymes for a broad array of industrial processes to
enable higher productivity, lower costs, and improved
environmental outcomes. The Company operates in one business
segment with four main product lines: animal health and nutrition,
grain processing, oilfield services and other industrial
processes.
VERISK ANALYTICS: Argus Deal No Impact on Moody's 'Ba1' Rating
--------------------------------------------------------------
Moody Investors Service said that Verisk Analytics Inc.'s
announcement that it will acquire Argus Information and Advisory
Services, LLC for $425 million in cash will not affect the
company's Ba1 rating or stable outlook. The transaction and
increased leverage (adjusted debt to EBITDA of 2.7 times following
the close) is consistent with Moody's view that Verisk will
continue to acquire companies to support revenue growth and
penetrate industries outside of its core property and casualty
(P&C) insurance customer base.
The principal methodology used in this rating was Moody's Global
Business and Consumer Service Industry rating methodology
published in October 2010.
VITESSE SEMICONDUCTOR: Posts $4.7-Mil. Net Income in Fiscal Q3
--------------------------------------------------------------
Vitesse Semiconductor Corporation filed with the U.S. Securities
and Exchange Commission its quarterly report on Form 10-Q
disclosing net income of $4.71 million on $30.28 million of net
revenues for the three months ended June 30, 2012, compared with
net income of $6.55 million on $35.98 million of net revenues for
the same period a year ago.
The Company reported a net loss of $2.33 million on $90.01 million
of net revenues for the nine months ended June 30, 2012, compared
with a net loss of $10.22 million on $110.62 million of net
revenues for the same period during the prior year.
The Company's balance sheet at June 30, 2012, showed $57.14
million in total assets, $84.38 million in total liabilities and a
$27.24 million total stockholders' deficit.
A copy of the Form 10-Q is available for free at:
http://is.gd/92bzGo
About Vitesse
Based in Camarillo, California, Vitesse Semiconductor Corporation
(Pink Sheets: VTSS.PK) -- http://www.vitesse.com/-- designs,
develops and markets a diverse portfolio of semiconductor
solutions for Carrier and Enterprise networks worldwide.
In October 2009, Vitesse completed a debt restructuring
transaction that resulted in the conversion of 96.7% of the
Company's 2024 Debentures into a combination of cash, common
stock, Series B Preferred Stock and 2014 Debentures. With respect
to the remaining 3.3% of the 2024 Debentures, Vitesse settled its
obligations in cash. Additionally, Vitesse repaid $5.0 million of
its $30.0 million Senior Term Loan, the terms of which were
amended as part of the debt restructuring transactions.
Vitesse Semiconductor Corporation reported a net loss of
$14.81 million on $140.96 million of net revenues for the year
ended Sept. 30, 2011, compared with a net loss of $20.05 million
on $165.99 million of net revenues during the prior year.
WARNER CHILCOTT: Moody's Rates New Senior Bank Facilities 'Ba3'
---------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to two new
tranches under the senior secured credit facility of Warner
Chilcott Company, LLC, Warner Chilcott Corporation, and WC Luxco
S.… r.l. (subsidiaries of Warner Chilcott plc), collectively
referred to as "Warner Chilcott."
At the same time, Moody's commented that the company's new special
dividend is credit negative, due to the increase in debt to fund
shareholder initiatives. However, there are no changes to Warner
Chilcott's existing ratings (including the B1 Corporate Family
Rating) and the stable rating outlook.
Ratings assigned:
Warner Chilcott Corporation, Warner Chilcott Company, LLC and WC
Luxco S.a r.l. (Borrowers):
Ba3 (LGD3, 34%) sr. secured Term Loan of $300 million due 2017
Ba3 (LGD3, 34%) sr. secured Term Loan of $300 million due 2018
Proceeds of the credit facilities, together with cash on hand, are
expected to be used to pay a new special cash dividend totaling
approximately $1 billion.
"The partially debt-financed special dividend raises Warner
Chilcott's debt/EBITDA, but well within the 4.5x level
incorporated in the B1 rating," stated Michael Levesque, Moody's
Senior Vice President.
Ratings Rationale
Warner Chilcott's B1 Corporate Family Rating reflects the
company's modest scale, high product concentration risk,
significant exposure to patent expirations and generic challenges,
and management's tolerance for leverage. Leverage is fairly high
relative to other specialty pharmaceutical companies, particularly
given its patent risk profile. The company faces generic threats
in 2014 on several core products including Actonel and Loestrin
24, but life cycle management of these brands could extend their
exclusivity periods. Offsetting these risks, the rating is
supported by the company's strong profitability and cash flow
generation, and its successful history of product life cycle
management and product acquisitions. Ample cash flow through 2013
provides good flexibility to fund acquisitions.
The rating outlook is stable. Although deleveraging could occur
over the next 12 to 24 months because of strong free cash flow,
rating constraints include product concentration, earnings
contraction and key patent exposures in 2014. Over time, a rating
upgrade could occur with a combination of (1) greater evidence
that life cycle management of Actonel and Loestrin 24 will be
successful; (2) debt/EBITDA sustained below 3.0 times; and (3)
improved revenue concentration, e.g. top 3 products below 50% of
sales. Conversely, a downgrade could occur if debt/EBITDA is
sustained above 4.5 times, which could occur if the company's life
cycle management plans are not successful and substantial revenue
erosion occurs in 2014.
Headquartered in Dublin, Ireland, Warner Chilcott plc (NASDAQ:
WCRX) is a specialty pharmaceutical company currently focused on
women's healthcare, gastroenterology, urology, and dermatology.
During the first six months of 2012 the company reported total
revenue of approximately $1.3 billion.
The methodologies used in this rating were Global Pharmaceutical
Industry published in October 2009, and Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
WEZBRA DAIRY: Sec. 341 Creditors' Meeting Set for Sept. 20
----------------------------------------------------------
The U.S. Trustee for Northern District of Indiana will convene a
Meeting of Creditors under 11 U.S.C. Sec. 341(a) in the Chapter 11
case of Wezbra Dairy, LLC, on Sept. 20, 2012, at 11:30 AM at Room
1194, Federal Building (Fort Wayne).
Objection to dischargeability of certain debts are due Nov. 19,
2012. Proofs of claim are due Dec. 19. Government proofs of
claim are due Feb. 4, 2013.
The Debtor is required to file a plan or progress report by
Jan. 18, 2013.
About Wezbra Dairy
Wezbra Dairy, LLC, operator of a dairy farm in Continental, Ohio,
filed a Chapter 11 petition (Bankr. N.D. Ind. Case No. 12-12592)
on Aug. 6, 2012. The Debtor owns 936 head of cattle and lease 24
head of cattle that must be fed and maintained on a daily basis.
Wezbra Dairy estimated $10 million to $50 million in assets and
$1 million to $10 million in debts. The Debtor owes Bank of
America N.A. the amount of $6.5 million, secured by a blanket lien
on the Debtor's assets.
Judge Robert E. Grant oversees the case. Daniel J. Skekloff,
Esq., and Scot T. Skekloff, Esq., at Skekloff, Adelsperger &
Kleven, LLP serve as counsel to the Debtor.
WHITESTAR DAIRY: Case Summary & 25 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Whitestar Dairy, Inc.
P.O. Box 6700
Visalia, CA 93290
Bankruptcy Case No.: 12-16877
Chapter 11 Petition Date: August 8, 2012
Court: United States Bankruptcy Court
Eastern District of California (Fresno)
Judge: Fredrick E. Clement
Debtor's Counsel: Riley C. Walter, Esq.
WALTER & WILHELM LAW GROUP
205 E. River Park Circle, Ste. 410
Fresno, CA 93720
Tel: (559) 435-9800
Fax: (559) 435-9868
E-mail: rileywalter@W2LG.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $10,000,001 to $50,000,000
A copy of the Company's list of its 25 largest unsecured creditors
filed together with the petition is available for free at
http://bankrupt.com/misc/caeb12-16877.pdf
The petition was signed by William Vander Poel, Sr., chief
executive officer.
Affiliates that filed separate Chapter 11 petitions:
Petition
Debtor Case No. Date
------ -------- ----
Tule River Ranch, Inc. 12-16879 08/08/12
William Vander Poel, Sr. 12-16876 08/08/12
WHITTINGTON LLC: Case Summary & 3 Unsecured Creditors
-----------------------------------------------------
Debtor: Whittington, LLC
100 10th Street, NE
Suite 301
Charlottesville, VA 22902
Bankruptcy Case No.: 12-61841
Chapter 11 Petition Date: August 8, 2012
Court: United States Bankruptcy Court
Western District of Virginia (Lynchburg)
Judge: William E. Anderson
Debtor's Counsel: W. Stephen Scott, Esq.
SCOTT/KRONER, PLC
P.O. Box 2737
Charlottesville, VA 22902
Tel: (434) 296-2161
E-mail: wscott@scottkroner.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 three unsecured creditors
filed together with the petition is available for free at
http://bankrupt.com/misc/vawb12-61841.pdf
The petition was signed by Robert M. Hauser, manager.
YNS ENTERPRISE: Schedules and Statement Due Aug. 20
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YNS Enterprise No. 1, LLC, has until Aug. 20, 2012, to file its
schedules of assets and liabilities and statement of financial
affairs, according to the bankruptcy case docket. YNS is also
required by that date to file a disclosure of compensation of the
Debtor's attorney, and corporate ownership statement.
YNS Enterprise No. 1, LLC, filed a bare-bones Chapter 11 petition
(Bankr. C.D. Calif. Case No. 12-28185) on Aug. 5, 2012 in
Riverside, California. The Debtor, a single asset real estate
under 11 U.S.C. Sec. 101(51B), estimated assets and debts of at
least $10 million. It said that its principal asset is located at
8122 Foothill Boulevard, in Rancho Cucamongo, California.
Related entities SSM Enterprises, Inc., YJC Investment Group V,
Inc., and YNS Investment Group, Inc. hold 100% of the membership
interests in the Debtor.
The petition was signed by Young Jae Chung, president of YJC.
Bankruptcy Judge Wayne E. Johnson presides over the case. Timothy
J. Yoo, Esq., at Levene Neale Bender Rankin & Brill LLP, serves as
the Debtor's counsel.
* No Exemption for Equity Created by Defective Mortgage
-------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the U.S. Court of Appeals in Philadelphia ruled on
Aug. 6 that if a subordinate home mortgage wasn't properly
perfected, individual bankrupts can't use a homestead exemption to
receive a portion of sale proceeds when there was no equity in the
property when the Chapter 7 petition was filed. The case is In re
Messina, 11-1426, U.S. 3rd Circuit Court of Appeals
(Philadelphia).
* Company Officer Has Fiduciary Duties to Creditors
---------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that an officer of a closely-held corporation breached a
fiduciary duty when he caused the insolvent company to transfer
property to an affiliate so the affiliate could pay a debt the
officer had guaranteed, U.S. District Judge Frederick J. Scullin
Jr. from Syracuse, New York, ruled on Aug. 7.
According to the report, Judge Scullin cited New York law saying
that when a company becomes insolvent, officers take on fiduciary
duties to creditors. By transferring an insolvent company's
property to benefit himself, Judge Scullin found a violation of
fiduciary duties, in the process reversing a fact-finding by the
bankruptcy judge. He rejected the argument by the bankruptcy
judge that finding breach of fiduciary duty "would arguably expand
nondischargeabililty to any and all creditors with claims against
the assets of insolvent corporations."
The Bloomberg report notes Judge Scullin still upheld the
bankruptcy judge's conclusion that the debt was discharged under
Section 523(a)(4) of the Bankruptcy Code because the creditor
failed to show there was "fraud or defalcation."
The case is Economic Development Growth Enterprises Corp. v.
McDermott, 10-696, U.S. District Court, Northern District New York
(Syracuse).
* BOOK REVIEW: Inside Investment Banking, Second Edition
--------------------------------------------------------
Author: Ernest Bloch
Publisher: BeardBooks,
Softcover: 430 pages
List Price: $34.95
Review by Henry Berry
Even though Bloch states that "no last word may ever be written
about the investment banking industry," he nonetheless has written
a timely, definitive book on the subject.
Bloch wrote Inside Investment Banking book after discovering that
no textbook on the subject was available when he began teaching a
course on investment banking. Bloch's book is like a textbook,
though one not meant to be restricted to classroom use. It's a
complete, knowledgeable study of the structure and operations of
the field of investment banking. With a long career in the field,
including work at the Federal Reserve Bank of New York, Bloch has
the background for writing the book. He sought the input of many
of his friends and contacts in investment banking for material as
well as for critical guidance to put together a text that would
stand the test of time.
While giving a nod to today's heightened interest in the
innovative securities that receive the most attention in the
popular media, Inside Investment Banking concentrates for the most
part on the unchanging elements of the field. The book takes a
subject that can appear mystifying to the average person and makes
it understandable by concentrating on its central processes,
institutional forms, and permanent aims. The author shows how all
aspects of the complex and ever-changing field of investment
banking, including its most misunderstood topic of innovative
securities, leads to a "financial ecology" which benefits business
organizations, individual investors in general, and the economy as
a whole. "[T]he marketplace for innovative securities becomes,
because of its imitators, a systematic mechanism for spreading
risk and improving efficiency for market makers and investors,"
says Bloch. .
For example, Bloch takes the reader through investment banking's
"market making" which continually adapts to changing economic
circumstances to attract the interest of investors. In doing so,
he covers the technical subject of arbitrage, the role of the
venture capitalist, and the purpose of initial public offerings,
among other matters. In addition to describing and explaining the
abiding basics of the field, Bloch also takes up issues regarding
policy (for example, full disclosure and government regulation)
that have arisen from the changes in the field and its enhanced
visibility with the public. In dealing with these issues, which
are to a large degree social issues, and similar topics which
inherently have no final resolution, Bloch deals indirectly with
criticisms the field has come under in recent years.
Bloch cites the familiar refrain "the more things change, the more
they remain the same" and then shows how this applies to
investment banking. With deregulation in the banking industry,
globalization, mergers among leading investment firms, and the
growing number of individuals researching and trading stocks on
their own, there is the appearance of sweeping change in
investment banking. However, as Inside Investment Banking shows,
underlying these surface changes is the efficiency of the market.
Anyone looking for an authoritative work covering in depth the
fundamentals of the field while reflecting both the interest and
concerns about this central field in the contemporary economy
should look to Bloch's Inside Investment Banking.
After time as an economist with the Federal Reserve Bank of New
York, Ernest Bloch was a Professor of Finance at the Stern School
of Business at New York University.
*********
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
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related conferences are encouraged. Send announcements to
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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
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re-mailing and photocopying) is strictly prohibited without prior
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*** End of Transmission ***