/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/120815.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, August 15, 2012, Vol. 16, No. 226 Headlines 3210 RIVERDALE: Rattet Pasternak Approved as Bankruptcy Attorneys 3210 RIVERDALE: Terminates Plan Filing Exclusivity ADAMS PRODUCE: PNC Bank Granted Relief From Automatic Stay ADVANCED COMPUTER: Can Hire Carrasquillo as Financial Consultant ADVANCED COMPUTER: Has Court OK to Hire Cuprill as Bankr. Counsel AEROGROW INTERNATIONAL: Incurs $7.2 Million Net Loss in Fiscal Q1 ALLISON TRANSMISSION: Fitch Rates Proposed $500-Mil. Loan 'BB' ALLY FINANCIAL: Inks Underwriting Pact with Citigroup, et al. AS SEEN ON TV: Executes Letter of Intent to Acquire eDiets.com ATP OIL: Credit Suisse Said to Be Arranging DIP Financing B GREEN INNOVATIONS: Incurs $111,000 Net Loss in Second Quarter B+H OCEAN: Taps More Fisher Brown as Special U.K. Counsel BEHRINGER HARVARD: Has OK to Use Cash Collateral Until Aug. 31 BEHRINGER HARVARD: Has Court OK to Hire Munsch Hardt as Attorneys BEHRINGER HARVARD: Wants to Hire McRoberts for Appraisal Services BELDEN INC: Moody's Assigns 'Ba2' Rating to Sub. Note Offering BELDEN INC: S&P Rates Proposed $550MM Sr. Subordinated Notes 'B+' BERNARD L. MADOFF: Victims Appeal for Right to Sue Picower Estate BINGO.COM LTD: Restates Form 10-K for FY Ended Dec. 31, 2011 BROWNIE'S WASTEWATER: Voluntary Chapter 11 Case Summary CANO PETROLEUM: Finishes Chapter 11 Plan, Sale to NBI Services CAPITOL BANCORP: Files Schedules of Assets and Liabilities CAPITOL BANCORP: Wants to Hire Honigman as Bankruptcy Counsel CAPITOL BANCORP: Hiring Kurtzman as Noticing & Balloting Agent CAPITOL BANCORP: Wants 341 Meeting, Committee Appointment Deferred CASCADE AG: Pleasant Valley Farms in Chapter 11 CASCADE AG: Case Summary & 20 Largest Unsecured Creditors CATASYS INC: May Issue up to 500 Million Common Shares CIRCLE ENTERTAINMENT: Six Directors Elected at Annual Meeting CIRCUS AND ELDORADO: Committee Taps XRoads as Financial Advisor COLUMBUS COUNTRY CLUB: Local College Bids for Assets COMBIMATRIX CORPORATION: Posts $2-Mil. Net Loss in Second Quarter COMMERCETEL CORP: Changes Name to "Mobivity Holdings Corp." CONDOR DEVELOPMENT: Has Final Order to Access Cash Collateral CONTINENTAL RESOURCES: Moody's Rates $700MM Sr. Unsec. Notes Ba2 CONTINENTAL RESOURCES: S&P Keeps BB+ Rating on Sr. Notes Due 2022 DELTA PETROLEUM: Committee Has Nod to Hire Akin Gump as Co-Counsel DELTA PETROLEUM: Pepper Hamilton OK'd as Committee's Del. Counsel DELTA PETROLEUM: U.S. Trustee Objects to Amended Ch. 11 Plan DESPERADO DAIRY: Voluntary Chapter 11 Case Summary DYNASTY DEVELOPMENT: Files Amended Schedules of Assets & Debts DYNASTY DEVELOPMENT: Manager's Spouse Wants Case Dismissed DYNEGY INC: Taps Ernst & Young to Audit 2012 Financials DYNEGY INC: Wants to Hire KPMG LLP as Tax Consultants DYNEGY INC: Wants to Hire White & Case as Bankruptcy Counsel ELPIDA MEMORY: Bondholders Seek to Collect in U.S. Court EMBASSY PLAZA: Restructures Debt, Saved From Foreclosure ENERGY FUTURE: Moody's Corrects August 9 Rating Release ENERSYS: Moody's Affirms 'Ba2' CFR/PDR; Outlook Positive EVT HOTEL: Case Summary & 13 Unsecured Creditors FIBERTOWER NETWORK: Sec. 341 Creditors' Meeting Set for Sept. 5 FIBERTOWER NETWORK: Taps BMC Group as Claims & Noticing Agent FIBERTOWER NETWORK: Members of Official Creditors Committee FIBERTOWER NETWORK: Creditors Seek to Push Back Rejection Hearing FRANKLIN CREDIT: Emerges From Chapter 11 Protection FREEDOM ENVIRONMENTAL: Voluntary Chapter 11 Case Summary GENERAL MOTORS: Fitch to Rate Senior Unsecured Notes 'BB' GEOMET INC: To Begin Trading Common Stocks on the OTC Markets HAWKER BEECHCRAFT: Court Approves Epiq as Administrative Advisor HAWKER BEECHCRAFT: Court OKs PwC as Accounting Consultants HAWKER BEECHCRAFT: Court Sets Sept. 14 as Claims Bar Date HAYDEL PROPERTIES: Withdraws Bid to Use BancorpSouth Cash HAYDEL PROPERTIES: Can Employ Andrew McDonald as Special Counsel HOLMES CONSTRUCTION: Files for Chapter 11 in North Carolina HORIZON PHARMA: Had $22.8 Million Net Loss in Second Quarter HORNE INTERNATIONAL: Delays Form 10-Q for Second Quarter IMAGEWARE SYSTEMS: Elects Neal Goldman to Board of Directors IMMUCOR INC: S&P Keeps 'BB-' Rating on $100MM Revolving Credit INNER CITY: Plan Filing Exclusivity Expires Sept. 4 INTEGRATED FREIGHT: Taps Fuselier as Turnaround Advisor INT'L ENVIRONMENTAL: Shareholder's Plea to Evict Trustee Denied INTERNATIONAL TEXTILE: Incurs $37.4 Million Net Loss in Q2 INTERVAL ACQUISITION: Moody's Lifts CFR to 'Ba2'; Outlook Stable JERRY'S NUGGET: Files for Chapter 11 in Las Vegas JERRY'S NUGGET: Case Summary & 20 Largest Unsecured Creditors JUNIPER GENERATION: Fitch Affirms Sr. Unsec. Notes Rating at 'BB+' KL SERVICES: Case Summary & 19 Largest Unsecured Creditors LEHMAN BROTHERS: Bid to Revise Ruling on JPMorgan Suit Denied LEHMAN BROTHERS: Seeks Approval of Claims Discovery Procedures LEHMAN BROTHERS: LBI Trustee to Sell Navigator to Wilbur Ross LEHMAN BROTHERS: LBI Trustee Still Opposes FirstBank Claim LEHMAN BROTHERS: Court Asked to Deny Class Certification Bid LEHMAN BROTHERS: Objects to 250 East Borrower's $20-Mil. Claim LEHMAN BROTHERS: Apartment Owner Archstone Files for IPO LEHMAN BROTHERS: Creditors Seeking $33 Million in Fees Today LPATH INC: Lehman Brothers Owns 2% of Class A Common Stock MEDICAL ALARM: Corrects Report on Warrants Cancellation MF GLOBAL: ConocoPhillips Wants Dispute in District Court MOLYCORP INC: S&P Cuts CCR to 'CCC+' Due to Liquidity Concerns MOMENTIVE PERFORMANCE: S&P Cuts CCR to 'CCC' Due to Weak Earnings MORGAN INDUSTRIES: Files Chapter 11 Liquidating Plan MY VIET: Case Summary & 13 Largest Unsecured Creditors OCALA FUNDING: Sec. 341 Creditors' Meeting Set for Aug. 22 OCALA FUNDING: Files Schedules of Assets and Liabilities OCTAVIAR ADMINISTRATION: Australian Liquidators File Chapter 15 OPEXA THERAPEUTICS: Gets Extension to Regain Listing Compliance ORAGENICS INC: Incurs $6.9 Million Net Loss in Second Quarter OTERO COUNTY: Wants to Hire Sutin Thayer as Special Bond Counsel OXLEY DEVELOPMENT: Creditor Says Case Filed in Bad Faith PACIFIC THOMAS: Sec. 341 Creditors' Meeting Set for Sept. 10 PEREGRINE FINANCIAL: New Office May Be a White Elephant PHYSICAL PROPERTY: Incurs HK$175,000 Net Loss in Second Quarter PILGRIM'S PRIDE: Fee Enhancements Allowed in Bankruptcy RACKWISE INC: Has $2.7 Million Net Loss in Second Quarter RACKWISE INC: Incurs $2.6 Million Net Loss in Second Quarter RADAR NETWORKS: Investor's Fraud Suit Allowed to Go Forward RESIDENTIAL CAPITAL: Citibank Wants Lift Stay to Foreclose RESIDENTIAL CAPITAL: Ally Posts Q2 Loss Due to ResCap Impact RESIDENTIAL CAPITAL: Says Taggart Suit Violates Automatic Stay RESIDENTIAL CAPITAL: Opposes Claimant Bid for Ch. 7 Conversion RESIDENTIAL CAPITAL: Lowenstein Represents Class Plaintiffs RG STEEL: Warren, Sparrows Point Plants Raise $88 Million RG STEEL: Face Class Action Over Air Pollution RITZ CAMERA: Creditors Panel Taps PwC as Financial Advisor RITZ CAMERA: Critical Vendor Agreement with Nikon Inc. Approved RITZ CAMERA: Has Until Aug. 22 to File Schedules and Statements RITZ CAMERA: Marc Weinsweig OK'd as Chief Restructuring Officer ROBERTS HOTELS: Judge Dismisses Jackson Hotel's Bankruptcy Case ROCK PARENT: S&P Affirms 'B' Corp. Credit Rating; Outlook Stable SAINTS MEDICAL: Fitch Withdraws 'B-' Rating on $42.1-Mil. Bonds SOLARWORLD AG: Has $198-Mil. Q2 Loss, Blames China for Woes SOLYNDRA LLC: Has $3.5 Million Settlement With Employees SOLYNDRA LLC: Ex-Employees Settle Litigation for $3.5 Million SPEEDEMISSIONS INC: Incurs $76,000 Net Loss in Second Quarter STOCKTON, CA: Wells Fargo, Assured Guaranty Object to Filing STOCKTON, CA: Judge Elizabeth Perris Named as Mediator T3 MOTION: Gets Notice of Acceptance of NYSE MKT Plan TEAM FINANCIAL: U.S. Trustee Seek to Convert Case to Ch. 7 TEARLAB CORPORATION: Posts $1.97 Million Net Loss in 2nd Quarter TENNESSEE GAS: S&P Raises Corp. Credit Rating From 'BB' to 'BBB' TESORO CORP: S&P Affirms 'BB+' Corp. Credit Rating; Outlook Stable THINKFILM INC: Bad Press Hurt Financier in $660MM Miramax Sale TOM MARTINO: To Pursue Conversion of Chapter 7 Case to Chapter 11 TRI-VALLEY: Receives Court Approval to Tap Its DIP Loan TRIBUNE CO: Says Appeals Could Cause Up to $3 Billion Damage TRIBUNE CO: Wins OK for BofA, Merrill Exit Financing Deal TRIBUNE CO: Taps Paul Weiss as Post-Emergence Financing Attorney TRONOX FINANCE: Moody's Assigns 'B1' Rating to $650MM Unsec. Notes TRONOX FINANCE: S&P Rates $650MM Senior Notes Due 2020 'BB-' US FIDELIS: Committee Resolves Objections to Liquidating Plan VANN'S INC: DIP Loan Requires Plan Filing or Sale by October VANN'S INC: Hiring Dye & Moe as Chapter 11 Counsel VELO HOLDINGS: Court Extends Plan Filing Period to Nov. 28 VENTANA 20/20: Chapter 11 Status Hearing Set for Sept. 6 VERSO PAPER: S&P Affirms 'B' Corp. Credit Rating; Outlook Negative VICTORY ENERGY: Re-Engages WilsonMorgan LLP as Accountant VIEW SYSTEMS: Errors Found on 2010 and 2011 Periodic Reports VILLAGIO PARTNERS: Wants to Use Wells Fargo Cash Collateral VISUALANT INC: Incurs $737,000 Net Loss in Second Quarter VITRO SAB: Takes Appeal From Court Ruling Denying Mexican Plan VYSTAR CORPORATION: Had $584,500 Net Loss in Second Quarter WAVE SYSTEMS: To Complete $1.66 Million Class A Stock Offering WAVE SYSTEMS: Incurs $6.5 Million Net Loss in Second Quarter WM SIX FORKS: Windsor Manor in Raleigh Files Chapter 11 WM SIX FORKS: Case Summary & 20 Largest Unsecured Creditors WPCS INTERNATIONAL: First Wilshire Hikes Equity Stake to 11.2% WISP RESORT: Has Two or Three Potential Buyers YERMO WATER: Utilities Commission to Put Firm in Receivership * Fitch Updates Rating Definitions * Weekend Deadlines in Court Orders Are Binding * Manager Bonuses Are Beneficial in Bankruptcies, Study Says * Upcoming Meetings, Conferences and Seminars ********* 3210 RIVERDALE: Rattet Pasternak Approved as Bankruptcy Attorneys ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of California authorized 3210 Riverdale Development LLC to employ Rattet Pasternak, LLP as counsel. Rattet Pasternak is replacing the Law Offices of Mark J. Friedman P.C., who was formally relieved as counsel pursuant to a May 15, 2012, order of the Court. FriedmanPC stated that there has been a breakdown in communication between FriedmanPC and the Debtor. RP is expected to, among other things: a. give advice to the Debtor with respect to its powers and duties as a Debtor-in-Possession and the continued management of its property and affairs; b. negotiate with creditors of the Debtor and work out a plan of reorganization and take the necessary legal steps in order to effectuate a plan including, if need be, negotiations with the creditors and other parties in interest; and c. prepare the necessary answers, orders, reports and other legal papers required for the Debtor who seeks protection from its creditors under Chapter 11 of the Bankruptcy Code. The hourly rates of the firm's personnel are: Partners $475 - $650 Of Counsel $425 - $475 Associates $250 - $450 Paraprofessionals $150 RP received an initial retainer of $15,000 on June 5, 2012, which was paid by Michael Waldman, the managing member of the Debtor's sole member, from his personal funds. To the best of the Debtor's knowledge, RP is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Jonathan S. Pasternak, Esq. Erica R. Feynman, Esq. RATTET PASTERNAK, LLP 550 Mamaroneck Avenue, Suite 510 Harrison, New York 10528 Tel: (914) 381-7400 About 3210 Riverdale Development LLC Bronx, New York-based 3210 Riverdale Development LLC filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 12-11109) on March 20, 2012. Judge James M. Peck is assigned to the Debtor's bankruptcy case. 3210 Riverdale owns certain real property and improvements located at 3210 Riverdale Ave., 3217 Irwin Ave., and 3219 Irwin Ave., in Bronx. The parties behind 3210 Riverdale Avenue Partners LLC are Michael Davis at Plymouth Group, and Laurence Rappaport, at KABR Group. The Debtor disclosed $30,000,000 in assets and $18,977,495 in liabilities as of the Chapter 11 filing. The property is currently in possession of a state court appointed receiver of rents, which receiver has been excused form compliance form turnover pursuant to an order of the Court dated May 11, 2012. The Debtor is currently represented by Jonathan S. Pasternak, Esq., at Rattet Pasternak, LLP. The senior lenders are represented by Andrew C. Gold, Esq. There's Chapter 11 co-proposed by the Debtor and senior lender 3210 Riverdale Avenue Partners LLC. The Plan provides that the senior lender, owed $22.7 million would have a 78% recovery. In satisfaction of the claim, the Debtor has agreed to convey its property to the lender or its buyer designee. The lender would waive its right to distribution on account of its unsecured deficiency claim but retained the right to vote on account of the claim. Holders of unsecured claims totaling $230,000 to $1,000,000 would have a recovery of 5% to 21.74%. Each would receive its pro rata share of cash from a "plan funding account." Equity holders would receive no distribution under the Plan. 3210 RIVERDALE: Terminates Plan Filing Exclusivity -------------------------------------------------- 3210 Riverdale Development LLC, asks the U.S. Bankruptcy Court for the Southern District of California to approve a stipulation and agreed order resolving a motion of senior lender 3210 Riverdale Avenue Partners LLC for dismissal of the Chapter 11 case, or in the alternative, for relief from the automatic stay. As reported in the Troubled Company Reporter on May 10, 2012, the senior lender said the case does not belong in bankruptcy court. It is a simple two-party dispute between a single asset real estate debtor and its secured lender, which, prior to the filing of the chapter 11 case, was being adjudicated in a foreclosure proceeding in the New York State Supreme Court. The senior lender said it is substantially under-secured and there is no equity in the Debtor's sole asset -- an uninhabited 46 unit condominium project in New York. If the Court declines to dismiss the Chapter 11 case, the senior lender said it is entitled, in the alternative, to relief from the automatic stay to allow it to proceed with the foreclosure action. Pursuant to the stipulation, the parties, among other things: -- agree that (i) as of the Petition Date, the Debtor is indebted to the senior lender in the aggregate amount of $22,626,043, plus fees, costs and expenses under the Prepetition Loan Documents, (ii) the indebtedness is not subject to offset, defense or counterclaims, and (iii) the amount of the indebtedness exceeds the fair market value of the Property by no less than $5 million; -- the senior lender is granted relief from the automatic stay to continue the foreclosure action including, but not limited to, a foreclosure sale of the property; -- the Debtor's exclusive period to file a plan of reorganization is terminated and the senior lender and the Debtor may propose a qualified plan as set forth in the settlement agreement. A copy of the settlement agreement is available for free at http://bankrupt.com/misc/321RIVERDALE_stipulation.pdf About 3210 Riverdale Development LLC Bronx, New York-based 3210 Riverdale Development LLC filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 12-11109) on March 20, 2012. Judge James M. Peck is assigned to the Debtor's bankruptcy case. 3210 Riverdale owns certain real property and improvements located at 3210 Riverdale Ave., 3217 Irwin Ave., and 3219 Irwin Ave., in Bronx. The parties behind 3210 Riverdale Avenue Partners LLC are Michael Davis at Plymouth Group, and Laurence Rappaport, at KABR Group. The Debtor disclosed $30,000,000 in assets and $18,977,495 in liabilities as of the Chapter 11 filing. The property is currently in possession of a state court appointed receiver of rents, which receiver has been excused form compliance form turnover pursuant to an order of the Court dated May 11, 2012. The Debtor is currently represented by Jonathan S. Pasternak, Esq., at Rattet Pasternak, LLP. The senior lenders are represented by Andrew C. Gold, Esq. There's Chapter 11 co-proposed by the Debtor and senior lender 3210 Riverdale Avenue Partners LLC. The Plan provides that the senior lender, owed $22.7 million would have a 78% recovery. In satisfaction of the claim, the Debtor has agreed to convey its property to the lender or its buyer designee. The lender would waive its right to distribution on account of its unsecured deficiency claim but retained the right to vote on account of the claim. Holders of unsecured claims totaling $230,000 to $1,000,000 would have a recovery of 5% to 21.74%. Each would receive its pro rata share of cash from a "plan funding account." Equity holders would receive no distribution under the Plan. ADAMS PRODUCE: PNC Bank Granted Relief From Automatic Stay ---------------------------------------------------------- Judge Tamara Mitchell of the Bankruptcy Court for the Northern District of Alabama signed off on an agreed order granting PNC Bank, National Association, relief from automatic stay to exercise any and all of its rights and remedies as the holder of a validly perfected, first priority security interest in and mortgage lien/deed of trust upon a real estate in Mississippi. The automatic stay is modified as to PNC to permit PNC to exercise any and all of its rights and remedies as the holder of a validly perfected, first priority security interest in and lien upon all personal property of the Debtors other than as expressly provided in the Order. Notwithstanding, the claimants under the Perishable Agricultural Commodities Act reserve the right to assert in subsequent proceedings before the Bankruptcy Court that one or more pieces of the Debtor's equipment constitute asset(s) of the PACA Trust and that the net proceeds of disposition of such Equipment are subject to the rights of PACA Claimants, and only to the extent that there are any net proceeds after payment of the costs and fees. The disposition of the Debtors' cash, inventory and accounts receivable will be determined in accordance with the PACA Procedures Order entered by the Court, with all rights and arguments of the parties reserved as to what portion of cash, inventory and accounts receivable constitute assets of the PACA Trust. About Adams Produce Adams Produce Company, LLC, filed a Chapter 11 petition (Bankr. N.D. Ala. Case No. 12-02036) on April 27, 2012, in its home-town in Birmingham, Alabama. Privately held Adams Produce is a distributor of fresh fruits and vegetables to restaurants, government and hospitality establishments across the Southeastern United States. With over 400 employees, Adams Produce services the states of Alabama, Arkansas, Florida, Georgia, Mississippi, and Tennessee. The company was founded by Edwin Calvin Adams in 1903. Adams Produce disclosed 19,545,473 in assets and $41,569,039 and liabilities as of the Chapter 11 filing. A debtor-affiliate, Adams Clinton Business Park, LLC, estimated up to $10 million in assets and liabilities. The Debtors owe PNC Bank, National Association, $750,000 under a term loan, $1.35 million under a real estate loan, and $3.4 million under a revolver. The Debtors are also indebted $2 million under promissory notes. Adams owes $4.4 million in accounts payable to trade and other creditors, and $10.2 million to agricultural commodity suppliers. The Debtors have tapped Burr & Forman as attorneys; CRG Partners Group LLC as financial advisor; and CRG's Thomas S. O'Donoghue, Jr. as chief restructuring officer; and Donlin Recano & Company Inc. as the claims and notice agent. The U.S. Bankruptcy Administrator notified the court that it is not feasible to form a committee of unsecured creditors because of an insufficient number of unsecured creditors were willing to serve. In June 2012, the Debtors sought conversion of the case to a liquidation under Chapter 7. ADVANCED COMPUTER: Can Hire Carrasquillo as Financial Consultant ---------------------------------------------------------------- The Hon. Brian K. Tester of the U.S. Bankruptcy Court for the District of Puerto Rico granted Advanced Computer Technology, Inc., permission to employ CPA Luis R. Carrasquillo & Co., PSC, as its financial consultant. The duties of Carrasquillo will consist of strategic counseling advice, pro forma modeling preparation, financial/business assistance, preparation of documentation as requested for and during the Debtor's Chapter 11 case, as well as recommendation and financial/business assessments regarding issues related to the Debtor. About Advanced Computer San Juan, Puerto Rico-based Advanced Computer Technology, Inc., filed a Chapter 11 petition (Bankr. D.P.R. Case No. 12-04454) in Old San Juan on June 6, 2012. The Debtor, an information system consulting firm, disclosed $10.34 million in assets and $6.176 million in liabilities in its schedules. It said software and licenses rights are worth $6.30 million. The value of its 100% ownership of Sprinter Solutions, Inc., is unknown. Bankruptcy Judge Brian K. Tester presides over the case. Charles Alfred Cuprill, PSC Law Office, serves as the Debtor's counsel. The petition was signed by Osvaldo Karuzic, chief executive officer. ADVANCED COMPUTER: Has Court OK to Hire Cuprill as Bankr. Counsel ----------------------------------------------------------------- The Hon. Brian K. Tester of the U.S. Bankruptcy Court for the District of Puerto Rico granted Advanced Computer Technology, Inc., authorization to employ Charles A. Cuprill, P.S.C., Law Offices, as its counsel. The Debtor retained Cuprill on the basis of a $35,000 retainer, against which the law firm will bill on the basis of $350 per hour, plus expenses, for work performed or to be performed by Charles A. Cuprill-Hernandez, Esq. The firm's other professionals are billed at $225 per hour for senior associates, $150 per hour for junior associates and $85 per hour for paralegals. About Advanced Computer San Juan, Puerto Rico-based Advanced Computer Technology, Inc., filed a Chapter 11 petition (Bankr. D.P.R. Case No. 12-04454) in Old San Juan on June 6, 2012. The Debtor, an information system consulting firm, disclosed $10.34 million in assets and $6.176 million in liabilities in its schedules. It said software and licenses rights are worth $6.30 million. The value of its 100% ownership of Sprinter Solutions, Inc., is unknown. Bankruptcy Judge Brian K. Tester presides over the case. Charles Alfred Cuprill, PSC Law Office, serves as the Debtor's counsel. The petition was signed by Osvaldo Karuzic, chief executive officer. AEROGROW INTERNATIONAL: Incurs $7.2 Million Net Loss in Fiscal Q1 ----------------------------------------------------------------- Aerogrow International, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $7.16 million on $1.41 million of net product sales for the three months ended June 30, 2012, compared with a net loss of $1.54 million on $1.47 million of net product sales for the same period a year ago. The Company reported a net loss of $3.55 million for the year ended March 31, 2012, a net loss of $7.92 million for the year ended March 31, 2011, and a net loss of $6.33 million for the year ended March 31, 2010. The Company's balance sheet at June 30, 2012, showed $3.86 million in total assets, $3.63 million in total liabilities and $229,483 in total stockholders' equity. "We were pleased to continue our sustained trend of improved earnings and margin performance," said Mike Wolfe, AeroGrow's President and CEO. "We believe we have successfully transformed the business model of the Company and built a solid foundation on which to invest for the future." "Our improved operating performance, in combination with the new capital we raised and a solid balance sheet, allowed us to begin our planned investment in re-building the revenue base of the Company," continued Mr. Wolfe. "With new products in the pipeline, planned expansion and testing of several new channels of distribution, and plans to increase our media and public relations reach, we're excited about the prospects for the upcoming indoor gardening season, which begins in earnest in November." A copy of the Form 10-Q is available for free at: http://is.gd/svKnjX About AeroGrow Boulder, Colo.-based AeroGrow International, Inc., is a developer, marketer, direct-seller, and wholesaler of advanced indoor garden systems designed for consumer use and priced to appeal to the gardening, cooking, and healthy eating, and home and office decor markets. ALLISON TRANSMISSION: Fitch Rates Proposed $500-Mil. Loan 'BB' -------------------------------------------------------------- Fitch Ratings has assigned initial issuer default ratings of 'BB-' to Allison Transmission Holdings, Inc. (ALSN) and its Allison Transmission Inc. (ATI) subsidiary. Fitch also assigns a 'BB' rating to ATI's proposed $500 million seven-year secured term loan B-3, proceeds of which will be used to refinance a portion of ATI's $1.8 billion secured term loan B-1. In addition, Fitch assigns a 'BB' rating to the existing secured term loans B-1 and B-2, as well as the company's secured revolving credit facility, and assigns ATI's senior unsecured notes a 'B+' rating. Fitch's ratings apply to $2.5 billion in secured term loans, a $400 million secured revolving credit facility and $471 million in senior unsecured notes. The Rating Outlook for ALSN and ATI is Stable. The ratings for ALSN and ATI reflect the transmission manufacturer's strong competitive position as a supplier of fully automatic transmissions for on-highway, off-highway and military applications, as well as hybrid propulsion systems for busses. ALSN enjoys a very strong position in the North American market, with the majority of school busses, Class 6 and 7 trucks, and Class 8 straight trucks manufactured with the company's transmissions in 2011. The company also has a recognized brand name that commands a price premium from end users. ALSN's position outside North America is considerably smaller, however, as manual transmissions continue to dominate most markets. Acceptance of fully automatic transmissions is growing, though, particularly in emerging markets, and the company has positioned itself to take advantage of opportunities in these regions, most notably in China and India. The combination of premium pricing and a focus on manufacturing cost control has led to a substantial margin performance and relatively strong free cash flow (FCF), which remained positive even during the downturn of 2008 and 2009. Leverage remains moderately high, however, as a result of substantial bank borrowings incurred with the company's 2007 leveraged buy-out. Since that time, ALSN has been focused on using FCF to reduce debt, including a $355 million decline in debt in the first half of 2012. Relatively low pension obligations and a sufficient liquidity position are other credit positives. Credit concerns include the highly cyclical nature of the global truck and capital goods industries, volatile raw material costs, relatively little global diversification, the aforementioned moderately high leverage and a concentrated maturity schedule which includes a significant amount of debt due in two years. These concerns are mitigated somewhat, however, by ALSN's strong FCF performance and increasing penetration into emerging markets. Also, ALSN primarily supplies the vocational truck market, which tends to be less cyclical than the linehaul truck market. Nonetheless, a broad-based global downturn in commercial vehicle production would potentially put significant pressure on the company's margins and FCF. Fitch also has some concerns around a continued decline in military-related revenue, given the possibility of significant program cuts in 2013 with a sequestration of U.S. military's budget. However, just 13% of ALSN's revenue in the 12 months ended June 30, 2012, was derived from its military segment, and Fitch believes only a portion of this would be at risk from sequestration. Outside of external market concerns, the labor agreement covering the company's U.S. hourly employees represented by the United Auto Workers (UAW) expires in November 2012, which increases the risk of operational disruption later this year. However, it is notable that the current UAW labor agreement is already similar to the one negotiated between the union and the three Detroit auto manufacturers in 2011, and ALSN does not have a history of labor- related disruptions. In addition to labor, Fitch also notes that ALSN's ownership structure is highly concentrated, with The Carlyle Group and Onex Corporation each holding a 41.5% stake in the company. It does not appear that this ownership concentration has resulted in any significant actions by the company that would be detrimental to its creditors. The Stable Rating Outlook on ALSN and ATI indicates that a near- term change in the company's ratings is not likely. Longer term, however, Fitch could consider an upgrade of the IDR to 'BB' if company continues to reduce debt, makes further progress on increasing the globalization of its revenue base, and FCF and margins remain high for an extended period. In particular, a continued strong performance in a slower commercial vehicle market would be a potential driver of higher ratings. On the other hand, Fitch could consider a downgrade in the ratings on an unexpected sharp decline in North American commercial vehicle production, or if the company increases its debt load. In particular, a significant increase in long-term debt to support shareholder-friendly actions would be viewed negatively, although cash returns to shareholders via FCF could be consistent with the current ratings, provided liquidity remains sufficient for ongoing financial flexibility. Although not expected, a significant increase in debt to support an acquisition might also be a trigger for a negative rating action; while a prolonged production decline caused by a labor disruption tied to the November 2012 UAW contract expiration could also trigger a downgrade. ALSN's credit profile is characterized by strong margins and FCF generation, but moderately high leverage. Fitch-calculated leverage (debt/Fitch-calculated EBITDA) in the 12 months ended June 30, 2012, was 4.1x, with $3.0 billion in debt and last 12 months (LTM) Fitch-calculated EBITDA of $745 million. The calculated EBITDA margin of 33.1% was very strong for a capital goods manufacturer, however, and Fitch believes ALSN has the financial flexibility to drive leverage below 4x in the next twelve months. Funds from operations (FFO) adjusted leverage was 4.4x and FFO fixed charge coverage was 4.0x in the LTM period ended June 30, 2012, versus 4.9x and 3.1x, respectively, at Dec. 31, 2011. The company's liquidity position at the end of the second quarter was more than sufficient to meet its cash obligations and included $112 million in cash and cash equivalents and $372 million of availability on its $400 million secured revolving credit facility (after accounting for $28 million in letters of credit). ALSN has been focused on reducing debt over the past several years, with debt (including short-term debt) declining from $4.0 billion at year-end 2008 to $3.0 billion at June 30, 2012. The current figure is down $536 million from the level at June 30, 2011, and down $358 million since year-end 2011. The decline in the first half of 2012 was primarily due to the early repayment of all of the company's 11% senior unsecured notes, which totaled $310 million at year-end 2011. ALSN has the flexibility to further reduce its debt through optional prepayments on its secured term loans or early redemption of all or a portion of its 7.125% senior unsecured notes, and Fitch expects that the company will take advantage of opportunities to reduce its debt over the intermediate term. The company's credit agreement includes financial covenants that require ALSN to maintain a senior secured leverage ratio below 5.50x. The actual senior secured leverage ratio, which is calculated net of cash, was well below the maximum level at 3.19x as of June 30, 2012. According to the facility's terms, a senior secured leverage ratio below 3.50x suspends certain provisions requiring excess cash flow (as defined in the agreement) to be applied to term loan reduction. The company is currently seeking commitments from banks on a proposed $500 million secured term loan B-3 that will be entered into through an amendment to the existing credit facility agreement. Terms and conditions of the amended facility are expected to be substantially similar to those in the current version of the credit agreement. Proceeds from the term loan B-3 will be used to prepay a portion of the $1.8 billion outstanding on the company's secured term loan B-1. The term loan B-3 will mature in August 2019 and augments the B-1 loan that matures in August 2014 and the $797 million term loan B-2 that matures in August 2017. At June 30, 2012, ALSN had no short-term debt outstanding, and current maturities of long-term debt totaled only $8.0 million. However, even with the proposed reduction to the B-1 term loan, ALSN's maturity schedule remains very uneven, with the large maturity coming due in 2014 when the remaining principal balance of the B-1 loan is due. Although the current term loan B-3 transaction is expected to reduce the amount of the B-1 maturity by about $500 million, the company will still have an estimated $1.3 billion in debt that matures in August 2014 and nearly $800 million maturing in August 2017. LTM FCF was $379 million at the end of the second quarter, leading to a relatively strong 16.9% FCF margin. Funds flow from operations (FFO) was $529 million in the LTM period, with working capital using a fairly modest $5.8 million. LTM capital spending was $132 million, equal to 5.9% of revenue, which was higher in relative terms than the company's spending in recent years as it continues to invest in its geographical footprint and new product programs. The company has guided to full-year 2012 capital spending in the range $115 million to $130 million. Fitch expects FCF to remain solid over the intermediate term and FCF margins to remain strong by industry standards as growth in operating cash flow more than offsets an expected rise in capital spending. Fitch notes, however, that ALSN instituted a dividend in the second quarter of 2012 that will reduce annual FCF by about $44 million going forward. ALSN's defined benefit pension obligations are relatively modest, with an underfunded status of only $16 million as of year-end 2011. he company's U.S. hourly pension plan was closed to new entrants in 2008, and benefits for U.S. hourly employees who retired prior to October 2, 2011, are covered under General Motors Company's (GM) hourly plan. ALSN completed the transfer of obligations and assets tied to those retirees from its hourly plan to GM's plan during the second quarter of 2012. Fitch does not currently view ALSN's pension obligations as a meaningful credit risk. The secured revolver and term loans that comprise ATI's credit facility are rated one notch above ATI's IDR at 'BB', reflecting their collateral coverage, which includes virtually all of ATI's assets. Fitch notes that property, plant, and equipment and intangible assets (including ALSN's intellectual property) comprised $2.4 billion of the $5.1 billion in assets on ALSN's consolidated balance sheet at June 30, 2012. With secured loans accounting for over 85% of the debt in the capital structure (assuming a fully-drawn revolver), ATI's senior unsecured notes are rated one notch lower than ATI's IDR at 'B+'. WHAT COULD TRIGGER A RATING ACTION Positive: Future developments that may, individually or collectively, lead to a positive rating action include: -- A meaningful reduction in leverage; -- Increased global revenue diversification; -- Continued strong margin performance; -- Ongoing positive FCF generation, especially in a weakened demand environment. Negative: Future developments that may, individually or collectively, lead to a negative rating action include: -- A sharp decline in commercial vehicle production, especially in North America; -- A significant increase in debt; -- An increase in leverage to support shareholder-friendly actions; -- A merger or acquisition that results in higher leverage over an extended period of time; -- A prolonged downturn in production caused by a labor disruption. Fitch has assigned the following ratings to ALSN and ATI: ALSN -- IDR 'BB-' Rating Outlook Stable. ATI -- IDR 'BB-' -- Secured term loan rating 'BB'; -- Secured revolving credit facility rating 'BB'; -- Senior unsecured rating 'B+'; Rating Outlook Stable. ALLY FINANCIAL: Inks Underwriting Pact with Citigroup, et al. ------------------------------------------------------------- Ally Financial Inc. entered into an Underwriting Agreement incorporating Ally's Underwriting Agreement Standard Provisions (Debt Securities) with Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and RBC Capital Markets, LLC, as representatives of the several Underwriters named therein, pursuant to which Ally agreed to sell to the Underwriters $600,000,000 aggregate principal amount of 4.625% Senior Guaranteed Notes due 2015. The Notes will be guaranteed by Ally US LLC, IB Finance Holding Company, LLC, GMAC Latin America Holdings LLC, GMAC International Holdings B.V. and GMAC Continental Corporation, each a subsidiary of Ally, on an unsubordinated basis. The Securities were registered pursuant to Ally's shelf registration statement on Form S-3 (File No. 333- 171519), which became automatically effective on Jan. 3, 2011. A copy of the Underwriting Agreement is available for free at: http://is.gd/gcKrkb About Ally Financial Ally Financial Inc., formerly GMAC Inc. -- http://www.ally.com/-- is one of the world's largest automotive financial services companies. The company offers a full suite of automotive financing products and services in key markets around the world. Ally's other business units include mortgage operations and commercial finance, and the company's subsidiary, Ally Bank, offers online retail banking products. Ally operates as a bank holding company. GMAC obtained a $17 billion bailout from the U.S. government in exchange for a 56.3% stake. Private equity firm Cerberus Capital Management LP keeps 14.9%, while General Motors Co. owns 6.7%. Ally reported a net loss of $157 million in 2011, compared with net income of $1.07 billion in 2010. Net income was $310 million for the three months ended March 31, 2012. The Company's balance sheet at June 30, 2012, showed $178.56 billion in total assets, $160.19 billion in total liabilities and $18.36 billion in total equity. * * * In February 2012, Fitch Ratings downgraded the long-term Issuer Default Rating (IDR) and the senior unsecured debt rating of Ally Financial and its subsidiaries to 'BB-' from 'BB'. The Rating Outlook is Negative. The downgrade primarily reflects deteriorating operating trends in ResCap, which has continued to be a drag on Ally's consolidated credit profile, as well as exposure to contingent mortgage-related rep and warranty and litigation issues tied to ResCap, which could potentially impact Ally's capital and liquidity levels. As reported by the TCR on May 22, 2012, Standard & Poor's Ratings Services revised its outlook on Ally Financial Inc. to positive from stable. At the same time, Standard & Poor's affirmed its ratings, including its 'B+' long-term counterparty credit and 'C' short-term ratings, on Ally. "The outlook revision reflects our view of potentially favorable implications for Ally's credit profile arising from measures the company announced May 14, 2012, designed to resolve issues relating to Residential Capital LLC, Ally's troubled mortgage subsidiary," said Standard & Poor's credit analyst Tom Connell. In the May 28, 2012, edition of the TCR, DBRS, Inc., has placed the ratings of Ally Financial Inc. and certain related subsidiaries, including its Issuer and Long-Term Debt rating of BB (low), Under Review Developing. This rating action follows the decision by Ally's wholly owned mortgage subsidiary, Residential Capital, LLC (ResCap) to file a pre- packaged bankruptcy plan under Chapter 11 of the U.S. Bankruptcy Code. AS SEEN ON TV: Executes Letter of Intent to Acquire eDiets.com -------------------------------------------------------------- As Seen On TV, Inc., has signed a letter of intent to acquire eDiets.com, Inc. The transaction is an all-stock deal, totals $13 million in As Seen On TV stock and is anticipated to result in pro-forma ownership of two-thirds As Seen On TV shareholders to one-third eDiets.com shareholders. The transaction, which is subject to certain closing conditions, is expected to close in 90- 120 days. eDiets.com has generated $22 million in revenue over the past 12 months. eDiets.com has focused its marketing and customer acquisition efforts on print media, short-form 30 and 60 second TV spots and Internet. In February 2012, Board member Tom Connerty assumed its CEO position and Chairman Kevin Richardson assumed its financial responsibilities and has since stabilized the business. eDiets.com has spent $250 million to-date since its inception in 1996 in building its brand and is now the number three national diet meal delivery company behind Nutrisystem and Jenny Craig. Since inception eDiets.com has helped millions of consumers effectively lose weight through its meal delivery and digital diet subscriptions. Both As Seen On TV and eDiets.com believe there are numerous synergies between the two companies that make a combination greater than one plus one. The identified synergies range from public company expense savings, assembling the strongest direct marketing team, to creative marketing and direct response expertise and cost savings. The two companies share a planned vision for accelerating the growth of eDiets.com fresh food dietary meal delivery business. To-date customer acquisition has been driven by print media and short-form 30 and 60 second TV spots. The shared plan is to create, develop and utilize a long-form infomercial to more effectively acquire customers and spur growth of eDiets.com, Inc. subscribers. The As Seen On TV team, led by Kevin Harrington, has a vision in creating an infomercial utilizing celebrities and will utilize its expertise in production and media buy planning. Additional opportunities include tying the eDiets.com dietary meal delivery plan to other infomercial fitness products and the ability to upsell complementary fitness and household good products, two solid segments in the As Seen On TV world. Tom Connerty has over 25 years of expertise in direct response marketing with leading consumer branded companies, including Nutrisystem and the Nautilus Group. Mr. Connerty served as Chief Marketing Officer of Nutrisystem from 2004 to 2008, and, in addition, he was promoted to Executive Vice President of Program Development in 2006. At Nutrisystem, Mr. Connerty was instrumental in successfully creating and implementing innovative direct marketing programs which contributed to Nutrisystem's rapid growth during his tenure at the Company. From 1999 to 2004, he served as Vice President of Direct Marketing of the Nautilus Group, where he played a key role in building the Bowflex division into one of the most profitable and recognizable names in the direct response home fitness market. Prior to Nautilus, he served as the Vice President of Broadcast for the Home Shopping Network where he managed advertising, programming and operations for two of the company's shopping channels that generated more than $1 billion in annual sales. eDiets.com, Inc., will be structured as a wholly-owned subsidiary of As Seen On TV and will continue to be operated by its current management team. Kevin Harrington, Chairman of As Seen On TV, Inc. stated, "Kevin Richardson and Tom Connerty have done a great job recently in positioning eDiets.com, Inc., for future growth. The opportunity for all of us here is to accelerate growth of eDiets.com, Inc., over the next few years by matching their teams marketing experience and background at Nautilus and Nutrisystem and our expertise in direct response television and celebrity rolodex." Tom Connerty, CEO of eDiets.com, stated, "I'm extremely excited about this merger. Both entities bring a lot of experience and success marketing products directly to consumers across a wide range of product categories. A lot of synergies exist between the two companies that I feel will create a powerful direct marketing partnership poised for significant profitable growth in 2013 and beyond." Kevin Richardson, Chairman of eDiets.com, stated, "The combination of these two teams puts us well on the way of assembling the "dream team" of direct response marketing. We are very excited to see the synergies benefit both groups of shareholders." About As Seen on TV Clearwater, Fla.-based As Seen On TV, Inc., is a direct response marketing company. It identifies, develops, and markets consumer products. The Company reported a net loss of $8.07 million on $8.16 million of revenue for the year ended March 31, 2012, compared with a net loss of $6.97 million on $1.35 million of revenue during the prior fiscal year. The Company's balance sheet at March 31, 2012, showed $9.78 million in total assets, $27.05 million in total liabilities, all current, and a $17.26 million total stockholders' deficiency. ATP OIL: Credit Suisse Said to Be Arranging DIP Financing --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that ATP Oil & Gas ATP Oil & Gas Corp., arranged for $600 million in financing ahead of a Chapter 11 filing that could take place within days. The financing is being arranged with Credit Suisse Group AG, according to the Bloomberg report, citing two people who asked not to be identified because the discussions are private. As reported in yesterday's edition of the Troubled Company Reporter, The Wall Street Journal's Mike Spector and Ryan Dezember, citing a person familiar with the matter, said ATP Oil is negotiating a $600 million loan that would help keep the company running during bankruptcy proceedings. That source said ATP could file for bankruptcy protection in coming days. The source said ATP was in discussions with senior creditors Friday afternoon about the parameters of the financing and possible bankruptcy filing. Bloomberg News, citing two people familiar with the matter, reported late in July that bondholders are organizing for a potential restructuring. One of those sources, who declined to be identified because he's involved in the process, told Bloomberg that investors interviewed potential advisers. The process isn't public, he said. About ATP Oil Houston, Tex.-based ATP Oil & Gas Corporation is an international offshore oil and gas development and production company focused in the Gulf of Mexico, Mediterranean Sea and North Sea. The Company trades publicly as ATPG on the NASDAQ Global Select Market. The Company's balance sheet at March 31, 2012, showed $3.63 billion in total assets, $3.48 billion in total liabilities, $115.81 million in redeemable noncontrolling interest, $71.18 million in 8% convertible perpetual preferred stock, and a $34.44 million total shareholders' deficit. * * * As reported by the Troubled Company Reporter on Aug. 3, 2012, Standard & Poor's Ratings Services lowered its long-term corporate credit ratings on ATP to 'CCC' from 'CCC+' The outlook is negative. S&P raised its issue rating on the company's senior unsecured notes to 'CCC' from 'CCC-' (same as the corporate credit rating). "The downgrade reflects our expectation that ATP's liquidity is currently limited relative to projected fixed charges over the next three months," said Standard & Poor's credit analyst Christine Besset. "Because of various operational issues faced by the company, we believe that cash flow in second-quarter 2012 will be below our forecasts, leaving ATP with lower-than-expected liquidity at the end of the quarter. We estimate that current liquidity and operating cash flow over the next three months will be insufficient to cover capital expenditures (capex), royalty interest payments and November bond interests without a cut in capital spending or outside financing." "The recovery rating revision reflects a change in our valuation of the company's reserves," added Ms. Besset. "Given the heightened risk of a near-term default, we are now valuing the reserves using price assumptions which are close to the current price environment rather than the low commodity prices we generally assume for most E&P companies." "The negative outlook reflects the looming liquidity shortfall. We could take a negative rating action if the company is unable to secure additional funding this year or is unsuccessful in developing planned 2012 wells, jeopardizing its liquidity situation for 2013. We may revise the outlook to positive if ATP finds additional financing and increases production, cash flow, and liquidity to fund 2012 and 2013 fixed charges -- likely in conjunction with continued high commodity prices," S&P said. As reported by the TCR on May 9, 2012, Moody's Investors Service affirmed ATP's Caa2 Corporate Family Rating. The Caa2 Corporate Family Rating reflects ATP's small production and cash flow base, low drilling risk diversification, high proportion of proved undeveloped reserves and short PD (proved developed) reserve life, extremely high leverage and chronic liquidity challenges. B GREEN INNOVATIONS: Incurs $111,000 Net Loss in Second Quarter --------------------------------------------------------------- B Green Innovations, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $111,379 on $78,911 of net sales for the three months ended June 30, 2012, compared with a net loss of $55,062 on $65,733 of net sales for the same period during the prior year. The Company reported a net loss of $126,888 on $187,646 of net sales for the six months ended June 30, 2012, compared with a net loss of $182,971 on $107,354 of net sales for the same period a year ago. The Company's balance sheet at June 30, 2012, showed $304,020 in total assets, $1.22 million in total liabilities and a $916,558 total stockholders' deficit. As of June 30, 2012, the Company had a net operating loss, and negative working capital. Rosenberg, Rich, Baker, Berman and Company, in Somerset, New Jersey, issued a "going concern" qualification on the financial statements for the year ended Dec. 31, 2011, citing negative cash flow from operations and recurring net losses which raised substantial doubt about the Company's ability to continue as a going concern. A copy of the Form 10-Q is available for free at: http://is.gd/q0Ixyo About B Green Innovations Matawan, N.J.-based B Green Innovations, Inc. (OTC BB: BGNN) -- http://www.bgreeninnovations.com/-- is dedicated to becoming a "green" technology company, focused on acquiring and identifying promising technologies that address environmental issues. The first technology will be used to create new products from recycled tire rubber. B+H OCEAN: Taps More Fisher Brown as Special U.K. Counsel --------------------------------------------------------- BankruptcyData.com reports that B+H Ocean Carriers filed with the U.S. Bankruptcy Court a motion to retain More Fisher Brown (Contact: Simon Wolsey) as special United Kingdom counsel at these hourly rates: Position Rate --------- ---- Senior partner at GBP315 Junior partner 280 Assistant 200 to 275 Trainee solicitor 100 B+H Ocean Carriers Ltd. is an international ship-owning and operating company that owns, through subsidiaries, a fleet of four product-suitable Panamax combination carriers capable of transporting both wet and dry bulk cargoes, along with a 50% interest in an additional combination carrier. B+H Ocean Carriers and its subsidiaries filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 12-12356) on May 30, 2012. The Debtors disclosed total assets of $4.52 million and total debts of $46.09 million as of the Chapter 11 filing. John H. Hall, Jr., Esq., at Pryor & Mandelup, L.L.P., in New York, served as bankruptcy counsel for the Debtors. BEHRINGER HARVARD: Has OK to Use Cash Collateral Until Aug. 31 -------------------------------------------------------------- The Hon. Brenda T. Rhoades of the U.S. Bankruptcy Court for the Eastern District of Texas has granted Behringer Harvard Frisco Square LP and its affiliated debtors, BHFS I LLC, BHFS II LLC, BHFS III LLC, BHFS IV LLC, BHFS Theater LLC, interim permission to continue using through the end of August 2012, cash securing their obligations to their prepetition lenders. The Court will hold a final interim hearing on the cash collateral motion on Sept. 14, 2012, at 2:00 p.m. The Court has already signed three interim orders allowing the continued use of cash collateral postpetition. As reported by the Troubled Company Reporter on July 24, 2012, the Debtors said in court papers that, without an immediate ability to use cash collateral, they do not have other sufficient cash and funds to carry on the operation of their businesses, to pay employees, pay vendors and service providers, and to protect their property. Absent an immediate use of cash collateral, the Debtors said they will suffer immediate and irreparable injury. Four debtors -- BHFS I LLC, BHFS II LLC, BHFS III LLC, and BHFS IV LLC -- owed Bank of America, N.A., as agent for itself and for Regions Bank, $43.8 million under a syndicated loan. BofA and Regions Bank assert a first lien on the Four Debtors' assets. BHFS Theater owed Bank of America $4.6 million under a separate loan. BofA asserts a first lien on BHFS Theater's assets. BofA and Regions Bank, as lenders under the syndicated loan, assert a second lien on BHFS Theater's assets. A copy of the interim budget is available for free at: http://bankrupt.com/misc/BHFS_I_3interimbudget.pdf About BHFS Addison, Texas-based BHFS I LLC and its affiliates, owners of the Frisco Square master-planned development in the Dallas suburb of Frisco, filed for Chapter 11 protection (Bankr. E.D. Tex. Case No. 12-41581 to 12-41585) on June 13 in Sherman. The affiliates are Behringer Harvard Frisco Square LP, BHFS II LLC, BHFS III LLC, BHFS IV LLC, and BHFS Theater LLC. BHFS I and BHFS II each estimated assets and debts of $10 million to $50 million. In its schedules, BHFS I LLC disclosed $28,947,198 in total assets and $13,742,348 in total liabilities. The Debtors own and operate substantial office, retail, and residential rental space at the highly regarded project known as "Frisco Square," in Frisco, Texas. The project has 103,120 square feet of rentable office space in three buildings, 110,395 square feet of retail space in six buildings, including a 12-screen, 41,464 square-foot Cinemark theater, and 114 high-end multifamily rental units in two buildings, all built between 2000 and 2010. Occupancy rates are more than 85% for the office and retail space and almost 95% for multifamily space. Judge Brenda T. Rhoades presides over the case. Davor Rukavina, Esq., and Jonathan Lindley Howell, Esq., at Munsch Hardt Kopf & Harr, P.C., serve as the Debtors' counsel. The petition was signed by Michael J. O'Hanlon, president. George H. Barber, Esq., and David D. Ritter, Esq., at Kane Russell Coleman & Logan PC, represent Regions Bank. Bank of America, N.A., is represented by Keith M. Aurzada, Esq., and John Leininger at Bryan Cave. BEHRINGER HARVARD: Has Court OK to Hire Munsch Hardt as Attorneys ----------------------------------------------------------------- The Hon. Brenda T. Rhoades of the U.S. Bankruptcy Court for the Eastern District of Texas has granted BHFS I, LLC, et al., permission to employ Munsch Hardt Kopf & Harr, P.C., as their attorneys. As reported by the Troubled Company Reporter on July 4, 2012, Munsch Hardt will, among other things, serve as attorneys of record for the Debtors in all aspects, to include any adversary proceedings commenced in connection with the Bankruptcy Case and to provide representation and legal advice to the Debtors throughout the bankruptcy case. About BHFS Addison, Texas-based BHFS I LLC and its affiliates, owners of the Frisco Square master-planned development in the Dallas suburb of Frisco, filed for Chapter 11 protection (Bankr. E.D. Tex. Case No. 12-41581 to 12-41585) on June 13 in Sherman. The affiliates are Behringer Harvard Frisco Square LP, BHFS II LLC, BHFS III LLC, BHFS IV LLC, and BHFS Theater LLC. BHFS I and BHFS II each estimated assets and debts of $10 million to $50 million. In its schedules, BHFS I LLC disclosed $28,947,198 in total assets and $13,742,348 in total liabilities. The Debtors own and operate substantial office, retail, and residential rental space at the highly regarded project known as "Frisco Square," in Frisco, Texas. The project has 103,120 square feet of rentable office space in three buildings, 110,395 square feet of retail space in six buildings, including a 12-screen, 41,464 square-foot Cinemark theater, and 114 high-end multifamily rental units in two buildings, all built between 2000 and 2010. Occupancy rates are more than 85% for the office and retail space and almost 95% for multifamily space. Judge Brenda T. Rhoades presides over the case. The petition was signed by Michael J. O'Hanlon, president. George H. Barber, Esq., and David D. Ritter, Esq., at Kane Russell Coleman & Logan PC, represent Regions Bank. Bank of America, N.A., is represented by Keith M. Aurzada, Esq., and John Leininger at Bryan Cave. BEHRINGER HARVARD: Wants to Hire McRoberts for Appraisal Services ----------------------------------------------------------------- BHFS I, LLC, et al., seek permission from the Hon. Brenda T. Rhoades of the U.S. Bankruptcy Court for the Eastern District of Texas to employ McRoberts & Company of Texas, LP, as appraiser. The value of the Debtors' real property and improvements is disputed and is an important issue in many aspects of the bankruptcy case. Most urgently, said value is important to the Court's consideration of the Debtors' requested usage of cash collateral on a final basis, a hearing on which is presently set for Sept. 14, 2012. The Debtors' lender has retained its expert appraiser and, unless the Debtors and the Estates have an expert appraiser of their own, the Debtors, the Estates, and unsecured creditors could be severely prejudiced. Having an accurate and expert opinion on the value of the Debtors' property will enable the Debtors to move forwards towards a plan, and will provide important information to all creditors and parties-in-interest. McRoberts will: a. collect and analyze data related to the Debtors' real property and improvements; b. conduct onsite inspections of the property and comparable developments; c. appraise the property using accepted approaches to value; d. prepare a final appraisal report, estimate the market value of the property as of the date of inspection, in a form conforming to the requirements of the Standards of Professional Appraisal Practices as adopted by the Appraisal Foundation; and e. provide supporting analysis and expert testimony. McRoberts will be paid at these hourly rates: Andrew J. McRoberts, President $300 David A. Tarrant, Executive Vice President $200 Lauren Maggard, Associate $200 McRoberts will receive a retainer in the amount of $20,000. To the best of the Debtors' knowledge, McRoberts is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code. About BHFS Addison, Texas-based BHFS I LLC and its affiliates, owners of the Frisco Square master-planned development in the Dallas suburb of Frisco, filed for Chapter 11 protection (Bankr. E.D. Tex. Case No. 12-41581 to 12-41585) on June 13 in Sherman. The affiliates are Behringer Harvard Frisco Square LP, BHFS II LLC, BHFS III LLC, BHFS IV LLC, and BHFS Theater LLC. BHFS I and BHFS II each estimated assets and debts of $10 million to $50 million. In its schedules, BHFS I LLC disclosed $28,947,198 in total assets and $13,742,348 in total liabilities. The Debtors own and operate substantial office, retail, and residential rental space at the highly regarded project known as "Frisco Square," in Frisco, Texas. The project has 103,120 square feet of rentable office space in three buildings, 110,395 square feet of retail space in six buildings, including a 12-screen, 41,464 square-foot Cinemark theater, and 114 high-end multifamily rental units in two buildings, all built between 2000 and 2010. Occupancy rates are more than 85% for the office and retail space and almost 95% for multifamily space. Judge Brenda T. Rhoades presides over the case. Davor Rukavina, Esq., and Jonathan Lindley Howell, Esq., at Munsch Hardt Kopf & Harr, P.C., serve as the Debtors' counsel. The petition was signed by Michael J. O'Hanlon, president. George H. Barber, Esq., and David D. Ritter, Esq., at Kane Russell Coleman & Logan PC, represent Regions Bank. Bank of America, N.A., is represented by Keith M. Aurzada, Esq., and John Leininger at Bryan Cave. BELDEN INC: Moody's Assigns 'Ba2' Rating to Sub. Note Offering -------------------------------------------------------------- Moody's Investors Service assigned Ba2 ratings to Belden Inc.'s proposed subordinated note offering and revised the senior secured revolver rating to Baa2 from Baa1. The proposed notes will be used to refinance Belden's existing subordinated debt and for general corporate purposes. The downward revision in the $400 million secured revolver rating to Baa2 from Baa1 is due to the recent increase in secured debt raised to finance Belden's acquisition of Miranda Technologies Inc. The ratings outlook is stable. Ratings Rationale Belden is opportunistically refinancing its existing $200 million and $350 million senior subordinated notes due 2019 and 2017 respectively. Although the subordinated note issue will not impact leverage on its own, leverage increases modestly pro forma for the recently closed Miranda acquisition to approximately 3.5x from 2.8x. The Miranda acquisition was funded with an unrated C$250 million senior secured term loan and cash on hand. The ratings on the debt instruments were determined using Moody's Loss Given Default Methodology and based on the instruments relative positions in the capital structure. The Ba1 CFR continues to reflect Belden's leading positions within segments of the enterprise and industrial cabling and connectivity product markets, which allows the company to generate strong free cash flow from improving operating margins during a strong market. While, Moody's expects leverage to increase one or more turns during a down cycle, free cash flow levels should remain strong as the company frees up working capital. Moody's expectation that Belden will sustain sizeable cash and free cash flow from operations is critical to maintaining the Ba1 rating. Liquidity is very good supported by the company's cash position, undrawn $400 million revolver and Moody's expectations of over $140 million in free cash flow over the next year. The ratings could be raised if permanent debt levels are reduced while the company continues its operating improvements and demonstrates conservative approaches to financing acquisitions. However, the cyclical nature of Belden's business and its acquisition appetite limit upwards movement. The ratings could face a downgrade if leverage were expected to remain above 3.5x for an extended period. Issuer: Belden Inc. Downgrades: US$400M Senior Secured Bank Credit Facility, Downgraded to Baa2 from Baa1 US$400M Senior Secured Bank Credit Facility, Downgraded to LGD2, 13 % from LGD2, 10 % Assignments: US$550M Senior Subordinated Regular Bond/Debenture, Assigned Ba2 US$550M Senior Subordinated Regular Bond/Debenture, Assigned LGD4, 69 % The principal methodology used in rating Belden Inc. was the Global Manufacturing 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. Belden Inc. is a leading designer and manufacturer of connectivity and signal transmission products for the global network communication and specialty electronic marketplaces with LTM July 2012 revenues of approximately $1.9 billion. The company is headquartered in St. Louis, Missouri. BELDEN INC: S&P Rates Proposed $550MM Sr. Subordinated Notes 'B+' ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' issue-level ratings to Belden Inc.'s proposed $550 million senior subordinated notes due 2022. "We also assigned a '6' recovery rating to this debt, indicating our expectation for negligible (0%-10%) recovery for lenders in the event of a payment default. The company intends to use the proceeds from the new debt to repurchase its existing callable $350 million senior subordinated notes due 2017 in their entirety, and to make a tender offer for its existing $200 million senior subordinated notes due 2019. The issue-level and recovery ratings on the company's senior secured revolving credit facility remain unchanged. The 'BB' corporate credit rating and outlook are unchanged as well," S&P said. "We have increased our estimated default-level enterprise valuation on the company. The higher enterprise valuation reflects continuing and sustained improvement in profitability, and the additional scale and enterprise value from acquisitions made since our last analysis. We have also updated our recovery analysis to include the new unrated 250 million Canadian dollar term loan A that was borrowed to complete the Miranda Technologies Inc. acquisition," S&P said. "The ratings on Belden reflect the company's participation in the highly competitive and cyclical cable, connectivity, and networking product markets; its exposure to volatile raw material pricing and foreign currency rates; and a 'significant' financial profile. Belden's diversification into higher margin value-added specialty products and expansion of its vertical markets served, along with 'adequate' liquidity (as defined in our criteria) and good cash flow characteristics, partly offset these risks. Last 12 months ended June 30, 2012 leverage pro forma for the recent Miranda acquisition was just over 3x. We expect leverage to gradually decline over the next year through modest revenue growth and continued incremental improvement in EBITDA margins," S&P said. RATINGS LIST Belden Inc. Corporate Credit Rating BB/Stable/-- New Ratings Belden Inc. Subordinated $550 mil. nts due 2022 B+ Recovery Rating 6 BERNARD L. MADOFF: Victims Appeal for Right to Sue Picower Estate ----------------------------------------------------------------- Richard Vanderford at Bankruptcy Law360 reports that victims of Bernard Madoff's Ponzi scheme on Friday filed an appeal against a decision that stops them from pursuing a securities class action against the so-called Picower estate, which already made a $7.2 billion deal with the Madoff trustee. According to Bankruptcy Law360, A&G Goldman Partnership and Pamela Goldman filed notice with the Manhattan federal court that they would appeal a decision from a bankruptcy court that prevented them from suing the estate of Jeffrey Picower, a Madoff customer who ended up a net-winner through the Ponzi scheme. 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. BINGO.COM LTD: Restates Form 10-K for FY Ended Dec. 31, 2011 ------------------------------------------------------------ Bingo.com, Ltd., has filed Amendment No. 1 on Form 10-K/A to amend our Annual Report on Form 10-K/A for the fiscal year ended Dec. 31, 2011, which was originally filed with the US Securities and Exchange commission on March 30, 2012. The following sections of the Original Filing have been revised: -- The Consolidated balance sheet -- This has been amended for the years ended Dec. 31, 2011, and 2010, to expense the purchase of the remaining 4% Domain Name Purchase payments for $900,000, in accordance with ASC Topic 420-10-25-11. This had the effect to reduce the intangible asset and to increase the retained deficit by $900,000 for the years ended Dec. 31, 2011, and 2010. -- The Consolidated Statement of Operations -- This has been amended as follows: * For the year ended Dec. 31, 2010, to expense the purchase of the remaining 4% Domain Name Purchase payments for $900,000, in accordance with ASC Topic 420-10-25-11. * For the year ended Dec. 31, 2010, the profit from the reversal of progressive jackpots was amended to adjust the opening retained deficit in accordance with ASU 2010-16. -- The Consolidated Statement of Stockholders' Equity -- This has been amended as follows: * For the year ended Dec. 31, 2010, the Consolidated Statement of Stockholders' Equity was amended to include the provision for progressive jackpots balance in the opening retained deficit in accordance with ASU 2010-16. * The retained deficit for the years ended Dec. 31, 2011, and 2010, was amended to expense the purchase of the remaining 4% Domain Name Purchase payments for $900,000,in accordance with ASC Topic 420-10-25-11. -- The Consolidated Statement of Cash flows -- This has been amended as follows: * For the year ended Dec. 31, 2010, to expense the purchase of the remaining 4% Domain Name Purchase payments for $900,000, in accordance with ASC Topic 420-10-25-11. The Company reported a net loss of $689,016 for 2011, compared to a net loss $1.97 million for 2010. The decrease in net loss, compared to the prior year, is due to the Company expensing the Domain Name Purchase payments of $900,000 during the year ended Dec. 31, 2010. In addition, the net loss decreased due to the reduction in expenses as a result of migrating to the Unibet's Partner platform during fiscal 2010. Total revenue decreased to $1.42 million for 2011, a decrease of 22% over revenue of $1.82 million for 2010. Gaming revenue decreased to $1.35 million for 2011, a decrease of 21% over gaming revenue of $1.72 million for 2010. This decrease compared to the prior year is due to a change in strategy and the resulting migration during the second quarter of fiscal 2010 of the Company's players to the Unibet Partner Program. Advertising Revenue decreased to $66,705 for 2011, a decrease of 32% over revenue of $98,547 for the same period in the prior year. During the first quarter of fiscal 2010 the Company suspended sales of new advertising. The Company's restated balance sheet at Dec. 31, 2011, showed $2.44 million in total assets, $96,291 in total liabilities, and stockholders' equity of $2.34 million. A copy of the Form 10-K/A is available for free at: http://is.gd/XGQpMw About Bingo.com Based in The Valley, Anguilla, B.W.I., Bingo.com, Ltd. is in the business of owning and marketing a bingo based entertainment website that provides a variety of Internet games plus other forms of entertainment, including an online community, chat rooms, and more. * * * Davidson & Company LLP's report on the Company's consolidated financial statements for the years ended Dec. 31, 2011, and 2010, dated July 30, 2012, included an explanatory paragraph stating that the Company's negative cash flows from operating activities during the past year and accumulated deficit of $15.92 million as of Dec. 31, 2011, raise substantial doubt about the Company's ability to continue as a going concern. BROWNIE'S WASTEWATER: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: Brownie's Wastewater Solutions, Inc. aka B&P Environmental Services, LLC 11372 United Way Orlando, FL 32824 Bankruptcy Case No.: 12-10993 Chapter 11 Petition Date: August 13, 2012 Court: U.S. Bankruptcy Court Middle District of Florida (Orlando) Debtor's Counsel: Paul DeCailly, Esq. DECAILLY LAW GROUP, P.A. 19455 Gulf Boulevard, Suite 8 Indian Shores, FL 33785 Tel: (727) 824-7709 Fax: (866) 906-5977 E-mail: pdecailly@dlg4me.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Michael Ciarlone, president. Affiliate that filed separate Chapter 11 petition: Entity Case No. Petition Date ------ -------- ------------- Freedom Environmental Services, Inc. 12-10958 08/13/12 CANO PETROLEUM: Finishes Chapter 11 Plan, Sale to NBI Services -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Cano Petroleum Inc., an independent oil and gas development and production company, implemented a Chapter 11 reorganization plan on Aug. 2 that the U.S. Bankruptcy Court in Dallas approved with a July 16 confirmation order. According to the report, the plan transfers ownership of the company for $47.5 million to closely owned NBI Services Inc. The sale was worked out before the Chapter 11 filing in March. There were no competing offers, so an auction in June was canceled. The report relates the sale and the plan were supported by the senior and junior secured lenders. Given that unsecured creditors voted in favor of the plan, both lender groups waived their deficiency claims because the sale price was less than the senior debt. According to the court-approved disclosure statement, unsecured creditors with claims of as much as $5 million could expect to receive between 4% and 14%. The payment on unsecured claims was the result of a so-called gift from secured lenders. Royalty claims were paid in full, according to the report. About Cano Petroleum Cano Petroleum, Inc. (NYSE Amex: CFW), an independent Texas- based energy producer with properties in the mid-continent region of the United States, filed for Chapter 11 bankruptcy (Bank. N.D. Tex. Lead Case No. 12-31549) on March 7, 2012. Other affiliates also sought bankruptcy protection: Cano Petro of New Mexico, Ladder Companies, Inc., Square One Energy, Inc., Tri-Flow, Inc., W.O. Energy of Nevada, Inc., W.O. Operating Company, Ltd., W.O. Production Company, Ltd., and WO Energy, Inc. The cases are jointly administered. The Debtors filed for bankruptcy to pursue a sale under a joint plan of reorganization filed on the petition date. Cano Petroleum have entered into a Stalking Horse Stock Purchase Agreement with NBI Services Inc., pursuant to which NBI would purchase all of the shares of common stock that would be issued by Reorganized Cano under the Plan for $47.5 million. The deal is subject to higher and better offers and a possible auction. The petitions were filed by James R. Latimer, III, chief executive officer. Judge Barbara J. Houser oversees the case. The Debtors are represented by lawyers at Thompson & Knight LLP, in Dallas Texas. Cano Petroleum's consolidated balance sheet at Sept. 30, 2011, showed $63.37 million in total assets, $116.25 million in total liabilities, and a $52.88 million total stockholders' deficit. In schedules filed with the Court, Cano Petroleum disclosed $1.16 million in assets and $82.5 million in liabilities. Union Bank of California, the administrative agent and issuing lender under the Debtors' prepetition senior credit facility; and UnionBanCal Equities, Inc., the administrative agent and issuing lender, under the junior credit facility, are represented by: William A. "Trey" Wood III, Esq., at Bracewell & Giuliani LLP. The Office of the U.S. Trustee has not appointed an official committee of unsecured creditors in the case. The Bankruptcy Court entered an order approving and confirming the Second Amended Joint Plan of Reorganization of Cano Petroleum, Inc., and its subsidiaries and approving the Stock Purchase Agreement, dated as of March 7, 2012, by and among NBI Services, Inc., and the Debtors, and authorizing the consummation of the transaction contemplated thereby. CAPITOL BANCORP: Files Schedules of Assets and Liabilities ---------------------------------------------------------- Capitol Bancorp Ltd. filed with the Bankruptcy Court its schedules of assets and liabilities, disclosing: Name of Schedule Total Assets Total Liabilities ---------------- ------------ ----------------- A -- Real Property $0 B -- Personal Property $112,634,112 C -- Property Claimed as Exempt D -- Creditors Holding Secured Claims $0 E -- Creditors Holding Unsecured Priority Claims $181,359 F -- Creditors Holding Unsecured Nonpriority Claims $195,463,167 ------------ ----------------- Total $112,634,112 $195,644,527 About Capitol Bancorp Capitol Bancorp Ltd. and Financial Commerce Corporation filed voluntary Chapter 11 bankruptcy petitions (Bankr. E.D. Mich. Case Nos. 12-58409 and 12-58406) on Aug. 9, 2012. Capitol Bancorp -- http://www.capitolbancorp.com/-- is a community banking company with a network of individual banks and bank operations in 10 states and total consolidated assets of roughly $2.0 billion as of June 30, 2012. Financial Commerce, formerly known as Michigan Commerce Bancorp Limited, is a Michigan corporation. CBC owns roughly 97% of FCC, with a number of CBC affiliates owning the remainder. FCC, in turn, is the holding company for five of the banks in CBC's network. CBC is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended, 12 U.S.C. Sec. 1841, et seq., and trades on the OTCQB under the symbol "CBCR." CBC's banks are community banks, relatively small in market size, emphasizing personalized banking relationships. The banks are located in Arizona, Georgia, Indiana, Michigan, Missouri, Nevada, New Mexico, North Carolina, Ohio and Oregon. CBC's consolidated financial position was significantly adversely affected by large operating losses in 2011, 2010 and 2009. Those operating losses resulted in an equity deficit and a regulatory-capital classification as "undercapitalized" or "significantly undercapitalized" as of Dec. 31, 2011. Dual-Track Restructuring In 2009, CBC entered into a written agreement with the Federal Reserve Bank of Chicago, its primary federal regulator, which required CBC to improve operating results and its overall condition. As part of its capital strategies and restructuring actions, CBC divested some of its banks as a means of raising additional capital and redeploying resources to its remaining banks. As of the end of 2011, CBC had divested 21 banks and one branch. In 2012, CBC has divested or entered into contracts to divest another four banks. On June 22, 2012, CBC commenced a voluntary restructuring plan designed to facilitate converting existing debt to equity, preserve CBC's substantial deferred tax assets and facilitate new equity investments in CBC, which new equity would be used to strengthen the bank subsidiaries. The restructuring plan was pursued on two simultaneous tracks: (a) an out-of-court restructuring and capital raise consisting of an exchange of its outstanding senior unsecured notes and trust preferred securities, with the simultaneous infusion of capital from outside investors; or (b) if the conditions to the out-of-court restructuring are not satisfied, an in-court financial restructuring through a Prepackaged Joint Plan of Reorganization, with the simultaneous infusion of capital from outside investors. On June 22, 2012, a Confidential Out-of-Court Exchange Offering Memorandum and Solicitation of Consents and Disclosure Statement and Solicitation of Votes Related to the Prepackaged Joint Plan of Reorganization, was served on all of the Debtors' creditors and equity security holders. The Exchange Offers were open until July 27, which was also the deadline for voting on the Standby Plan. On July 6, 2012, the Debtors, to better protect CBC's deferred tax attributes in connection with the restructuring, modified certain terms of the stock to be issued to Class 2 under the Standby Plan by supplementing the Offering Memorandum. Because CBC did not reach the requisite threshold to complete the Exchange Offers but did receive the requisite acceptances of the Plan, CBC commenced the Chapter 11 cases to consummate the Debtors' restructuring pursuant to confirmation of the Plan. Bankruptcy Judge Walter Shapero presides over the case. Lawyers at Honigman Miller Schwartz and Cohn LLP represent the Debtors as counsel. The petitions were signed by Cristin K. Reid, corporate president. CAPITOL BANCORP: Wants to Hire Honigman as Bankruptcy Counsel ------------------------------------------------------------- Capitol Bancorp Ltd. and Financial Commerce Corporation filed papers seeking formal approval of Honigman Miller Schwartz and Cohn LLP as their general bankruptcy counsel. Honigman has represented the Debtors as their primary outside counsel since 2008 and has served as the Debtors' counsel, for among other things, drafting and preparing the Debtors' proposed Exchange Offers, Offering Memoranda, the Standby Plan and the Amended Standby Plan, as well as the preparation for the Chapter 11 cases. To the best of Debtors' knowledge, Honigman does not have any connection with the Debtors, their creditors, or any other party in interest, or their attorneys. About Capitol Bancorp Capitol Bancorp Ltd. and Financial Commerce Corporation filed voluntary Chapter 11 bankruptcy petitions (Bankr. E.D. Mich. Case Nos. 12-58409 and 12-58406) on Aug. 9, 2012. Capitol Bancorp -- http://www.capitolbancorp.com/-- is a community banking company with a network of individual banks and bank operations in 10 states and total consolidated assets of roughly $2.0 billion as of June 30, 2012. Financial Commerce, formerly known as Michigan Commerce Bancorp Limited, is a Michigan corporation. CBC owns roughly 97% of FCC, with a number of CBC affiliates owning the remainder. FCC, in turn, is the holding company for five of the banks in CBC's network. CBC is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended, 12 U.S.C. Sec. 1841, et seq., and trades on the OTCQB under the symbol "CBCR." CBC's banks are community banks, relatively small in market size, emphasizing personalized banking relationships. The banks are located in Arizona, Georgia, Indiana, Michigan, Missouri, Nevada, New Mexico, North Carolina, Ohio and Oregon. CBC's consolidated financial position was significantly adversely affected by large operating losses in 2011, 2010 and 2009. Those operating losses resulted in an equity deficit and a regulatory-capital classification as "undercapitalized" or "significantly undercapitalized" as of Dec. 31, 2011. Dual-Track Restructuring In 2009, CBC entered into a written agreement with the Federal Reserve Bank of Chicago, its primary federal regulator, which required CBC to improve operating results and its overall condition. As part of its capital strategies and restructuring actions, CBC divested some of its banks as a means of raising additional capital and redeploying resources to its remaining banks. As of the end of 2011, CBC had divested 21 banks and one branch. In 2012, CBC has divested or entered into contracts to divest another four banks. On June 22, 2012, CBC commenced a voluntary restructuring plan designed to facilitate converting existing debt to equity, preserve CBC's substantial deferred tax assets and facilitate new equity investments in CBC, which new equity would be used to strengthen the bank subsidiaries. The restructuring plan was pursued on two simultaneous tracks: (a) an out-of-court restructuring and capital raise consisting of an exchange of its outstanding senior unsecured notes and trust preferred securities, with the simultaneous infusion of capital from outside investors; or (b) if the conditions to the out-of-court restructuring are not satisfied, an in-court financial restructuring through a Prepackaged Joint Plan of Reorganization, with the simultaneous infusion of capital from outside investors. On June 22, 2012, a Confidential Out-of-Court Exchange Offering Memorandum and Solicitation of Consents and Disclosure Statement and Solicitation of Votes Related to the Prepackaged Joint Plan of Reorganization, was served on all of the Debtors' creditors and equity security holders. The Exchange Offers were open until July 27, which was also the deadline for voting on the Standby Plan. On July 6, 2012, the Debtors, to better protect CBC's deferred tax attributes in connection with the restructuring, modified certain terms of the stock to be issued to Class 2 under the Standby Plan by supplementing the Offering Memorandum. Because CBC did not reach the requisite threshold to complete the Exchange Offers but did receive the requisite acceptances of the Plan, CBC commenced the Chapter 11 cases to consummate the Debtors' restructuring pursuant to confirmation of the Plan. Bankruptcy Judge Walter Shapero presides over the case. Lawyers at Honigman Miller Schwartz and Cohn LLP represent the Debtors as counsel. In its petition, Capitol Bancorp scheduled $112,634,112 in total assets and $195,644,527 in total liabilities. The petitions were signed by Cristin K. Reid, corporate president. CAPITOL BANCORP: Hiring Kurtzman as Noticing & Balloting Agent -------------------------------------------------------------- Capitol Bancorp Ltd. and Financial Commerce Corporation seek Bankruptcy Court permission to employ Kurtzman Carson Consultants LLC as noticing and balloting agent. The Debtors said they have identified hundreds of entities or persons to which notice must be given for various purposes, making utilization of an outside noticing agent appropriate in these cases. Preparing and serving the notices on all such creditors and parties in interest would impose a significant administrative burden on the Debtors' estates. The Debtors said their engagement of an independent third party is the most effective and efficient manner by which to perform, among other things, the tasks of (i) transmitting certain notices to creditors and parties in interest in these cases, (ii) overseeing the administration of solicitation material, (iii) receiving, reviewing and tabulating ballots, and (v) performing other administrative tasks such as maintaining creditor lists and mailing addresses. The Debtors propose to retain KCC pursuant to the parties' Engagement Agreement. Notwithstanding, to the extent that KCC's out-of-pocket costs and expenses relating to the Chapter 11 cases are expected to exceed $10,000 in any single month, the Debtors may compensate KCC in advance for such costs and expenses. Albert Kass, Vice President of Corporate Restructuring Services of Kurtzman Carson Consultants LLC, attests that the officers and employees of KCC (a) do not have any material adverse connection with the Debtors, the Debtors' creditors or any other party in interest or their attorneys and accountants, the United States Trustee or any person employed in the office of the United States Trustee; and (b) do not hold or represent an interest materially adverse to the Debtors' estates. In addition, KCC is a "disinterested person" as that term is defined in section 101(14) of the Bankruptcy Code, as modified by section 1107(b) of the Bankruptcy Code. About Capitol Bancorp Capitol Bancorp Ltd. and Financial Commerce Corporation filed voluntary Chapter 11 bankruptcy petitions (Bankr. E.D. Mich. Case Nos. 12-58409 and 12-58406) on Aug. 9, 2012. Capitol Bancorp -- http://www.capitolbancorp.com/-- is a community banking company with a network of individual banks and bank operations in 10 states and total consolidated assets of roughly $2.0 billion as of June 30, 2012. Financial Commerce, formerly known as Michigan Commerce Bancorp Limited, is a Michigan corporation. CBC owns roughly 97% of FCC, with a number of CBC affiliates owning the remainder. FCC, in turn, is the holding company for five of the banks in CBC's network. CBC is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended, 12 U.S.C. Sec. 1841, et seq., and trades on the OTCQB under the symbol "CBCR." CBC's banks are community banks, relatively small in market size, emphasizing personalized banking relationships. The banks are located in Arizona, Georgia, Indiana, Michigan, Missouri, Nevada, New Mexico, North Carolina, Ohio and Oregon. CBC's consolidated financial position was significantly adversely affected by large operating losses in 2011, 2010 and 2009. Those operating losses resulted in an equity deficit and a regulatory-capital classification as "undercapitalized" or "significantly undercapitalized" as of Dec. 31, 2011. Dual-Track Restructuring In 2009, CBC entered into a written agreement with the Federal Reserve Bank of Chicago, its primary federal regulator, which required CBC to improve operating results and its overall condition. As part of its capital strategies and restructuring actions, CBC divested some of its banks as a means of raising additional capital and redeploying resources to its remaining banks. As of the end of 2011, CBC had divested 21 banks and one branch. In 2012, CBC has divested or entered into contracts to divest another four banks. On June 22, 2012, CBC commenced a voluntary restructuring plan designed to facilitate converting existing debt to equity, preserve CBC's substantial deferred tax assets and facilitate new equity investments in CBC, which new equity would be used to strengthen the bank subsidiaries. The restructuring plan was pursued on two simultaneous tracks: (a) an out-of-court restructuring and capital raise consisting of an exchange of its outstanding senior unsecured notes and trust preferred securities, with the simultaneous infusion of capital from outside investors; or (b) if the conditions to the out-of-court restructuring are not satisfied, an in-court financial restructuring through a Prepackaged Joint Plan of Reorganization, with the simultaneous infusion of capital from outside investors. On June 22, 2012, a Confidential Out-of-Court Exchange Offering Memorandum and Solicitation of Consents and Disclosure Statement and Solicitation of Votes Related to the Prepackaged Joint Plan of Reorganization, was served on all of the Debtors' creditors and equity security holders. The Exchange Offers were open until July 27, which was also the deadline for voting on the Standby Plan. On July 6, 2012, the Debtors, to better protect CBC's deferred tax attributes in connection with the restructuring, modified certain terms of the stock to be issued to Class 2 under the Standby Plan by supplementing the Offering Memorandum. Because CBC did not reach the requisite threshold to complete the Exchange Offers but did receive the requisite acceptances of the Plan, CBC commenced the Chapter 11 cases to consummate the Debtors' restructuring pursuant to confirmation of the Plan. Bankruptcy Judge Walter Shapero presides over the case. Lawyers at Honigman Miller Schwartz and Cohn LLP represent the Debtors as counsel. In its petition, Capitol Bancorp scheduled $112,634,112 in total assets and $195,644,527 in total liabilities. The petitions were signed by Cristin K. Reid, corporate president. CAPITOL BANCORP: Wants 341 Meeting, Committee Appointment Deferred ------------------------------------------------------------------ Capitol Bancorp Ltd. and Financial Commerce Corporation ask the Bankruptcy Court for an Order Directing that the U.S. Trustee Defer the Meeting of Creditors Pursuant to 11 U.S.C. Sec. 341(e) and the Appointment of Any Statutory Committee Pursuant to 11 U.S.C. Sec. 1102 until at least 60 days after the Petition Date. If the Plan is confirmed in that 60-day period, the 341 Meeting and the appointment of a committee of creditors will be unnecessary. If the Plan is not confirmed within that time, the 341 Meeting may be held and the committee of creditors may be formed. Section 341(a) of the Bankruptcy Code requires the U.S. Trustee to convene and preside at a meeting of creditors. Section 341(b) authorizes the U.S. Trustee to convene a meeting of equity security holders. Section 341(e), however, provides the following exception: "[n]otwithstanding subsections (a) and (b), the court, on the request of a party in interest and after notice and a hearing, for cause may order that the United States Trustee not convene a meeting of creditors or equity security holders if the debtor has filed a plan as to which the debtor solicited acceptances prior to the commencement of the case." The purpose of a 341 Meeting is to provide parties-in-interest with an opportunity to examine and obtain information about the debtor. However, the Debtors solicited voting and obtained the requisite acceptances of the Plan prior to the Petition Date. Because the Plan has been overwhelmingly accepted by those classes of creditors and equity security holders that are impaired and entitled to vote on the Plan, the Debtors anticipate a brief stay and prompt emergence from these Chapter 11 cases. Furthermore, the Plan provides that general unsecured creditors are unimpaired and will be paid in full. Accordingly, the Debtors submit that ample cause exists for the Court to direct that the U.S. Trustee defer the meeting of creditors and equity security holders, unless the Plan is not confirmed within 60 days after the Petition Date. About Capitol Bancorp Capitol Bancorp Ltd. and Financial Commerce Corporation filed voluntary Chapter 11 bankruptcy petitions (Bankr. E.D. Mich. Case Nos. 12-58409 and 12-58406) on Aug. 9, 2012. Capitol Bancorp -- http://www.capitolbancorp.com/-- is a community banking company with a network of individual banks and bank operations in 10 states and total consolidated assets of roughly $2.0 billion as of June 30, 2012. Financial Commerce, formerly known as Michigan Commerce Bancorp Limited, is a Michigan corporation. CBC owns roughly 97% of FCC, with a number of CBC affiliates owning the remainder. FCC, in turn, is the holding company for five of the banks in CBC's network. CBC is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended, 12 U.S.C. Sec. 1841, et seq., and trades on the OTCQB under the symbol "CBCR." CBC's banks are community banks, relatively small in market size, emphasizing personalized banking relationships. The banks are located in Arizona, Georgia, Indiana, Michigan, Missouri, Nevada, New Mexico, North Carolina, Ohio and Oregon. CBC's consolidated financial position was significantly adversely affected by large operating losses in 2011, 2010 and 2009. Those operating losses resulted in an equity deficit and a regulatory-capital classification as "undercapitalized" or "significantly undercapitalized" as of Dec. 31, 2011. Dual-Track Restructuring In 2009, CBC entered into a written agreement with the Federal Reserve Bank of Chicago, its primary federal regulator, which required CBC to improve operating results and its overall condition. As part of its capital strategies and restructuring actions, CBC divested some of its banks as a means of raising additional capital and redeploying resources to its remaining banks. As of the end of 2011, CBC had divested 21 banks and one branch. In 2012, CBC has divested or entered into contracts to divest another four banks. On June 22, 2012, CBC commenced a voluntary restructuring plan designed to facilitate converting existing debt to equity, preserve CBC's substantial deferred tax assets and facilitate new equity investments in CBC, which new equity would be used to strengthen the bank subsidiaries. The restructuring plan was pursued on two simultaneous tracks: (a) an out-of-court restructuring and capital raise consisting of an exchange of its outstanding senior unsecured notes and trust preferred securities, with the simultaneous infusion of capital from outside investors; or (b) if the conditions to the out-of-court restructuring are not satisfied, an in-court financial restructuring through a Prepackaged Joint Plan of Reorganization, with the simultaneous infusion of capital from outside investors. On June 22, 2012, a Confidential Out-of-Court Exchange Offering Memorandum and Solicitation of Consents and Disclosure Statement and Solicitation of Votes Related to the Prepackaged Joint Plan of Reorganization, was served on all of the Debtors' creditors and equity security holders. The Exchange Offers were open until July 27, which was also the deadline for voting on the Standby Plan. On July 6, 2012, the Debtors, to better protect CBC's deferred tax attributes in connection with the restructuring, modified certain terms of the stock to be issued to Class 2 under the Standby Plan by supplementing the Offering Memorandum. Because CBC did not reach the requisite threshold to complete the Exchange Offers but did receive the requisite acceptances of the Plan, CBC commenced the Chapter 11 cases to consummate the Debtors' restructuring pursuant to confirmation of the Plan. Bankruptcy Judge Walter Shapero presides over the case. Lawyers at Honigman Miller Schwartz and Cohn LLP represent the Debtors as counsel. In its petition, Capitol Bancorp scheduled $112,634,112 in total assets and $195,644,527 in total liabilities. The petitions were signed by Cristin K. Reid, corporate president. CASCADE AG: Pleasant Valley Farms in Chapter 11 ----------------------------------------------- Cascade Ag Services, Inc., operator of the Pleasant Valley Farms in Mount Vernon, Washington, filed a Chapter 11 petition (Bankr. D. Wash. Case No. 12-18366) in Seattle on Aug. 13. The Debtor disclosed $23.6 million in assets and $22.26 million in liabilities in its schedules. The Debtor says real property is only worth $2.23 million, but it has $1.32 million in current receivables, $12.8 million of machinery and equipment, $6 million of tanked inventory. Secured debt is only $7.74 million. According to the statement of financial affairs, the business generated income of $13.7 million in 2011, and $11.7 million in 2010. A copy of the schedules filed with the petition is available at: http://bankrupt.com/misc/wawb12-18366.pdf CASCADE AG: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Cascade Ag Services, Inc. dba Pleasant Valley Farms fdba Mountain View Produce, Inc. Staffanson Harvesting LLC Sterling Investment Group, L.L.C. 13459 Dodge Valley Road Mount Vernon, WA 98273 Bankruptcy Case No.: 12-18366 Chapter 11 Petition Date: August 13, 2012 Court: U.S. Bankruptcy Court Western District of Washington (Seattle) Judge: Karen A. Overstreet Debtor's Counsel: John R. Rizzardi, Esq. CAIRNCROSS & HEMPELMANN PS 524 2nd Avenue, Suite 500 Seattle, WA 98104-2323 Tel: (206) 254-4444 E-mail: jrizzardi@cairncross.com Scheduled Assets: $25,820,499 Scheduled Liabilities: $22,255,482 The petition was signed by Craig Staffanson, president. Debtor's List of Its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Hughes Farm Grower Payable $2,043,853 13255 Farm to Market Road Mount Vernon, WA 98273 Farms Northwest-C. Johnson Grower Payable $520,674 16918 Best Road Mount Vernon, WA 98273 TricorBraun Trade Debt $350,109 P.O. Box 60000 San Francisco, CA 94160 Main Ingredient Trade Debt $319,000 Creative Center LLC Publishers of Main Ingredient 8565 SW Salish Lane, Suite 135 Wilsonville, OR 97070 Susan Esola Note Payable $287,206 18502 Valentine Road Mount Vernon, WA 98273 Letica Corporation Trade Debt $243,482 Lee Farms Grower Payable $232,219 Encore Sales & Marketing Trade Debt $204,704 Elmer & Mabel Martin Note Payable $200,000 Martin Investment LLC Note Payable $200,000 Pacific Trails Logistics Note Payable $200,000 Norton Packaging, Inc. Trade Debt $190,533 Moss Adams, LLP Note Payable $180,000 Uni Pro Food Service, Inc. Trade Debt $159,913 John Rose Note Payable $150,000 Skagit Farmers Supply Trade Debt $140,340 Evelyn Youngquist Note Payable $125,000 Curtis Johnson Note Payable $123,870 American West Environmental Trade Debt $122,505 John Roozen Note Payable $119,000 CATASYS INC: May Issue up to 500 Million Common Shares ------------------------------------------------------ Catasys, Inc., filed a certificate of amendment of its certificate of incorporation with the Secretary of State of the State of Delaware providing for the reduction in the number of shares of common stock, par value $0.0001 per share, that the Company is authorized to issue, from 2,000,000,000 shares to 500,000,000 shares, effective immediately. The number of issued and outstanding shares of Common Stock was not impacted by the Certificate of Amendment. About Hythiam, Inc. Based in Los Angeles, California, Hythiam, Inc., n/k/a Catasys, Inc., is a healthcare services management company, providing through its Catasys(R) subsidiary specialized behavioral health management services for substance abuse to health plans. In its auditors' report accompanying the consolidated financial statements for the year ended Dec. 31, 2011, Rose, Snyder & Jacobs LLP, in Encino, California, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred significant operating losses and negative cash flows from operations during the year ended Dec. 31, 2011. The Company reported a net loss of $8.12 million in 2011, compared with a net loss of $19.99 million in 2010. The Company's balance sheet at March 31, 2012, showed $2.63 million in total assets, $9.57 million in total liabilities, and a $6.93 million total stockholders' deficit. Bankruptcy Warning As of March 28, 2012, the Company had a balance of approximately $95,000 cash on hand. The Company had working capital deficit of approximately $2.2 million at Dec. 31, 2011, and has continued to deplete its cash position subsequent to Dec. 31, 2011. The Company has incurred significant net losses and negative operating cash flows since its inception. The Company could continue to incur negative cash flows and net losses for the next twelve months. The Company's current cash burn rate is approximately $450,000 per month, excluding non-current accrued liability payments. The Company expects its current cash resources to cover expenses into April 2012, however delays in cash collections, revenue, or unforeseen expenditures could impact this estimate. The Company will need to immediately obtain additional capital and there is no assurance that additional capital can be raised in an amount which is sufficient for the Company or on terms favorable to its stockholders, if at all. If the Company does not immediately obtain additional capital, there is a significant doubt as to whether it can continue to operate as a going concern and the Company will need to curtail or cease operations or seek bankruptcy relief. CIRCLE ENTERTAINMENT: Six Directors Elected at Annual Meeting -------------------------------------------------------------- Circle Entertainment Inc. held its 2012 annual meeting of stockholders on Aug. 7, 2012, at which the stockholders (i) elected six directors to serve on the Company's Board of Directors until the next annual meeting of stockholders and until their respective successors are duly elected and qualified, namely: (1) Robert F.X. Sillerman; (2) Paul C. Kanavos; (3) David M. Ledy; (4) Michael J. Meyer; (5) Harvey Silverman; and (6) Robert Sudack. The stockholders also ratified the appointment of L.L. Bradford & Company, LLC, as the Company's independent registered public accounting firm for the fiscal year ending Dec. 31, 2012. About Cirle Entertainment New York City-based Circle Entertainment Inc. has been pursuing the development and commercialization of its new location-based entertainment line of business since Sept. 10, 2010, which has and will continue to require significant capital and financing. The Company does not currently generate any revenues from this new line of business. The Company has no long-term financing in place or commitments for such financing to develop and commercialize its new location-based entertainment line of business. As reported in the TCR on March 30, 2012, L.L. Bradford & Company, LLC, in Las Vegas, Nevada, expressed substantial doubt about Circle Entertainment'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 limited available cash, has a working capital deficiency and will need to secure new financing or additional capital in order to pay its obligations. The Company's balance sheet at June 30, 2012, showed $7 million in total assets, $16.50 million in total liabilities and a $9.50 million total stockholders' deficit. CIRCUS AND ELDORADO: Committee Taps XRoads as Financial Advisor --------------------------------------------------------------- The Official Committee of Unsecured Creditors in the Circus And Eldorado Joint Venture, et al. bankruptcy case seeks permission from the U.S. Bankruptcy Court for the District of Nevada to retain XRoads Solutions Group, LLC, as its financial advisor nunc pro tunc to Aug. 6, 2012. XRoads will: i. assist and advise the Committee and its counsel in preparation for and participation in the upcoming confirmation hearing concerning the joint plan of reorganization; ii. advise the Committee and the Committee's counsel regarding financial, strategic and business issues concerning the Debtors and their Chapter 11 cases; iii. participate and advise the Committee in negotiations with the Debtors and other parties-in-interest; and iv. provide other ancillary financial advisory services in connection with these matters as the Committee or its counsel may from time to time reasonably request and which are customarily provided by financial advisors in similar situations. XRoads will be compensated at these hourly rates: Managing Principal/Principal(s) $595-$695 Managing Director(s) $495-$575 Director(s) $400-$490 Senior Consultant(s) $300-$395 Consultant(s) $260-$295 Associate(s)/Paraprofessional(s) $95-$195 Jeffrey R. Truitt, a principal of XRoads, attests to the Court that the firm does not have an interest adverse to the Debtor or the bankruptcy and is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. About Circus and Eldorado Circus and Eldorado Joint Venture and Silver Legacy Capital Corp. filed for Chapter 11 bankruptcy (Bankr. D. Nev. Case Nos. 12-51156 and 12-51157) on May 17, 2012. Circus and Eldorado Joint Venture owns and operates the Silver Legacy Resort Casino, a 19th century silver mining themed hotel, casino and entertainment complex located in downtown Reno, Nevada. The casino and entertainment areas at Silver Legacy are connected by skyway corridors to the neighboring Eldorado Hotel & Casino and the Circus Circus Hotel and Casino, each of which are owned by affiliates of the Debtors. Together, the three properties comprise the heart of the Reno market's prime gaming area and room base. Silver Legacy Capital is a wholly owned subsidiary of the Joint Venture and was created and exists for the sole purpose of serving as a co-issuer of the mortgage notes due 2012. SLCC has no operations, assets or revenues. Eldorado Hotel & Casino and Circus Circus Hotel and Casino are not debtors in the Chapter 11 cases. The Company did not make the required principal payment of its 10.125% mortgage notes on the maturity date of March 1, 2012. The company also elected not to make the scheduled interest payment. As a result, an aggregate of $142.8 million principal amount of Notes were outstanding and accrued interest of $7.23 million on the Notes, as of March 1, 2012, is due and payable. The Debtors have entered into a Restructuring Support Agreement with Capital Research and Management Company, a holder of a substantial portion of the mortgage notes. A copy of the RSA dated March 15, 2012, is available for free at http://is.gd/diDPh3 The RSA contemplates a proposed plan will be filed no later than June 1, 2012. The plan will contain creditor treatments that have already been negotiated with and agreed to by creditor constituents. The Debtors will seek approval of the explanatory disclosure statement within 45 days after the Petition Date and obtain confirmation of the Plan 60 days later. Judge Bruce T. Beesley presides over the case. Paul S. Aronzon, Esq., and Thomas P. Kreller, Esq., at Milbank, Tweed, Hadley & McCloy LLP; and Sallie B. Armstrong, Esq., at Downey Brand LLP, serve as the Debtors' counsel. The Debtors' financial advisor is FTI Consulting Inc. The claims agent is Kurtzman Carson Consultants LLC. The Bank of New York Mellon Trust Company, N.A., the trustee for the Debtors' 10-1/8% Mortgage Notes due 2012, is represented by Craig A. Barbarosh, Esq., and Karen B. Dine, Esq., at Pillsbury Winthrop Shaw Pittman LLP. Circus and Eldorado Joint Venture disclosed $264,649,800 in assets and $158,753,490 in liabilities as of the Chapter 11 filing. The petitions were signed by Stephanie D. Lepori, chief financial officer. The Plan dated June 1, 2012, pays much of its debt in cash and the balance with new secured liens. August B. Landis, Acting U.S. Trustee for Region 17, appointed three creditors to serve in the Official Committee of Unsecured Creditors in the Debtors' Chapter 11 cases. Stutman, Treister & Glatt Professional Corporation represents the Committee. COLUMBUS COUNTRY CLUB: Local College Bids for Assets ---------------------------------------------------- Jeff Clark at The Dispatch reports that Columbus Country Club heads to the auction block after more than a year in Chapter 11 bankruptcy, and the East Mississippi Community College is one of the potential buyers with an offer on the table. According to the report, Will Cooper of the Columbus Country Club confirmed the community college has submitted a bid for the purchase of the club's property and facilities. Mr. Cooper did not state how much money the school's offer contained. EMCC President Dr. Rick Young would not comment on the offer, when contacted by phone Friday. The report notes EMCC board members discussed purchasing the club and its golf course in April 2011. After a 6-5-1 vote to pursue purchasing the club, board members then voted unanimously not to proceed with the purchase. The club owes money to three primary secured creditors: $1,520,390 to a group of five banks, $190,672 to Cadence Bank and $300,000 to Columbus businessman David Shelton The three lenders hold the first, second and third mortgages on the club's real estate, respectively. The report notes Mr. Shelton also submitted a $1.3 million offer. According to the report, court documents showed the school had submitted an undisclosed offer to purchase the club. In July, Mr. Young discussed the possible purchase of the club during a meeting of the Lowndes County Board of Supervisors. According to the report, members of the Columbus Country Club were going to submit a second plan to its creditors through U.S. Bankruptcy Court in June, but Mr. Cooper said they opted for a "363 sale" or auction of the property. The sale of the Columbus Country Club will be finalized in mid-September. Based in Columbus, Massachusetts, Columbus Country Club Inc. filed for Chapter 11 bankruptcy protection (Bankr. N.D. Miss. Case No. 11-12005) on May 3, 2011. Craig M. Geno, Esq., at Harris Jernigan & Geno, PLLC, represents the Debtor. The Debtor estimated assets and debts of between $1 million and $10 million. COMBIMATRIX CORPORATION: Posts $2-Mil. Net Loss in Second Quarter ----------------------------------------------------------------- CombiMatrix Corporation filed its quarterly report on Form 10-Q, reporting a net loss of $2.03 million on $1.31 million of revenues for the three months ended June 30, 2012, compared with a net loss of $1.68 million on $1.23 million of revenues for the corresponding period last year. For the six months ended June 30, 2012, the Company had a net loss of $4.40 million on $2.58 million of revenues, compared with a net loss of $3.64 million on $2.17 million of revenues for the same period of 2011. The Company's balance sheet at June 30, 2012, showed $5.32 million in total assets, $1.31 million in total liabilities, and stockholders' equity of $4.00 million. As reported in the TCR on April 16, 2012, Haskell & White LLP, in Irvine, Calif., expressed substantial doubt about CombiMatrix Corporation's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has a history of incurring net losses and net operating cash flow deficits. A copy of the Form 10-Q is available for free at: http://is.gd/kTS69L Irvine, Calif.-based CombiMatrix Corporation is a molecular diagnostics company that operates primarily in the field of genetic analysis and molecular diagnostics through its wholly owned subsidiary, CombiMatrix Molecular Diagnostics, Inc. CMDX operates as a diagnostics reference laboratory, providing DNA- based clinical diagnostic testing services to physicians, hospitals, clinics and other laboratories in the areas of pre-and postnatal development disorders and hematology/oncology genomics. COMMERCETEL CORP: Changes Name to "Mobivity Holdings Corp." ----------------------------------------------------------- CommerceTel Corporation filed a document with the Secretary of State of the State of Nevada changing its corporate to Mobivity Holdings Corp. The name change will be effectuated by merging the Company's wholly owned subsidiary into itself without shareholder approval, as permitted by Nevada law. The name change will become effective on Aug. 22, 2012, which the Company expects is the date that the Finra will announce the name change. About CommerceTel Corporation CommerceTel Corporation, headquartered in Chandler, Ariz., is a provider of technology that enables major brands and enterprises to engage consumers via their mobile phone. The Company's balance sheet at March 31, 2012, showed $4.57 million in total assets, $9.19 million in total liabilities, and a stockholders' deficit of $4.62 million. M&K CPAs, PLLC, in Houston, Texas, expressed substantial doubt about CommerceTel Corporation's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has incurred recurring operating losses and negative cash flows from operations and is dependent on additional financing to fund operations. CONDOR DEVELOPMENT: Has Final Order to Access Cash Collateral ------------------------------------------------------------- Judge Karen Overstreet of the Bankruptcy Court for the Western District of Washington signed off on a final stipulated order allowing Condor Development LLC to use cash collateral of EastWest Bank on a final basis. The Debtors are authorized to use Cash Collateral to fund the costs and expenses of operations unless the Court enters a subsequent order terminating the Debtors' authority to use Cash Collateral. The Debtors' authority to use Cash Collateral is limited strictly to the amounts and uses of Cash Collateral as set forth in each line item of the Final Budget and compliance with the borrowing base requirements of the Loan Documents. The Lender specifically reserves the right, at its sole discretion, to revoke its consent or amend the terms of its consent to the continued use of Cash Collateral. The Debtors will not, without the prior written consent of the Lender, pay any expenses at any time before the period for which such expense is budgeted. The Debtors also may not exceed the Final Budget without the Lender's prior written consent. As adequate protection for the Debtors' use of Cash Collateral, the Debtors will pay the Lender all monthly net income in excess of the total monthly operating expenses reflected in an interim budget. As additional adequate protection for the Debtors' use of Cash Collateral, the Lender is granted replacement liens in all property of the Debtors. On Nov. 15, 2005, Condor executed a promissory note in favor of Washington First International Bank in the principal amount of $865,000. EastWest is a successor-in-interest to the note. The Note is secured by Condor's interest in real property located at 19266 28th Ave South, SeaTac, Washington. Condor is in default under the Note for failure to pay all outstanding indebtedness under the Note by March 31, 2012. The debt as of the petition date totals $785,957.39. On Jan. 29, 2009, Condor executed a promissory note in favor of WFIB in the principal amount of $6,850,000. The amount of debt owed to the Lender under the Second Note as of the petition date is $8,275,039. The Second Note is secured by the Debtors' interest in the Comfort Inn property located at 19260 28th Ave South and 19333 International Boulevard, also in SeaTac. A copy of the cash collateral budget is available for free at: http://bankrupt.com/misc/CONDOR_cashcollbudget.pdf About Condor Development Condor Development LLC, aka Ciara Inn and Condor Management Group, operates the Comfort Inn Suites, a hotel located at Seatac, Washington. Condor Development filed a Chapter 11 petition (Bankr. W.D. Wash. Case No. 12-13287) on March 30, 2012, in Seattle. The petition was signed by Joseph Ciaramella, managing member. In its schedules, the Debtor disclosed $16.4 million in total assets and $9.11 million in total liabilities. Affiliate Seattle Group also filed for Chapter 11 protection (Bankr. Case No. 12-13263) on March 30, 2012, disclosing $16.3 million in total assets and $9.21 million in total liabilities. CONTINENTAL RESOURCES: Moody's Rates $700MM Sr. Unsec. Notes Ba2 ---------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to the Continental Resources, Inc. (CLR) offering of $700 million senior unsecured notes due 2022. These notes are a tack-on issuance to the existing $800 million 5% senior unsecured notes due 2022. CLR intends to use the net proceeds from the proposed offering to prefund a portion of its development requirements in the Bakken and refresh the liquidity under its Revolving Credit. The rating outlook is stable. Ratings Rationale "CLR continues its rapid rate of development drilling and prolific reserve and production additions in the Bakken. Reasonable finding costs, lease operating expenses and commodity pricing have all combined to make this an area where expansion, funded modestly beyond internally generated cash flow, creates significant value for all stakeholders and is justified." said Harry Schroeder, Moody's Vice President. The Ba1 Corporate Family Rating (CFR) is supported by CLR's high quality asset base, leverage metrics, and returns on capital. It also incorporates the expectation that CLR's management will be diligent in maintaining its existing leverage metrics, which is something they should easily be able to achieve. Moody's estimates a capital expenditure budget of $3.0 billion in 2012 and 2013 yielding total year-end proved reserves at year-end 2012 and 2013 of about 650 million boe and 825 million boe, respectively. Production should be around 35 million boe and 45 million boe for each year respectively, and given an unlevered cash margin of about $50 boe, about $750 - $1 billion will be externally debt financed in each year. After this period, activity should slow as all acreage in the Bakken will be held by production and a more efficient drilling program can be followed. Asset growth has been remarkable. From 2008-2011 proved developed reserves grew an average of 25% a year to 205 million boe with 71% oil. Proved reserves have grown an average of 47% a year to 508 million boe with 64% oil. There is a tremendous inventory of acreage yet to be developed: Net Undeveloped Acres total 1.2 million acres, 604 thousand net acres of which are in the Bakken (net acres are the equivalent of a 5-mile wide swath running from New York to Boston). The equally notable element is that it has accomplished this rapid growth while maintaining a balanced and stable capital structure that is rooted in the returns on drilling capital it earns. It has reinvested all internally generated cash flow ($2.1 billion since 2008) and supplemented it with debt ($1.3 billion) and equity ($660 million in 2011) for a total investment of about $4.0 billion. As a gauge of value creation, the standardized measure of discounted future net cash flow (SEC10) is $7.5 billion at December 31, 2011, a $ 6.2 billion increase after giving effect to taxes and gives no credit for the very valuable acreage position it holds. These results are empirical evidence of the core philosophy of management that, having operated through numerous cycles, uses debt to augment, not drive, disciplined development through the drill bit. CLR's SGL-2 Speculative Grade Liquidity Rating reflects its good liquidity position. After the issuance of this note, it will have full availability under its $1.5 billion revolving credit facility. Over the next two years, Moody's expects negative free cash flow of about $1.5 billion which will likely be funded under the credit facility or with new bond issuances. The credit facility has two covenants: Debt/EBITDAX < 3.75x and a current ratio of 1.0x. Based on Moody's projections, both covenants appear to have significant head room. Moody's stable outlook is based on its expectation that CLR will continue to grow its reserves and production rate while maintaining reasonable leverage metrics, limiting the downside risk. Moody's will look carefully at production diversification (significant unexploited acreage position in the Red River, Anadarko Woodford and Niobrara) and takeaway infrastructure in the Bakken before an upgrade to Baa3 would be considered. A downgrade becomes possible if CLR's capital efficiency deteriorates meaningfully with a concurrent run up of leverage due to a continued aggressive expansion or sizeable acquisition of non- immediate production. Should the ratio of debt to average daily production exceed $25,000 per boe on a sustained basis, or if the ratio of Debt to Proved Developed Reserves exceeds $10.00 per boe, a review of the rating is possible. The principal methodology used in rating CLR USA Oil & Gas, Inc was the Independent Exploration and Production (E&P) Industry Rating 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. Continental Resources, Inc. is based in Oklahoma City, Oklahoma and explores for and produces oil, natural gas liquids and natural gas. CONTINENTAL RESOURCES: S&P Keeps BB+ Rating on Sr. Notes Due 2022 ----------------------------------------------------------------- Standard & Poor's Ratings Services said its 'BB+' senior unsecured debt rating on Oklahoma City-based Continental Resources Inc.'s 5% senior unsecured notes due 2022 remains unchanged after the company announced it will seek to add on $700 million to the existing $800 million notes outstanding. "This brings the total issue amount to $1.5 billion. The recovery rating on the notes is '3', indicating our expectation of meaningful (50% to 70%) recovery in the event of a payment default," S&P said. "The 'BB+' corporate credit rating and stable outlook on Continental are unaffected. The exploration and production company intends to use proceeds to repay outstanding amounts under its revolving credit facility and for general corporate purposes," S&P said. "The ratings on Continental reflect Standard & Poor's Ratings Services' assessment of the company's 'fair' business risk and 'significant' financial risk. The ratings on Continental incorporate its strong reserve replacement performance, solid production growth, and the expectation that Continental will continue to grow its reserve base, which totaled 610 million barrels of oil equivalent on June 30, 2012. In addition, given the current price of hydrocarbons, it is highly favorable that the company's reserves are focused on oil and its gas assets are generally liquids rich. The ratings on the company also reflect its participation in the competitive and highly cyclical oil and gas industry, its aggressive capital spending program, and its geographically concentrated reserve base," S&P said. RATINGS LIST Continental Resources Inc. Corporate credit rating BB+/Stable/-- $1.5 bil 5% senior unsecured notes due 2022 BB+ Recovery rating 3 DELTA PETROLEUM: Committee Has Nod to Hire Akin Gump as Co-Counsel ------------------------------------------------------------------ The Hon. Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware granted the Official Committee of Unsecured Creditors in the Chapter 11 cases of Delta Petroleum Corporation, et al., authority to retain Akin Gump Strauss Hauer & Feld LLP as its co-counsel. Akin Gump said that in addition to the financial restructuring lawyers, it will be necessary, during the course of the Chapter 11 cases, for other Akin Gump professionals in other legal disciplines to provide services to the Committee. About Delta Petroleum Delta Petroleum Corporation (NASDAQ: DPTR) is an independent oil and gas company engaged primarily in the exploration for, and the acquisition, development, production, and sale of, natural gas and crude oil. Natural gas comprises over 90% of Delta's production services. The core area of its operations is the Rocky Mountain Region of the United States, where the majority of the proved reserves, production and long-term growth prospects are located. Delta and seven of its subsidiaries sought Chapter 11 bankruptcy protection (Bankr. D. Del. Case Nos. 11-14006 to 11-14013, inclusive) on Dec. 16, 2011, roughly six weeks before the Jan. 31, 2012 scheduled maturity of its $38.5 million secured credit facility with Macquarie Bank Limited and after several months of unsuccessful attempts to sell the business. Delta disclosed $375,498,248 in assets and $310,679,157 in liabilities, which also include $152,187,500 in outstanding obligations on account of the 7% senior unsecured notes issued in March 2005 with US Bank National Association indenture trustee; and $115,527,083 in outstanding obligations on account of 3-3/4% Senior Convertible Notes due 2037 issued in April 2007. In its amended schedules, the Delta Petroleum disclosed $373,836,358 in assets and $312,864,788 in liabilities. W. Peter Beardsley, Esq., Christopher Gartman, Esq., Kathryn A. Coleman, Esq., and Ashley J. Laurie, Esq., at Hughes Hubbard & Reed LLP, in New York, N.Y., represent the Debtors as counsel. Derek C. Abbott, Esq., Ann C. Cordo, Esq., and Chad A. Fights, Esq., at Morris, Nichols, Arsht & Tunnel LLP, in Wilmington, Del., represent the Debtors as co-counsel. Conway Mackenzie is the Debtors' restructuring advisor. Evercore Group L.L.C. is the financial advisor and investment banker. The Debtors selected Epiq Bankruptcy Solutions, LLC as claims and noticing agent. The petition was signed by Carl E. Lakey, chief executive officer and president. Laramie Energy II LLC has been approved by the Court to serve as the sponsor for Delta's reorganization plan. Delta Petroleum has won approval for its disclosure statement explaining the Chapter 11 reorganization plan. There's a hearing to consider confirmation of the Plan on Aug. 15. DELTA PETROLEUM: Pepper Hamilton OK'd as Committee's Del. Counsel ----------------------------------------------------------------- The Hon. Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware granted the Official Committee of Unsecured Creditors in the Chapter 11 cases of Delta Petroleum Corporation, et al., permission to retain Pepper Hamilton LLP as its Delaware counsel. Pepper Hamilton will, among other things, assist Akin Gump Strauss Hauer & Feld LLP as requested in representing the Committee. About Delta Petroleum Delta Petroleum Corporation (NASDAQ: DPTR) is an independent oil and gas company engaged primarily in the exploration for, and the acquisition, development, production, and sale of, natural gas and crude oil. Natural gas comprises over 90% of Delta's production services. The core area of its operations is the Rocky Mountain Region of the United States, where the majority of the proved reserves, production and long-term growth prospects are located. Delta and seven of its subsidiaries sought Chapter 11 bankruptcy protection (Bankr. D. Del. Case Nos. 11-14006 to 11-14013, inclusive) on Dec. 16, 2011, roughly six weeks before the Jan. 31, 2012 scheduled maturity of its $38.5 million secured credit facility with Macquarie Bank Limited and after several months of unsuccessful attempts to sell the business. Delta disclosed $375,498,248 in assets and $310,679,157 in liabilities, which also include $152,187,500 in outstanding obligations on account of the 7% senior unsecured notes issued in March 2005 with US Bank National Association indenture trustee; and $115,527,083 in outstanding obligations on account of 3-3/4% Senior Convertible Notes due 2037 issued in April 2007. In its amended schedules, the Delta Petroleum disclosed $373,836,358 in assets and $312,864,788 in liabilities. W. Peter Beardsley, Esq., Christopher Gartman, Esq., Kathryn A. Coleman, Esq., and Ashley J. Laurie, Esq., at Hughes Hubbard & Reed LLP, in New York, N.Y., represent the Debtors as counsel. Derek C. Abbott, Esq., Ann C. Cordo, Esq., and Chad A. Fights, Esq., at Morris, Nichols, Arsht & Tunnel LLP, in Wilmington, Del., represent the Debtors as co-counsel. Conway Mackenzie is the Debtors' restructuring advisor. Evercore Group L.L.C. is the financial advisor and investment banker. The Debtors selected Epiq Bankruptcy Solutions, LLC as claims and noticing agent. The petition was signed by Carl E. Lakey, chief executive officer and president. Laramie Energy II LLC has been approved by the Court to serve as the sponsor for Delta's reorganization plan. Delta Petroleum has won approval for its disclosure statement explaining the Chapter 11 reorganization plan. There's a hearing to consider confirmation of the Plan on Aug. 15. DELTA PETROLEUM: U.S. Trustee Objects to Amended Ch. 11 Plan ------------------------------------------------------------ BankruptcyData.com reports that the U.S. Trustee assigned to the Delta Petroleum case filed with the U.S. Bankruptcy Court an objection to the Debtors' Second Amended Chapter 11 Plan of Reorganization. The U.S. Trustee asserts, "The Debtors' Plan is not confirmable because it contains releases to be given by the Debtor in favor of numerous non-debtor parties who have not made a substantial contribution to the Plan and which otherwise fail to comply with the elements required for such releases under applicable law." The Court previously scheduled an Aug. 15, 2012 hearing on the Plan. The Amended Plan The TCR, citing BankruptcyData.com, reported on July 5, 2012, that Delta Petroleum filed with the U.S. Bankruptcy Court an Amended Chapter 11 Plan of Reorganization and related Disclosure Statement. "The Plan allows the Debtors to deleverage their balance sheets through their agreement with the Plan Sponsor to form a new limited liability company with assets contributed by the Plan Sponsor and the Debtors, including each party's oil and gas, surface real estate, and related assets located in Garfield and Mesa Counties, Colorado. Reorganized Delta will retain (i) a 33.34% interest in the Joint Venture Company, and (ii) $75 million in Cash, subject to certain adjustments set forth in the Contribution Agreement, drawn from a senior secured term loan credit facility obtained by the Plan Sponsor on behalf of the Joint Venture Company Approximately $75,000,000 in proceeds from the JV Company Credit Facility will be applied, along with certain other funds)and Holders of General Unsecured Claims who choose either affirmatively or by default to receive 15% of the Allowed amount of their General Unsecured Claim in Cash. To the extent that the $75 million is not enough to repay the DIP Facility Claims in full on the Effective Date, the Debtors may enter into an Exit Loan facility to repay the DIP Facility Claims in full. Precise sources and uses of the approximately $75 million in Cash will depend on the amount of Allowed Administrative Expense Claims. The Plan further provides that the Holders of General Unsecured Claims and Noteholder Claims will receive their Pro Rata shares of Reorganized Delta's New Common Stock (and in the case of Holders of Noteholder Claims, any distribution that such Holder is entitled to receive from Debtors other than Delta) in full satisfaction of their Claims, although unless Holders of General Unsecured Claims elect to receive New Common Stock, they will instead receive Cash equal to 15% of the Allowed amount of their Claims on the Effective Date as the default option. Holders of General Unsecured Claims against Delta should be aware of certain risks relating to their treatment under the Plan. First, the Debtors are not representing that the 15% cash option is equivalent in value to the New Common Stock of Reorganized Delta. The Debtors believe that fifteen cents on the dollar could be substantially less than the return implied by the receipt of the New Common Stock of Reorganized Delta, subject to the risk factors described herein, including the limited liquidity and market for the New Common Stock. Second, the existing Holders of Noteholder Claims will own the substantial majority of the New Common Stock after the Effective Date and as such, will control the operations and corporate decision-making of Reorganized Delta," according to the Disclosure Statement obtained by BankruptcyData.com. About Delta Petroleum Delta Petroleum Corporation (NASDAQ: DPTR) is an independent oil and gas company engaged primarily in the exploration for, and the acquisition, development, production, and sale of, natural gas and crude oil. Natural gas comprises over 90% of Delta's production services. The core area of its operations is the Rocky Mountain Region of the United States, where the majority of the proved reserves, production and long-term growth prospects are located. Delta and seven of its subsidiaries sought Chapter 11 bankruptcy protection (Bankr. D. Del. Case Nos. 11-14006 to 11-14013, inclusive) on Dec. 16, 2011, roughly six weeks before the Jan. 31, 2012 scheduled maturity of its $38.5 million secured credit facility with Macquarie Bank Limited and after several months of unsuccessful attempts to sell the business. Delta disclosed $375,498,248 in assets and $310,679,157 in liabilities, which also include $152,187,500 in outstanding obligations on account of the 7% senior unsecured notes issued in March 2005 with US Bank National Association indenture trustee; and $115,527,083 in outstanding obligations on account of 3-3/4% Senior Convertible Notes due 2037 issued in April 2007. In its amended schedules, the Delta Petroleum disclosed $373,836,358 in assets and $312,864,788 in liabilities. W. Peter Beardsley, Esq., Christopher Gartman, Esq., Kathryn A. Coleman, Esq., and Ashley J. Laurie, Esq., at Hughes Hubbard & Reed LLP, in New York, N.Y., represent the Debtors as counsel. Derek C. Abbott, Esq., Ann C. Cordo, Esq., and Chad A. Fights, Esq., at Morris, Nichols, Arsht & Tunnel LLP, in Wilmington, Del., represent the Debtors as co-counsel. Conway Mackenzie is the Debtors' restructuring advisor. Evercore Group L.L.C. is the financial advisor and investment banker. The Debtors selected Epiq Bankruptcy Solutions, LLC as claims and noticing agent. The petition was signed by Carl E. Lakey, chief executive officer and president. Laramie Energy II LLC has been approved by the Court to serve as the sponsor for Delta's reorganization plan. Delta Petroleum has won approval for its disclosure statement explaining the Chapter 11 reorganization plan. There's a hearing to consider confirmation of the Plan on Aug. 15. DESPERADO DAIRY: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Desperado Dairy, LLC 2106 Topeka Avenue Lubbock, TX 79407 Bankruptcy Case No.: 12-50354 Chapter 11 Petition Date: August 13, 2012 Court: U.S. Bankruptcy Court Northern District of Texas (Lubbock) Judge: Robert L. Jones Debtor's Counsel: David R. Langston, Esq. MULLIN, HOARD & BROWN P.O. Box 2585 Lubbock, TX 79408-2585 Tel: (806) 765-7491 E-mail: drl@mhba.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Howard M. Hellman, manager. Affiliate that filed separate Chapter 11 petition: Entity Case No. Petition Date ------ -------- ------------- Howard and Lillian Hellman 12-50353 08/13/12 DYNASTY DEVELOPMENT: Files Amended Schedules of Assets & Debts ------------------------------------------------------------- Dynasty Development Group, LLC, filed with the U.S. Bankruptcy Court for the Southern District of Mississippi its amended schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $2,850,000 B. Personal Property $5,178,400 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $1,000,000 E. Creditors Holding Unsecured Priority Claims $0 F. Creditors Holding Unsecured Non-priority Claims $3,525,678 ----------- ----------- TOTAL $8,028,400 $4,525,678 A full-text copy of the schedules of assets and liabilities is available for free at: http://bankrupt.com/misc/DYNASTY_DEVELOPMENT_sal.pdf Las Vegas-based Dynasty Development Group, LLC, doing business as Paradise Bay Hotel & Casino, filed a Chapter 11 petition (Bankr. D. Nev. Case No. 12-16334) on May 29, 2012. The Debtor is represented by J. Taylor Oblad, Esq., at The Oblad Law Group in Las Vegas. Dynasty Development previously sought Chapter 11 protection (Bankr. S.D. Miss. Case NO. 11-50997) on April 29, 2011, disclosing $5.22 million in assets and $1.78 million in liabilities in its schedules. The lenders led by DDJ Capital Management, LLC, sought dismissal of that bankruptcy case, citing the filing was made to avoid obligations in a civil action. DYNASTY DEVELOPMENT: Manager's Spouse Wants Case Dismissed ---------------------------------------------------------- Lynita Nelson asks the U.S. Bankruptcy Court for relief from automatic stay and to dismiss the Chapter 11 case of Dynasty Development Group, LLC. Erin M. Houston, Esq., at Goldsmith & Guymon P.C., notes the Debtor is owned by a family trust by the name of Eric L. Nelson Nevada Trust dated May 30, 2001, and managed by Eric Nelson, the husband of Lynita Nelson for 29 years. The Nelsons are currently in divorce proceedings. A trial in that case was set for July 16, 2012, before the Eighth Judicial District Court, Family Division. The Debtor at one time owned 43.6% of Silver Slipper Casino Venture, LLC. A dispute arose between the members of Casino Venture, namely the Debtor and about 30 other interest holders holding the remaining 56.4% and the board of directors. The dispute resulted in a legal proceeding initiated by those opposed to the Debtor in the state of California, seeking to compel the Debtor to sell its interests in Casino Venture under buy/sell provisions in the operating agreement. The facts giving rise to the dispute were made subject of Bankruptcy Court findings in the Debtor's prior bankruptcy filing in the Southern District of Mississippi, Case Number 11-50997, which case was dismissed as a bad faith filing following findings of bad faith upon evidentiary hearing. The Mississippi Bankruptcy Court found the bankruptcy filing to solely for the purpose of delaying the California litigation and dismissed the case. The Plaintiffs in the California litigation thereafter obtained summary judgment against the Debtor and forced the sale of the Debtor's interest. The Debtor received $1,568,000 in payment of its interest in Casino Venture. Upon learning of the payment, Ms. Houston states Lynita asserted her community interest in the funds paid through the Family Court. The Family Court issued a preliminary injunction as to the Funds and ordered the Funds to be held in an interest bearing account by Mr. Nelson's legal counsel pending division upon further order of the court. As in the Mississippi bankruptcy filing, in anticipation of the upcoming divorce trial and in contemplation of delaying litigation diluting his interest in the Debtor, Mr. Nelson caused the filing of the Debtor's present bankruptcy proceeding. In its Schedules and Statements, Ms. Nelson notes that the Debtor lists numerous creditors, the majority of which are Insiders as defined under the Bankruptcy Code. Mr. Nelson confirmed the majority of the creditors listed were his immediately family, employees, or friends. Mr. Nelson could not identify whether these creditors held supporting documentation for their listed claims. Ms. Houston believes that granting relief from stay would result in complete resolution of the issues. By allowing Ms. Nelson to proceed in Family Court, a final distribution of property can be determined, which would provide the Bankruptcy Court with a definite list of Debtor' s ownership interest. Ms. Houston contends that the bankruptcy case will benefit if this matter is allowed to properly proceed before the family court tribunal. The completion of the family court case, including a final determination of ownership of the Debtor, will not interfere with the bankruptcy proceedings in any way. Rather, it will clarify who the equity holders of the Debtor are for purposes of estate administration. The Debtor has acknowledged Ms. Nelson as a creditor, albeit in an unliquidated, disputed, unknown amount. The Family Court proceedings should be allowed to continue so that Ms. Nelson's claim may properly determined. Stay relief does not pose a threat to preserving the value of the Debtor's bankruptcy estate because the Bankruptcy Court retains jurisdiction over the Debtor's assets. Ms. Houston tells the Court that the Family Court is clearly a specialized tribunal with the necessary expertise established to hear divorce proceedings. Proceeding in the Family Court would not prejudice the interests of other creditors. Las Vegas-based Dynasty Development Group, LLC, doing business as Paradise Bay Hotel & Casino, filed a Chapter 11 petition (Bankr. D. Nev. Case No. 12-16334) on May 29, 2012. The Debtor scheduled $8,028,400 in total assets and $4,525,678 in total liabilities. The Debtor is represented by J. Taylor Oblad, Esq., at The Oblad Law Group in Las Vegas. Dynasty Development previously sought Chapter 11 protection (Bankr. S.D. Miss. Case NO. 11-50997) on April 29, 2011, disclosing $5.22 million in assets and $1.78 million in liabilities in its schedules. The lenders led by DDJ Capital Management, LLC, sought dismissal of that bankruptcy case, citing the filing was made to avoid obligations in a civil action. DYNEGY INC: Taps Ernst & Young to Audit 2012 Financials ------------------------------------------------------- Dynegy Inc., et al., ask the U.S. Bankruptcy Court Southern District of New York for permission to employ Ernst & Young LLP as auditor. EY LLP, will among other things; a. audit and report on the consolidated financial statements of DI for the year ended Dec. 31, 2012; b. auditing and report on the effectiveness of DI's internal control over financial reporting as of Dec. 31, 2012; c. review DI's unaudited interim financial information before it files its Form 10-Q; and d. as requested, provide services related to accounting consultations, SEC filings, fresh-start accounting matters, letters for underwriters and requesting parties, and bankruptcy employment and fee-requirement related work. EY LLP and DI have agreed to a fixed fee of $1,277,000 for these services: auditing and reporting on the consolidated financial statements of DI for the year ended Dec. 31, 2012, auditing and reporting on the effectiveness of DI's internal control over financial reporting as of Dec. 31, 2012, and reviewing DI's unaudited interim financial information before it files its Form 10-Q. The fixed fee will be payable on EY LLP's invoices submitted as the work progresses on this schedule: July 2012 $141,000 August 2012 $41,000 September 2012 $41,000 October 2012 $142,000 November 2012 $142,000 December 2012 $142,000 January 2013 $242,000 February 2013 $242,000 March 2013 $144,000 Separate from the Fixed Fee, EY LLP will invoice DI for the DI Accounting Services at these hourly rates: Title Rate Per Hour ----- ------------- Partner $550 Senior Manager $460 Manager $370 Senior $260 Staff $180 According to EY LLP's books and records, during the 90-day period prior to the DI Petition Date, EY LLP received $424,718 from DI for professional services performed and expenses incurred. DI does not owe EY LLP any amounts for services rendered prior to the DI Petition Date. To the best of the Debtor's knowledge, EY LLP is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Dynegy Through its subsidiaries, Houston, Texas-based Dynegy Inc. (NYSE: DYN) -- http://www.dynegy.com/-- produces and sells electric energy, capacity and ancillary services in key U.S. markets. The power generation portfolio consists of approximately 12,200 megawatts of baseload, intermediate and peaking power plants fueled by a mix of natural gas, coal and fuel oil. Dynegy Holdings LLC and four other affiliates of Dynegy Inc. sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-38111) Nov. 7, 2011, to implement an agreement with a group of investors holding more than $1.4 billion of senior notes issued by Dynegy's direct wholly-owned subsidiary, Dynegy Holdings, regarding a framework for the consensual restructuring of more than $4.0 billion of obligations owed by DH. If this restructuring support agreement is successfully implemented, it will significantly reduce the amount of debt on the Company's consolidated balance sheet. Dynegy Holdings disclosed assets of $13.77 billion and debt of $6.18 billion. Dynegy Inc. on July 6, 2012, filed a voluntary petition to reorganize under Chapter 11 (Bankr. S.D.N.Y. Case No. 12-36728) to effectuate a merger with Dynegy Holdings, pursuant to Holdings' Chapter 11 plan. A settlement, which has already been approved by the bankruptcy court, provides for Dynegy Inc. and Holdings to merge and for the administrative claim granted to Dynegy Inc. in the Holdings Chapter 11 case to be transferred out of Dynegy Inc. for the benefit of its shareholders. Dynegy Holdings and its affiliated debtor-entities are represented in the Chapter 11 proceedings by Sidley Austin LLP as their reorganization counsel. Dynegy and its other subsidiaries are represented by White & Case LLP, who is also special counsel to the Debtor Entities with respect to the Roseton and Danskammer lease rejection issues. The financial advisor is FTI Consulting. Epiq Bankruptcy Solutions, LLC, as its notice and claims agent. The deadline for voting on and for objecting to the Joint Plan is Aug. 24, 2012. The Joint Plan is subject to confirmation by the Bankruptcy Court and the confirmation hearing is scheduled for Sept. 5, 2012. The Plan provides for, among other things, that Dynegy Holdings will be merged with and into Dynegy Inc., with Dynegy Inc. being the Surviving Entity. The Plan provides that each holder of an Allowed General Unsecured Claim against the Surviving Entity will receive its Pro Rata Share of (a) 99% of the Reorganized Dynegy Common Stock, (b) the Plan Cash Payment (of $200,000,000), and (c) the Allocated Facilities Sale Proceeds (the amount of which is to be determined. The Official Committee of Unsecured Creditors in Holdings' cases has tapped Akin Gump Strauss Hauer & Feld LLP as counsel. Dynegy Inc. is represented by White & Case LLP and advised by Lazard Freres & Co. LLC. Dynegy Inc., Dynegy Holdings, LLC, the Consenting Senior Noteholders, the Consenting Lease Certificate Holders and Resources Capital Management Corporation entered into the First Amendment to the Amended Plan Support Agreement. DYNEGY INC: Wants to Hire KPMG LLP as Tax Consultants ------------------------------------------------------ Dynegy Inc., et al., ask the U.S. Bankruptcy Court Southern District of New York for permission to employ KPMG LLP as tax consultants and valuation and accounting advisors. KPMG will perform these services: a. Tax Consulting Services. Pursuant to the July 12 Letter, KPMG will make certain determinations and provide DI with analysis concerning the tax implications of the transactions contemplated in connection with the DI Case and the tax treatment of DI's discharge. b. Valuation, Accounting, and Financial Reporting Services. Pursuant to the July 20 Letter, the January 20 Letter, and the May 31 Letter, KPMG will provide a range of valuation, accounting, and financial reporting services in connection the DI Case and DI's operation as a debtor in possession, generally. In addition, KPMG will provide other consulting, advice, research, planning, and analysis regarding tax consulting and valuation and accounting advisory services as may be necessary, desirable, or requested from time to time. The hourly rates of KPMG's personnel are: A. Tax Consulting Services Discounted Rate ----------------------- --------------- Partners $597 Managing Directors $555 Senior Managers/Directors $540 Managers $420 Senior Associates $360 Associates $225 B. Valuation and Accounting Advisory Services Discounted Rate ------------------------ --------------- Partners $610 Directors $500 Managers $375 Senior Associates $275 Associates $190 DI has agreed to compensate KPMG for the general accounting advisory services provided pursuant to the July 20 Letter at a blended rate of $284 per hour. According to KPMG's books and records, during the 90-day period prior to the Petition Date, KPMG received $569,795 from DI for professional services performed and expenses incurred. To the best of the Debtors' knowledge, KPMG is a "disinterested persons" as that term is defined in Section 101(14) of the Bankruptcy Code. About Dynegy Through its subsidiaries, Houston, Texas-based Dynegy Inc. (NYSE: DYN) -- http://www.dynegy.com/-- produces and sells electric energy, capacity and ancillary services in key U.S. markets. The power generation portfolio consists of approximately 12,200 megawatts of baseload, intermediate and peaking power plants fueled by a mix of natural gas, coal and fuel oil. Dynegy Holdings LLC and four other affiliates of Dynegy Inc. sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-38111) Nov. 7, 2011, to implement an agreement with a group of investors holding more than $1.4 billion of senior notes issued by Dynegy's direct wholly-owned subsidiary, Dynegy Holdings, regarding a framework for the consensual restructuring of more than $4.0 billion of obligations owed by DH. If this restructuring support agreement is successfully implemented, it will significantly reduce the amount of debt on the Company's consolidated balance sheet. Dynegy Holdings disclosed assets of $13.77 billion and debt of $6.18 billion. Dynegy Inc. on July 6, 2012, filed a voluntary petition to reorganize under Chapter 11 (Bankr. S.D.N.Y. Case No. 12-36728) to effectuate a merger with Dynegy Holdings, pursuant to Holdings' Chapter 11 plan. A settlement, which has already been approved by the bankruptcy court, provides for Dynegy Inc. and Holdings to merge and for the administrative claim granted to Dynegy Inc. in the Holdings Chapter 11 case to be transferred out of Dynegy Inc. for the benefit of its shareholders. Dynegy Holdings and its affiliated debtor-entities are represented in the Chapter 11 proceedings by Sidley Austin LLP as their reorganization counsel. Dynegy and its other subsidiaries are represented by White & Case LLP, who is also special counsel to the Debtor Entities with respect to the Roseton and Danskammer lease rejection issues. The financial advisor is FTI Consulting. Epiq Bankruptcy Solutions, LLC, as its notice and claims agent. The deadline for voting on and for objecting to the Joint Plan is Aug. 24, 2012. The Joint Plan is subject to confirmation by the Bankruptcy Court and the confirmation hearing is scheduled for Sept. 5, 2012. The Plan provides for, among other things, that Dynegy Holdings will be merged with and into Dynegy Inc., with Dynegy Inc. being the Surviving Entity. The Plan provides that each holder of an Allowed General Unsecured Claim against the Surviving Entity will receive its Pro Rata Share of (a) 99% of the Reorganized Dynegy Common Stock, (b) the Plan Cash Payment (of $200,000,000), and (c) the Allocated Facilities Sale Proceeds (the amount of which is to be determined. The Official Committee of Unsecured Creditors in Holdings' cases has tapped Akin Gump Strauss Hauer & Feld LLP as counsel. Dynegy Inc. is represented by White & Case LLP and advised by Lazard Freres & Co. LLC. Dynegy Inc., Dynegy Holdings, LLC, the Consenting Senior Noteholders, the Consenting Lease Certificate Holders and Resources Capital Management Corporation entered into the First Amendment to the Amended Plan Support Agreement. DYNEGY INC: Wants to Hire White & Case as Bankruptcy Counsel ------------------------------------------------------------- Dynegy Inc., et al., ask the U.S. Bankruptcy Court Southern District of New York for permission to employ White & Case LLP as counsel. According to the Debtors, W&C has represented the Debtors throughout the cases and is intimately familiar with the factual and legal matters associated with the cases and Dynegy Inc's role as sole member of Dynegy Holdings, LLC and co-proponent of the Plan. To the best of the Debtor's knowledge, W&C is a "disinterested persons" as that term is defined in Section 101(14) of the Bankruptcy Code. About Dynegy Through its subsidiaries, Houston, Texas-based Dynegy Inc. (NYSE: DYN) -- http://www.dynegy.com/-- produces and sells electric energy, capacity and ancillary services in key U.S. markets. The power generation portfolio consists of approximately 12,200 megawatts of baseload, intermediate and peaking power plants fueled by a mix of natural gas, coal and fuel oil. Dynegy Holdings LLC and four other affiliates of Dynegy Inc. sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-38111) Nov. 7, 2011, to implement an agreement with a group of investors holding more than $1.4 billion of senior notes issued by Dynegy's direct wholly-owned subsidiary, Dynegy Holdings, regarding a framework for the consensual restructuring of more than $4.0 billion of obligations owed by DH. If this restructuring support agreement is successfully implemented, it will significantly reduce the amount of debt on the Company's consolidated balance sheet. Dynegy Holdings disclosed assets of $13.77 billion and debt of $6.18 billion. Dynegy Inc. on July 6, 2012, filed a voluntary petition to reorganize under Chapter 11 (Bankr. S.D.N.Y. Case No. 12-36728) to effectuate a merger with Dynegy Holdings, pursuant to Holdings' Chapter 11 plan. A settlement, which has already been approved by the bankruptcy court, provides for Dynegy Inc. and Holdings to merge and for the administrative claim granted to Dynegy Inc. in the Holdings Chapter 11 case to be transferred out of Dynegy Inc. for the benefit of its shareholders. Dynegy Holdings and its affiliated debtor-entities are represented in the Chapter 11 proceedings by Sidley Austin LLP as their reorganization counsel. Dynegy and its other subsidiaries are represented by White & Case LLP, who is also special counsel to the Debtor Entities with respect to the Roseton and Danskammer lease rejection issues. The financial advisor is FTI Consulting. Epiq Bankruptcy Solutions, LLC, as its notice and claims agent. The deadline for voting on and for objecting to the Joint Plan is Aug. 24, 2012. The Joint Plan is subject to confirmation by the Bankruptcy Court and the confirmation hearing is scheduled for Sept. 5, 2012. The Plan provides for, among other things, that Dynegy Holdings will be merged with and into Dynegy Inc., with Dynegy Inc. being the Surviving Entity. The Plan provides that each holder of an Allowed General Unsecured Claim against the Surviving Entity will receive its Pro Rata Share of (a) 99% of the Reorganized Dynegy Common Stock, (b) the Plan Cash Payment (of $200,000,000), and (c) the Allocated Facilities Sale Proceeds (the amount of which is to be determined. The Official Committee of Unsecured Creditors in Holdings' cases has tapped Akin Gump Strauss Hauer & Feld LLP as counsel. Dynegy Inc. is represented by White & Case LLP and advised by Lazard Freres & Co. LLC. Dynegy Inc., Dynegy Holdings, LLC, the Consenting Senior Noteholders, the Consenting Lease Certificate Holders and Resources Capital Management Corporation entered into the First Amendment to the Amended Plan Support Agreement. ELPIDA MEMORY: Bondholders Seek to Collect in U.S. Court -------------------------------------------------------- Peg Brickley and Shara Tibken at Dow Jones' Daily Bankruptcy Review report that a contingent of Elpida Memory Inc. bondholders said that the planned sale of the chip maker to rival Micron Technology Inc. may be such a bad deal they are considering filing an involuntary U.S. bankruptcy case to protect themselves. About Micron Technology Headquartered in Boise, Idaho., Micron Technology Inc. (NYSE: MU) -- http://www.micron.com/-- provides advanced semiconductor solutions. Through its worldwide operations, Micron manufactures and markets DRAMs, NAND Flash memory, CMOS image sensors, other semiconductor components and memory modules for use in leading- edge computing, consumer, networking and mobile products. * * * Micron Technology Inc. carries Standard & Poor's Ratings Services' 'BB-' corporate credit rating. Outlook is Stable. About Elpida Memory Elpida Memory Inc. (TYO:6665) -- http://www.elpida.com/ja/ -- is a Japan-based company principally engaged in the development, design, manufacture and sale of semiconductor products, with a focus on dynamic random access memory (DRAM) silicon chips. The main products are DDR3 SDRAM, DDR2 SDRAM, DDR SDRAM, SDRAM, Mobile RAM and XDR DRAM, among others. The Company distributes its products to both domestic and overseas markets, including the United States, Europe, Singapore, Taiwan, Hong Kong and others. The company has eight subsidiaries and two associated companies. After semiconductor prices plunged, Japan's largest maker of DRAM chips filed for bankruptcy in February with liabilities of 448 billion yen ($5.6 billion) after losing money for five quarters. Elpida Memory and its subsidiary, Akita Elpida Memory, Inc., filed for corporate reorganization proceedings in Tokyo District Court on Feb. 27, 2012. The Tokyo District Court immediately rendered a temporary restraining order to restrain creditors from demanding repayment of debt or exercising their rights with respect to the company's assets absent prior court order. Atsushi Toki, Attorney-at-Law, has been appointed by the Tokyo Court as Supervisor and Examiner in the case. Elpida Memory Inc. sought the U.S. bankruptcy court's recognition of its reorganization proceedings currently pending in Tokyo District Court, Eight Civil Division. Yuko Sakamoto, as foreign representative, filed a Chapter 15 petition (Bankr. D. Del. Case No. 12-10947) for Elpida on March 19, 2012. EMBASSY PLAZA: Restructures Debt, Saved From Foreclosure -------------------------------------------------------- Breakwater Equity Partners disclosed that it has successfully restructured the debt on Embassy Plaza, a three-story, multi- tenant office building located in Omaha, Nebraska. The 132,000 square-foot building is owned by 22 individual tenant-in-common (TIC) investors who invested in the property as a source of retirement income. The TIC investors purchased the property in 2004 for $17 million and were unable to refinance the property when the loan matured in Nov. 2011. The lender forced the owners to suspend dividends in 2009. By the time the loan reached its maturity date the property value had declined significantly; the lender was unwilling to extend the loan, declared a default, and started foreclosure. "When the lender stopped the dividends we knew that the property was in trouble," said Robert Bartley, a member of the Steering Committee for Embassy Plaza. "We hired a couple of different law firms and a mortgage broker; when they failed, we hired Breakwater to save our investment. We couldn't afford to lose all that money." Breakwater performed an in depth analysis of the investment, including potential litigation claims, property economics, and possible bankruptcy reorganization strategies. Breakwater then recommended a comprehensive workout plan. As part of that plan the investors converted from a tenant in common ownership structure to an LLC ownership structure. Breakwater then successfully negotiated with the lender to reduce the loan payoff and provided the loan guarantees necessary to secure new long-term financing at a 5% interest rate. Dividend distributions to the investors will be reinstated within 60 days. "When we invested in Embassy Plaza our objective was to create steady cash flow to fund our retirement," said Bartley. "Many of the TIC investors depend on that income to pay for their living expenses. It was difficult losing the cash flow, but it would have been devastating to lose our entire investment. Naturally, we are very relieved that this matter has been favorably resolved." "We are very sympathetic to the difficulties facing real estate investors, particularly TIC investors who were just looking for stable income to finance their retirements," said Phil Jemmett, Breakwater CEO. "Many other investors have lost their life savings in similar investments and we did everything possible to ensure that this didn't happen to the Embassy Plaza TICs. As part of our restructuring services we were happy to provide the loan guarantees that were critical to obtaining the new financing." "We expect that the Embassy Plaza investors will recover all of their investment capital, with dividends, over time," said Armand Nicholi, Breakwater CFO. "Despite the many difficulties faced by this property, it will be generating net income after debt service equal to approximately 7.5% of the initial cash investment. We anticipate that the dividends will grow each year as rental revenue increases under our leasing agreements." About Breakwater Equity Partners Breakwater Equity Partners -- http://www.breakwaterequity.com-- is a San Diego-based commercial real estate workout consultancy and investment firm. Through Breakwater's extensive experience on over 200 engagements with loan values in excess of a $2.5B, the firm has devised a unique, multidisciplinary approach to uncovering and resolving distressed asset situations. Breakwater's professional team combines legal, financial, economic, banking, and real estate expertise to devise customized strategies for each case regardless of market (gateways to tertiary), asset class (single and multi-family, office, flex, multi-tenant land, time shares, development, power centers) or loan type (portfolio or CMBS). About Breakwater Resources Breakwater Resources Ltd. is a mineral resource company engaged in the acquisition, exploration, development and mining of base metal and precious metal deposits in the Americas. Breakwater has three producing zinc mines: the Myra Falls mine in British Columbia, Canada; the El Mochito mine in Honduras; and the El Toqui mine in Chile. The Langlois mine in north western Quebec, Canada has temporarily suspended operations. Breakwater is listed on the Toronto Stock Exchange under the ticker BWR. ENERGY FUTURE: Moody's Corrects August 9 Rating Release ------------------------------------------------------- Moody's Investors Service issued a correction to the August 9, 2012 rating release of Energy Future Holdings Corp. and Oncor Electric Delivery Company. The corrected release is as follows: Moody's downgraded the Corporate Family Rating (CFR) of EFH to Caa3 from Caa2 and affirmed its Caa3 Probability of Default Rating (PDR) and SGL-4 Speculative Grade Liquidity Rating. The rating outlook remains negative. In addition, Moody's downgraded the senior secured rating of Oncor to Baa2 from Baa1. Oncor's rating outlook remains negative. At the same time, Moody's assigned a Caa3 rating (LGD4 58%) to Energy Future Intermediate Holding Company's (EFIH) new $250 million senior secured notes due 2017 and $500 million senior secured second lien notes due 2022. The ratings for EFH, its subsidiaries and individual debt instruments are derived from the Caa3 CFR, with the exception of Oncor due to its ring fence type provisions. Individual instrument ratings and Loss Given Default (LGD) assessments are included at the end of this press release. Ratings Rationale The downgrade of EFH's CFR to Caa3 from Caa2 reflects the company's financial distress and limited financial flexibility. EFH's capital structure is complex and, in Moody's opinion, untenable which calls into question the sustainability of the business model and expected duration of its liquidity reserves. Moody's expects material balance sheet restructuring within the next 12 to 18 months. For the latest twelve months ended June 2012, EFH's ratio of cash flow to debt is approximately 1% and is expected to remain near this level for the foreseeable future. EFH's unregulated subsidiary, Texas Competitive Electric Holdings Company LLC (TCEH), is the principal driver behind EFH's cash flows. TCEH's coal fired generation fleet requires a material amount of capital investment to comply with more stringent environmental mandates, and low natural gas prices have displaced a sizeable portion of expected generation volumes. Moody's estimated valuation of TCEH has fallen to approximately $15 - $20 billion, which suggests sizeable impairments for lenders, including the TCEH senior secured first lien lenders. In Moody's opinion, this level of impairment suggests the potential for a more contentious restructuring process which, in turn, raises the risk of contagion across the entire EFH family, including Oncor. Moody's sees a strong correlation between the default probability of EFH, Energy Future Competitive Holdings (EFCH), EFIH and TCEH. As a result, the primary rating drivers for EFH and EFIH are heavily influenced by TCEH. That said, with the expected elimination of the intercompany note that EFH owes to TCEH, Moody's sees a stronger case of credit separateness. The negative outlook for EFH reflects a sustained period of low natural gas prices which will keep EFH's cash flows depressed and potentially create further large goodwill impairments. Moody's also sees declining volumes and an increase in operating costs and capital investment needs. The likelihood of some form of restructuring will continue to increase, absent a shift in market fundamentals. RATINGS RATIONALE -- ONCOR The downgrade of Oncor's senior secured debt to Baa2 from Baa1 reflects two primary issues, both of which are beyond Oncor's and its principal regulator, the Public Utility Commission of Texas' (PUCT), control. The first issue is the rising contagion risk exposure that Oncor has with its majority owner-parent, EFH. As the risk of a contentious restructuring increases at EFH and TCEH, Oncor will be exposed, at a minimum, to some level of contagion. Approximately one-third of Oncor's revenues are associated with its affiliate, TXU Energy, and Oncor reports roughly $159 million of receivables from TCEH. In addition, as an 80% owned subsidiary, Oncor remains exposed to various consolidated corporate services, such as EFH's tax systems. That said, Moody's notes that EFH's recent decision to terminate its non-union pension fund serves to incrementally insulate Oncor from that specific contagion risk. The second issue is EFH's indirect leveraging of Oncor's implied equity value, which will approximate $5.8 billion with the recent issuance of new EFIH securities (see below). Despite the ring fence provisions, EFH has utilized its equity in Oncor as a primary source of liquidity over the past few years. Moody's notes that this financing structure does not benefit Oncor, but rather benefits EFH and TCEH as it transfers debt originally raised at the EFH and TCEH levels and refinances it at the parent level of Oncor. As the pledged equity in Oncor approaches the high end of Moody's estimated valuation range, Moody's sees EFIH's intermediate parent holding company debt as a source of permanent leverage for Oncor, since Oncor is the only cash flow generating subsidiary of EFIH. Over the next few years, Moody's calculates annual cash flow of roughly $1.5 billion for Oncor. This results in a ratio of cash flow to debt approaching the 10% threshold, by including the debt of EFIH and EFH in the denominator, which is more indicative of a Baa2 senior secured rating, after taking into account the lower business risk profile associated with being a transmission and distribution (T&D) utility in a supportive regulatory environment. Absent the contagion risk exposure and indirect leveraging of its equity, Oncor is viewed as a fundamentally strong T&D utility, with good growth prospects and a supportive regulatory environment. On a stand-alone basis, Oncor would likely be rated at least A3 senior secured, similar to CenterPoint Energy Houston Electric (A3 senior secured), its most comparable peer. Oncor's negative rating outlook reflects the contagion risks associated with the rising probability that its parent will need to restructure. As EFH's most valuable asset, Oncor will attract a significant amount of attention from various creditor classes. For now, Moody's continues to incorporate a view that Oncor will remain insulated from its parent's financial distress, thanks to its ring fence type provisions and regulatory oversight. Moody's incorporates a view that EFH, Oncor and the PUCT are most interested in avoiding any testing by a bankruptcy court as to the strength of the ring fence's provisions. Oncor's negative rating outlook will remain in place until EFH's restructuring program is completed and more clarity is available with regards to what that potential restructuring might entail. On Aug. 13, Moody's thinks it would be unlikely that Oncor's senior secured rating would fall below the investment grade category. EFIH's SENIOR SECURED NOTES DUE 2017 AND SENIOR SECURED SECOND LIEN NOTES DUE 2022 EFIH's senior secured notes due 2017 and senior secured second lien notes due 2022 are assigned a Caa3 (LGD4, 58%) rating. These ratings are primarily derived from EFH's Caa3 CFR and Moody's LGD methodology, but Moody's notes that any recovery value, in the event of a default, would ultimately be derived from the value of Oncor although Oncor remains outside of Moody's EFH CFR because of its ring fence type provisions. Depending on how EFH might approach any potential restructuring activity, a new CFR could be assigned which excludes TCEH. Under this hypothetical scenario, EFIH's ratings would likely be upgraded by several notches. EFIH currently owns approximately $4.5 billion of EFH and TCEH debt securities, comprising roughly one-third of its balance sheet. The other two-thirds of EFIH's balance sheet is comprised of EFIH's ownership interests in Oncor Electric Holdings Company LLC (Oncor Holdings), which owns roughly 80% of Oncor. EFIH's ownership interest in Oncor Holdings has been pledged as collateral for approximately $5.8 billion (principal amount) in debt securities, which includes the Aug. 13 issuance. Of this total amount, approximately $3.7 billion is secured on a first lien basis, with another approximately $2.1 billion secured on a second lien basis. On Aug. 13, Moody's estimates the value of Oncor Holdings at approximately $5.5 - $6.0 billion, which implies a total equity value of Oncor, including its 20% minority owners, of approximately $7 - $7.5 billion. In Moody's opinion, this valuation incorporates premium multiples of book value, net income and EBITDA. If, in a restructuring, the EFIH lenders foreclosed on the collateral, Moody's sees reasonably good recovery for both of EFIH's first lien and second lien securities, but Moody's also notes that any change of control at Oncor would require the approval of the PUCT. Since the PUCT's approval would undoubtedly consider the public interest, the timing associated with achieving such an approval is uncertain, notwithstanding the PUCT's established guidelines on regulatory decisions. This potential regulatory uncertainty could affect the timing of recovery. LIQUIDITY EFH's Speculative Grade Liquidity rating is SGL-4. Moody's expects the company to continue to produce negative free cash flow over the next few years, due to a sustained period of low natural gas and power prices and higher capital expenditures as TCEH brings its coal-fired generation fleet into compliance with new, more stringent environmental regulations. Liquidity is primarily supported by EFH's cash, which Moody's estimates is approximately $1.1 billion as of June 30, 2012. Liquidity is also supported by TCEH, which has a $2.1 billion revolver ($0.645 billion of which expires in October 2013 and $1.4 billion of which expires in October 2016); a $1.06 billion special LC facility ($1.02 billion of which expires in October 2017) and an unlimited commodity collateral posting facility (expiring in December 2012). All of these liquidity facilities are senior secured and backed by the same collateral package associated with the approximately $20 billion secured first lien term loan facilities. The revolving credit facilities have roughly $1.9 billion available, which combined with the $1.1 billion in cash equates to $3.0 billion in available liquidity. For the twelve months ended June 2012, cash flow from operations has fallen to roughly $710 million while capital expenditures, which includes nuclear fuel, was $797 million, leaving EFH with negative free cash flow of $87 million. While Moody's sees only modest scheduled debt maturities over the next twelve months of roughly $100 million, Moody's does see some liquidity risks with the approximately $1 billion of margin deposits received from counterparties that are included in EFH's cash balance. With respect to over-the-counter transactions, counterparties generally have the right to substitute letters of credit for such cash collateral. In such event, the cash collateral previously posted would be returned to such counterparties thereby reducing liquidity. Additionally, in the event of a reversal of mark to market gains, which would be triggered by an increase in gas prices, these margin deposits would also be returned to counterparties. Despite these risks, collateral deposits are being used for working capital and other corporate purposes including reducing short-term borrowings under credit facilities. EFH has effectively monetized and utilized for liquidity purposes $1 billion of its unrealized commodity gains so EFH's liquidity runway might be shorter than it first appears. The TCEH revolving credit facility includes a maintenance covenant, secured debt to adjusted EBITDA of 8.0x, which was reset as part of the April 2011 amend and extend transaction. But based on its projections, Moody's sees a rising risk of a covenant breach in the first 6 months of 2013, absent an improvement in market conditions for TCEH. This would represent a material credit negative for EFH because maintaining liquidity is critical for the company's business plan. In addition, the adverse market conditions, sizeable maturity profile beginning in 2014 and the potential for a covenant breach raises questions as to whether EFH will attain a going concern opinion from the auditors in early 2013. With a going concern opinion, EFH would lose access to TCEH's revolving credit facility. The ratings for EFH, TCEH and EFIH's individual securities were determined using Moody's Loss Given Default (LGD) methodology. Based on EFH's Caa3 CFR and Caa3 PDR, and based strictly on the priority of claims within those entities, the LGD model would suggest a rating of Ca for TCEH's senior secured second lien and EFIH's senior secured and senior secured second lien debt securities. The Caa3 rating assigned to TCEH's senior secured first lien and EFIH's senior secured first and second lien debt securities reflects the fact that the holders of these securities will benefit primarily from their security interests of TCEH's assets and subsidiaries and Oncor Holdings equity in Oncor, respectively. The methodologies used in this rating were Unregulated Utilities and Power Companies published in August 2009 and Regulated Electric and Gas Utilities published in August 2009. Ratings affirmed: EFH's Caa3 Probability of Default Rating EFH's SGL-4 Speculative Grade Liquidity Rating Ratings assigned: EFIH's Caa3 (LGD4 58%) $250 million senior secured notes due 2017 EFIH's Caa3 (LGD4 58%) $500 million senior secured second lien notes due 2022 Ratings downgraded: Issuer: Energy Future Holdings Corp Corporate Family Rating: Caa3 from Caa2 Senior secured notes: Caa3 (LGD4 58%) from Caa3 (LGD4 62%) Senior unsecured guaranteed notes: Ca (LGD6 92%) from Ca, (LGD5, 81%) Senior unsecured legacy notes: Ca (LGD6 96%) from Ca (LGD5, 85%) Issuer: Energy Future Intermediate Holding Company LLC Senior secured notes: Caa3 (LGD4, 58%), from Caa3 (LGD4, 62%) Senior secured second lien notes: Caa3 (LGD4, 58%), from Caa3 (LGD4, 62%) Issuer: Texas Competitive Electric Holdings Senior secured first lien: Caa1 (LGD2, 26%), from B2 (LGD2, 15%) Senior secured second lien: Caa3 (LGD4, 58%), from Caa3 (LGD3, 44%) Senior unsecured guaranteed notes: Ca (LGD5, 82%), from Caa3 (LGD4, 62%) Senior unsecured pollution control legacy notes: Ca (LGD6, 94%), from Ca (LGD4, 62%) Issuer: Oncor Electric Delivery Company Senior secured: Baa2, from Baa1 Issuer: TXU US Holdings Company Senior unsecured notes, assumed by Energy Future Competitive Holdings Co.: Ca (LGD6, 96%), from Caa3 (LGD4, 69%). ENERSYS: Moody's Affirms 'Ba2' CFR/PDR; Outlook Positive -------------------------------------------------------- Moody's Investors Service changed EnerSys' rating outlook to positive from stable and affirmed the company's CFR and PDR at Ba2. Moody's also assigned a Speculative Grade Liquidity rating of SGL-1 to reflect the company's very good liquidity profile. The change in outlook to positive reflects the company's strong credit metrics for the rating and the expectation for continued conservative balance sheet management as it relates to leverage, acquisitions, and share repurchases. Moreover, good liquidity, positive free cash flow generation, and extensive customer diversity also help balance against its high product concentration, technological obsolescence risk, and uncertainty surrounding its European demand. Affirmation: Issuer: EnerSys CFR and PDR Affirmed at Ba2 Senior Unsecured Conv./Exch. Bond/Debenture, changed to LGD6, 91% from LGD6, 90% Assignments: Issuer: EnerSys Speculative Grade Liquidity Rating, Assigned SGL-1 Outlook Actions: Issuer: EnerSys Outlook, Changed To Positive From Stable Ratings Rationale The Ba2 CFR reflects the company's leading global market position in industrial batteries, low leverage level, and high free cash flow generation. The ratings have been constrained by its relatively narrow range of products and services, dependence on key end markets that are typically more prone to economic conditions and cyclical patterns, the commodity nature of its products, and exposure to raw material cost volatility. However, the company's EBITDA to interest coverage of over 10.0 times and free cash flow to adjusted debt of over 32% are supportive of positive ratings traction given the view that the company's balance sheet and cash flow generation are sufficiently strong so as provide management with the flexibility to manage through macro economic challenges. EnerSys' Speculative Grade Liquidity rating of SGL-1 reflects Moody's assessment that the company will maintain a very good liquidity position over the next 12-18 months. The company reported a sizeable cash balance of over $180 million at July 1, 2012. Moreover, Moody's expects that the company will generate operating cash flow well in excess of its capital spending and enjoy further free cash flow generation. Its $350 million revolving credit facility, due March 31, 2016, provides sufficient back-up liquidity for a company its size. Total availability, including its international facilities totaled $357 million as of July 1, 2012. The company also has ample cushion under its financial covenants as prescribed under its revolving credit facility. Upwards ratings pressure may develop as the company successfully manages through the challenges presented by the European economic environment. Additionally, the company may expand its product base through acquisitions thereby making it important to better understand the use of debt in funding an acquisition, the maximum size, and anticipated geography. Moreover, large acquisitions include a level of integration and execution risks. Debt to EBITDA sustainable below 1.5 times, and EBIT to interest above 7 times along with free cash flow to debt over 15% are all supportive of positive ratings traction. The rating or outlook may deteriorate if free cash flow to debt was projected to fall below 10% or if interest coverage falls below 3 times. An inability to manage through the volatility of lead prices or a change in the competitive climate due to a technological breakthrough in battery technology by its competitors could also adversely affect the ratings. An inability to manage through the challenges posed to its European operations could also adversely affect the ratings. Moody's last rating action on EnerSys was on March 9, 2011 when the company's CFR and PDR were upgraded to Ba2 and a Baa3 was assigned to the company's new $350 million revolving credit facility. The principal methodology used in this rating was Global Manufacturing Industry published in December 2010 and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. EnerSys, headquartered in Reading, Pennsylvania, is the world's largest manufacturer, marketer and distributor of industrial batteries. The company also manufactures related products such as chargers, power equipment and battery accessories and provides aftermarket and customer-support services for industrial batteries. Revenues for the LTM period through July 1, 2012 totaled $2.3 billion. EVT HOTEL: Case Summary & 13 Unsecured Creditors ------------------------------------------------ Debtor: EVT Hotel, Inc. PMB 300, P.O. Box 4956 Caguas, PR 00726 Bankruptcy Case No.: 12-06358 Chapter 11 Petition Date: August 13, 2012 Court: U.S. Bankruptcy Court District of Puerto Rico (Old San Juan) Debtor's Counsel: Luis D. Flores Gonzalez, Esq. LUIS D. FLORES GONZALEZ LAW OFFICE 80 Calle Georgetti, Suite 202 San Juan, PR 00925-3624 Tel: (787) 758-3606 Fax: (787) 753-5317 E-mail: ldfglaw@coqui.net Scheduled Assets: $1,860,000 Scheduled Liabilities: $5,061,445 The Company's list of its 13 unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/prb12-06358.pdf The petition was signed by Ezequiel Vazquez Toro, president. FIBERTOWER NETWORK: Sec. 341 Creditors' Meeting Set for Sept. 5 --------------------------------------------------------------- The U.S. Trustee for the Middle District of Florida will convene a meeting of creditors under 11 U.S.C. Sec. 341(a) in the Chapter 11 case of FiberTower Network Services Corp. and FiberTower Corporation and their affiliated debtors on Sept. 5, 2012, at 9:30 a.m., at FTW 341 Rm 7A24. Proofs of Claims are due by Dec. 4, 2012. About FiberTower FiberTower Corporation, FiberTower Network Services Corp., FiberTower Licensing Corp., and FiberTower Spectrum Holdings LLC filed for Chapter 11 protection (Bankr. N.D. Tex. Case Nos. 12-44027 to 12-44031) on July 17, 2012, together with a plan support agreement struck with prepetition secured noteholders. FiberTower is an alternative provider of facilities-based backhaul services, principally to wireless carriers, and a national provider of millimeter-band spectrum services. Backhaul is the transport of voice, video and data traffic from a wireless carrier's mobile base station, or cell site, to its mobile switching center or other exchange point. FiberTower provides spectrum leasing services directly to other carriers and enterprise clients, and also offer their spectrum services through spectrum brokerage arrangements and through fixed wireless equipment partners. FiberTower's significant asset is the ownership of a national spectrum portfolio of 24 GHz and 39 GHz wide-area spectrum licenses, including over 740 MHz in the top 20 U.S. metropolitan areas and, in the aggregate, roughly 1.72 billion channel pops (calculated as the number of channels in a given area multiplied by the population, as measured in the 2010 census, covered by these channels). FiberTower believes the Spectrum Portfolio represents one of the largest and most comprehensive collections of millimeter wave spectrum in the U.S., covering areas with a total population of over 300 million. As of the Petition Date, FiberTower provides service to roughly 5,390 customer locations at 3,188 deployed sites in 13 markets throughout the U.S. The fixed wireless portion of these hybrid services is predominantly through common carrier spectrum in the 11, 18 and 23 GHz bands. FiberTower's biggest service markets are Dallas/Fort Worth and Washington, D.C./Baltimore, with additional markets in Atlanta, Boston, Chicago, Cleveland, Denver, Detroit, Houston, New York/New Jersey, Pittsburgh, San Antonio/Austin/Waco and Tampa. As of June 30, 2012, FiberTower's books and records reflected total combined assets, at book value, of roughly $188 million and total combined liabilities of roughly $211 million. As of the Petition Date, FiberTower had unrestricted cash of roughly $23 million. For the six months ending June 30, 2012, FiberTower had total revenue of roughly $33 million. With the help of FTI Consulting Inc., FiberTower's preliminary valuation work shows that the Company's enterprise value is materially less than $132 million -- i.e., the approximate principal amount of the 9.00% Senior Secured Notes due 2016 outstanding as of the Petition Date. The preliminary valuation work is based upon the assumption that FiberTower's spectrum licenses will not be terminated. Judge D. Michael Lynn oversees the Chapter 11 case. Lawyers at Andrews Kurth LLP serve as the Debtors' lead counsel. Lawyers at Hogan Lovells and Willkie Farr and Gallagher LLP serve as special FCC counsel. FTI Consulting serve as financial advisor. BMC Group Inc. serve as claims and noticing agent. The petitions were signed by Kurt J. Van Wagenen, president. Wells Fargo Bank, National Association -- as indenture trustee and collateral agent to the holders of 9.00% Senior Secured Notes due 2016 owed roughly $132 million as of the Petition Date -- is represented by Eric A. Schaffer, Esq., at Reed Smith LLP. An Ad Hoc Committee of Holders of the 9% Secured Notes Due 2016 is represented by Kris M. Hansen, Esq., and Sayan Bhattacharyya, Esq., at Stroock & Stroock & Lavan LLP. Wells Fargo and the Ad Hoc Committee also have hired Stephen M. Pezanosky, Esq., and Mark Elmore, Esq., at Haynes and Boone, LLP, as local counsel. U.S. Bank, National Association -- in its capacity as successor indenture trustee and collateral agent to holders of the 9.00% Convertible Senior Secured Notes due 2012, owed $37 million as of the Petition Date -- is represented by Michael B. Fisco, Esq., at Faegre Baker Daniels LLP, as counsel and J. Mark Chevallier, Esq., at McGuire Craddock & Strother PC as local counsel. FIBERTOWER NETWORK: Taps BMC Group as Claims & Noticing Agent ------------------------------------------------------------- FiberTower Network Services Corp. and FiberTower Corporation and their affiliated debtors seek permission from the U.S. Bankruptcy Court for the Northern District of Texas to employ BMC Group, Inc., as claims, noticing and solicitation agent. BMC will, among other things: a. prepare and serve notices required in the bankruptcy cases; b. receive, record and maintain copies of all proofs of claim and proofs of interest filed in the bankruptcy cases; c. create and maintain the official claims register(s); d. receive and record transfers of claims pursuant to Bankruptcy Rule 3001(e); and e. maintain an up-to-date mailing list for all entities who have filed proofs of claim and requests for notices in these bankruptcy cases. Data Entry/Administrative Support $25/$45-$65 Analysts $80-$110 Consultants $110-$145 Project Managers $175-$250 Director/Principal $250-$275 BMC will be provided with an advance payment retainer of $20,000. Tinamarie Fell, president of Legal Services at BMC, attests to the Court that the firm does not have an interest adverse to the Debtor or the bankruptcy and is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. About FiberTower FiberTower Corporation, FiberTower Network Services Corp., FiberTower Licensing Corp., and FiberTower Spectrum Holdings LLC filed for Chapter 11 protection (Bankr. N.D. Tex. Case Nos. 12-44027 to 12-44031) on July 17, 2012, together with a plan support agreement struck with prepetition secured noteholders. FiberTower is an alternative provider of facilities-based backhaul services, principally to wireless carriers, and a national provider of millimeter-band spectrum services. Backhaul is the transport of voice, video and data traffic from a wireless carrier's mobile base station, or cell site, to its mobile switching center or other exchange point. FiberTower provides spectrum leasing services directly to other carriers and enterprise clients, and also offer their spectrum services through spectrum brokerage arrangements and through fixed wireless equipment partners. FiberTower's significant asset is the ownership of a national spectrum portfolio of 24 GHz and 39 GHz wide-area spectrum licenses, including over 740 MHz in the top 20 U.S. metropolitan areas and, in the aggregate, roughly 1.72 billion channel pops (calculated as the number of channels in a given area multiplied by the population, as measured in the 2010 census, covered by these channels). FiberTower believes the Spectrum Portfolio represents one of the largest and most comprehensive collections of millimeter wave spectrum in the U.S., covering areas with a total population of over 300 million. As of the Petition Date, FiberTower provides service to roughly 5,390 customer locations at 3,188 deployed sites in 13 markets throughout the U.S. The fixed wireless portion of these hybrid services is predominantly through common carrier spectrum in the 11, 18 and 23 GHz bands. FiberTower's biggest service markets are Dallas/Fort Worth and Washington, D.C./Baltimore, with additional markets in Atlanta, Boston, Chicago, Cleveland, Denver, Detroit, Houston, New York/New Jersey, Pittsburgh, San Antonio/Austin/Waco and Tampa. As of June 30, 2012, FiberTower's books and records reflected total combined assets, at book value, of roughly $188 million and total combined liabilities of roughly $211 million. As of the Petition Date, FiberTower had unrestricted cash of roughly $23 million. For the six months ending June 30, 2012, FiberTower had total revenue of roughly $33 million. With the help of FTI Consulting Inc., FiberTower's preliminary valuation work shows that the Company's enterprise value is materially less than $132 million -- i.e., the approximate principal amount of the 9.00% Senior Secured Notes due 2016 outstanding as of the Petition Date. The preliminary valuation work is based upon the assumption that FiberTower's spectrum licenses will not be terminated. Judge D. Michael Lynn oversees the Chapter 11 case. Lawyers at Andrews Kurth LLP serve as the Debtors' lead counsel. Lawyers at Hogan Lovells and Willkie Farr and Gallagher LLP serve as special FCC counsel. FTI Consulting serve as financial advisor. BMC Group Inc. serve as claims and noticing agent. The petitions were signed by Kurt J. Van Wagenen, president. Wells Fargo Bank, National Association -- as indenture trustee and collateral agent to the holders of 9.00% Senior Secured Notes due 2016 owed roughly $132 million as of the Petition Date -- is represented by Eric A. Schaffer, Esq., at Reed Smith LLP. An Ad Hoc Committee of Holders of the 9% Secured Notes Due 2016 is represented by Kris M. Hansen, Esq., and Sayan Bhattacharyya, Esq., at Stroock & Stroock & Lavan LLP. Wells Fargo and the Ad Hoc Committee also have hired Stephen M. Pezanosky, Esq., and Mark Elmore, Esq., at Haynes and Boone, LLP, as local counsel. U.S. Bank, National Association -- in its capacity as successor indenture trustee and collateral agent to holders of the 9.00% Convertible Senior Secured Notes due 2012, owed $37 million as of the Petition Date -- is represented by Michael B. Fisco, Esq., at Faegre Baker Daniels LLP, as counsel and J. Mark Chevallier, Esq., at McGuire Craddock & Strother PC as local counsel. FIBERTOWER NETWORK: Members of Official Creditors Committee ----------------------------------------------------------- William T. Neary, the U.S. Trustee for the Northern District of Texas, has appointed five members to the Official Committee of Unsecured Creditors in the bankruptcy case of FiberTower Network Services Corp. and FiberTower Corporation and their affiliated debtors. The newly elected Committee members are: (1) Jacalyn Shapiro, Esq., Corporate Counsel SBA Sites, Inc. 5900 Broken Sound Parkway NW Boca Raton, FL 33487-2797 Tel: (561) 226-9268 E-mail: jshapiro@sbasite.com (2) Margaret Robinson, Senior Counsel American Towers, LLC 10 Presidential Way Woburn, MA 01801 Tel: (781) 926-4753 E-mail: margaret.robinson@americantower.com (3) Chad Pifer, Executive Vice President FiberLight, LLC 11700 Great Oaks Way, Suite 100 Alpharetta, GA 30022-2449 Tel: (678) 824-6625 E-mail: Chad.Pifer@FiberLight.com (4) C. Nicole Gladden, Esq., In House Counsel AT&T Services, Inc. One AT&T Way, Room 3A204 Bedminster, NJ 07921 Tel: (908) 234-6499 E-mail: gn235y@att.com (5) Gregory Friedman, Chief Financial Officer Zayo Group, LLC 400 Centennial Parkway, Suite 200 Louisville, CO 80027 Tel: (303) 381-3298 E-mail: greg.friedman@zayo.com About FiberTower FiberTower Corporation, FiberTower Network Services Corp., FiberTower Licensing Corp., and FiberTower Spectrum Holdings LLC filed for Chapter 11 protection (Bankr. N.D. Tex. Case Nos. 12-44027 to 12-44031) on July 17, 2012, together with a plan support agreement struck with prepetition secured noteholders. FiberTower is an alternative provider of facilities-based backhaul services, principally to wireless carriers, and a national provider of millimeter-band spectrum services. Backhaul is the transport of voice, video and data traffic from a wireless carrier's mobile base station, or cell site, to its mobile switching center or other exchange point. FiberTower provides spectrum leasing services directly to other carriers and enterprise clients, and also offer their spectrum services through spectrum brokerage arrangements and through fixed wireless equipment partners. FiberTower's significant asset is the ownership of a national spectrum portfolio of 24 GHz and 39 GHz wide-area spectrum licenses, including over 740 MHz in the top 20 U.S. metropolitan areas and, in the aggregate, roughly 1.72 billion channel pops (calculated as the number of channels in a given area multiplied by the population, as measured in the 2010 census, covered by these channels). FiberTower believes the Spectrum Portfolio represents one of the largest and most comprehensive collections of millimeter wave spectrum in the U.S., covering areas with a total population of over 300 million. As of the Petition Date, FiberTower provides service to roughly 5,390 customer locations at 3,188 deployed sites in 13 markets throughout the U.S. The fixed wireless portion of these hybrid services is predominantly through common carrier spectrum in the 11, 18 and 23 GHz bands. FiberTower's biggest service markets are Dallas/Fort Worth and Washington, D.C./Baltimore, with additional markets in Atlanta, Boston, Chicago, Cleveland, Denver, Detroit, Houston, New York/New Jersey, Pittsburgh, San Antonio/Austin/Waco and Tampa. As of June 30, 2012, FiberTower's books and records reflected total combined assets, at book value, of roughly $188 million and total combined liabilities of roughly $211 million. As of the Petition Date, FiberTower had unrestricted cash of roughly $23 million. For the six months ending June 30, 2012, FiberTower had total revenue of roughly $33 million. With the help of FTI Consulting Inc., FiberTower's preliminary valuation work shows that the Company's enterprise value is materially less than $132 million -- i.e., the approximate principal amount of the 9.00% Senior Secured Notes due 2016 outstanding as of the Petition Date. The preliminary valuation work is based upon the assumption that FiberTower's spectrum licenses will not be terminated. Judge D. Michael Lynn oversees the Chapter 11 case. Lawyers at Andrews Kurth LLP serve as the Debtors' lead counsel. Lawyers at Hogan Lovells and Willkie Farr and Gallagher LLP serve as special FCC counsel. FTI Consulting serve as financial advisor. BMC Group Inc. serve as claims and noticing agent. The petitions were signed by Kurt J. Van Wagenen, president. Wells Fargo Bank, National Association -- as indenture trustee and collateral agent to the holders of 9.00% Senior Secured Notes due 2016 owed roughly $132 million as of the Petition Date -- is represented by Eric A. Schaffer, Esq., at Reed Smith LLP. An Ad Hoc Committee of Holders of the 9% Secured Notes Due 2016 is represented by Kris M. Hansen, Esq., and Sayan Bhattacharyya, Esq., at Stroock & Stroock & Lavan LLP. Wells Fargo and the Ad Hoc Committee also have hired Stephen M. Pezanosky, Esq., and Mark Elmore, Esq., at Haynes and Boone, LLP, as local counsel. U.S. Bank, National Association -- in its capacity as successor indenture trustee and collateral agent to holders of the 9.00% Convertible Senior Secured Notes due 2012, owed $37 million as of the Petition Date -- is represented by Michael B. Fisco, Esq., at Faegre Baker Daniels LLP, as counsel and J. Mark Chevallier, Esq., at McGuire Craddock & Strother PC as local counsel. FIBERTOWER NETWORK: Creditors Seek to Push Back Rejection Hearing ----------------------------------------------------------------- Katy Stech at Dow Jones' DBR Small Cap reports that Creditors of FiberTower Corp. saidthey need more time to examine the San Francisco communications tech company's plan to ditch 11 fiber- transport service agreements and 238 expensive leases for spots where the company has installed equipment for its data-backhaul services. About FiberTower FiberTower Corporation, FiberTower Network Services Corp., FiberTower Licensing Corp., and FiberTower Spectrum Holdings LLC filed for Chapter 11 protection (Bankr. N.D. Tex. Case Nos. 12-44027 to 12-44031) on July 17, 2012, together with a plan support agreement struck with prepetition secured noteholders. FiberTower is an alternative provider of facilities-based backhaul services, principally to wireless carriers, and a national provider of millimeter-band spectrum services. Backhaul is the transport of voice, video and data traffic from a wireless carrier's mobile base station, or cell site, to its mobile switching center or other exchange point. FiberTower provides spectrum leasing services directly to other carriers and enterprise clients, and also offer their spectrum services through spectrum brokerage arrangements and through fixed wireless equipment partners. FiberTower's significant asset is the ownership of a national spectrum portfolio of 24 GHz and 39 GHz wide-area spectrum licenses, including over 740 MHz in the top 20 U.S. metropolitan areas and, in the aggregate, roughly 1.72 billion channel pops (calculated as the number of channels in a given area multiplied by the population, as measured in the 2010 census, covered by these channels). FiberTower believes the Spectrum Portfolio represents one of the largest and most comprehensive collections of millimeter wave spectrum in the U.S., covering areas with a total population of over 300 million. As of the Petition Date, FiberTower provides service to roughly 5,390 customer locations at 3,188 deployed sites in 13 markets throughout the U.S. The fixed wireless portion of these hybrid services is predominantly through common carrier spectrum in the 11, 18 and 23 GHz bands. FiberTower's biggest service markets are Dallas/Fort Worth and Washington, D.C./Baltimore, with additional markets in Atlanta, Boston, Chicago, Cleveland, Denver, Detroit, Houston, New York/New Jersey, Pittsburgh, San Antonio/Austin/Waco and Tampa. As of June 30, 2012, FiberTower's books and records reflected total combined assets, at book value, of roughly $188 million and total combined liabilities of roughly $211 million. As of the Petition Date, FiberTower had unrestricted cash of roughly $23 million. For the six months ending June 30, 2012, FiberTower had total revenue of roughly $33 million. With the help of FTI Consulting Inc., FiberTower's preliminary valuation work shows that the Company's enterprise value is materially less than $132 million -- i.e., the approximate principal amount of the 9.00% Senior Secured Notes due 2016 outstanding as of the Petition Date. The preliminary valuation work is based upon the assumption that FiberTower's spectrum licenses will not be terminated. Judge D. Michael Lynn oversees the Chapter 11 case. Lawyers at Andrews Kurth LLP serve as the Debtors' lead counsel. Lawyers at Hogan Lovells and Willkie Farr and Gallagher LLP serve as special FCC counsel. FTI Consulting serve as financial advisor. BMC Group Inc. serve as claims and noticing agent. The petitions were signed by Kurt J. Van Wagenen, president. Wells Fargo Bank, National Association -- as indenture trustee and collateral agent to the holders of 9.00% Senior Secured Notes due 2016 owed roughly $132 million as of the Petition Date -- is represented by Eric A. Schaffer, Esq., at Reed Smith LLP. An Ad Hoc Committee of Holders of the 9% Secured Notes Due 2016 is represented by Kris M. Hansen, Esq., and Sayan Bhattacharyya, Esq., at Stroock & Stroock & Lavan LLP. Wells Fargo and the Ad Hoc Committee also have hired Stephen M. Pezanosky, Esq., and Mark Elmore, Esq., at Haynes and Boone, LLP, as local counsel. U.S. Bank, National Association -- in its capacity as successor indenture trustee and collateral agent to holders of the 9.00% Convertible Senior Secured Notes due 2012, owed $37 million as of the Petition Date -- is represented by Michael B. Fisco, Esq., at Faegre Baker Daniels LLP, as counsel and J. Mark Chevallier, Esq., at McGuire Craddock & Strother PC as local counsel. FRANKLIN CREDIT: Emerges From Chapter 11 Protection --------------------------------------------------- BankruptcyData.com reports that the Franklin Credit Holding's First Amended Prepackaged Plan of Reorganization became effective, and the Company emerged from Chapter 11 protection. The Court confirmed the Plan on July 18, 2012. BankruptcyData.com relates that pursuant to the Prepackaged Plan, shareholders of the common stock as of the record date are entitled to receive their respective pro rata shares of the company's 80% interest in Franklin Credit Management Corporation (FCMC), a national mortgage servicer (which did not and is not proposing to file a petition for bankruptcy). About Franklin Credit Franklin Credit Holding Corporation (OTC BB: FCMC) -- http://www.franklincredit.com/-- is a specialty consumer finance company primarily engaged in the servicing and resolution of performing, re-performing and nonperforming residential mortgage loans, including specialized loan recovery servicing, and in the analysis, pricing, due diligence and acquisition of residential mortgage portfolios for third parties. The Company's executive, administrative and operations offices are located in Jersey City, N.J. Franklin Credit Holding Corporation filed a Chapter 11 bankruptcy petition (Bankr. D. N.J. Case No. 12-24411) in Newark, New Jersey, on June 4, 2012. Franklin Credit also filed a prepackaged plan. The Debtor is seeking a combined hearing on the plan and the explanatory disclosure statement. Judge Donald H. Steckroth presides over the case. Lawyers at McCarter & English, LLP, serves as the Debtor's counsel. In its petition, the Debtor estimated $1 million to $10 million in assets and $500 million to $1 billion in debts. In a recent regulatory filing with the U.S. Securities and Exchange Commission, Franklin Credit Holding's balance sheet at March 31, 2012, showed $29.02 million in total assets, $874.02 million in total liabilities, and a $845 million total stockholders' deficit. The petition was signed by Paul Colasono, executive vice president and chief financial officer. The Plan provides for the liquidation of its assets -- the ownership of 80% of the stock in non-debtor Franklin Credit Mortgage Corp. -- with the proceeds or the fair market value of the assets being distributed in accordance with the Bankruptcy Code. The fair market value of FCMC will be distributed through the payment of $250,000 in cash on the effective date of the Plan and an aggregate $1.11 million over a period of five years, evidenced by a promissory note guaranteed by Thomas J. Axon, the chairman and president of the Debtor and FCMC, and the owner of 20% of the common shares of FCMC, and 45.2% of the common shares of the Debtor. The payments will be made by FCMC, and will be the primary source of cash for distributions contemplated by the Plan. IN exchange for the payment by FCMC, the Debtor's interests in the stock of FCMC will be distributed, pro-rata, to holders of allowed interests. The Plan provides for payment in full of allowed priority non-tax claims. The secured claims of the legacy lenders totaling $820.6 million will be unaltered by the Plan. Huntington National Bank and Huntington Finance LLC will release the Debtor from any obligations in connection with their secured claims of $4.7 million. Holders of general unsecured claims estimated to total $1.9 million will receive their pro rata share of the proceeds of the liquidation of the remaining assets. The Court has established July 18, 2012, as the hearing on the adequacy of the Disclosure Statement. The Debtor filed a First Amended Prepackaged Plan of Reorganization that proposes to change, among other things, the proposed record date to identify stockholders for a proposed distribution of a pro rata share of the Company's 80% interest in its mortgage servicing subsidiary, Franklin Credit Management Corporation. The Debtor now proposes the record date to be a date after a confirmation order has been entered by the Bankruptcy Court. The Debtor also proposes to exclude liability to the Securities and Exchange Commission from the releases proposed to be granted in favor of non-debtors. The Debtor asks the Court to approve those modifications as non-material without the need for further solicitation of votes to accept or reject the Prepackaged Plan. FREEDOM ENVIRONMENTAL: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: Freedom Environmental Services, Inc. 11372 United Way Orlando, FL 32824 Bankruptcy Case No.: 12-10958 Chapter 11 Petition Date: August 13, 2012 Court: U.S. Bankruptcy Court Middle District of Florida (Orlando) Debtor's Counsel: Paul DeCailly, Esq. DECAILLY LAW GROUP, P.A. 19455 Gulf Boulevard, Suite 8 Indian Shores, FL 33785 Tel: (727) 824-7709 Fax: (866) 906-5977 E-mail: pdecailly@dlg4me.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Michael Ciarlone, COO & CFO. Affiliate that filed separate Chapter 11 petition: Entity Case No. Petition Date ------ -------- ------------- Brownie's Wastewater Solutions, Inc. 12-10993 08/13/12 GENERAL MOTORS: Fitch to Rate Senior Unsecured Notes 'BB' --------------------------------------------------------- Fitch Ratings expects to rate General Motors Financial's (GMF) senior unsecured notes 'BB'. Proceeds from the issuance will be used for general corporate purposes, which may include acquisitions. The expected rating reflects GMF's relationship to its parent, General Motors Corp (GM), its solid market position in the auto finance space, seasoned management team, strong asset quality and improving operating performance. The ratings also reflect GMF's improved funding flexibility, low leverage relative to other rated captive finance companies, and enhanced liquidity profile. Ratings are constrained by Fitch's view of GM's credit profile, as Fitch cannot envision a scenario where the captive would be rated higher than its parent. Rating constraint's also include GMF's heavily secured funding profile, strong reliance on the asset backed securitization market, which could become illiquid during times of unfavorable economic conditions, and the company's increased susceptibility to any dramatic weakening in the economy due to its focus on subprime customers. GMF, formerly AmeriCredit Corp, was founded in 1992 as an automotive finance company, headquartered in Fort Worth, TX. In October 2010, GM acquired AmeriCredit for $3.5 billion in cash. Today, GMF offers subprime consumer loans to GM and non-GM dealers, leasing products in the U.S. and Canada and commercial lending to GM dealers. Fitch expects to assign the following ratings: General Motors Financial -- Senior Unsecured Notes 'BB' GEOMET INC: To Begin Trading Common Stocks on the OTC Markets ------------------------------------------------------------- GeoMet, Inc. disclosed that that its common stock will begin trading Aug. 14 on the OTCQB Marketplace under the Company's current symbol, GMET. The OTCQB is a market tier for over-the-counter-traded companies that are registered and reporting with the Securities and Exchange Commission. The Company's preferred stock will continue to trade on the NASDAQ Capital Market under the symbol GMETP. On Aug. 2, 2012 the Company was notified by the Listing Qualifications Department of the NASDAQ Stock Market that the Company's common stock had closed at less than $1 over the previous 180 calendar days and, as a result, did not comply with listing rules. The Company was further advised that its common stock would be scheduled for delisting from the NASDAQ Capital Market and would be suspended from trading at the opening of business on Aug. 13, 2012. About Geomet Inc. Houston, Texas-based GeoMet, Inc., is an independent energy company primarily engaged in the exploration for and development and production of natural gas from coal seams ("coalbed methane" or "CBM") and non-conventional shallow gas. It was originally founded as a consulting company to the coalbed methane industry in 1985 and has been active as an operator, developer and producer of coalbed methane properties since 1993. Its principal operations and producing properties are located in the Cahaba and Black Warrior Basins in Alabama and the central Appalachian Basin in Virginia and West Virginia. It also owns additional coalbed methane and oil and gas development rights, principally in Alabama, Virginia, West Virginia, and British Columbia. As of March 31, 2012, it owns a total of approximately 192,000 net acres of coalbed methane and oil and gas development rights. The Company's balance sheet at March 31, 2012, showed $199.21 million in total assets, $176.64 million in total liabilities, $30.47 million of Series A convertible redeemable preferred stock, and a stockholders' deficit of $7.90 million. "As of May 11, 2012, we had $148.6 million outstanding under our Fifth Amended and Restated Credit Agreement," the Company said in its quarterly report for the period ending March 31, 2012. "As of March 31, 2012, we were in compliance with all of the covenants in our Credit Agreement. The Credit Agreement provides, however, that if the amount outstanding at any time exceeds the "borrowing base", we must provide additional collateral to the lenders or repay the excess as provided in the Credit Agreement. The borrowing base is set in the sole discretion of our lenders in June and December of each year based, in part, on the value of our estimated reserves as determined by the lenders using natural gas prices forecasted by the lenders." "Due to the decline in the bank group's price projections, we expect our outstanding loan balance at the June determination date will exceed the new borrowing base, resulting in a borrowing base deficiency. We do not have additional collateral to provide to the lenders and we expect that our operating cash flows would be insufficient to repay the expected borrowing base deficiency, as required under the Credit Agreement. As such, unless we amend the Credit Agreement, we may be in default under the agreement when the borrowing base is determined in June 2012. In addition, the elimination of the unused availability under the borrowing base, which is a factor in our working capital covenant, may result in a future default of that covenant under the Credit Agreement. We have begun discussions with our bank group; however, until the borrowing base for June 2012 has been determined, we will not know the amount of the deficiency. As of March 31, 2012, the debt is classified as long-term as we are not in violation of any debt covenants. Should we be in violation of any covenants which have not been waived or have a borrowing base deficiency as of June 30, 2012, some or all of the debt will be reclassified to current. There are no assurances that we will be able to amend our Credit Agreement or obtain a waiver. If we do obtain a waiver or an amendment, there can be no assurance as to the cost or terms of such an amendment." "These conditions raise substantial doubt about our ability to continue as a going concern for the next twelve months." HAWKER BEECHCRAFT: Court Approves Epiq as Administrative Advisor ---------------------------------------------------------------- The Hon. Stuart M. Bernstein of the U.S. Bankruptcy Court for the Southern District of New York authorized Hawker Beechcraft, Inc., et al., to employ Epiq Bankruptcy Solutions, LLC as administrative advisor. Epiq is expected to: a. assist with, among other things, solicitation, balloting and tabulation and calculation of votes, well as preparing any appropriate reports, as required in furtherance of confirmation of plan(s) of reorganization; b. generate an official ballot certification and testifying, if necessary, in support of the ballot tabulation results; and c. gather data in conjunction with the preparation, and assist with the preparation, of the Debtors' schedules of assets and liabilities and statements of financial affairs. The Debtors will pay Epiq at these hourly rates: Clerk $28 - $42 Case Manager $66 - $101 IT/Programming $98 - $133 Senior Case Manager/Consultant $115 - $154 Senior Consultant $157 - $192 Vice President $200 The Debtors will pay Epiq a retainer in the amount of $25,000. Jason D. Horwitz, vice president and senior consultant of Epiq, attests to the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Hawker Beechcraft Hawker Beechcraft Inc., a designer and manufacturer of light and medium-sized jet, turboprop and piston aircraft, filed for Chapter 11 reorganization together with 17 affiliates (Bankr. S.D.N.Y. Lead Case No. 12-11873) on May 3, 2012, having already negotiated a plan that eliminates $2.5 billion in debt and $125 million of annual cash interest expense. The plan, filed on June 30, would give 81.9% of the new stock to holders of $1.829 billion of secured debt, reserving 18.9% for unsecured creditors. The restructuring support agreement stated that the $780.9 million in unsecured deficiency claims of secured lenders are to participate in the pool of unsecured claims to share in 18.9% of the new equity. The unsecured recovery that otherwise would go to holders of $308 million in subordinated note claims will be directed to senior unsecured noteholders. Hawker is 49%-owned by affiliates of Goldman Sachs Group Inc. and 49%-owned by Onex Corp. The Company's balance sheet at Dec. 31, 2011, showed $2.77 billion in total assets, $3.73 billion in total liabilities and a $956.90 million total deficit. Other claims include pensions underfunded by $493 million. Hawker's legal representative is Kirkland & Ellis LLP, its financial advisor is Perella Weinberg Partners LP and its restructuring advisor is Alvarez & Marsal. Epiq Bankruptcy Solutions LLC is the claims and notice agent/ as administrative advisor. PricewaterhouseCoopers LLP is accounting consultants and independent auditors. Sidley Austin LLP serves as legal counsel and Houlihan Lokey Howard & Zukin Capital Inc. serves as financial advisor to the DIP Agent and the Prepetition Agent. The Senior Secured Lenders' legal representative is Wachtell Lipton Rosen & Katz and their financial advisor is Houlihan Lokey. Superior's legal representative is Locke Lord LLP and its financial advisor is Grant Thornton. Wachtell, Lipton, Rosen & Katz represents an ad hoc committee of senior secured prepetition lenders holding 70% of the loans. Milbank, Tweed, Hadley & McCloy LLP represents an ad hoc committee of holders of the 8.500% Senior Fixed Rate Notes due 2015 and 8.875%/9.625% Senior PIK Election Notes due 2015 issued by Hawker Beechcraft Acquisition Company LLC and Hawker Beechcraft Notes Company. The members of the Ad Hoc Committee -- GSO Capital Partners, L.P. and Tennenbaum Capital Partners, LLC -- hold claims or manage accounts that hold claims against the Debtors' estates arising from the purchase of the Senior Notes. Deutsche Bank National Trust Company, the indenture trustee for senior fixed rate notes and the senior PIK-election notes, is represented by Foley & Lardner LLP. An Official Committee of Unsecured Creditors appointed in the case has selected Daniel H. Golden, Esq., and the law firm of Akin Gump Strauss Hauer & Feld LLP as legal counsel. The Committee tapped FTI Consulting, Inc., as its financial advisor. HAWKER BEECHCRAFT: Court OKs PwC as Accounting Consultants ---------------------------------------------------------- The Hon. Stuart M. Bernstein of the U.S. Bankruptcy Court for the Southern District of New York authorized Hawker Beechcraft, Inc., et al., to employ PricewaterhouseCoopers LLP as their accounting consultants and independent auditors. PwC is expected to, among other things: a. provide general and technical accounting advice with respect to the contemplated bankruptcy process including impacts on monthly operating reporting requirements and matters related to post-acquisition accounting; b. assist with due diligence requests such as coordinating workpaper reviews and responding to management inquiries about historical accounting records; and c. provide limited-scope audit services, of the Debtors' savings and investment plan and retirement income plans, including issuance of a report expressing our opinion on whether the form and content of the information included in the Plans' financial statements and supplemental schedules comply with federal rules and regulations. The Debtors related that the professional services provided by PwC will not be duplicative of those services provided by Alvarez & Marsal North America, LLC, as restructuring advisors. As reported in the Troubled Company Reporter on July 23, 2012, the Debtors will compensate PwC at these hourly rates: Partner/Principal $650 National Office Specialist $850 Director/Senior Manager $425 Manager $300 Senior Associate $225 Associate $150 Secretarial $100 PwC will be seeking the full payment of each of these fixed-fee arrangements through its fee applications: a. Savings and Investment Audit Engagement Letter $30,000 b. Retirement Plan Audit Engagement Letter $90,000 Phil W. Caster, a partner at PwC, attests to the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. In a separate filing, the Court authorized Locke Lord LLP to withdraw as counsel for Entergy Arkansas, Inc., party to a settlement agreement with the Debtor. About Hawker Beechcraft Hawker Beechcraft Inc., a designer and manufacturer of light and medium-sized jet, turboprop and piston aircraft, filed for Chapter 11 reorganization together with 17 affiliates (Bankr. S.D.N.Y. Lead Case No. 12-11873) on May 3, 2012, having already negotiated a plan that eliminates $2.5 billion in debt and $125 million of annual cash interest expense. The plan, filed on June 30, would give 81.9% of the new stock to holders of $1.829 billion of secured debt, reserving 18.9% for unsecured creditors. The restructuring support agreement stated that the $780.9 million in unsecured deficiency claims of secured lenders are to participate in the pool of unsecured claims to share in 18.9% of the new equity. The unsecured recovery that otherwise would go to holders of $308 million in subordinated note claims will be directed to senior unsecured noteholders. Hawker is 49%-owned by affiliates of Goldman Sachs Group Inc. and 49%-owned by Onex Corp. The Company's balance sheet at Dec. 31, 2011, showed $2.77 billion in total assets, $3.73 billion in total liabilities and a $956.90 million total deficit. Other claims include pensions underfunded by $493 million. Hawker's legal representative is Kirkland & Ellis LLP, its financial advisor is Perella Weinberg Partners LP and its restructuring advisor is Alvarez & Marsal. Epiq Bankruptcy Solutions LLC is the claims and notice agent/ as administrative advisor. PricewaterhouseCoopers LLP is accounting consultants and independent auditors. Sidley Austin LLP serves as legal counsel and Houlihan Lokey Howard & Zukin Capital Inc. serves as financial advisor to the DIP Agent and the Prepetition Agent. The Senior Secured Lenders' legal representative is Wachtell Lipton Rosen & Katz and their financial advisor is Houlihan Lokey. Superior's legal representative is Locke Lord LLP and its financial advisor is Grant Thornton. Wachtell, Lipton, Rosen & Katz represents an ad hoc committee of senior secured prepetition lenders holding 70% of the loans. Milbank, Tweed, Hadley & McCloy LLP represents an ad hoc committee of holders of the 8.500% Senior Fixed Rate Notes due 2015 and 8.875%/9.625% Senior PIK Election Notes due 2015 issued by Hawker Beechcraft Acquisition Company LLC and Hawker Beechcraft Notes Company. The members of the Ad Hoc Committee -- GSO Capital Partners, L.P. and Tennenbaum Capital Partners, LLC -- hold claims or manage accounts that hold claims against the Debtors' estates arising from the purchase of the Senior Notes. Deutsche Bank National Trust Company, the indenture trustee for senior fixed rate notes and the senior PIK-election notes, is represented by Foley & Lardner LLP. An Official Committee of Unsecured Creditors appointed in the case has selected Daniel H. Golden, Esq., and the law firm of Akin Gump Strauss Hauer & Feld LLP as legal counsel. The Committee tapped FTI Consulting, Inc., as its financial advisor. HAWKER BEECHCRAFT: Court Sets Sept. 14 as Claims Bar Date --------------------------------------------------------- The Hon. Stuart M. Bernstein of the U.S. Bankruptcy Court for the Southern District of New York established 5 p.m., Eastern Time, on Sept. 14, 2012, as the deadline for any individual or entity to file proofs of claim against Hawker Beechcraft, Inc., et al. The Court also set 5 p.m., on Oct. 30, as the governmental bar date. Proofs of claim must be received by the claims agent: if delivered by first-class U.S. mail: Hawker Beechcraft, Inc. c/o Epiq Bankruptcy Solutions, LLC FDR Station P.O. Box 5285 New York, NY 10150-5285 if delivered by hand delivery or overnight mail: Hawker Beechcraft, Inc. c/o Epiq Bankruptcy Solutions, LLC 757 Third Avenue 3rd Floor New York, New York 10017 The United States Bankruptcy Court for the Southern District of New York One Bowling Green, Room 534 New York, NY 10004 About Hawker Beechcraft Hawker Beechcraft Inc., a designer and manufacturer of light and medium-sized jet, turboprop and piston aircraft, filed for Chapter 11 reorganization together with 17 affiliates (Bankr. S.D.N.Y. Lead Case No. 12-11873) on May 3, 2012, having already negotiated a plan that eliminates $2.5 billion in debt and $125 million of annual cash interest expense. The plan, filed on June 30, would give 81.9% of the new stock to holders of $1.829 billion of secured debt, reserving 18.9% for unsecured creditors. The restructuring support agreement stated that the $780.9 million in unsecured deficiency claims of secured lenders are to participate in the pool of unsecured claims to share in 18.9% of the new equity. The unsecured recovery that otherwise would go to holders of $308 million in subordinated note claims will be directed to senior unsecured noteholders. Hawker is 49%-owned by affiliates of Goldman Sachs Group Inc. and 49%-owned by Onex Corp. The Company's balance sheet at Dec. 31, 2011, showed $2.77 billion in total assets, $3.73 billion in total liabilities and a $956.90 million total deficit. Other claims include pensions underfunded by $493 million. Hawker's legal representative is Kirkland & Ellis LLP, its financial advisor is Perella Weinberg Partners LP and its restructuring advisor is Alvarez & Marsal. Epiq Bankruptcy Solutions LLC is the claims and notice agent/ as administrative advisor. PricewaterhouseCoopers LLP is accounting consultants and independent auditors. Sidley Austin LLP serves as legal counsel and Houlihan Lokey Howard & Zukin Capital Inc. serves as financial advisor to the DIP Agent and the Prepetition Agent. The Senior Secured Lenders' legal representative is Wachtell Lipton Rosen & Katz and their financial advisor is Houlihan Lokey. Superior's legal representative is Locke Lord LLP and its financial advisor is Grant Thornton. Wachtell, Lipton, Rosen & Katz represents an ad hoc committee of senior secured prepetition lenders holding 70% of the loans. Milbank, Tweed, Hadley & McCloy LLP represents an ad hoc committee of holders of the 8.500% Senior Fixed Rate Notes due 2015 and 8.875%/9.625% Senior PIK Election Notes due 2015 issued by Hawker Beechcraft Acquisition Company LLC and Hawker Beechcraft Notes Company. The members of the Ad Hoc Committee -- GSO Capital Partners, L.P. and Tennenbaum Capital Partners, LLC -- hold claims or manage accounts that hold claims against the Debtors' estates arising from the purchase of the Senior Notes. Deutsche Bank National Trust Company, the indenture trustee for senior fixed rate notes and the senior PIK-election notes, is represented by Foley & Lardner LLP. An Official Committee of Unsecured Creditors appointed in the case has selected Daniel H. Golden, Esq., and the law firm of Akin Gump Strauss Hauer & Feld LLP as legal counsel. The Committee tapped FTI Consulting, Inc., as its financial advisor. HAYDEL PROPERTIES: Withdraws Bid to Use BancorpSouth Cash -------------------------------------------------------- Haydel Properties LP has withdrawn its motion to use the cash collateral of BancorpSouth Mortgage. At the time of the motion, it was anticipated that the three properties of the Debtor subject to the motion would be generating rental income that would constitute as cash collateral of BancorpSouth Mortgage. However, Haydel said the properties currently are not rented and not generating cash collateral. As reported by the Troubled Company Reporter on March 22, 2012, Haydel Properties sought permission to use cash collateral of BanCorpSouth, Community Bank, Gene Whitehurst, Hancock Bank, BanCorpSouth Mortgage, and Peoples Bank. The Debtor intended to use cash collateral for payment of ad valorem taxes. The Debtor owed the Banks on multiple promissory notes, all of which are secured by deeds of trust on property located in different states: Note Payoff Balance Bank as of Petition Date Total Liens ------------ ------------------- ----------- BancorpSouth $428,485 $468,213 Community Bank $1,506,500 $1,567,561 Gene Whitehurst $166,440 $170,216 Hancock Bank $101,500 $106,140 BanCorpSouth Mortgage $82,350 $84,888 Peoples Bank $3,893,800 $4,203,768 About Haydel Properties Haydel Properties LP, based in Biloxi, Mississippi, filed for Chapter 11 bankruptcy (Bankr. S.D. Miss. Case No. 12-50048) on Jan. 11, 2012. Judge Katharine M. Samson presides over the case. Christy Pickering serves as accountant. The Debtor disclosed $11.7 million in assets and $6.8 million in liabilities as of the Chapter 11 filing. The petition was signed by Michael D. Haydel, manager of general partner. HAYDEL PROPERTIES: Can Employ Andrew McDonald as Special Counsel ---------------------------------------------------------------- Haydel Properties LP sought and obtained authorization from the U.S. Bankruptcy Court for the Southern District of Mississippi to employ M. Andrew McDonald as special counsel. M. Andrew McDonald will be employed as special counsel to represent the Debtor in an eminent domain proceeding with the Special Court of Eminent Domain for the First Judicial District of Harrison County, Mississippi in Harrison County Utility Authority v. Haydel Properties LP et al., case no. D2402-10-1884. The Debtor's prior counsel in the proceeding, Gary E. White, Esq., has resigned and will be filing a motion to withdraw from the case. The Debtor has agreed to compensate Mr. McDonald on a contingency fee basis to be paid 35% above the initial valuation and offer made by the Harrison County Utility Authority or the entity taking the property, exclusive of litigation costs, capped at 50% of the total eminent domain award. Mr. McDonald attests that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Haydel Properties Haydel Properties LP, based in Biloxi, Mississippi, filed for Chapter 11 bankruptcy (Bankr. S.D. Miss. Case No. 12-50048) on Jan. 11, 2012. Judge Katharine M. Samson presides over the case. Christy Pickering serves as accountant. The Debtor disclosed $11.7 million in assets and $6.8 million in liabilities as of the Chapter 11 filing. The petition was signed by Michael D. Haydel, manager of general partner. HOLMES CONSTRUCTION: Files for Chapter 11 in North Carolina ----------------------------------------------------------- Property developer Holmes Construction & Excavation LLC filed for Chapter 11 bankruptcy protection (Bankr. E.D.N.C. Case No. 12-05717) on Aug. 7, 2012. Judge Randy D. Doub presides over the case. The meeting of creditors 341(a) will be held on Sept. 10, 2012, at 10:00 a.m. at Wilson 341 Meeting Room. The last day to file a complaint is Nov. 9. Proofs of claim are due by Dec. 10. Government proofs of claim are due by Feb. 3, 2013. The Chapter 11 plan and disclosure statement are due in the case by Nov. 5, 2012. The Court set a status conference for Sept. 10. J. Elias O'Neal at Greater Wilmington Business Journal says Kim Fuller was listed as member and manager of Holmes Construction & Excavation LLC. Mr. O'Neal says the Company listed between $500,001 and $1 million in assets, and $500,001 and $1 million in liabilities. According to the report, Holmes Construction & Excavation owes a number of creditors, including more than $146,000 to John Deere Credit, $168,000 to Security Savings Bank and $35,600 to First Bank. Business Journal reports challenges still persist in the greater Wilmington, N.C. market for area contractors and construction firms. The report notes the Associated General Contractors of America -- a Washington, D.C.-based national network of general contractors and builders -- recently released its annual report on construction employment between June 2011 and June 2012. Of the country's 337 metro areas, 162 posted declines. According to the report, the decline includes metro Wilmington, which saw one of the worse declines not only in North Carolina, but in the country -- going from 9,800 construction jobs in June 2011 to 7,800 jobs in June 2012, which was a 20% net job loss, according to the report. Overall, the Tarheel state employed 173,400 in the construction industry in June 2012. That's down from 178,100 in June 2011, the report stated. The report notes Lee F. Cowper Inc., a construction firm that once employed nearly 65 employees, shuttered its office in December after its owner, Lee F. Cowper, pleaded guilty to illegally billing New Hanover County's Alcoholic Beverage Control Board for work on its administrator's home in federal court. He was sentenced to three years probation and fined $25,000. HORIZON PHARMA: Had $22.8 Million Net Loss in Second Quarter ------------------------------------------------------------ Horizon Pharma, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $22.78 million on $3.84 million of sales for the three months ended June 30, 2012, compared with a net loss of $11.64 million on $1.34 million of sales for the same period a year ago. For the six months ended June 30, 2012, the Company had a net loss of $46.51 million on $6.36 million of sales, compared with a net loss of $19.31 million on $3.1 million of sales for the same period of 2011. The Company's balance sheet at June 30, 2012, showed $148.75 million in total assets, $90.88 million in total liabilities, and stockholders' equity of $57.87 million. According to the regulatory filing, the Company believes that it has sufficient liquidity and capital resources to operate into the first half of 2013. "However, the Company is highly dependent in the near term on the commercial success of DUEXIS in the U.S. market, where it was only recently launched, and has insufficient commercial operating history to accurately predict its future performance. In February 2012, the Company entered into a $60,000 loan facility with a group of institutional investors ("Senior Secured Loan") which includes certain performance covenants, including minimum trailing twelve month revenue covenants at each quarter end, beginning in the second quarter of 2012. As of June 30, 2012, the Company was in compliance with all financial loan covenants pursuant to the Senior Secured Loan. Should the Company not meet these quarterly minimum revenue covenants, in addition to an increase in the interest rate payable under the loan facility, the lenders have the right to demand repayment of the obligations under the loan. The Company also cannot predict whether the lenders would demand repayment of the outstanding balance of the loan if the Company was unable to meet the minimum quarterly revenue covenants. The inability to meet the covenants under the loan facility could have an adverse impact on the Company's financial position and results of operations. These uncertainties and lack of commercial operating history raise substantial doubt about the Company's ability to continue as a going concern." As reported in the TCR on March 29, 2012, PricewaterhouseCoopers LLP, in Chicago, Illinois, expressed substantial doubt about Horizon Pharma's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has a limited commercial operating history and may not be able to comply with certain debt covenants. A complete text of the Form 10-Q is available for free at: http://is.gd/63eO4Y Horizon Pharma, Inc., headquartered in Deerfield, Illinois, is a biopharmaceutical company that is developing and commercializing innovative medicines to target unmet therapeutic needs in arthritis, pain and inflammatory diseases. HORNE INTERNATIONAL: Delays Form 10-Q for Second Quarter -------------------------------------------------------- Due to reduced staffing levels, Horne International, Inc., experienced delays in closing its quarter, and consequently the Company's independent registered public accounting firm was unable to complete its review of the Company's quarterly report on Form 10-Q for the period ended June 24, 2012, within the prescribed time period without unreasonable effort or expense. The Form 10-Q will be filed no later than the fifth calendar day following the prescribed due date. About Horne International Fairfax, Va.-based Horne International, Inc., is an engineering services company focused on provision of integrated, systems approach based solutions to the energy and environmental sectors. The Company reported a net and total comprehensive loss of $121,000 on $5.68 million of revenue for the 12 months ended Dec. 25, 2011, compared with a net and total comprehensive loss of $1.04 million on $3.43 million of revenue for the 12 months ended Dec. 26, 2010. The Company's balance sheet at March 25, 2012, showed $1.17 million in total assets, $2.21 million in total liabilities, and a $1.03 million total stockholders' deficit. In its audit report accompanying the 2011 financial statements, Stegman & Company, in Baltimore, Maryland, expressed substantial doubt as to the Company's ability to continue as a going concern. The independent auditors noted that the Company has experienced continuing net losses for each of the last four years and as of Dec. 25, 2011, current liabilities exceeded current assets by $900,000. IMAGEWARE SYSTEMS: Elects Neal Goldman to Board of Directors ------------------------------------------------------------ ImageWare Systems, Inc., announced that Neal Goldman has been elected to its board of directors effective Aug. 7, 2012. Mr. Goldman comes to ImageWare as the president, chief compliance officer and director of Goldman Capital Management, Inc., an employee owned investment advisor that he founded in 1985. Additionally, Mr. Goldman is a member of the CFA institute and serves as a member of the board of directors and compensation committee for Blyth, Inc., a New York Stock Exchange-listed designer and marketer of home decorative and fragrance products. "Neal's extensive knowledge of corporate finance, the capital markets and his proven leadership abilities will be highly complementary to our existing board," said Jim Miller, ImageWare chairman and CEO. "These qualities will be a tremendous asset as ImageWare enters its next stage of growth and we are delighted to have him join our team." Goldman commented, "Imageware's foundational patents in multi- modal biometrics have created a unique barrier to entry and by leveraging their industry-leading IP portfolio, the company is well poised to grow its government and law enforcement business while aggressively pursuing the commercial marketplace. I am looking forward to joining Jim and the rest of the board at such a pivotal time in the company's development." About ImageWare Systems Headquartered in San Diego, California, ImageWare Systems, Inc. is a leader in the emerging market for software-based identity management solutions, providing biometric, secure credential, law enforcement and enterprise authorization. Its "flagship" product is the IWS Biometric Engine. Scalable for small city business or worldwide deployment, the Company's biometric engine is a multi- biometric platform that is hardware and algorithm independent, enabling the enrollment and management of unlimited population sizes. The Company's identification products are used to manage and issue secure credentials, including national IDs, passports, driver licenses, smart cards and access control credentials. Its law enforcement products provide law enforcement with integrated mug shot, fingerprint LiveScan and investigative capabilities. The Company also provides comprehensive authentication security software. The Company reported a net loss of $3.18 million in 2011, compared with a net loss of $5.05 million in 2010. The Company's balance sheet at March 31, 2012, showed $9.42 million in total assets, $10.20 million in total liabilities and a $776,000 total shareholders' deficit. IMMUCOR INC: S&P Keeps 'BB-' Rating on $100MM Revolving Credit -------------------------------------------------------------- Standard & Poor's Ratings Services said its ratings on Norcross, Ga.-based blood analysis company Immucor Inc.'s $100 million senior secured revolving credit facility remain unchanged following a proposed extension of the maturity date to Aug. 19, 2017 from Aug. 19, 2016. "The issue rating on the revolver remains at 'BB-' (one notch higher than the 'B+' corporate credit rating on the company) and the recovery rating remains at '2', indicating our expectation of substantial (70% to 90%) recovery for lenders in the event of a payment default," S&P said. "We affirmed our 'B+' corporate credit rating on Immucor. The rating outlook is stable," S&P said. "We rate the company's $715 million secured bank facility (consisting of a $615 million term loan B and a $100 million revolving credit facility) 'BB-' with a '2' recovery rating. The '2' recovery rating indicates our expectation of substantial recovery (70% to 90%) in the event of a default," S&P said. "We rate Immucor's issue of $400 million in unsecured notes 'B- '(two notches below the corporate credit rating) with a '6' recovery rating. The '6' recovery rating indicates our expectation of negligible (0% to 10%) recovery in the event of a default. None of the ratings are affected by current company proposals for a one-year extension of the revolver maturity date, reduced interest rates, and some easing of covenant restrictions," S&P said. "The ratings on Immucor consider our expectations that the company's important role in blood transfusion procedures position it well for some recovery in demand," said Standard & Poor's credit analyst Michael Kaplan, "but also that it will continue to operate under a heavy debt burden. The company's narrow scope and exposure to technology shifts contribute to a business risk profile we consider 'fair,' according to our criteria. In addition, we believe Immucor's financial risk profile will remain 'highly leveraged,' with limited near-term prospects it can meaningfully reduce the large amount of borrowing tied to its 2011 LBO." "The stable rating outlook on Immucor reflects our near-term expectations of low-single-digit revenue gains, and relatively flat margins, in an environment of stabilized demand for medical procedures that require blood transfusions. Over time, the company's revenues and earnings could benefit from its strategy to convert manual customers to automated systems. Nevertheless, we believe that EBITDA growth in the year ahead will be limited, leaving little prospect for a meaningful increase in internally generated funds for debt repayment, and that debt leverage will be sustained above 6x," S&P said. "There is the potential for a downgrade within a year if there is an unexpected tightening of liquidity. We believe that a higher rating is unlikely within a year. In our view, Immucor would need a double-digit revenue increase combined with a several hundred- basis-point increase in EBITDA margin to reduce debt leverage to 5x. This probably would require a dramatic shift in the competitive landscape. Moreover, we do not believe Immucor's sponsor would sustain leverage below the 5x level that might indicate an 'aggressive' (as opposed to highly leveraged) financial risk profile that could suggest an upgrade," S&P said. INNER CITY: Plan Filing Exclusivity Expires Sept. 4 --------------------------------------------------- The Hon. Shelley C. Chapman for the U.S. Bankruptcy Court for the Southern District of New York extended to Sept. 4, 2012, Inner City Media Corp., et al.'s exclusive period to propose a Chapter 11 Plan. The period to solicit acceptances of the Plan was also extended to Nov. 5, 2012. As reported by the Troubled Company Reporter on July 6, 2012, the Debtors requested for an extension of their exclusive periods to preserve all of their options in case the sale transactions cannot be consummated or cannot be consummated on a timely basis. The Debtors explained that while they believe that the sale transactions approved by the Court represent the best way to maximize the value of the Debtors' assets, the Debtors cannot know with certainty if the sale transactions will obtain the requisite regulatory approval from the Federal Communications Commission, let alone before the expiration of the current exclusive periods. The Court previously granted the Debtors until July 5 to exclusively file a plan and solicit acceptances of that plan until Nov. 2. About Inner City On Aug. 23, 2011, affiliates of Yucaipa and CF ICBC LLC, Fortress Credit Funding I L.P., and Drawbridge Special Opportunities Fund Ltd., signed involuntary Chapter 11 petitions for Inner City Media Corp. and its affiliates (Bankr. S.D.N.Y. Case Nos. 11-13967 to 11-13979) to collect on a $254 million debt. The Petitioning Creditors are party to the senior secured credit Facility pursuant to which they (or their predecessors in interest) extended $197 million in loans to the Alleged Debtors to be used for general corporate purposes. More than two years ago, the Alleged Debtors defaulted under the Senior Secured Credit Facility, and in any event the entire amount of principal and accrued and unpaid interest and fees became immediately due and payable on Feb. 13, 2010. Inner City Media's affiliates subject to the involuntary Chapter 11 are ICBC Broadcast Holdings, Inc., Inner-City Broadcasting Corporation of Berkeley, ICBC Broadcast Holdings-CA, Inc., ICBC- NY, L.L.C., ICBC Broadcast Holdings-NY, Inc., Urban Radio, L.L.C., Urban Radio I, L.L.C., Urban Radio II, L.L.C., Urban Radio III, L.L.C., Urban Radio IV, L.L.C., Urban Radio of Mississippi, L.L.C., and Urban Radio of South Carolina, L.L.C. Judge Shelley C. Chapman granted each of Inner City Media Corporation and its debtor affiliates relief under Chapter 11 of the United States Code. The decision came after considering the involuntary petitions, and the Debtors' answer to involuntary petitions and consent to entry of order for relief and reservation of rights. Attorneys for Yucaipa Corporate Initiatives Fund II, L.P. and Yucaipa Corporate Initiatives (Parallel) Fund II, L.P. are John J. Rapisardi, Esq., and Scott J. Greenberg, Esq., at Cadwalader, Wickersham & Taft LLP. Attorneys for CF ICBC LLC, Fortress Credit Funding I L.P., and Drawbridge Special Opportunities Fund Ltd. are Adam C. Harris, Esq., and Meghan Breen, Esq., at Schulte Roth & Zabel LLP. Akin Gump Strauss Hauer & Feld LLP serves as the Debtors' counsel. Rothschild Inc. serves as the Debtors' financial advisors and investment bankers. GCG Inc. serves as the Debtors' claims agent. The United States Trustee said that an official committee under 11 U.S.C. Sec. 1102 has not been appointed in the bankruptcy case of Inner City Media because an insufficient number of persons holding unsecured claims against the Debtor has expressed interest in serving on a committee. INTEGRATED FREIGHT: Taps Fuselier as Turnaround Advisor ------------------------------------------------------- Integrated Freight Corporation's board of directors approved a two-year consulting agreement with Fuselier and Co., Inc., renewable for one year, to advise the Company on a corporate turnaround strategy. The compensation arrangement gives Fuselier the right to earn up to 13,330,000 shares of the Company's common stock in 2012 and ten million shares thereafter annually through the term of the agreement. Under the terms of the consulting agreement, management of the two currently operating subsidiaries have full decision-making authority and operational control until such time as the personal guaranties by their respective management of their respective equipment financing are eliminated, which the Company has an obligation to accomplish as quickly as may be reasonable. David Fuselier has been elected as a director and chairman and been appointed to fill the vacancy in the position of chief executive officer, on a part-time basis. Mr. Fuselier is 52 years old. The Company expects Mr. Fuselier to devote a substantial portion of his working time to the Company's business and affairs. For the last 15 years, Mr. Fuselier has been the principal of Fuselier and Co., a private merchant banking firm engaged in corporate turnarounds. He is chairman and chief executive officer on a part-time basis of New Leaf Brands, Inc., a publicly traded company, beginning Feb. 15, 2012. He is a graduate of Louisiana State University (MSJ) and Louisiana College (BA). The Company has entered into a five-year employment agreement with Mr. Fuselier, which provides an initial annual base salary of $150,000 with five percent annual increases and an annual bonus award based on the achievement of established financial goals as set forth annually by the Board. The Company's Board will research and establish an executive option pool, under which Mr. Fuselier will be a number of options to be determined to purchase shares of the Company's common stock at an exercise price equal to the current market price on the date of grant. The options will vest twenty percent on the date of grant and twenty percent on each subsequent anniversary date. Meanwhile, Mark Morris, one of the Company's directors, has resigned effective Aug. 2, 2012. Mr. Morris will continue in his position with the Company's wholly owned subsidiary, Morris Transportation, Inc. Monte W. Smith, one of the Company's directors, has resigned effective Aug. 2, 2012. Mr. Smith will continue in his position with the Company's wholly owned subsidiary, Smith Systems Transportation, Inc. The Company has entered into a mutual termination of employment and release Matthew Veal as the Compay's chief financial officer and simultaneously entered into a consulting agreement with Mr. Veal pursuant to which he will provide services as the Company's chief financial officer. About Integrated Freight Integrated Freight Corporation, formerly PlanGraphics, Inc., (OTC BB: IFCR) -- http://www.integrated-freight.com/-- is a Sarasota, Florida headquartered motor freight company providing long-haul, regional and local service to its customers. The Company specializes in dry freight, refrigerated freight and haz-waste truckload services, operating primarily in well-established traffic lanes in the upper mid-West, Texas, California and the Atlantic seaboard. IFCR was formed for the purpose of acquiring and consolidating operating motor freight companies. On Aug. 19, 2010, at a special stockholders' meeting the Company approved a reverse stock split, a relocation of its State of Incorporation to Florida and a change of its name to Integrated Freight Corporation. The Company's name change and State of Incorporation have been approved and are effective as of Aug. 18, 2010. The reverse stock split has been approved but is not effective as of the date of this filing. The Company ended fiscal 2011 with a net loss of $7.76 million on $18.82 million of revenue and fiscal 2010 with a net loss of $3.14 million on $17.33 million of revenue. The Company's balance sheet at Dec. 31, 2011, showed $11.70 million in total assets, $26.29 million in total liabilities and a $14.58 million total stockholders' deficit. In the auditors' report accompanying the financial statements for year ended March 31, 2011, Sherb & Co., LLP, in Boca Raton, Florida, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has suffered recurring losses and has a negative working capital position and a stockholders' deficit. INT'L ENVIRONMENTAL: Shareholder's Plea to Evict Trustee Denied --------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California denied Steven Thompson's motion to set aside order appointing Howard Grobstein as the Chapter 11 trustee for International Environmental Solutions Corporation (I.E.S.) Mr. Thompson, a shareholder, noteholder and party-in-interest in the Chapter 11 case of the Debtor, asserted that Mr. Grobstein is a not "disinterested person as that term is defined in Section 101(14) of the Bankruptcy Code. About International Environmental Karen Bertram, James Hinkle, Blaine Scott Molle & Dennis Molle, and Linda Babb filed an involuntary Chapter 11 petition against International Environmental Solutions Corporation, dba IES Corporation, (Bankr. C.D. Calif. Case No. 12-16268) on March 13, 2012. Judge Wayne E. Johnson presides over the case. On April 16, 2012, the Debtor filed their consent for relief under Chapter 11. The Debtor hired Goe & Forsythe, LLP, as counsel. The Debtor disclosed $25,129,244 in assets and $10,387,254 in liabilities. At the behest of a shareholder, the U.S. Trustee appointed Howard Grobstein as Chapter 11 trustee for the Debtor's estate. Marshack Hays as his general counsel Crowe Horwath LLP as his accountants Dzida, Carey & Steinman as his special transactional counsel. Stetina Brunda Garred & Brucker as his special patent and trademark counsel. INTERNATIONAL TEXTILE: Incurs $37.4 Million Net Loss in Q2 ---------------------------------------------------------- International Textile Group, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $37.39 million on $163.10 million of net sales for the three months ended June 30, 2012, compared with a net loss of $13.80 million on $167.34 million of net sales for the same period during the prior year. The Company reported a net loss of $59.87 million on $318.75 million of net sales for the six months ended June 30, 2012, compared with a net loss of $25.74 million on $315.60 million of net sales for the same period a year ago. The Company reported a net loss of $69.43 million in 2011, compared with a net loss of $46.30 million in 2010. The Company's balance sheet at June 30, 2012, showed $375.64 million in total assets, $592.17 million in total liabilities, and a $216.53 million total stockholders' deficit. A copy of the Form 10-Q is available for free at: http://is.gd/wPucdA About International Textile International Textile Group, Inc., is a global, diversified textile manufacturer headquartered in Greensboro, North Carolina, with current operations principally in the United States, China, Mexico, and Vietnam. ITG's long-term focus includes the realization of the benefits of its global expansion, including reaching full production at ITG facilities in China and Vietnam, and continuing to seek other strategic growth opportunities. INTERVAL ACQUISITION: Moody's Lifts CFR to 'Ba2'; Outlook Stable ---------------------------------------------------------------- Moody's Investors Service upgraded Interval Acquisition Corp.'s Corporate Family and Probability of Default ratings to Ba2 from Ba3, and its senior unsecured notes rating to Ba3 from B1. The company's SGL-1 Speculative Grade Liquidity rating remains unchanged. The rating outlook is stable. The upgrade in Interval's Corporate Family Rating reflects the reduction in the company's financial leverage since fiscal 2009 resulting from modest EBITDA growth and the voluntary pre-payment of outstanding debt from free cash flow. Combined, these factors have reduce debt/EBITDA and improved EBITDA less capital expenditures/interest to levels consistent with Moody's previously stated triggers for a higher rating -- debt/EBITDA below 2.5 times, and EBITDA less capital expenditures/interest at or above 3.25 times. Interval's debt/EBITDA and EBITDA less capital expenditures/interest for the 12-month period ended June 30, 2012 was 2.2 times and 3.6 times, respectively. The upgrade also considers that Interval has maintained its very good liquidity profile which continues to be characterized by significant free cash flow, large existing cash balance, and relaxed debt maturity profile. Interval eliminated a relatively near-term maturity when in June 2012 the company refinanced its $50 million revolver due July 2013 with a $500 million revolver due 2017. Ratings upgraded: Corporate Family Rating to Ba2 from Ba3 Probability of Default Rating to Ba2 from Ba3 $300 million senior unsecured guaranteed notes due September 2016 to Ba3 (LGD 5, 76%) from B1 (LGD 4, 61%) Ratings Rationale Interval's Ba2 Corporate Family Rating reflects the company's demonstrated stable revenue and cash flow characteristics. The company has been able to maintain retention rates comparable to historical levels despite a weak economy and transaction revenue continues to grow as occupancy rates at timeshare resorts remains near pre-recession levels. As a result, membership fees and transaction revenues -- which account for a significant portion of the company's consolidated revenues -- have remained relatively stable (excluding acquisitions). In Moody's opinion, these data points reflect the high value that vacation interest owners place on the ability to easily and conveniently exchange timeshare locations and period of occupancy. In addition to Interval's high member retention rates, the company's cash flow stability reflects the low capital intensity of its service model. It also acknowledges the company's success at managing operating costs and margins. Combined, these factors have enabled Interval to maintain relatively strong credit metrics. Key credit concerns include Interval's small scale in terms of revenue, concentrated business profile -- the company's exchange business accounts for about 90% of its EBITDA -- and event risk associated with potential acquisitions and/or shareholder activities. The ratings also consider that the anemic economic environment will continue to weigh on timeshare demand thereby slowing the growth of new members for Interval's exchange business. Additionally, limited availability of credit to the timeshare industry continues to hamper developers' ability to sell new timeshare units. As a result, Moody's expects future earnings growth will be slow and could pressure the company to find other growth alternatives. The stable rating outlook reflects Moody's expectation that Interval will continue to grow earnings and generate free cash flow despite the limited availability of credit and overall sluggish demand environment for timeshare product. The stable outlook also incorporates Moody's expectation that Interval will apply a portion of its free cash flow to make dividends and share repurchases in addition to debt repayment. The stable rating outlook also incorporates Interval's announcement that it issued an irrevocable notice of redemption stating that it will redeem its 9.5% senior notes due 2016 on September 4, 2012 at par. Interval plans to refinance the senior notes with its $500 million revolver expiring 2017. While the interest savings is expected to approximate $20 million annually, and will contribute favorable to Interval's free cash flow profile and coverage metrics, Moody's does not expect it will result in further ratings improvement. Further rating improvement is limited at given Interval's relatively small size and narrow business profile. The ratings could be lowered if Moody's believes Interval's debt/EBITDA will rise and remain above 2.5 times and/or the company's retained cash flow/net debt will drop and remain below 18%. Ratings could also be pressured if Interval were to pursue debt-financed share repurchases, dividends, or other shareholder-friendly activities. The principal methodology used in rating Interval Acquisition Corp. was the Business and Consumer Service Rating Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Interval Acquisition Corp. headquartered in Miami, Florida, is a provider of membership and leisure services to the vacation industry. It operates under two segments: Membership and Exchange and Management and Rental. The company generates annual net revenues of about $450 million. JERRY'S NUGGET: Files for Chapter 11 in Las Vegas ------------------------------------------------- Jerry's Nugget Inc. and affiliate Spartan Gaming LLC sought Chapter 11 protection (Bankr. D. Nev. Lead Case No. 12-19387) in Las Vegas on Aug. 13, 2012. Stamis family-owned Jerry's Nugget has a 9.1-acre casino property in North Las Vegas. The property consists of 87,187 square feet of building area and 24,511 square feet of casino floor space, with 630 slot and video poker machines and 9 table games. Jerry's Nugget also contains a sports book, a keno area, and a small live pit. There are two restaurants the Uncle Angelo's Pizza Joint and Jerry's Famous Coffee shop as well as Uncle Angelo's Bakery, a locals' favorite. Net revenues totaled $22.5 million, including $15.3 million in gaming revenue, in the year ended Dec. 31, 2011. Spartan Gaming owns 12 parcels of real property in Nevada. Two of the parcels provide parking access for Jerry's Nugget. US Bank claims to be owed $3.6 million on a secured term note that matured in October 2011. 2010-1 CRE Venture, LLC, claims it is owed $728,000 on a business loan provided by Community Bank of Nevada to JNI. CM Capital Services, LLC, asserts $944,000 owing on a business loan. Jerry's Nugget estimated assets and debts of $10 million to $50 million. The Debtor said its current going concern value is at least $8 million. "Despite the fact that US Bank is oversecured by more than 120%, as a result of certain asserted guarantor liabilities and under the current tightened credit markets, JNI has not been able to obtain a refinancing of the matured term note," Jeremy Stamis, directors of operations of JNI, explains in a court filing. Mr. Stamis says JNI's potential guarantor liabilities precluded the refinancing. In 2007, CBN tendered a loan to Stamis- controlled Barcelona Partners, LLC, a land development company that owns approximately 194 acres of land in Mesquite, Nevada. CRE contends the loan was guaranteed by JNI. Litigation is pending. Mr. Stamis said that until recently, JNI had been faced with declining casino revenues based on reduced consumer spending resulting heavily from the dramatic increases in unemployment in the Las Vegas area, a tightened credit market, and an overall weakened economy. Gaming revenue in Clark County, Nevada, after 2007 underwent three consecutive years of decline, only improving 0.8% in 2010 and 1.61% in 2011. Jerry's Nugget engaged in negotiations with US Bank but the bank declined a restructuring proposal submitted by the Debtor. Instead in March 2012, the bank sued in Clark County state court and requested a receiver to take over the casino. The Debtor said that despite its ability to service its monthly obligations to US Bank, it has sought Chapter 11 relief because a consensual loan modification or note sale could not be reached. First Day Motions The Debtors said that they have filed first day motions to maintain strong relationships with their customers, employees, partners, vendors, creditors, gaming regulators, and other governmental entities. The Debtors have filed motions to, among other things, use cash collateral, honor casino chips and other gaming liabilities, and pay wages of employees, grant adequate assurance to utilities. According to the docket, there's a meeting of creditors under 11 U.S.C. Sec. 341(a) on Sept. 13, 2012, at 01:00 p.m. The last day to file proofs of claim is Dec. 12. JERRY'S NUGGET: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Jerry's Nugget Inc. 1821 North Las Vegas Boulevard North Las Vegas, NV 89030 Bankruptcy Case No.: 12-19387 Affiliate that filed separate Chapter 11 petition: Entity Case No. ------ -------- Spartan Gaming, LLC 12-19388 Chapter 11 Petition Date: August 13, 2012 Court: U.S. Bankruptcy Court District of Nevada (Las Vegas) Judge: Mike K. Nakagawa Debtors' Counsel: Talitha B. Gray, Esq. GORDON & SILVER, LTD. 3960 Howard Hughes Parkway, 9th Floor Las Vegas, NV 89169 Tel: (702) 796-5555 E-mail: tgray@gordonsilver.com Jerry's Nugget's Estimated Assets: $10,000,001 to $50,000,000 Jerry's Nugget's Estimated Debts: $10,000,001 to $50,000,000 Spartan Gaming's Estimated Assets: $1,000,001 to $10,000,000 Spartan Gaming's Estimated Debts: $1,000,001 to $10,000,000 The petitions were signed by Jeremy Stamis, president. A. Jerry's Nugget's List of Its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ George Stamis and Effie Stamis Promissory Note $5,382,714 5527 Topaz Street Las Vegas, NV 89120 CM Capital Services -- $1,000,000 1291 W. Galleria Drive, Suite 220 Henderson, NV 89014 2010-1 CRE Venture, LLC -- $728,000 2450 Broadway, 6th Floor Santa Monica, CA 90404 Jerry's Lodge Property Trust -- $282,046 4465 S. Jones Boulevard Las Vegas, NV 89103 Hereiu Welfare Fund -- $91,492 Rich, Wightman & Company -- $61,909 Outwest Meat Company -- $57,027 Nevada Power -- $52,621 US Food Service -- $33,497 American Express -- $30,312 Alliance Management -- $28,407 Clark County Treasurer -- $21,481 Young Electric Sign Company -- $19,884 Southern Nevada Pension Trust -- $19,545 GMAC -- $19,256 Lotus Broadcasting -- $15,716 Aristocrat Technologies -- $15,537 SYSCO -- $15,140 FortuNet -- $14,862 Mega Jackpot Fund -- $10,954 B. Spartan Gaming's list of its eight largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/nvb12-19388.pdf JUNIPER GENERATION: Fitch Affirms Sr. Unsec. Notes Rating at 'BB+' ------------------------------------------------------------------ Fitch Ratings has affirmed Juniper Generation, LLC's (Juniper) senior secured notes due 2014 at 'BB+'. The Rating Outlook is Positive. Key Rating Drivers -- Revenue Risk: Revenues are fully contracted with capacity and energy payments from an investment grade utility offtaker. Exposure to fluctuations in power pricing is mitigated by established heat rates that factor in market prices under the short run avoided cost (SRAC) formula through the project's debt maturity in 2014. The project, however, remains exposed to fluctuations in gas prices, which also factor in market power prices. Amid an environment of continuing low gas prices, dispatch can be reduced to minimize negative margins. -- Operating Risk: Operating performance has historically been stable despite the 2011 forced outage, which has been resolved. Decline in portfolio diversification exacerbates the project's exposure to event risks such as forced outages. The declining debt profile, however, coincides with the expectation of fewer assets remaining in the portfolio. -- Financial Results: Debt service coverage ratios (DSCRs) declined to 1.48x in 2011, from a historical average of 1.80x since 2007. A slow rebound in gas prices suggests continuation of low power prices in the near term. As a result, Fitch projects base case DSCRs averaging 1.53x and DSCRs averaging 1.40x under a combination of stresses through 2014, consistent with the current rating category. What Could Trigger a Rating Change? -- The rating could be upgraded based upon continued adequate cash flow and liquidity to support debt repayment in the remaining 2.5 year amortization. -- An extended forced outage for the Bear Mountain plant that reduces capacity payments and materially erodes the project's cash flow could trigger a downgrade. Security The senior notes are secured by a first-priority security interest in Juniper's equity interests. The collateral comprises all of Juniper's accounts and assets, including the assets of the wholly owned projects, until the scheduled expiration of their respective power purchase agreements (PPAs). Upon the expiry of each facility's PPA, the facility and the relevant equity interest are removed from the collateral package, and the cash flows associated with that facility will no longer be available to pay debt service. Credit Update The Positive Outlook reflects Fitch's expectation of adequate financial cushion to support full debt repayment by 2014, despite a decline in actual and projected financial metrics. Fitch's rating case financial analysis is based upon a forecast of continued low gas prices, which currently average $2.67/mmbtu compared to about $4.00/mmbtu in 2011. Fitch's analysis also includes low power prices, increased operating expenses, and heat rates under Option A as defined by the SRAC settlement. The Bear Mountain facility was not dispatched from January through March 2012 to minimize negative financial margins during periods of low market prices. As such, Fitch projects 2012 generation output to be 9% lower than 2011. The project is still expected to earn full capacity payments, which substantially mitigate the impact of potentially reduced energy revenues. The Corona facility is not expected to provide distributions material to the project's overall financial performance. Fitch's projections do not include potential revenue increases from cap and trade auctions that could benefit the project beginning in 2013. Juniper Generation has a history of stable operating performance. However, operating performance for Bear Mountain declined in 2011. With a 2011 capacity factor of 76% (99% in 2010), 2011 generation declined nearly 23% compared to 2010. Availability declined to 75% in 2011, as the project experienced a forced outage to repair a high pressure compressor rotor. Despite the outage, the project earned its full capacity payment, as its units were available during periods required by the offtaker. Expiration of the Bear Mountain gas supply agreement in October 2012 is not a rating constraint as the plant should be able to secure adequate fuel supply at market price. Of the nine assets that originally formed the Juniper Generation portfolio, two, Bear Mountain and Corona remain. As expected, individual plants have been removed from the loan's collateral as their respective PPAs expire. These projects no longer contribute equity distributions to service Juniper's debt obligations. Favorably, the declining debt structure accommodates the decline in the number of assets in the portfolio to adequately service debt obligations. Support for Juniper's debt is also derived from equity distributions from the WCAC operating company, which provides operations and maintenance to all of the nine assets that were part of the original Juniper portfolio. Juniper is a special purpose company created solely to issue the secured notes and hold a portfolio of equity interests in nine gas-fired cogeneration plants and two service companies. The facilities, located in southern California, sell energy and capacity to Pacific Gas and Electric (PG&E; Issuer Default Rating [IDR] of 'BBB+', with a Stable Outlook) and Southern California Edison (SCE; IDR of 'A-', with a Stable Outlook) under PPAs expiring through 2018. There is no debt at the individual project level. KL SERVICES: Case Summary & 19 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: KL Services, LLC 222 Wilson Road Somerset, NJ 08873 Bankruptcy Case No.: 12-30023 Chapter 11 Petition Date: August 13, 2012 Court: U.S. Bankruptcy Court District of New Jersey (Trenton) Judge: Kathryn C. Ferguson Debtor's Counsel: David A. Kasen, Esq. KASEN & KASEN 1874 East Route 70, Suite 3 Cherry Hill, NJ 08003 Tel: (856) 424-4144 E-mail: dkasen@kasenlaw.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 The Company's list of its 19 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/njb12-30023.pdf The petition was signed by Robert Kaiser, member. LEHMAN BROTHERS: Bid to Revise Ruling on JPMorgan Suit Denied ------------------------------------------------------------- Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York denied Lehman Brothers Holdings Inc.'s motion to revise his ruling in an $8.6 billion lawsuit against JPMorgan Chase & Co. In an August 7 decision, the bankruptcy judge said he was satisfied with the way he had dealt with the issues, Bloomberg News reported. Lehman, which is gathering money for a second payment to creditors, filed the motion asking the bankruptcy judge to reconsider the dismissal of some claims in the lawsuit. The company said it might gain hundreds of millions of dollars if Judge Peck reinstated the claims he dismissed. The claims are related to guarantees given to JPMorgan in the months leading up to Lehman's bankruptcy filing. Lehman argued in the court filing that the dismissal was a mistake because the guarantees themselves will be relied upon by JPMorgan to assert unsecured claims if the company wins on the other claims that were not dismissed. By throwing out the guarantees, JPMorgan won't have any claim at all should Lehman win on other theories. The reconsideration motion was filed after Judge Peck issued an opinion on April 19, saying that Lehman cannot claim money from JPMorgan for securities transactions governed by the so-called safe harbor law. Safe harbor laws can shield some financial transactions from being included in the pool of assets divided among creditors when a company files for Chapter 11 protection. The lawsuit is Lehman Brothers Holdings Inc. v. JPMorgan Chase Bank NA, 10-03266, U.S. Bankruptcy Court, Southern District of New York (Manhattan). About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. Lehman is set to make its first payment to creditors under its $65 billion payout plan on April 17, 2012. LEHMAN BROTHERS: Seeks Approval of Claims Discovery Procedures -------------------------------------------------------------- Lehman Brothers Holdings Inc. is seeking court approval to implement procedures in connection with discovery related to the company's omnibus objections to claims based on restricted stock units and contingent stock awards. The proposed procedures are designed to provide the claimants with the discovery they have requested, according to Lehman lawyer, Ralph Miller, Esq., at Weil Gotshal & Manges LLP, in New York. As of August 8, there are more than 300 claims that remain pending on omnibus objections that need to be resolved by the bankruptcy court. Many claimants believe the objections cannot be resolved without discovery from Lehman. Also in connection with the discovery, Lehman asked Judge James Peck to approve a process governing disclosure of confidential information by the company to holders of the claims and vice- versa. The procedures are outlined in the proposed order, a copy of which is available for free at http://is.gd/vHPK5Q A court hearing is scheduled for August 23. Objections are due by August 16. 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. LEHMAN BROTHERS: LBI Trustee to Sell Navigator to Wilbur Ross ------------------------------------------------------------- The trustee liquidating Lehman Brothers Holdings Inc.'s brokerage unit is seeking court approval to sell the shares of Navigator Holdings Ltd. James Giddens, the court-appointed trustee, plans to sell 4,406,763 shares of Navigator to entities sponsored by or affiliated with Wilbur Ross's WL Ross & Co. LLC for more than $110.1 million. The shares will be sold "free and clear of all liens, claims, encumbrances and interests," according to the court filing. The shares represent approximately 34% of the total outstanding shares of common stock of Navigator, a Marshall Islands company owned by the Lehman brokerage. Objections to the sale must be filed on or before September 5. If an objection is filed, a court hearing will be convened on September 19 to consider approval of the sale. The terms of the sale are outlined in a 15-page agreement, a copy of which is available at http://is.gd/XMCQoE The sale agreement contains a no-shop clause, which bars the trustee from soliciting a rival offer. The trustee, however, can negotiate with any rival buyer making an unsolicited offer, subject to the bankruptcy court's approval. In case there is an unsolicited offer, the WL Ross buyers have to be informed about the offer. They can revise the terms of the sale to make their own proposal the best offer for the shares. The trustee will pay the WL Ross buyers a termination fee of $3,305,072 or 3% of the price being offered in case he enters into an agreement with another buyer. 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. LEHMAN BROTHERS: LBI Trustee Still Opposes FirstBank Claim ---------------------------------------------------------- The trustee liquidating Lehman Brothers Holdings Inc.'s brokerage unit is blocking efforts by FirstBank Puerto Rico to have his decision on the bank's claim reconsidered by a bankruptcy court. FirstBank previously asked the U.S. Bankruptcy Court in Manhattan to reconsider the Lehman trustee's decision denying customer status to the bank's claim, which the trustee said, is a duplicate or an amendment of another claim filed by Lehman's special financing unit. FirstBank asserts a claim in the sum of $61.5 million against the brokerage based on government securities, which the bank entrusted to the brokerage for safekeeping and for use as collateral for swap deals with Lehman's special financing unit. Lawyer for the trustee, Sarah Cave, Esq., at Hughes Hubbard & Reed LLP, in New York, said granting the bank's request would "inject uncertainty into the claims process by unsettling a determined claim" and inviting other claimants to seek to revisit their claims. Ms. Cave further said the issue raised by FirstBank should be resolved in the discussions between the bank and Lehman's special financing unit. "That issue has no place in the SIPA liquidation of [the brokerage]," she said. Meanwhile, a Lehman lawyer questioned FirstBank's move to intervene in a fight between Lehman and the trustee over the latter's determination of the company's customer claims. "The relief requested is, at a minimum, premature and may be, in all likelihood, moot given the current status of FirstBank's asserted customer claim and the imminent consummation of a settlement between the trustee and the Lehman entities," said Robert Lemons, Esq., at Weil Gotshal & Manges LLP, in New York. Barclays Capital Inc., a defendant in a lawsuit filed by FirstBank involving securities that are the subject of its claim against the brokerage, urged the bankruptcy court to refrain from ruling on the issues raised by FirstBank that may have an effect on its claim in the lawsuit until both banks are able to brief those issues. Also in connection with FirstBank's request, a group of claimants led by Federal Deposit Insurance Corp. urged the bankruptcy court to defer any ruling concerning repurchase agreements until after it rules on the trustee's previously filed motion. The motion filed on April 6 seeks an order confirming the trustee's determination that the group's claims are not customer claims. A court hearing is scheduled for August 15. Objections are due by August 8. 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. LEHMAN BROTHERS: Court Asked to Deny Class Certification Bid ------------------------------------------------------------ Lehman Brothers Holdings Inc. asked the U.S. Bankruptcy Court in Manhattan to deny the motion filed by Michael McCully and Michael Mullen to certify a class of claimants. The company said the claimants failed to show that certification of the putative class "would be consistent with the goals of bankruptcy." "Far from it, certifying the proposed class would only further complicate and delay the adjudication of the contested claims at issue," Lehman said in a court filing. The company further said it would be forced to continue to hold reserves on account of $100 million in claims, adding the reserve would impact the size of any upcoming distribution to creditors. Messrs. McCully and Mullen filed the motion to ensure that class members receive due process notice of all bankruptcy proceedings. The members of the putative class include those who have filed claims against Lehman for deferred compensation, and who were identified in the company's 313th and 319th omnibus objections. The class is estimated to have more than 250 members. Lehman previously sought for the reclassification of those claims as equity interests. The claims were filed by employees of the company and affiliates on account of restricted stock units or contingent stock awards. A court hearing to consider approval of the motion is scheduled for August 23. 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. LEHMAN BROTHERS: Objects to 250 East Borrower's $20-Mil. Claim -------------------------------------------------------------- Lehman Brothers Holdings Inc. proposed the disallowance of Claim No. 27245 filed by 250 East Borrower LLC, saying the company has no liability for the claim. The claim seeks $20 million in damages that allegedly resulted from Lehman's alleged failure to provide loans to 250 East under a series of agreements they entered into prior to the company's bankruptcy filing. A court hearing is scheduled for September 27. Objections are due by September 13. 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. LEHMAN BROTHERS: Apartment Owner Archstone Files for IPO -------------------------------------------------------- Archstone Inc., the apartment owner taken over by Lehman Brothers Holdings Inc., filed papers on Aug. 10 for an initial public offering. The initial offering for $100 million may be the precursor to a later sale where Lehman will dispose of all of its holdings to pay creditors under the Chapter 11 reorganization implemented in March. 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. LEHMAN BROTHERS: Creditors Seeking $33 Million in Fees Today ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the bankruptcy judge will decide today, Aug. 15, whether four Lehman Brothers Holdings Inc. creditor groups are entitled to reimbursement of $33 million they spent on lawyers for allegedly making a "substantial contribution" to the defunct broker's Chapter 11 plan. According to the report, those seeking reimbursement include affiliates of Goldman Sachs Group Inc. and three ad hoc groups representing creditors. If their fees are permitted, total professional expense in the Lehman case will exceed $1.5 billion, according to the U.S. Trustee. The U.S. Trustee, the Justice Department's bankruptcy watchdog, contended in her opposition papers that the unofficial committees failed to show "a substantial contribution to all creditors and their estates." It's not enough, she argues, for the creditors' efforts to have enhanced their own recoveries. Under the governing standard contained in Section 503(b)(3) of the Bankruptcy Code, the U.S. Trustee asserts that "active participation" in the bankruptcy isn't sufficient to justify recovery of legal fees that would in effect be paid by unsecured creditors whose recoveries would be diminished as a result. The report notes that a group that represented creditors of Lehman Brothers Treasury Co. takes issue with the U.S. Trustee and argues that they "played an integral role in formulating and garnering the necessary support for the plan," according to the report. 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. LPATH INC: Lehman Brothers Owns 2% of Class A Common Stock ---------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Lehman Brothers Holdings Inc. and its affiliates disclosed that, as of June 22, 2012, they beneficially own 1,447,293 shares of Class A Common Stock of LPath Inc. representing 2% of the shares outstanding, based on 73,720,944 shares of Common Stock outstanding as of May 9, 2012. A copy of the filing is available for free at http://is.gd/JJUwpL About Lpath, Inc. San Diego, Calif.-based Lpath, Inc. is a biotechnology company focused on the discovery and development of lipidomic-based therapeutics, an emerging field of medical science whereby bioactive lipids are targeted to treat human diseases. The Company reported a net loss of $3.11 million in 2011, compared with a net loss of $4.60 million in 2010. The Company's balance sheet at March 31, 2012, showed $23.28 million in total assets, $16.07 million in total liabilities and $7.21 million in total stockholders' equity. MEDICAL ALARM: Corrects Report on Warrants Cancellation ------------------------------------------------------- Medical Alarm Concepts Holding, Inc., on Aug. 3, 2012, reached an agreement with various investors who held certain rights to buy common stock in the Corporation. They agreed that it is in the best interests of the parties to cancel a total of 60,825,660 million warrants. All of these warrants had strike prices that were below 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. A press release was issued and an 8-K was filed with the Securities & Exchange Commission on Aug. 6, 2012, indicating these warrants were canceled. The company erroneously listed the number of cancelled warrants at 61.5 million. The correct number of warrants cancelled was 60,825,660. 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." MF GLOBAL: ConocoPhillips Wants Dispute in District Court --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that ConocoPhillips Co. filed papers last week asking U.S. District Judge Katherine B. Forrest to remove a dispute from bankruptcy court over customer claims against MF Global Inc., the liquidating commodities broker. The report relates that at the end of the week, the bankruptcy judge approved a settlement with CME Group Inc., the owner of the world's largest futures exchanges. Conoco deposited $205 million in letters of credit with MF Global in connection with its customer accounts. According to the report, the Houston-based energy producer and marketer said in its court filing that MF Global was not contractually entitled to draw the letters of credit when the bankruptcy began. Now that the accounts have been transferred to other brokers, Conoco claims MF Global is barred from drawing on the letters of credit. Conoco disagreed with the MF Global trustee's disposition of about $300 million in claims in a dispute over whether the customer was entitled to maintain the letters of credit. The dispute must be removed from bankruptcy court, Conoco says, because it involves interpretation of a regulation by the Commodity Futures Trading Commission. In addition, Conoco contends the CFTC was barred by federal law from making rules dealing with letters of credit. A schedule hasn't yet been set for James Giddens, the MF Global brokerage trustee, to file papers in opposition. U.S. Bankruptcy Judge Martin Glenn, according to the report, wrote a 15-page opinion on Aug. 10 explaining why he was approving the settlement with CME. He said that the settlement passes muster because it's "within the range of reasonableness." The report relates there was only one objection, from a customer named Paul Hamann. Mr. Glenn said that Hamann's objection was "unsupported by any facts." The judge also refused to allow Hamann to take a direct appeal to the U.S. Court of Appeals, overstepping an intermediate appeal to a district judge. The report notes the settlement calls for CME to turn over $175 million, with $130 million earmarked for customers. The CME exchanges are subordinating $30 million of their claims to the claims of customers. Conoco's motion to remove the claim dispute to district court is In re MF Global Inc., 12-cv-06014, U.S. District Court, Southern District of New York (Manhattan). About MF Global New York-based MF Global (NYSE: MF) -- http://www.mfglobal.com/-- is one of the world's leading brokers of commodities and listed derivatives. MF Global provides access to more than 70 exchanges around the world. The firm is also one of 22 primary dealers authorized to trade U.S. government securities with the Federal Reserve Bank of New York. MF Global's roots go back nearly 230 years to a sugar brokerage on the banks of the Thames River in London. MF Global Holdings Ltd. and MF Global Finance USA Inc. filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15059 and 11-5058) on Oct. 31, 2011, after a planned sale to Interactive Brokers Group collapsed. As of Sept. 30, 2011, MF Global had $41,046,594,000 in total assets and $39,683,915,000 in total liabilities. It is easily the largest bankruptcy filing so far this year. Judge Honorable Martin Glenn presides over the Chapter 11 case. J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve as bankruptcy counsel. The Garden City Group, Inc., serves as claims and noticing agent. The petition was signed by Bradley I. Abelow, Executive Vice President and Chief Executive Officer of MF Global Finance USA Inc. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. U.S. regulators are investigating about $633 million missing from MF Global customer accounts, a person briefed on the matter said Nov. 3, according to Bloomberg News. Bankruptcy Creditors' Service, Inc., publishes MF GLOBAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by MF Global Holdings and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MOLYCORP INC: S&P Cuts CCR to 'CCC+' Due to Liquidity Concerns -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Colorado-based Molycorp Inc. to 'CCC+' from 'B' and placed the ratings on CreditWatch with developing implications. "Developing implications means we could affirm, raise, or lower the existing ratings following the completion of our analysis. Key factors in our analysis will include a review of the company's capital spending plans and timing of its outlays, the plans for funding the convertible notes if they are put back to the company, and its plans for obtaining additional funding," S&P said. "The downgrade and CreditWatch listing reflects our view that weaker market conditions, spending to complete the Mountain Pass project and the potential need to fund the convertible notes are likely to stress the company's liquidity in the near term," said Standard & Poor's credit analyst Marie A. Shmaruk. "With the recent drop in the company's share price, the convertible notes are now out of the money and, in our view, holders are more likely to put the notes back to the company rather than convert them as we had originally anticipated. At June 30, 2012 the company had $370 million of cash. Capital spending to complete Mountain Pass is estimated to be $289 million, some of which could be deferred. Moreover, if all the convertible bonds are put back to the company, it would have to redeem the entire $230 million plus accrued interest. With lower than expected operating performance, we do not expect the company to generate sufficient cash from operations during the remainder of 2012 to fund the shortfall, and we believe that it will have to seek funding alternatives or slow its capital spending." "If during the coming weeks Molycorp obtains sufficient additional funding to provide it with an adequate cash cushion to comfortably fund its operations and capital program, and is able to address the convertible bond put, we could affirm the rating or take a positive ratings action. On the other hand, failure to obtain funding or covenant relief could further pressure the company's liquidity, resulting in an additional downgrade," S&P said. "We will monitor developments regarding the company's financing plans and its funding requirements. Key factors in our analysis will be the company's ability to raise cash to fund the convertible notes, its funding needs to bring its mine up in a reasonable time frame and generate sufficient cash flow to support operational and spending needs, as well as its ability to obtain additional financing, if needed," S&P said. MOMENTIVE PERFORMANCE: S&P Cuts CCR to 'CCC' Due to Weak Earnings ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered all of its ratings on MPM by two notches, including the corporate credit rating to 'CCC' from 'B-'. The outlook is negative. "The likelihood that earnings and cash flow will remain very weak for the next several quarters prompted the downgrade," explained credit analyst Cynthia Werneth. "In our view, leverage is unsustainably high, with total adjusted debt to EBITDA above 15x as of June 30, 2012." "The negative outlook reflects our expectation that silicone overcapacity and a tepid global economy will keep MPM's operating results weak for the foreseeable future. We also believe that the risk of increased borrowings and lower EBITDA could restrict availability under the company's revolving credit facility," S&P said. "We could lower the ratings during the next few quarters if industry conditions and the company's performance do not improve and MPM continues to consume cash, heightening the probability of a payment default or covenant breach. We could also lower the ratings if the company voluntarily restructures or repurchases its debt in such a way that results in anything less than full and timely repayment," S&P said. "On the other hand, we could revise the outlook to stable if earnings and cash flow strengthen, leverage declines, liquidity stabilizes, and MPM remains comfortably in compliance with covenants," S&P said. MORGAN INDUSTRIES: Files Chapter 11 Liquidating Plan ---------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Morgan Industries Inc. filed a proposed Chapter 11 plan of liquidation last week, which was not accompanied by a disclosure statement telling creditors how much they can expect to recover. The plan provides for distributing assets in the order of priority called for in bankruptcy law, with secured creditors first receiving sale proceeds from their collateral. The draft plan has blanks to fill in with the amount of claims in each class. About Morgan Industries Morgan Industries Corporation, along with affiliates, sought Chapter 11 protection (Bankr. D. N.J. Lead Case No. 12-21156) in Trenton, New Jersey, on April 30, 2012. Affiliates that filed separate bankruptcy petitions are Hunter Composite Technologies Corporation; Hunter Marine Corporation; Luhrs Corporation; Mainship Corporation; Ovation Yachts Corporation; Salisbury 10 Acres, L.L.C.; Salisbury 20 Acres, L.L.C.; and Silverton Marine Corporation. The Debtors, through their trade name the Luhrs Marine Group, produce and sell recreational powerboats and sailboats under the iconic brand names of Silverton, Ovation, Luhrs, Mainship, and Hunter Marine. In 2010, Silverton, Mainship and Luhrs, collectively, held roughly 5.3% of the U.S. market for fiberglass, in-board engine powerboats greater than 27 feet in length. Additionally, Hunter Marine was the largest manufacturer of sailboats in the U.S., accounting for an estimated 32% of new sailboat registrations in 2010, making it the sixth consecutive year Hunter Marine represented roughly 30% of all new sailboat registrations in the U.S. The Debtors have a network of 90 dealers in the U.S. and 80 dealers in 40 other countries. Judge Michael B. Kaplan oversees the case. Robert Hirsh, Esq., and George Angelich, Esq., at Arent Fox LLP serve as bankruptcy general counsel to the Debtors; Capstone Advisory Group, LLC, acts as financial advisors; Katz, Kane & Co. as investment bankers; and Donlin Recano & Company, Inc. as claims agent. The Debtors disclosed $53 million in total assets and $80 million in total liabilities as of the Chapter 11 filing. Stuart M. Brown, Esq., at DLA Piper LLP (US), represents primary lender Bank of America N.A. The Official Committee of Unsecured Creditors is represented by Lowenstein Sandler PC. The bankruptcy is being funded by the secured lender Bank of America NA, which required a quick sale. The Company was authorized in July to sell the Hunter sailboat business and most of the other assets to three buyers for a total of about $2.5 million. MY VIET: Case Summary & 13 Largest Unsecured Creditors ------------------------------------------------------ Debtor: My Viet Phu, L.P. 202 W. Campbell Road Richardson, TX 75080 Bankruptcy Case No.: 12-35275 Chapter 11 Petition Date: August 13, 2012 Court: U.S. Bankruptcy Court Northern District of Texas (Dallas) Judge: Harlin DeWayne Hale Debtor's Counsel: Eric A. Liepins, Esq. ERIC A. LIEPINS, P.C. 12770 Coit Road, Suite 1100 Dallas, TX 75251 Tel: (972) 991-5591 E-mail: eric@ealpc.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 13 unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/txnb12-35275.pdf The petition was signed by Sonny Huynh, managing member of GP. OCALA FUNDING: Sec. 341 Creditors' Meeting Set for Aug. 22 ---------------------------------------------------------- The U.S. Trustee for the Middle District of Florida will convene a Meeting of Creditors under 11 U.S.C. Sec. 341(a) in the Chapter 11 case of Ocala Funding, LLC, on Aug. 22, 2012, at 12:00 p.m. at Jacksonville, FL (3-40) - Suite 1-200, 300 North Hogan Street. Proofs of claims are due by Nov. 20, 2012. About Ocala Funding Orange, Florida-based Ocala Funding, LLC, a funding vehicle once controlled by mortgage lender Taylor Bean & Whitaker Mortgage Corp., filed a Chapter 11 petition (Bankr. M.D. Fla. Case No. 12-04524) in Jacksonville on July 10, 2012. Ocala Funding used to be the largest originator and servicer of residential loans. Ocala was created by Taylor Bean & Whitaker to purchase loans originated by TBW and selling the loans to third parties, Freddie Mac. In furtherance of this structure Ocala raised money from noteholders Deutsche Bank AG and BNP Paribas Mortgage Corp. and other financial institutions, as secured lenders through sales of asset-backed commercial paper. TBW was forced to file for Chapter 11 relief (Bankr. M.D. Fla. Case No. 09-07047) on Aug. 24, 2009, amid allegations of fraud by Taylor Bean's former CEO Lee Farkas and other employees. Mr. Farkas is now serving a 30-year prison term for 14 counts of conspiracy and fraud for being the mastermind of a $2.9 billion bank fraud. Mr. Farkas allegedly directed the sale of more than $1.5 billion in fake mortgage assets to Colonial Bank and misappropriated more than $1.5 billion from Ocala. TBW's bankruptcy also caused the demise of Colonial Bank, which for years was TBW's primary bank. TBW and its joint debtor-affiliates confirmed their Second Amended Joint Plan of Liquidation on July 21, 2011, and the TBW Plan became effective on Aug. 10, 2011. The TBW Plan established the TBW Plan Trust to marshal and distribute all remaining assets of TBW. Neil F. Lauria, as CRO for TBW and trustee of the TBW Plan Trust, signed the Chapter 11 petition of Ocala. In its Chapter 11 Petition, Ocala estimated more than $1 billion in assets and debts. Ocala holds 252 mortgage loans with an unpaid balance of $42.3 million as of May 31, 2012. The Debtor also holds five "real estate owned" properties resulting from foreclosures. The Debtor also holds $22.4 million in proceeds of mortgage loans previously owned by it that are on deposit in an account in the Debtor's name at Regions Bank. It also has an interest in $75 million in cash, consisting of proceeds of mortgage loans previously owned by the Debtor, that are in an account maintained by Bank of America, N.A. as prepetition indenture trustee for the benefit of the Noteholders. The Debtor also holds a claim in the current amount of $1.6 billion against the estate of TBW. The largest unsecured creditors include the Federal Deposit Insurance Corp., owed $898,873,958; and Cadwalader, Wickersham & Taft LLP, owed $1,632,385. Judge Jerry A. Funk presides over the case. Proskauer Rose LLP and Stichter, Riedel, Blain & Prosser, serve as the Debtor's counsel. Neil F. Lauria at Navigant Capital Advisors, LLC, serves as the Debtor's Chief Restructuring Officer. OCALA FUNDING: Files Schedules of Assets and Liabilities -------------------------------------------------------- Ocala Funding, LLC, filed with the U.S. Bankruptcy Court for the Middle District of Florida its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $0 B. Personal Property $1,747,749,787 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $1,750,000,000 E. Creditors Holding Unsecured Priority Claims $0 F. Creditors Holding Unsecured Non-priority Claims $900,569,181 -------------- -------------- TOTAL $1,747,749,787 $2,650,569,181 A full text copy of the schedules of assets and liabilities is available for free at: http://bankrupt.com/misc/OCALA_FUNDING_sal.pdf About Ocala Funding Orange, Florida-based Ocala Funding, LLC, a funding vehicle once controlled by mortgage lender Taylor Bean & Whitaker Mortgage Corp., filed a Chapter 11 petition (Bankr. M.D. Fla. Case No. 12-04524) in Jacksonville on July 10, 2012. Ocala Funding used to be the largest originator and servicer of residential loans. Ocala was created by Taylor Bean & Whitaker to purchase loans originated by TBW and selling the loans to third parties, Freddie Mac. In furtherance of this structure Ocala raised money from noteholders Deutsche Bank AG and BNP Paribas Mortgage Corp. and other financial institutions, as secured lenders through sales of asset-backed commercial paper. TBW was forced to file for Chapter 11 relief (Bankr. M.D. Fla. Case No. 09-07047) on Aug. 24, 2009, amid allegations of fraud by Taylor Bean's former CEO Lee Farkas and other employees. Mr. Farkas is now serving a 30-year prison term for 14 counts of conspiracy and fraud for being the mastermind of a $2.9 billion bank fraud. Mr. Farkas allegedly directed the sale of more than $1.5 billion in fake mortgage assets to Colonial Bank and misappropriated more than $1.5 billion from Ocala. TBW's bankruptcy also caused the demise of Colonial Bank, which for years was TBW's primary bank. TBW and its joint debtor-affiliates confirmed their Second Amended Joint Plan of Liquidation on July 21, 2011, and the TBW Plan became effective on Aug. 10, 2011. The TBW Plan established the TBW Plan Trust to marshal and distribute all remaining assets of TBW. Neil F. Lauria, as CRO for TBW and trustee of the TBW Plan Trust, signed the Chapter 11 petition of Ocala. In its Chapter 11 Petition, Ocala estimated more than $1 billion in assets and debts. Ocala holds 252 mortgage loans with an unpaid balance of $42.3 million as of May 31, 2012. The Debtor also holds five "real estate owned" properties resulting from foreclosures. The Debtor also holds $22.4 million in proceeds of mortgage loans previously owned by it that are on deposit in an account in the Debtor's name at Regions Bank. It also has an interest in $75 million in cash, consisting of proceeds of mortgage loans previously owned by the Debtor, that are in an account maintained by Bank of America, N.A. as prepetition indenture trustee for the benefit of the Noteholders. The Debtor also holds a claim in the current amount of $1.6 billion against the estate of TBW. The largest unsecured creditors include the Federal Deposit Insurance Corp., owed $898,873,958; and Cadwalader, Wickersham & Taft LLP, owed $1,632,385. Judge Jerry A. Funk presides over the case. Proskauer Rose LLP and Stichter, Riedel, Blain & Prosser, serve as the Debtor's counsel. Neil F. Lauria at Navigant Capital Advisors, LLC, serves as the Debtor's Chief Restructuring Officer. OCTAVIAR ADMINISTRATION: Australian Liquidators File Chapter 15 --------------------------------------------------------------- Australian liquidators for Octaviar Administration Pty Ltd. filed a petition for creditor protection under Chapter 15 of the Bankruptcy Code (Bankr. S.D.N.Y. Case No. 12-13443) Aug. 14 in Manhattan. The liquidators said the company didn't do business in the U.S., and they aren't aware of any U.S. creditors. But the liquidators filed a Chapter 15 petition in light of potential claims or causes of action against parties located in the United States. If the application for recognition of the Australian liquidation as "foreign main proceeding" is recognized, the liquidators will investigate these potential claims and may ultimately commence proceedings in the U.S. and/or seek to enforce a foreign judgment in the U.S. The Chapter 15 petition listed less than $100 million in assets and more than $100 million in debt. Prior to its demise, the Octaviar Group consisted of a travel and tourism business, a corporate and investment banking business, a funds management business, and as structured finance and advisory business. At it height, the Octaviar Group consisted of more than 400 companies, employed more than 3,000 employees, and had offices in Australia, New Zealand and the United Arab Emirates. The business collapsed when the company announced in January 2008 that it's separating its financial services business from its travel and tourism business, which led to shares declining from AU$3.18 at opening to AU$0.99 at closing. The decline caused an event of default with lenders under a A$150 million bride financing facility. The travel and tourism business was ultimately sold to Global Voyager Pty Limited to pay off debt. Octaviar Administration provided the treasury function for Octaviar Group. OA was placed into liquidation by the Supreme Court of Queensland in July 2009. Katherine Elizabeth Barnet and William John Fletcher, the liquidators of OA, are represented in the U.S. proceedings by: Howard Seife, Esq. CHADBOURNE & PARKE LLP 30 Rockefeller Plaza New York, NY 10112 Tel: (212) 408-5361 Fax: (212) 541-5369 E-mail: hseife@chadbourne.com OPEXA THERAPEUTICS: Gets Extension to Regain Listing Compliance --------------------------------------------------------------- Opexa Therapeutics, Inc., on Aug. 9, received notice that the listing qualifications department staff of the NASDAQ Stock Market has granted the Company an extension of an additional 180 days to regain compliance with the listing standard for the minimum bid price rule contained in Listing Rule 5550(a) (2) which will allow the continued listing of the Company's securities on The NASDAQ Capital Market. In Feb. 2012, Opexa received a staff deficiency letter from NASDAQ notifying the Company that for the preceding 30 consecutive business days, the bid price of the Company's common stock had closed below the minimum closing bid price of $1.00 per share. To regain compliance, the closing bid price of the Company's common stock must be at least $1.00 per share for a minimum of ten consecutive business days (or such longer period of time as the NASDAQ staff may require) before Feb. 4, 2013. In the event the Company is unable to regain compliance in a timely manner or if it does not meet the other listing standards, NASDAQ staff could provide notice that the Company's common stock will become subject to delisting, and in such event, the Company may request a hearing before the NASDAQ Listing Qualifications Panel. ORAGENICS INC: Incurs $6.9 Million Net Loss in Second Quarter ------------------------------------------------------------- Oragenics, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $6.92 million on $256,407 of net revenues for the three months ended June 30, 2012, compared with a net loss of $2.37 million on $347,569 of net revenues for the same period during the prior year. For the six months ended June 30, 2012, the Company reported a net loss of $8.54 million on $636,934 of net revenues, compared to a net loss of $3.93 million on $697,506 of net revenues for the same period a year ago. The Company's balance sheet at June 30, 2012, showed $1.98 million in total assets, $3.43 million in total liabilities, and a $1.44 million total shareholders' deficit. A copy of the Form 10-Q is available for free at: http://is.gd/EV2arI About Oragenics Inc. Tampa, Fla.-based Oragenics, Inc. -- http://www.oragenics.com/-- is a biopharmaceutical company focused primarily on oral health products and novel antibiotics. Within oral health, Oragenics is developing its pharmaceutical product candidate, SMaRT Replacement Therapy, and also commercializing its oral probiotic product, ProBiora3. Within antibiotics, Oragenics is developing a pharmaceutical candidate, MU1140-S and intends to use its patented, novel organic chemistry platform to create additional antibiotics for therapeutic use. In its audit report for the 2011 financial statements, Mayer Hoffman McCann P.C., in Clearwater, Florida, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred recurring operating losses, negative operating cash flows and has an accumulated deficit. The Company reported a net loss of $7.67 million in 2011, compared with a net loss of $7.80 million in 2010. Bankruptcy Warning The Company said in its annual report for the year ended Dec. 31, 2011, that its loan agreement with the Koski Family Limited Partnership matures in three years and select material assets of the Company relating to or connected with its ProBiora3, SMaRT Replacement Therapy, MU1140 and LPT3-04 technologies have been pledged as collateral to secure the Company's borrowings under the Loan Agreement. This secured indebtedness could impede the Company from raising the additional equity or debt capital the Company needs to continue its operations even though the amount borrowed under the Loan Agreement automatically converts into equity upon a qualified equity financing of at least $5 million. The Company's ability to repay the loan will depend largely upon the Company's future operating performance and the Company cannot assure that its business will generate sufficient cash flow or that the Company will be able to raise the additional capital necessary to repay the loan. If the Company is unable to generate sufficient cash flow or are otherwise unable to raise the funds necessary to repay the loan when it becomes due, the KFLP could institute foreclosure proceedings against the Company's material intellectual property assets and the Company could be forced into bankruptcy or liquidation. OTERO COUNTY: Wants to Hire Sutin Thayer as Special Bond Counsel ---------------------------------------------------------------- Otero County Hospital Association, Inc., dba Gerald Champion Regional Medical Center, asks for authorization from the U.S. Bankruptcy Court for the District of New Mexico to employ Sutin, Thayer & Browne, APC, as special bond counsel. Sutin Thayer will, among other things: a. assist the Debtor with submission of an application for conduit bond issuance; b. prepare a resolution under which the exit financing bonds will be issued, and related financing documents and instruments; c. attend meetings to the extent required; and d. supervise the closing of the transaction and delivery of the bonds to the purchaser. Sutin Thayer will carefully coordinate its efforts with bankruptcy counsel and other professionals retained by the Debtor and clearly delineate its duties to prevent any duplication of effort. For the exit financing, the Debtor has agreed, subject to court approval, to pay Sutin Thayer a flat fee of $75,000, plus applicable tax and customary expenses, provided that, should the exit financing be structured as something other than a bond issuance or not be completed, the Debtor will compensate Sutin Thayer at its standard hourly rates, plus applicable tax and customary expenses, for any work performed related to the bond issuance, in the maximum aggregate amount of $75,000, at these rates: Robert G. Heyman $350 Rachel S. King $290 Anne P. Browne $285 Eduardo Duffy $285 Suzanne Wood Bruckner $285 Tracy Hofmann $250 Rita C. Jennings, Paralegal $110 No compensation will be due to Sutin Thayer until either the exit financing is closed or a decision is made not to pursue exit financing. Robert G. Heyman, a Senior Attorney of Sutin, Thayer attests to the Court that the firm does not have an interest adverse to the Debtor or the bankruptcy and is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. About Otero County Hospital Otero County Hospital Association Inc. filed for Chapter 11 protection (Bankr. D. N.M. Case No. 11-13686) in Albuquerque, New Mexico, on Aug. 16, 2011. The Alamogordo, New Mexico-based nonprofit developed and operates the Gerald Champion Regional Medical Center. GCRMC serves a total population of approximately 70,000 people. Otero County Hospital Association also does business as Mountain View Catering. Judge Robert H. Jacobvitz presides over the case. Craig H. Averch, Esq., and Roberto J. Kampfner, Esq., at White & Case, LLP, in Los Angeles; and John D. Wheeler, Esq., at John D. Wheeler & Associates, PC, in Alamogordo, New Mexico, serve as bankruptcy counsel. Kurtzman Carson Consultants, LLC, serves as claims agent. The Debtor disclosed $124,186,104 in assets and $40,506,759 in liabilities as of the Chapter 11 filing. Alice Nystel Page, U.S. Trustee for Region 20, appointed five creditors to serve on the Official Committee of Unsecured Creditors of the Debtor. Gardere Wynne Sewell LLP serves as the Committee's counsel. The Committee tapped James Morell of JCM Advisors, LLC, as healthcare management consultant. The U. S. Trustee appointed E. Marissa Lane PLLC as patient care ombudsman on Sept. 13, 2011. No trustee or examiner has been requested or appointed in the Chapter 11 Case. OXLEY DEVELOPMENT: Creditor Says Case Filed in Bad Faith -------------------------------------------------------- One day after Oxley Development Company, LLC's bankruptcy filing, German American Capital Corporation filed a complaint in Bankruptcy Court seeking relief from the automatic stay to exercise its rights and remedies under applicable state law. German American Capital said Oxley filed the Chapter 11 case in bad faith to stop a foreclosure sale scheduled for Aug. 7. German American Capital recounted that Oxley was a debtor in a Chapter 11 case in the United States Bankruptcy Court for the Southern District of Georgia (Case No. 11-21388) in which German American Capital was granted stay relief after a three-hour evidentiary hearing on May 18, 2012, and the bankruptcy case was dismissed on July 20. German American Capital and the Debtor are parties to a Loan Agreement, dated April 18, 2007, pursuant to which German American Capital agreed to loan to the Debtor $37,000,000. Pursuant to the Loan Agreement, and in connection with the loan made by German American Capital to the Debtor, the Debtor made in favor of German American Capital a Promissory Note, dated April 18, 2007, in the original principal amount of $37,000,000. Pursuant to an Intercreditor Agreement between German American Capital and Duck Pond, LLC, the holder of the second mortgage, the second mortgage claim is contractually subordinated to the claim held by German American Capital. Pursuant to the terms of the Note and the Loan Agreement, interest was to be paid through an "interest reserve" established at closing. Consequently, the Debtor never made any actual payments under the Note, but instead used proceeds of the Note to make interest payments. The Note matured by its terms on Aug. 1, 2009. No payment was made on the amounts due under the Note at maturity, and no payment has been made on the Note since maturity. At maturity, the full $37,000,000 in principal, plus accrued interest, costs and other items chargeable under the Loan Agreement, the Note and the other loan documents, came due. On July 29, 2010, German American Capital filed suit against the Debtor and the guarantors of the loan (Tidewater Plantations, Inc. and Carl "Chip" M. Drury, III.) on the Note and their guaranties in the Supreme Court of the State of New York (New York County), where the Debtor and the guarantors had consented to jurisdiction. On July 28, 2011, German American Capital, over the opposition of the Debtor and the guarantors, was granted summary judgment in the amount of $49,474,138, plus post-judgment interest. The Debtor has appealed the Judgment, but has not sought or obtained any stay pending appeal. During the month of October 2011, German American Capital advertised the Property for a nonjudicial foreclosure sale to be held on Nov. 1, 2011. On Oct. 31, 2011, the Debtor filed the Prior Case. On Feb. 29, 2012, German American Capital filed a motion for relief from stay in the Prior Case. On May 18, 2012, after a continuation of the hearing to permit the Debtor additional time to propose a resolution of its debts to GACC, the Court held an evidentiary hearing on the motion for relief from stay. After a three-hour evidentiary hearing, the Court granted German American Capital's motion for relief from stay. German American Capital advertised the Property for foreclosure during the month of July 2012. The Property was scheduled for foreclosure sale on Aug. 7, 2012, in Camden County, Georgia. German American Capital is presently the owner and holder of the Loan Agreement, the Note, the Security Deed and the Judgment. According to the appraisal testimony presented by GACC in the Prior Case, the Property is worth less than $4 million. About Oxley Development Oxley Development Company, LLC, filed a Chapter 11 petition (Bankr. N.D. Ga. Case No. 12-69799) in Atlanta Aug. 6, 2012. Oxley Development owns the Laurel Bluff and Lauren Island, in Camden County, Georgia. The Debtor, a single asset real estate under 11 U.S.C. Sec. 101(51B), estimated assets of at least $100 million and debts under $100 million. This is not the first time Oxley has sought bankruptcy protection. In October 2011, Oxley filed a Chapter 11 petition in Brunswick (Bankr. S.D. Ga. Case No. 11-21338). But the case was dismissed at the behest of the U.S. Trustee. The bankruptcy judge in May granted relief from stay to German American Capital Corporation, allowing the creditor to pursue its state law remedies in connection with the Debtor's real property. William S. Orange, III, Attorney at Law, represented the Debtor in the prior Chapter 11 case. In the new case, the Debtor is represented by Paul Reece Marr P.C. Creditor German American Capital Corp. is represented in the case by: Paul Baisier, Esq. Shuman Sohrn, Esq. SEYFARTH SHAW LLP 1075 Peachtree Street, N.E., Suite 2500 Atlanta, GA 30309 Tel: 404-885-1500 Fax: 404-892-7056 E-mail: pbaisier@seyfarth.com ssohrn@seyfarth.com PACIFIC THOMAS: Sec. 341 Creditors' Meeting Set for Sept. 10 ------------------------------------------------------------ The U.S. Trustee for Northern District of California will convene a First Meeting of Creditors under 11 U.S.C. Sec. 341(a) in the Chapter 11 case of Pacific Thomas Corporation on Sept. 10, 2012, at 9:00 a.m. at Oakland U.S. Trustee Office. Proofs of claim are due by Dec. 10, 2012. About Pacific Thomas Corp. Walnut Creek, California, Pacific Thomas Corporation filed a Chapter 11 petition (Bankr. N.D. Calif. Case No. 12-46534) in Oakland on Aug. 6, 2012, estimating in excess of $10 million in assets and liabilities. The Debtor is related to Pacific Thomas Capital, which specializes in real estate services, focusing on the investment, ownership and development of commercial real estate properties, according to http://www.pacificthomas.com/ Real estate activities has spanned throughout the Hawaiian Islands as well as U.S. West Coast locations in California, Nevada, Arizona and Utah. Hawaii based activities are managed under the name Thomas Capital Investments. Bankruptcy Judge M. Elaine Hammond presides over the case. Anne- Leith Matlock, Esq., at Matlock Law Group, P.C. The petition was signed by Jill V. Worsley, COO, secretary. PEREGRINE FINANCIAL: New Office May Be a White Elephant ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the receiver for Peregrine Financial Group Inc. may have difficulty finding a tenant or a buyer for the $24 million headquarters building the company built in 2009 in Cedar Falls, Iowa. The area doesn't have employers to utilize the now-vacant space, and the town has a five-year supply of empty offices. Owned by a company controlled by Peregrine's Chief Executive Russell R. Wasendorf Sr., the building has a $5.9 million mortgage. Meanwhile, Jacob Bunge at Dow Jones' Daily Bankruptcy Review reports that the trustee unwinding Peregrine Financial told customers of the collapsed brokerage that efforts to return their money are being slowed by a still-unfolding investigation into its books. About Peregrine Financial Peregrine Financial Group Inc. filed to liquidate under Chapter 7 of the U.S. Bankruptcy Code (Bankr. N.D. Ill. Case No. 12-27488) on July 10, 2012, disclosing between $500 million and $1 billion of assets, and between $100 million and $500 million of liabilities. Earlier that day, at the behest of the U.S. Commodity Futures Trading Commission, a U.S. district judge appointed a receiver and froze the firm's assets. The firm put itself into bankruptcy liquidation in Chicago later the same day. The CFTC had sued Peregrine, saying that more than $200 million of supposedly segregated customer funds had been "misappropriated." The CFTC case is U.S. Commodity Futures Trading Commission v. Peregrine Financial Group Inc., 12-cv-5383, U.S. District Court, Northern District of Illinois (Chicago). Peregrine's Chief Executive Russell R. Wasendorf Sr. unsuccessfully attempted suicide outside a firm office in Cedar Falls, Iowa, on July 9. The bankruptcy petition was signed in his place by Russell R. Wasendorf Jr., the firm's chief operating officer. The resolution stated that Wasendorf Jr. was given a power of attorney on July 3 to exercise if Wasendorf Sr. became incapacitated. Peregrine Financial Group Inc. is the regulated unit of the brokerage PFGBest. At a quickly-convened hearing on July 13, the bankruptcy judge authorized the Chapter 7 trustee to operate Peregrine's business on a "limited basis" through Sept. 13. PHYSICAL PROPERTY: Incurs HK$175,000 Net Loss in Second Quarter --------------------------------------------------------------- Physical Property Holdings Inc. filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss and total comprehensive loss of HK$175,000 on HK$145,000 of total operating revenues for the three months ended June 30, 2012, compared with a net loss and total comprehensive loss of HK$119,000 on HK$208,000 of total operating revenues for the same period a year ago. For the six months ended June 30, 2012, the Company reported a net loss and total comprehensive loss of HK$272,000 on HK$376,000 of total operating revenues, as compared to a net loss and total comprehensive loss of HK$271,000 on HK$401,000 of total operating revenues for the same period during the prior year. The Company's balance sheet at June 30, 2012, showed HK$10.20 million in total assets, HK$11.49 million in total liabilities, all current, and a HK$1.28 million total stockholders' deficit. A copy of the Form 10-Q is available for free at: http://is.gd/DMox6d About Physical Property Physical Property Holdings Inc. (formerly known as Physical Spa & Fitness Inc.), through its wholly-owned subsidiary Good Partner Limited, owns five residential apartments located in Hong Kong. The Company was incorporated on Sept. 21, 1988, under the laws of the United States of America. In the auditors' report accompanying the consolidated financial statements for the year ended Dec. 31, 2011, Mazars CPA Limited, in Hongkong, noted that the Company had a negative working capital as of Dec. 31, 2011, and incurred loss for the year then ended, which raised substantial doubt about its ability to continue as a going concern. PILGRIM'S PRIDE: Fee Enhancements Allowed in Bankruptcy ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Court of Appeals in New Orleans ruled on Aug. 10 that the Supreme Court's Perdue decision virtually prohibiting fee enhancements in civil-rights fee-shifting cases does not apply in bankruptcy. According to the report, the fee dispute arose in the aftermath of the successful reorganization of chicken producer Pilgrim's Pride Corp., where all creditors were paid in full. CRG Partners LLC, the chief restructuring officer, was granted payment of almost $6 million in fees. Later, CRG filed an application for a $1 million enhancement given the successful outcome. The report notes around the same time, the U.S. Supreme Court decided a civil rights case known as Perdue v. Kennedy, where lawyers wanted their fees enhanced and paid by the opposition in view of successful results. The Supreme Court in Perdue listed three "rare circumstances" when fees could be increased over the lawyer's ordinary time charges. The report relates the bankruptcy judge ruled in 2010 that Perdue applied in bankruptcy cases and denied CRG an enhanced fee. CRG appealed, and a district judge in Fort Worth, Texas reversed, saying that Purdue didn't apply in bankruptcy cases. On remand, the bankruptcy judge granted the $1 million fee enhancement, followed by a direct appeal by the U.S. Trustee to the Court of Appeals. According to the report, the 26-page opinion by 5th Circuit Judge Jennifer W. Elrod upheld the district court, saying that "Purdue did not unequivocally, sub silentio, overrule our legion of precedent in the field of bankruptcy." She said that fee enhancements would continue to be governed by a case from the Court of Appeals in New Orleans called Johnson v. Georgia Highway Express Inc., another civil rights case. Judge Elrod said the result was commanded in part by a rule that the circuit court will "exercise restraint when determining whether a Supreme Court decision has produced an intervening change in the law." The Bloomberg report disclosed Judge Elrod pointed to statements by the Supreme Court saying that the lodestar method from Pursue "has superseded the Johnson factors in the fee-shifting arena." Bankruptcy, she said, is not the same as fee-shifting civil rights cases. In fee-shifting cases, fee enhancements "often come at the expense of the taxpayer," Judge Elrod said. She said that the "public purse is left untouched in bankruptcy proceedings." She ended her opinion by observing that the Pilgrim's Pride case was like a "parallel universe" where everyone was being paid in full. The case is CRG Partners LLC v. U.S. Trustee (In re Pilgrim's Pride Corp.), 11-10774, 5th U.S. Circuit Court of Appeals (New Orleans). The case in district court was CRG Partners LLC v. U.S. Trustee, 10-688, U.S. District Court, Northern District of Texas (Fort Worth). About Pilgrim's Pride Pilgrim's Pride Corporation -- http://www.pilgrimspride.com/-- is one of the largest chicken companies in the United States, Mexico and Puerto Rico. The Company's fresh chicken retail line is sold throughout the US, throughout Puerto Rico, and in the northern and central regions of Mexico. The Company exports commodity chicken products to 90 countries. The Company operates feed mills, hatcheries, processing plants and distribution centers in 15 U.S. states, Puerto Rico and Mexico. Pilgrim's Pride and six of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Lead Case No. 08-45664) on Dec. 1, 2008. The Company's subsidiaries in Mexico and certain subsidiaries in the United States were not included in the filing and operated outside of the Chapter 11 process. Attorneys at Weil, Gotshal & Manges LLP served as bankruptcy counsel. Lazard Freres & Co., LLC, was the Company's investment bankers. Kurtzman Carson Consulting LLC served as claims and notice agent. Kelly Hart and Brown Rudnick represented the official equity committee. Attorneys at Andrews Kurth LLP represented the official committee of unsecured creditors. On Dec. 10, 2009, the Bankruptcy Court confirmed the Joint Plan of Reorganization filed by the Debtors. The Plan was premised on the sale of the business to JBS SA. Under the Plan, creditors are paid in full. Existing owners retained 34% of the equity. The Company emerged from Chapter 11 on Dec. 28, 2009. RACKWISE INC: Has $2.7 Million Net Loss in Second Quarter --------------------------------------------------------- Rackwise, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $2.67 million on $1.19 million of revenues for the three months ended June 30, 2012, compared with a net loss of $1.27 million on $260,106 of revenues for the same period last year. For the six months ended June 30, 2012, the Company had a net loss of $4.90 million on $1.88 million of revenues, compared with a net loss of $2.16 million on $796,581 or revenues for the same period of 2011. The Company's balance sheet at June 30, 2012, showed $1.67 million in total assets, $5.74 million in total liabilities, and a stockholders' deficit of $4.07 million. As reported in the TCR on April 9, 2012, Marcum LLP, in New York, N.Y., expressed substantial doubt about Rackwise, Inc.'s ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has not achieved a sufficient level of revenues to support its business and has suffered recurring losses from operations. A copy of the Form 10-Q is available for free at: http://is.gd/6VOeQ4 Headquartered in Folsom, Calif., Rackwise, Inc., is a software development, sales and marketing company. The Company creates Microsoft applications for network infrastructure administrators that provide for the modeling, planning and documentation of data centers. Its Data Center Management (DCM) software product, Rackwise(R), is used by over 100 companies worldwide. RACKWISE INC: Incurs $2.6 Million Net Loss in Second Quarter ------------------------------------------------------------ Rackwise, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $2.67 million on $1.19 million of revenue for the three months ended June 30, 2012, compared with a net loss of $1.26 million on $260,106 of revenue for the same period during the prior year. The Company reported a net loss of $4.90 million on $1.87 million of revenue for the six months ended June 30, 2012, compared with a net loss of $2.16 million on $796,581 of revenue for the same period a year ago. The Company's balance sheet at June 30, 2012, showed $1.67 million in total assets, $5.74 million in total liabilities, and a $4.07 million total stockholders' deficiency. The Company believes it will be successful in its efforts to continue to grow its business; however, there can be no assurance that it will meet its revenue forecasts or, if necessary, be successful in raising additional debt or equity financing to fund its operations on terms agreeable to the Company. These matters raise substantial doubt about the Company's ability to continue as a going concern. As reported in the TCR on April 9, 2012, Marcum LLP, in New York, N.Y., expressed substantial doubt about Rackwise, Inc.'s ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has not achieved a sufficient level of revenues to support its business and has suffered recurring losses from operations. A copy of the Form 10-Q is available for free at: http://is.gd/6VOeQ4 About Rackwise Inc. Rackwise, Inc., is a software development, sales and marketing company within the markets of IT infrastructure, data center monitoring, management and optimization, data center cost efficiency and green data centers. The Company's executive offices are currently located in San Francisco, California, and the Company has a software development and data center in the Research Triangle Park in Raleigh, North Carolina. The Company is in the process of relocating our executive offices to Folsom, California and expanding its software development center. RADAR NETWORKS: Investor's Fraud Suit Allowed to Go Forward ----------------------------------------------------------- Kaitlin Ugolik at Bankruptcy Law360 reports that U.S. District Judge Thomas E. Carlson judge on Friday agreed to approve a deal reached by the trustee overseeing Radar Networks Inc.'s bankruptcy proceedings that will allow a Radar investor's fraud suit against former Yahoo Inc. CEO Ross Levinsohn and Vulcan Capital managing partner Steve Hall to go forward. About Radar Networks Radar Networks, formed in 2003, developed semantic web applications and operated Twine.com, a consumer online service to collect, share, and discover online content with related communities. Fuse Capital and Vulcan Capital invested substantial sums in the San Francisco, California-based statert-up. Beginning in early 2009, after failing to achieve a profit over the life of its operations, the Debtor undertook an intensive year long search for a prospective buyer to acquire its assets and obtain the best available return for its stakeholders. The Debtor sold all of its assets in March 2010 and ceased operating. In April 2010, the Debtor filed a certificate of dissolution in its jurisdiction of organization, and pursuant to Delaware law, the Debtor will cease to exist three years after the filing. Radar Networks commenced a Chapter 7 case (Bankr. N.D. Calif. Case No. 11-33990) in San Francisco in 2011. The Debtor is represented by John Walshe Murray, Esq., and Jenny Lynn Fountain, Esq., at Murray & Murray. RESIDENTIAL CAPITAL: Citibank Wants Lift Stay to Foreclose ---------------------------------------------------------- Citibank NA, as Trustee for PHHMC 2005-6, seeks an order from the Bankruptcy Court vacating the automatic stay as to real property known as 23904 Lakeside Road, Santa Clarita, California. Citibank intends to resume foreclosure proceedings with respect to the Property. As trustee, Citibank is the holder of a mortgage executed to Merrill Lynch Credit Corporation by Todd J. Kleinfeld and Lisa M. Kleinfeld on September 22, 2005, and granting to Merrill Lynch a security interest in the property in Lakeside Road. The mortgage is in default for the installment due on November 1, 2011, and all subsequent monthly installments. Citibank commenced foreclosure proceedings. GMAC Mortgage USA Corporation holds a second lien mortgage on the property. As of May 25, 2012, the payoff balance on the first mortgage held by Citibank is $785,376. The fair market value of the Property is $725,000. Since Citibank's claim against the property exceeds the value of the property, the Debtor GMAC has no equity in the Property. 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: Ally Posts Q2 Loss Due to ResCap Impact ------------------------------------------------------------ Ally Financial Inc., the U.S.-controlled lender whose mortgage subsidiary went bankrupt, posted a second-quarter loss on costs tied to the court filing, Hugh Son at Bloomberg News reports. The loss of $898 million compares with profit of $113 million a year earlier, Ally said in an Aug. 1 statement. The core pretax loss was $753 million. According to Bloomberg, Ally Chief Executive Officer Michael Carpenter is searching for ways to repay U.S. bailouts exceeding $17 billion that left the Treasury Department with a 74% stake. He's selling foreign operations to focus on auto lending in the U.S., where the firm ranked No. 1 last year, and Ally Bank, the online unit known for its ads that satirize the ethics of rival bankers, the report said. "Our objective in life is pretty straightforward," Bloomberg quotes Mr. Carpenter as saying during a conference call with analysts. "It's to continue building the auto business, to continue to build the bank, and it's to get the U.S. government completely out of their shareowner position." Residential Capital LLC was removed from Ally's financial statements, Bloomberg said. Without the costs and other losses tied to the unit, Ally said it would have earned $533 million in core pretax profit, aided by growth in automotive services and direct banking, Bloomberg pointed out. Ally, according to Bloomberg, also said the quarter included a $1.2 billion charge tied to ResCap's bankruptcy. The parent company has contributed $750 million to cover soured loans at the bankrupt mortgage unit to insulate itself from legal claims and "avoid the noise," Mr. Carpenter has said. 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: Says Taggart Suit Violates Automatic Stay -------------------------------------------------------------- Several parties-in-interest filed motions asking the U.S. Bankruptcy Court for the Southern District of New York to lift the automatic stay to allow them to pursue legal processes outside the bankruptcy court. The parties-in-interest seek modification of the automatic stay to, among other things, terminate prepetition agreements with certain Debtors, and to pursue prepetition lawsuits pending in state and federal courts. The Debtors relate that without seeking a modification of the automatic stay, on July 18, 2012, Kenneth Taggart, by filing a complaint, commenced an action in the United States District Court for the Eastern District of Pennsylvania, captioned Taggart v. GMAC Mortgage LLC, Case No. CV-12-4077 (E.D. Pa.), in violation of the automatic stay. The Taggart complaint asserts claims for damages in excess of $46 million and to "Quiet Title" against GMAC Mortgage, several GMAC Mortgage employees and GMAC Mortgage's attorneys in the Foreclosure Proceeding related to the same allegedly wrongful foreclosure at issue in the Foreclosure Proceeding. The Debtors reserve all rights with respect to the Taggart Action. The Foreclosure Proceeding is captioned GMAC Mortgage, LLC v. Taggart, Case No. 09-25338 (Mont. Cty. C.C.P. 2009) (the "Foreclosure Proceeding"). Mr. Taggart alleges 32 counterclaims against GMAC Mortgage for: (i) alleged violations of the Real Estate Settlement and Procedures Act ("RESPA"), 12 U.S.C. Section 2601 et. seq., and related regulations, 24 C.F.R. Section 350; (ii) alleged violations of the Truth-in-Lending Act ("TILA"), 15 U.S.C. Section 1601 et. seq.; (iii) alleged violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. Section 1692 et. seq.; (iv) alleged violations of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. Section 1681 et. seq.; (v) the Pennsylvania Unfair Trade Practice and Consumer Protection Act, 73 P.S. Section 201-1 et. seq.; (vi) Regulation Z, 12 C.F.R. Section 226.18(g), (h); (vii) Quiet Title, (viii) alleged violations of the Fair Credit Extension Uniform Act, 73 P.S. Section 2270.1 et. seq.; (ix) alleged violations of the Mortgage Property Insurance Coverage Act, 7 P.S. Section 6701 et. seq. (the "Insurance Claim"); and (x) alleged violations of Mr. Taggart's 1st and 4th Amendment rights of freedom of expression and due process. On July 23, 2012, Mr. Taggart sought to proceed with the Action and filed a separate action pending in the United States District Court for the Eastern District of Pennsylvania, captioned Taggart v. GMAC Mortgage, LLC, Case No. 2:2012 - cv00415 (E.D. Pa.) (the "Prepetition Federal Action"), which also seeks damages and certain declaratory relief in response to the Debtors' allegedly wrongful foreclosure. In response to Mr. Taggart's arguments, the Court directed (i) that the Debtors reach out to Mr. Taggart to further discuss the potential for an agreed resolution of his Motion and (ii) to the extent that the parties were not able to consensually resolve Mr. Taggart's motion prior to July 17, 2012, the Court requested supplemental briefing regarding which of Mr. Taggart's counterclaims could proceed under Pennsylvania law. On July 17, 2012, the parties agreed to adjourn the hearing on the Motion to the August 14, 2012 hearing. The Debtors and Mr. Taggart have engaged in discussions directly via telephone and via email; however, to date a compromise has not been reached. With limited exceptions, the Debtors argue that Mr. Taggart has not pled valid defenses in the Foreclosure Proceeding. Notwithstanding the very clear Pennsylvania Law on the relief requested by Mr. Taggart in the Motion, the Debtors are prepared to consent to limited stay relief as follows: the parties may proceed through any dispositive motions practice in the Foreclosure Proceeding, by which the trial court will determine the viability of Mr. Taggart's alleged defenses to foreclosure in the Foreclosure Proceeding. Thereafter, Mr. Taggart would have the opportunity to renew his Motion by filing a notice of hearing 14 days in advance of the next available omnibus hearing to the extent that any of Mr. Taggart's Counterclaims remain that would otherwise be stayed by the Supplemental Servicing Order. The Debtors ask the Court to modify the automatic stay for the limited purposes they proposed or, or otherwise, deny Mr. Taggart's request. Debtors Object to Other Requests With respect to the motions to lift the automatic stay filed by Alan Moss, Kenneth Taggart, Hedeya Haroutunian, and Hitoshi and Wakana Inoue, the Debtors clarify that the Supplemental Servicing Order specifies that the automatic stay remains in full force and effect with regard to any direct claims or counterclaims for monetary damages "of any kind or nature against the Debtors, except where a monetary claim must be plead in order for an Interested Party to a assert a claim to defend against or otherwise enjoin or preclude a foreclosure." The Supplemental Servicing Order, the Debtors point out, provides certain limited relief from the automatic stay to permit borrowers to proceed, in Debtor-initiated foreclosure proceedings, with defenses, counter-claims, and Mandatory Monetary Claims that could defeat a foreclosure. Additionally, the Supplemental Servicing Order grants additional limited relief from the automatic stay -- in non-judicial foreclosure states -- to continue to prosecute certain borrower-initiated actions for purposes of defending, unwinding, or challenging a foreclosure where any applicable challenge period has not yet expired. With respect to Christina Ulbrich's motion to lift stay, the Debtors argue that Ms. Ulbrich cannot satisfy her burden of establishing sufficient cause as to why her potentially massive and complex class action lawsuit should be permitted to proceed notwithstanding the statutorily imposed breathing spell to which the Debtors are entitled under Section 362 of the Bankruptcy Code. For the reasons stated, the Debtors ask the Court to deny the motions. 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: Opposes Claimant Bid for Ch. 7 Conversion -------------------------------------------------------------- A Residential Capital claimant filed a motion seeking the conversion of the company's bankruptcy case to a Chapter 7 case. Paul Papas alleged the company "acted in bad faith" when it attempted to sell properties it does not own. He said the properties the company is trying to sell at a public auction are not listed in its statement of assets and liabilities. The Debtors contend that the Court should deny the Motion because it is not supported by facts or evidence. The Debtors strongly object to any suggestion that their Chapter 11 cases were filed in bad faith. They point out that the Court has already ruled that the cases were filed in good faith. At a recent hearing, the Court noted that various parties have filed motions in the Debtors' cases to dismiss the Chapter 11 cases that are "never supported by any evidence, just assertions that the cases were filed in bad faith. Everything that has occurred in the Debtors' cases since the petition date would establish to the contrary. The Debtors submit that further oversight in Chapter 7 is unnecessary and unwarranted. The Court has already appointed an Examiner to oversee the Debtors' Chapter 11 cases. In addition, liquidation in Chapter 7 would not provide the maximum return to creditors that the filing of the Chapter 11 cases and the Debtors' sale of their assets will provide. Thus, the Debtors ask the Court to deny the Motion. Motion Withdrawn Paul N. Papas, II, withdrew his request without prejudice to be renewed after he reviews and evaluates the evidence presented at the 341 Creditors Meeting. Even with the benefit of the Creditors Meeting, Mr. Papas says the exact value of the bankruptcy estate is not known. The business affairs of the Debtors are not sufficiently known to enable a creditor to make an informed judgment about the Debtors' plan of reorganization, he adds. 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: Lowenstein Represents Class Plaintiffs ----------------------------------------------------------- Lowenstein Sandler PC disclosed it has been retained as bankruptcy counsel to represent the interests of these creditors in the Chapter 11 cases of Residential Capital: (a) New Jersey Carpenters Health Fund (the "Lead Plaintiff"), New Jersey Carpenters Vacation Fund ("Vacation Fund") and Boilermaker Blacksmith National Pension Trust (collectively with Lead Plaintiff and the Vacation Fund, the "Class Action Plaintiffs") on behalf of themselves and the class of persons and entities (the "Putative Class"), who purchased or otherwise acquired interests in certain Issuing Trusts pursuant to Registration Statements filed by certain of the Debtors, in the consolidated securities class action styled as New Jersey Carpenters Health Fund, et al., on Behalf of Themselves and All Others Similarly Situated v. Residential Capital, LLC et al., Case No. 08-CV-8781 (HB) (S.D.N.Y.) (the "Class Action"), asserting claims for damages against the Debtors and others for violations of sections 11, 12 and 15 of the Securities Act of 1933 (15 U.S.C. Sections 77k, 77l(a)(2) and 77(o)); (b) The Union Central Life Insurance Company, Ameritas Life Insurance Corp., and Acacia Life Insurance Company (collectively "Union Central"), plaintiffs in the civil action styled as The Union Central Life Ins. Co. et al. v. Credit Suisse First Boston Mortg. Sec. Corp. et al., Case No. 11-CV-2890 (GBD) (S.D.N.Y.) (the "Union Central Action"), asserting claims for damages against the Debtors and others for violations of section 10(b) of the Securities Exchange Act of 1934 (the "1934 Act") (15 U.S.C. Section 78j(b)) and Rule 10b-5 (17 C.F.R. Section 240.10b-5) promulgated there under, section 20(a) of the 1934 Act (15 U.S.C. Section 78t(a) and (b)), and New York state law (fraud, unjust enrichment and aiding and abetting), arising out of the purchase and sale of certain residential mortgage-backed securities as described in the Union Central Action; and (c) Cambridge Place Investment Management Inc. ("CPIM"), plaintiff in the civil actions styled as Cambridge Place Investment Management Inc. v. Morgan Stanley & Co., Inc., et al., pending in the Superior Court of Massachusetts, Case Nos. 10-2741-BLS1 and 11-0555-BLS1 (collectively, the "CPIM Actions"), asserting claims for damages against the Debtors and others for violations of sections 410(a)(2) and (b) of the Massachusetts Uniform Securities Act, MASS. GEN. LAWS ch 110A (2012), arising out of the purchase and sale of certain residential mortgage-backed securities as described in the CPIM Actions. 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). RG STEEL: Warren, Sparrows Point Plants Raise $88 Million --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that RG Steel LLC reported to the bankruptcy court in Delaware that the Aug. 7 auction for the plants in Warren, Ohio, and Sparrows Point, Maryland, fetched a total of $88 million. The high bid from a consortium of three buyers was $72 million for the Maryland plant. The buyer is a group led by Commercial Development Co. Inc. The top bid of $16 million cash for the Warren, Ohio, facility came from CJ Betters Enterprises Inc. The report relates there is a hearing scheduled Aug. 15 to approve the sale of the Warren and Sparrows Point plants. At the same hearing, the judge is also scheduled to review the sale of the operations in Yorkville, Ohio, and Wheeling, West Virginia. About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as its financial advisor. The judge has approved the sale of the Martins Ferry and Mingo Junction plants for a combined $22 million. RG STEEL: Face Class Action Over Air Pollution ---------------------------------------------- Sean McLernon at Bankruptcy Law360 reports that a pair of Maryland residents lodged a putative nuisance class action against Lafarge North America Inc. and RG Steel LLC in state court Thursday, seeking damages for health hazards caused by the companies' alleged release of toxic pollutants. RG Steel and Lafarge operate facilities in the Sparrows Point Peninsula section of Baltimore County that have caused noxious odors and released hazardous substances into the atmosphere, according to the complaint cited by Bankruptcy Law360. About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as its financial advisor. RITZ CAMERA: Creditors Panel Taps PwC as Financial Advisor ---------------------------------------------------------- The Official Committee of Unsecured Creditors in the Chapter 11 cases of Ritz Camera & Image, L.L.C., et al., asks the U.S. Bankruptcy Court for the District of Delaware for permission to retain PricewaterhouseCoopers LLP as its financial advisor. PwC will, among other things: a) review of all financial information prepared by the Debtors or its consultants as requested by the Committee including, but not limited to, a review of Debtors' schedules of assets and liabilities, statements of financial affairs, monthly operating reports, business plans and financial projections; b) assist the Committee in monitoring, assessing, and analyzing the Debtors' going-out-of-business liquidation of merchandise, including reviewing and analyzing cash flows from GOB sales, inventory levels and augmentation strategies, GOB funds flow and cash management, liquidation fees and expenses, analysis of budget to net results, monitoring and analysis of inventory levels; and c) assist the Committee in developing, evaluating, structuring and negotiating the terms and conditions of offers received on the sale of its remaining stores on a going-concern or liquidation basis, or as part of a plan of reorganization or as part of a plan of liquidation including modeling creditor recoveries under various scenarios and comparison to a liquidation analysis. PwC's hourly rates are: Personnel Hourly Billing Rate --------- ------------------- Partner/Principal $790 Managing Director $615 Director/Senior Manager $560 Manager $435 Senior Associate $360 Associate $305 Paraprofessionals/Secretarial $110 To the best of the Committee's knowledge, PwC is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. A hearing on Aug. 28, 2012, at 11 a.m. has been set. Objections, if any, are due Aug. 14, at 4 p.m. About Ritz Camera Beltsville, Maryland-based Ritz Camera & Image LLC -- http://www.ritzcamera.com-- sells digital cameras and accessories, and electronic products. It sought Chapter 11 protection (Bankr. D. Del. Case No. 12-11868) on June 22, 2012, to close unprofitable stores. Ritz claims to be the largest camera and image chain the U.S., operating 265 camera stores in 34 states as well as an Internet business. Ritz Camera intends to shut 128 locations and cut its staff in half. Included in the closing are 10 locations in Maryland and 4 in Virginia. Affiliate Ritz Interactive Inc., owner e-commerce Web sites that include RitzCamera.com and BoatersWorld.com, also filed for bankruptcy. RCI's predecessor, Ritz Camera Centers, Inc., sought Chapter 11 protection (Bankr. D. Del. Case No. 09-10617) on Feb. 22, 2009. Ritz generated $40 million by selling all 129 Boater's World Marine Centers. A group that included the company's chief executive officer, David Ritz, formed Ritz Camera & Image to buy at least 163 of the remaining 375 camera stores. The group paid $16.25 million in cash and a $7.8 million note. Later, Ritz sold a $4 million account receivable for $1.5 million to an owner of the company that owed the debt. In the 2009 petition, Ritz disclosed total assets of $277 million and total debts of $172.1 million. Lawyers at Cole, Schotz, Meisel, Forman & Leonard, P.A., served as bankruptcy counsel. Thomas & Libowitz, P.A., served as the Debtor's special corporate counsel and conflicts counsel. Marc S. Seinsweig, at FTI Consulting, Inc., served as the Debtor's chief restructuring officer. Kurtzman Carson Consultants LLC acted as claims and noticing agent. Attorneys at Cooley Godward Kronish LLP and Bifferato LLC represented the official committee of unsecured creditors as counsel. In April 2010, the Court approved a liquidating Chapter 11 plan proposed by the company and the official creditor's committee. Under the Plan, unsecured creditors were to recover 4% to 14% of their claims. In the 2012 petition, RCI estimated total assets and liabilities of $50 million to $100 million. The Debtors owe not less than $16.32 million for term and revolving loans provided by secured lenders led by Crystal Finance LLC, as administrative agent. Attorneys at Cole, Schotz, Meisel, Forman & Leonard, P.A., serve as bankruptcy counsel. Kurtzman Carson Consultants LLC is the claims agent. WeinsweigAdvisors LLC's Marc Weinsweig has been appointed as Ritz's CRO. Mark L. Desgrosseilliers, Esq., and Ericka F. Johnson, Esq., at Womble Carlyle Sandridge & Rice, LLP, represent liquidators Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC. Crystal Finance, the DIP lender, is represented by Morgan, Lewis & Bockius and Young Conaway Stargatt & Taylor LLP. Roberta A. Deangelis, U.S. Trustee for Region 3, appointed seven creditors to serve on the Official Committee of Unsecured Creditors in the Debtors' cases. The Committee tapped Cooley LLP as its lead counsel, Richards, Layton & Finger, P.A. as its Delaware counsel, and PricewaterhouseCoopers LLP as its financial advisor. RITZ CAMERA: Critical Vendor Agreement with Nikon Inc. Approved --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved the critical vendor agreement between Ritz Camera & Image, L.L.C., et al., and Nikon Inc. Nikon is the Debtors' largest supplier of digital cameras, lenses, accessories, and other related products and services, with Nikon Products accounting for more of RCI's sales than any other single vendor. After the Petition Date, the Debtors requested that Nikon sell and deliver products to the Debtors and Nikon agreed to do so subject to certain terms and conditions. The agreement dated July 20, 2012, provides in pertinent part that Nikon will continue to sell and deliver products in an amount of up to $2,000,000 in the next seven weeks on a cash advance basis, provided that: 1) the Debtors and any other representative of the Debtors' bankruptcy estates agree not to assert any claims against Nikon to avoid and to recover alleged preferential transfers; and 2) the Debtors agree to recognize that portion of Nikon's reclamation claim in the amount of $484,307 as an allowed claim under Section 503(b)(9) of the Bankruptcy Code. A copy of the critical vendor agreement is available for free at http://bankrupt.com/misc/RITZ_critical-vendor_agreement.pdf About Ritz Camera Beltsville, Maryland-based Ritz Camera & Image LLC -- http://www.ritzcamera.com-- sells digital cameras and accessories, and electronic products. It sought Chapter 11 protection (Bankr. D. Del. Case No. 12-11868) on June 22, 2012, to close unprofitable stores. Ritz claims to be the largest camera and image chain the U.S., operating 265 camera stores in 34 states as well as an Internet business. Ritz Camera intends to shut 128 locations and cut its staff in half. Included in the closing are 10 locations in Maryland and 4 in Virginia. Affiliate Ritz Interactive Inc., owner e-commerce Web sites that include RitzCamera.com and BoatersWorld.com, also filed for bankruptcy. RCI's predecessor, Ritz Camera Centers, Inc., sought Chapter 11 protection (Bankr. D. Del. Case No. 09-10617) on Feb. 22, 2009. Ritz generated $40 million by selling all 129 Boater's World Marine Centers. A group that included the company's chief executive officer, David Ritz, formed Ritz Camera & Image to buy at least 163 of the remaining 375 camera stores. The group paid $16.25 million in cash and a $7.8 million note. Later, Ritz sold a $4 million account receivable for $1.5 million to an owner of the company that owed the debt. In the 2009 petition, Ritz disclosed total assets of $277 million and total debts of $172.1 million. Lawyers at Cole, Schotz, Meisel, Forman & Leonard, P.A., served as bankruptcy counsel. Thomas & Libowitz, P.A., served as the Debtor's special corporate counsel and conflicts counsel. Marc S. Seinsweig, at FTI Consulting, Inc., served as the Debtor's chief restructuring officer. Kurtzman Carson Consultants LLC acted as claims and noticing agent. Attorneys at Cooley Godward Kronish LLP and Bifferato LLC represented the official committee of unsecured creditors as counsel. In April 2010, the Court approved a liquidating Chapter 11 plan proposed by the company and the official creditor's committee. Under the Plan, unsecured creditors were to recover 4% to 14% of their claims. In the 2012 petition, RCI estimated total assets and liabilities of $50 million to $100 million. The Debtors owe not less than $16.32 million for term and revolving loans provided by secured lenders led by Crystal Finance LLC, as administrative agent. Attorneys at Cole, Schotz, Meisel, Forman & Leonard, P.A., serve as bankruptcy counsel. Kurtzman Carson Consultants LLC is the claims agent. WeinsweigAdvisors LLC's Marc Weinsweig has been appointed as Ritz's CRO. Mark L. Desgrosseilliers, Esq., and Ericka F. Johnson, Esq., at Womble Carlyle Sandridge & Rice, LLP, represent liquidators Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC. Crystal Finance, the DIP lender, is represented by Morgan, Lewis & Bockius and Young Conaway Stargatt & Taylor LLP. Roberta A. Deangelis, U.S. Trustee for Region 3, appointed seven creditors to serve on the Official Committee of Unsecured Creditors in the Debtors' cases. The Committee tapped Cooley LLP as its lead counsel, Richards, Layton & Finger, P.A. as its Delaware counsel, and PricewaterhouseCoopers LLP as its financial advisor. RITZ CAMERA: Has Until Aug. 22 to File Schedules and Statements --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended until Aug. 22, 2012, Ritz Camera & Image, L.L.C., et al.'s time to file their schedules of assets and liabilities, and statements of financial affairs. The Debtors said the initial deadline was inadequate to compile information from books, records, and documents related to the claims of approximately 2,000 creditors. About Ritz Camera Beltsville, Maryland-based Ritz Camera & Image LLC -- http://www.ritzcamera.com-- sells digital cameras and accessories, and electronic products. It sought Chapter 11 protection (Bankr. D. Del. Case No. 12-11868) on June 22, 2012, to close unprofitable stores. Ritz claims to be the largest camera and image chain the U.S., operating 265 camera stores in 34 states as well as an Internet business. Ritz Camera intends to shut 128 locations and cut its staff in half. Included in the closing are 10 locations in Maryland and 4 in Virginia. Affiliate Ritz Interactive Inc., owner e-commerce Web sites that include RitzCamera.com and BoatersWorld.com, also filed for bankruptcy. RCI's predecessor, Ritz Camera Centers, Inc., sought Chapter 11 protection (Bankr. D. Del. Case No. 09-10617) on Feb. 22, 2009. Ritz generated $40 million by selling all 129 Boater's World Marine Centers. A group that included the company's chief executive officer, David Ritz, formed Ritz Camera & Image to buy at least 163 of the remaining 375 camera stores. The group paid $16.25 million in cash and a $7.8 million note. Later, Ritz sold a $4 million account receivable for $1.5 million to an owner of the company that owed the debt. In the 2009 petition, Ritz disclosed total assets of $277 million and total debts of $172.1 million. Lawyers at Cole, Schotz, Meisel, Forman & Leonard, P.A., served as bankruptcy counsel. Thomas & Libowitz, P.A., served as the Debtor's special corporate counsel and conflicts counsel. Marc S. Seinsweig, at FTI Consulting, Inc., served as the Debtor's chief restructuring officer. Kurtzman Carson Consultants LLC acted as claims and noticing agent. Attorneys at Cooley Godward Kronish LLP and Bifferato LLC represented the official committee of unsecured creditors as counsel. In April 2010, the Court approved a liquidating Chapter 11 plan proposed by the company and the official creditor's committee. Under the Plan, unsecured creditors were to recover 4% to 14% of their claims. In the 2012 petition, RCI estimated total assets and liabilities of $50 million to $100 million. The Debtors owe not less than $16.32 million for term and revolving loans provided by secured lenders led by Crystal Finance LLC, as administrative agent. Attorneys at Cole, Schotz, Meisel, Forman & Leonard, P.A., serve as bankruptcy counsel. Kurtzman Carson Consultants LLC is the claims agent. WeinsweigAdvisors LLC's Marc Weinsweig has been appointed as Ritz's CRO. Mark L. Desgrosseilliers, Esq., and Ericka F. Johnson, Esq., at Womble Carlyle Sandridge & Rice, LLP, represent liquidators Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC. Crystal Finance, the DIP lender, is represented by Morgan, Lewis & Bockius and Young Conaway Stargatt & Taylor LLP. Roberta A. Deangelis, U.S. Trustee for Region 3, appointed seven creditors to serve on the Official Committee of Unsecured Creditors in the Debtors' cases. The Committee tapped Cooley LLP as its lead counsel, Richards, Layton & Finger, P.A. as its Delaware counsel, and PricewaterhouseCoopers LLP as its financial advisor. RITZ CAMERA: Marc Weinsweig OK'd as Chief Restructuring Officer --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Ritz Camera & Image, L.L.C., et al., to employ WeinsweigAdvisors LLC, to appoint the firm's Marc Weinsweig as chief restructuring officer; and provide temporary employees. As reported in the Troubled Company Reporter on July 19, 2012, the services Mr. Weinsweig will render include the provision of crisis and turnaround management services to the Debtors. Mr. Weinsweig's hourly fee is $425. WeinsweigAdvisors will have a financing fee of $150,000 for achieving certain restructuring milestones, including entry of a final order approving (i) debtor-in-possession financing or (ii) use of cash collateral. WeinsweigAdvisors wil have a success fee opportunity for achieving the restructuring objectives of the Debtors. If creditors below Crystal Financial LLC in the "waterfall" receive a minimum gross recovery of $3,225,000, WeinsweigAdvisors will earn a success fee of $100,000. The engagement letter provides for an "evergreen" retainer to be paid to WeinsweigAdvisors in the amount of $500,000, to be held as continuing security for the payment of fees and expenses to WeinsweigAdvisors and applied to any unpaid amounts due to the firm at the completion of the engagement, with the unused portion to be returned to the Debtors upon payment in full of all fees and expenses. Mr. Weinsweig, founder, principal and managing director of WeinsweigAdvisors, attests to the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Ritz Camera Beltsville, Maryland-based Ritz Camera & Image LLC -- http://www.ritzcamera.com-- sells digital cameras and accessories, and electronic products. It sought Chapter 11 protection (Bankr. D. Del. Case No. 12-11868) on June 22, 2012, to close unprofitable stores. Ritz claims to be the largest camera and image chain the U.S., operating 265 camera stores in 34 states as well as an Internet business. Ritz Camera intends to shut 128 locations and cut its staff in half. Included in the closing are 10 locations in Maryland and 4 in Virginia. Affiliate Ritz Interactive Inc., owner e-commerce Web sites that include RitzCamera.com and BoatersWorld.com, also filed for bankruptcy. RCI's predecessor, Ritz Camera Centers, Inc., sought Chapter 11 protection (Bankr. D. Del. Case No. 09-10617) on Feb. 22, 2009. Ritz generated $40 million by selling all 129 Boater's World Marine Centers. A group that included the company's chief executive officer, David Ritz, formed Ritz Camera & Image to buy at least 163 of the remaining 375 camera stores. The group paid $16.25 million in cash and a $7.8 million note. Later, Ritz sold a $4 million account receivable for $1.5 million to an owner of the company that owed the debt. In the 2009 petition, Ritz disclosed total assets of $277 million and total debts of $172.1 million. Lawyers at Cole, Schotz, Meisel, Forman & Leonard, P.A., served as bankruptcy counsel. Thomas & Libowitz, P.A., served as the Debtor's special corporate counsel and conflicts counsel. Marc S. Seinsweig, at FTI Consulting, Inc., served as the Debtor's chief restructuring officer. Kurtzman Carson Consultants LLC acted as claims and noticing agent. Attorneys at Cooley Godward Kronish LLP and Bifferato LLC represented the official committee of unsecured creditors as counsel. In April 2010, the Court approved a liquidating Chapter 11 plan proposed by the company and the official creditor's committee. Under the Plan, unsecured creditors were to recover 4% to 14% of their claims. In the 2012 petition, RCI estimated total assets and liabilities of $50 million to $100 million. The Debtors owe not less than $16.32 million for term and revolving loans provided by secured lenders led by Crystal Finance LLC, as administrative agent. Attorneys at Cole, Schotz, Meisel, Forman & Leonard, P.A., serve as bankruptcy counsel. Kurtzman Carson Consultants LLC is the claims agent. WeinsweigAdvisors LLC's Marc Weinsweig has been appointed as Ritz's CRO. Mark L. Desgrosseilliers, Esq., and Ericka F. Johnson, Esq., at Womble Carlyle Sandridge & Rice, LLP, represent liquidators Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC. Crystal Finance, the DIP lender, is represented by Morgan, Lewis & Bockius and Young Conaway Stargatt & Taylor LLP. Roberta A. Deangelis, U.S. Trustee for Region 3, appointed seven creditors to serve on the Official Committee of Unsecured Creditors in the Debtors' cases. The Committee tapped Cooley LLP as its lead counsel, Richards, Layton & Finger, P.A. as its Delaware counsel, and PricewaterhouseCoopers LLP as its financial advisor. ROBERTS HOTELS: Judge Dismisses Jackson Hotel's Bankruptcy Case --------------------------------------------------------------- Jeff Ayres, writing for the Clarion Ledger, reports that a federal judge recently dismissed a Chapter 11 bankruptcy filing by the Roberts brothers last year in an attempt to reorganize the Roberts Walthall Hotel's business affairs. According to the Clarion Ledger, that move could pave the way for Wells Fargo, the hotel's main creditor, to begin foreclosure proceedings, although the company has not filed any paperwork in that regard. The report says the hotel could be sold or a judge could appoint a receiver to secure the property to protect it from vandalism. Or, according to the report, the Roberts brothers could continue to seek a financing agreement that will allow them to finish the renovations, which were halted after water-pressure changes damaged most of the rooms in November 2010, and reopen the hotel. "They have not abandoned the property," said John Moore, Esq., a Ridgeland attorney who represented the brothers in the Chapter 11 case, according to the Clarion Ledger. "They have an interest in securing the property. They have all those options available to them. The report notes Brian Crumbaker, Esq., a Tallahassee, Fla., attorney who represents Wells Fargo, couldn't be reached for comment on how that company will proceed. Neither Mike nor Steve Roberts could be reached for comment. According to the report, Wells Fargo is trustee for the holders of $7.5 million in nontaxable Gulf Opportunity Zone bonds that were to go toward the hotel's upgrades. The hotel property itself served as collateral, according to court filings. According to the report, the company alleged the hotel hadn't paid $300,000 in property taxes from the 2010 and 2011 tax years and was $12,000 past due in electric bill payments. With no tangible operations at the hotel by last December, and with revenue generated by renting parking spaces in the hotel parking garage not nearly enough to cover what was owed, Wells Fargo contended the brothers filed for Chapter 11 merely as a way to delay a foreclosure filing that would have been done that month. Wells Fargo has said in court papers the hotel "has no reasonable prospect for reorganizing and is unable to provide . . . adequate protection for its collateral." With the hotel closed and repairs still needed for an aging building, it might be best if the property were sold, the hotel torn down and something new built in its place, said Chuck Pinkowski, who heads Pinkowski and Co., a Memphis-based hospitality-industry consulting firm, according to the Clarion Ledger. "Trying to retrofit an old building is a very expensive challenge," the report quotes Mr. Pinkowski as saying. "You need to have the right average occupancy rate to justify that expense. If you can't, it's not worth putting money into." The consulting firm may be reached at: Chuck Pinkowski PINKOWSKI & COMPANY 6829 Eastridge Cove, Suite 201 Memphis, TN 38120 Tel: (901) 684-1080 Fax: (901) 754-8120 E-mail: chuck@pinkowskicompany.com About Roberts Hotels Hotel portfolios owned by St. Louis, Mo.-based Roberts Cos. have filed separate Chapter 11 bankruptcy petitions. The hotels are among those involved in a lawsuit Bank of America filed against Roberts Cos. in April 2012. BofA alleges Roberts Cos. defaulted on a loan to renovate six hotels it owns outside of Missouri and owes more than $34 million. The hotels are located in Tampa, Atlanta, Dallas, Houston, Shreveport, La., and Spartanburg, S.C. Roberts Hotels Dallas LLC, which operates as a Courtyard by Marriott at 2383 Stemmons Trail in Dallas, filed for Chapter 11 bankruptcy (Bankr. E.D. Mo. Case No. 12-45017) on May 23, 2012, listing $1 million to $10 million in assets, and $10 million to $50 million in debts. Roberts Hotels Atlanta LLC, dba Clarion Hotel Atlanta, filed for Chapter 11 (Bankr. E.D. Mo. Case No. 12-44493) on May 9, 2012, listing $1 million to $10 million in assets, and $10 million to $50 million in debts. Roberts Hotels Shreveport LLC, also under the Clarion flag, sought Chapter 11 bankruptcy protection (Bankr. E.D. Mo. Case No. 12- 44495) on May 9, listing between $1 million and $10 million in assets and between $10 million and $50 million in debts. Roberts Hotels Spartanburg LLC, which owns the Clarion Hotel, formerly named Radisson Hotel & Suites Spartanburg, filed a Chapter 11 petition (Bankr. E.D. Mo. Case No. 12-43756) on April 19, 2012. It scheduled $3,028,820 in assets and $34,775,209 in debts. Roberts Hotels Houston LLC, dba Holiday Inn Houston, filed for Chapter 11 (Bankr. E.D. Mo. Case No. 12-43590) on April 16, 2012, listing under $50,000 in assets and up to $50 million in debts. Roberts Hotels Tampa LLC, which owns the Comfort Inn hotel at 820 East Busch Blvd. in Tampa, filed for Chapter 11 Bankr. E.D. Mo. Case No. 12-44391) on May 7, estimating assets between $1 million and $10 million and debts between $10 million and $50 million. A. Thomas DeWoskin, Esq., at Danna McKitrick, PC, serves as the Debtors' counsel. The petitions were signed by Mike Kirtley, chief operating officer. On Dec. 15, 2011, Roberts Hotels Jackson LLC, which owns Roberts Walthall Hotel, filed for Chapter 11 protection (Bankr. S.D. Miss. Case No. 11-04341), estimating both assets and debts of between $1 million and $10 million. John D. Moore, P.A., represents the Debtor. ROCK PARENT: S&P Affirms 'B' Corp. Credit Rating; Outlook Stable ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Ohio-based Rock Parent LLC. The rating outlook is stable. "We affirmed our 'BB-' issue-level ratings (two notches higher than the 'B' corporate credit rating) on the company's first-lien senior secured credit facilities, which were borrowed by wholly owned subsidiary ROC Finance LLC. The company plans to increase the size of its revolver to $35 million from $25 million and add $110 million to its existing term loan facilities. We also assigned the company's proposed $40 million multi-draw delayed draw term loan our issue level rating of 'BB-' (two notches higher than the 'B' corporate credit rating) and assigned this debt a recovery rating of '1', indicating our expectation of very high (90% to 100%) recovery for lenders in the event of a payment default. Pro forma for this transaction, the first-lien credit facilities will consist of a $260 million funded term loan and three delayed-draw term loans totaling $165 million, all due Aug. 19, 2017, and a $35 million revolving credit facility due Aug. 19, 2016," S&P said. "We revised our recovery rating on the company's second-lien notes to '4' (expectation of 30% to 50% recovery) from '3' (50% to 70% recovery). In addition, we affirmed our issue-level rating on the notes at 'B' (at the same level as the 'B' corporate credit rating), in accordance with our notching criteria. The revised recovery rating reflects weaker recovery prospects for holders of the notes as a result of a greater amount of first-lien debt outstanding under our simulated default scenario from the planned financings," S&P said. "We expect proceeds from the planned incremental term loans will be used primarily to fund the construction of a gaming facility at the company's Thistledown racetrack and to pay associated license fees for Thistledown," S&P said. Rock Parent LLC is a subsidiary of Rock Ohio Caesars LLC (ROC), which is 80% owned by Rock Gaming, a Midwest-based gaming company (principal investor, Dan Gilbert), and 20% owned by subsidiaries of Caesars Entertainment Corp. The company was created to develop and operate two casino facilities in Ohio. The casinos, as well as the planned gaming facility at Thistledown raceway (racino), will be managed by Caesars. "The corporate credit rating on Ohio-based Rock Parent LLC reflects our assessment of the company's business risk profile as 'weak' and its financial risk profile as 'highly leveraged,' according to our rating criteria," S&P said. "Our assessment of Rock's business risk profile as weak reflects construction and execution risk associated with developing and opening two casinos and one racino in new gaming markets. Our assessment also incorporates favorable demographics in the market, limited direct competition (particularly in Cleveland), the experience of the management team in operating regional casinos, and the inclusion of the casinos in Caesars' Total Rewards network," S&P said. "Our assessment of Rock's financial risk profile as highly leveraged reflects our view that the company's interest reserve is thin, and we expect covenants will be tight initially. In addition, new gaming projects are often somewhat slow to ramp up operations because of uncertainties surrounding demand and challenges in managing costs effectively, particularly in the first few months. We expect Horseshoe Cleveland's ramp up will benefit from favorable market demographics, a good competitive position as the only full-service casino operator in this new market, and the ability to leverage Caesars' extensive customer database in marketing the new facility. However, our rating reflects Rock's reliance on a single property for cash flow generation until Horseshoe Cincinnati opens in the early 2013 and the gaming facility at Thistledown racetrack opens a few months later. While the development of Thistledown racetrack will be funded by the proposed incremental credit facilities, cash flows from Cleveland are critical to the success of completing the Cincinnati casino, as Rock expects to use approximately $70 million in funds generated by Cleveland to complete the Cincinnati Development," S&P said. SAINTS MEDICAL: Fitch Withdraws 'B-' Rating on $42.1-Mil. Bonds --------------------------------------------------------------- Fitch Ratings has withdrawn the 'B-' rating on the following bonds issued on behalf of the Saints Medical Center (Saints): -- $42.1 million Massachusetts Health and Educational Facilities Authority revenue bonds, series 1993A. Key Rating Drivers SAINTS PART OF LOWELL MEDICAL CENTER: Fitch withdraws its 'B-' rating on Saints, as the rating had been based on the credit profile of Saints. As of July 1, 2012, Saints became part of Lowell General Hospital, and Lowell is now the obligor of Saints' debt. Fitch does not rate Lowell General Hospital. SOLARWORLD AG: Has $198-Mil. Q2 Loss, Blames China for Woes ----------------------------------------------------------- SolarWorld AG (ETR: SWV) reported a quarterly loss of $198 million in the second quarter, dropping from a $2.2 million income in the previous quarter and $12 million in the second quarter of 2011. The company had a $385M loss in the fourth quarter of 2011. A copy of the first half report is available at http://is.gd/JlKMvE SolarWorld said it is in an increasingly precarious financial position as it alleges Chinese competitors continue to flood Europe and the U.S. with cut-price solar panels in breach of global trade rules. Harriet Torry at Dow Jones' DBR Small Cap reports that investors Monday dumped shares in Solarworld. Solarworld AG is a Germany-based company, operating in the crystalline solar power sector. The Company's core business activity is the production and distribution of solar power applications and ready-to-assembly solar kits for roof installation and large-scale solar power plants. SOLYNDRA LLC: Has $3.5 Million Settlement With Employees -------------------------------------------------------- Nate Raymond at Reuters reports that Solyndra LLC has agreed to pay $3.5 million to settle accusations it did not properly notify employees that they would lose their jobs. The report says settlement papers outlining the pact were filed in U.S. Bankruptcy Court in Wilmington, Delaware, last week. The agreement came a week after Solyndra filed its Chapter 11 reorganization plan. The employee accord is subject to approval of U.S. Bankruptcy Judge Mary Walrath, who is overseeing the bankruptcy case. Reuter says the company laid off about 850 of its 960 employees days before filing for bankruptcy in September 2011. Employees sued, alleging they were entitled to at least 60 days' notice before losing their jobs. The employees sought up to $15 million in damages for lost wages and benefits. Jack Raisner at the law firm Outten & Golden represents the employees. About Solyndra LLC Founded in 2005, Solyndra LLC was a U.S. manufacturer of solar photovoltaic solar power systems specifically designed for large commercial and industrial rooftops and for certain shaded agriculture applications. The Company had 968 full time employees and 211 temporary employees. Solyndra has sold more than 500,000 of its panels since 2008 and generated cumulative sales of over $250 million. Fremont, California-based Solyndra and affiliate 360 Degree Solar Holdings Inc. sought Chapter 11 bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12799) on Sept. 6, 2011. Solyndra is at least the third solar company to seek court protection from creditors since August 2011. Judge Mary F. Walrath presides over the Debtors' cases. The Debtors are represented by Pachulski Stang Ziehl & Jones LLP as legal adviser. AlixPartners LLP serves as noticing claims and balloting agent. Imperial Capital LLC serves as the company's investment banker and financial adviser. The Debtors also tapped former Massachusetts Governor William F. Weld, now with the law firm McDermott Will & Emery, to represent the company in government investigations and related litigation. BDO Consulting, a division of BDO USA, LLP, as financial advisor and BDO Capital Advisors, LLC, serves as investment banker for the creditors' panel. The Official Committee of Unsecured Creditors of Solyndra LLC has tapped Blank Rome LLP as counsel and BDO Consulting as financial advisors. In October 2011, the Debtors hired Berkeley Research Group, LLC, and designated R. Todd Neilson as Chief Restructuring Officer. Solyndra owed secured lenders $783.8 million, including $527.8 million to the U.S. government pursuant to a federal loan guarantee, and held assets valued at $859 million as of the Petition date. The U.S. Federal Financing Bank, owned by the U.S. Treasury Department, is the Company's biggest lender. When they filed for Chapter 11, the Debtors pursued a two-pronged strategy to effectuate either a sale of their business to a "turnkey" buyer who may acquire substantially all of Solyndra's assets or, if the Debtors were unable to identify any potential buyers, an orderly liquidation of the assets for the benefit of their creditors. Solyndra did not receive acceptable offers to buy the business as a going concern. Two auctions late last year brought in a total of $8 million. A three-day auction in February generated another $3.8 million. An auction in June generated $1.79 million from the sale of 7,200 lots of equipment. Solyndra filed a liquidating plan at the end of July and scheduled a hearing on Sept. 7 for approval of the explanatory disclosure statement. SOLYNDRA LLC: Ex-Employees Settle Litigation for $3.5 Million ------------------------------------------------------------- Jacqueline Palank at Dow Jones' Daily Bankruptcy Review reports that Solyndra LLC, which shut down its solar panel plants and laid off hundreds of workers before filing for bankruptcy protection, struck a deal to pay those workers $3.5 million so they'll drop litigation seeking $15 million in damages for their abrupt firing. About Solyndra LLC Founded in 2005, Solyndra LLC was a U.S. manufacturer of solar photovoltaic solar power systems specifically designed for large commercial and industrial rooftops and for certain shaded agriculture applications. The Company had 968 full time employees and 211 temporary employees. Solyndra has sold more than 500,000 of its panels since 2008 and generated cumulative sales of over $250 million. Fremont, California-based Solyndra and affiliate 360 Degree Solar Holdings Inc. sought Chapter 11 bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12799) on Sept. 6, 2011. Solyndra is at least the third solar company to seek court protection from creditors since August 2011. Judge Mary F. Walrath presides over the Debtors' cases. The Debtors are represented by Pachulski Stang Ziehl & Jones LLP as legal adviser. AlixPartners LLP serves as noticing claims and balloting agent. Imperial Capital LLC serves as the company's investment banker and financial adviser. The Debtors also tapped former Massachusetts Governor William F. Weld, now with the law firm McDermott Will & Emery, to represent the company in government investigations and related litigation. BDO Consulting, a division of BDO USA, LLP, as financial advisor and BDO Capital Advisors, LLC, serves as investment banker for the creditors' panel. The Official Committee of Unsecured Creditors of Solyndra LLC has tapped Blank Rome LLP as counsel and BDO Consulting as financial advisors. In October 2011, the Debtors hired Berkeley Research Group, LLC, and designated R. Todd Neilson as Chief Restructuring Officer. Solyndra owed secured lenders $783.8 million, including $527.8 million to the U.S. government pursuant to a federal loan guarantee, and held assets valued at $859 million as of the Petition date. The U.S. Federal Financing Bank, owned by the U.S. Treasury Department, is the Company's biggest lender. When they filed for Chapter 11, the Debtors pursued a two-pronged strategy to effectuate either a sale of their business to a "turnkey" buyer who may acquire substantially all of Solyndra's assets or, if the Debtors were unable to identify any potential buyers, an orderly liquidation of the assets for the benefit of their creditors. Solyndra did not receive acceptable offers to buy the business as a going concern. Two auctions late last year brought in a total of $8 million. A three-day auction in February generated another $3.8 million. An auction in June generated $1.79 million from the sale of 7,200 lots of equipment. Solyndra filed a liquidating plan at the end of July and scheduled a hearing on Sept. 7 for approval of the explanatory disclosure statement. SPEEDEMISSIONS INC: Incurs $76,000 Net Loss in Second Quarter ------------------------------------------------------------- Speedemissions, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $75,967 on $1.98 million of revenue for the three months ended June 30, 2012, compared with a net loss of $92,468 on $2.15 million of revenue for the same period during the prior year. The Company reported a net loss of $192,749 on $3.90 million of revenue for the six months ended June 30, 2012, compared with a net loss of $236,419 on $4.26 million of revenue for the same period a year ago. The Company reported a net loss of $1.6 million on $8.3 million of revenue for 2011, compared with a net loss of $2.2 million on $9.3 million of revenue for 2010. The Company's balance sheet at June 30, 2012, showed $2.25 million in total assets, $985,146 in total liabilities, $4.57 million in Series A convertible, redeemable preferred stock, and a $3.31 million total shareholders' deficit. After auditing the 2011 results, Habif, Arogeti & Wynne, LLP, in Atlanta, Georgia, expressed substantial doubt about Speedemissions' ability to continue as a going concern. The independent auditors noted that the Company has suffered recurring losses from operations and has a capital deficiency. A copy of the Form 10-Q is available for free at: http://is.gd/ab33D3 Tyrone, Georgia-based Speedemissions, Inc., is a test-only emissions testing and safety inspection company. STOCKTON, CA: Wells Fargo, Assured Guaranty Object to Filing ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Assured Guaranty Municipal Corp. joined fellow bond insurer National Public Finance Guarantee Corp. in filing papers objecting to the right of Stockton, California, to trim debt in a Chapter 9 municipal bankruptcy. According to the report, Wells Fargo Bank NA, as indenture trustee for bondholders, joined in the objections. Among other grounds, all contend the city doesn't qualify for Chapter 9 because it didn't negotiate before bankruptcy in good faith as a result of seeking no concessions from California Public Employees' Retirement System, the largest creditor with a claim of $147.5 million. The report relates the bankruptcy judge in Sacramento, California, will hold a status conference on Aug. 23. About Stockton, California The City of Stockton, California, filed a Chapter 9 petition (Bankr. E.D. Calif. Case No. 12-32118) in Sacramento on June 28, 2012, becoming the largest city to seek creditor protection in U.S. history. The city was forced to file for bankruptcy after talks with bondholders and labor unions failed. Stockton estimated more than $1 billion in assets and in excess of $500 million in liabilities. The city, with a population of about 300,000, identified the California Public Employees Retirement System as the largest unsecured creditor with a claim of $147.5 million for unfunded pension costs. In second place is Wells Fargo Bank NA as trustee for $124.3 million in pension obligation bonds. The list of largest creditors includes $119.2 million owing on four other series of bonds. The city is being represented by Marc A. Levinson, Esq., at Orrick, Herrington & Sutcliffe LLP. The petition was signed by Robert Deis, city manager. Mr. Levinson also represented the city of Vallejo, Calif. in its 2008 bankruptcy. Vallejo filed for protection under Chapter 9 (Bankr. E.D. Calif. Case No. 08-26813) on May 23, 2008, estimating $500 million to $1 billion in assets and $100 million to $500 million in debts in its petition. In August 2011, Vallejo was given green light to exit the municipal reorganization. The Vallejo Chapter 9 plan restructures $50 million of publicly held debt secured by leases on public buildings. Although the Plan doesn't affect pensions, it adjusts the claims and benefits of current and former city employees. Bankruptcy Judge Michael McManus released Vallejo from bankruptcy on Nov. 1, 2011. STOCKTON, CA: Judge Elizabeth Perris Named as Mediator ------------------------------------------------------ Bankruptcy Judge Elizabeth Perris was authorized by the Judicial Council of the Ninth District to serve as judicial mediator in the Chapter 9 case of City of Stockton in California. Judge Perris will hold a conference on Aug. 30, 2012, at 10 a.m. to discuss and organize the judicial mediation. As reported in the Troubled Company Reporter on July 24, 2012, Steven Church at Bloomberg News reported that Stockton said it asked bondholders and other lenders owed more than $300 million to take less than full repayment as part of an unsuccessful bid to avert the biggest ever bankruptcy filing by a U.S. city. Under a proposal made public July 20, Stockton told unsecured bondholders owed about $124.3 million they would no longer receive any debt payments from the general fund, the main account used to pay for services like police and fire protection. Secured bondholders, who hold debt guaranteed by assets, were asked to accept smaller interest payments and a longer, 40-year repayment term. The Bloomberg report said that U.S. Bankruptcy Judge Christopher Klein has authorized the city to file the so-called Ask document, and other files related to the state-mandated mediation, along with details about its meetings with creditors. Judge Klein denied the city's request to release creditors' counteroffers, saying that might disrupt future mediation efforts. About Stockton, Calif. The City of Stockton, California, filed a Chapter 9 petition (Bankr. E.D. Calif. Case No. 12-32118) in Sacramento on June 28, 2012, becoming the largest city to seek creditor protection in U.S. history. The city was forced to file for bankruptcy after talks with bondholders and labor unions failed. Stockton estimated more than $1 billion in assets and in excess of $500 million in liabilities. The city, with a population of about 300,000, identified the California Public Employees Retirement System as the largest unsecured creditor with a claim of $147.5 million for unfunded pension costs. In second place is Wells Fargo Bank NA as trustee for $124.3 million in pension obligation bonds. The list of largest creditors includes $119.2 million owing on four other series of bonds. The city is being represented by Marc A. Levinson, Esq., at Orrick, Herrington & Sutcliffe LLP. The petition was signed by Robert Deis, city manager. Mr. Levinson also represented the city of Vallejo, Calif. in its 2008 bankruptcy. Vallejo filed for protection under Chapter 9 (Bankr. E.D. Calif. Case No. 08-26813) on May 23, 2008, estimating $500 million to $1 billion in assets and $100 million to $500 million in debts in its petition. In August 2011, Vallejo was given green light to exit the municipal reorganization. The Vallejo Chapter 9 plan restructures $50 million of publicly held debt secured by leases on public buildings. Although the Plan doesn't affect pensions, it adjusts the claims and benefits of current and former city employees. Bankruptcy Judge Michael McManus released Vallejo from bankruptcy on Nov. 1, 2011. T3 MOTION: Gets Notice of Acceptance of NYSE MKT Plan ----------------------------------------------------- T3 Motion, Inc. disclosed that on June 1, 2012, it received notice from NYSE MKT, LLC staff indicating that the Company is below certain of the Exchange's continuing listing standards due to sustained losses which are so substantial in relation to its overall operations or its existing financial resources, or its financial condition has become so impaired that it appears questionable, in the opinion of the Exchange, as to whether the Company will be able to continue operations and/or meet its obligations as they mature, as set forth in Section 1003(a)(iv) of the NYSE AMEX Company Guide. The Company was afforded the opportunity to submit a plan of compliance to the Exchange and on July 2, 2012, presented its plan to the Exchange. On Aug. 10, 2012, the Exchange notified the Company that it accepted the Company's plan of compliance and granted the Company an extension until Nov. 20, 2012 to regain compliance with the continued listing standards. The Company will be subject to periodic review by Exchange staff during the extension period. Failure to make progress consistent with the plan or to regain compliance with the continued listing standards by the end of the extension period could result in the Company being delisted from the Exchange. In addition, on Aug. 10, 2012, the Company closed its $1 million bridge loan facility with JMJ Financial in the form of a secured convertible note in addition to four year warrants with a $0.60 exercise price per share. The initial draw on the facility consisted of $525,000 and included repayment of the previous bridge note of $275,000 and cash proceeds of $250,000. The initial note is convertible into shares of the Company's common stock at a conversion price of $1.31 per share. The notes bear interest at a rate of 10% per annum. A total of 550,000 warrants are issuable for the initial draw with an additional 475,000 warrants issuable if the entire credit facility is drawn. Prior to the execution of credit facility, the Company's Board of Directors authorized an adjustment to the exercise price of the Company's Series I warrants to $0.60 per warrant. The Series I warrants were originally issued in conjunction with the Company's May 2011 public offering and initially had an exercise price of $3.50 per warrant and expire in May 2016. The Series I warrants were subject to a negative covenant agreement dated May 19, 2011 and which provided, with limited exceptions, that issuances of the Company's common stock or common stock equivalents are prohibited if they are deemed issued for a price less than the exercise price of the Series I warrants. The price change to $0.60 is effective immediately and affects all 4,943,557 Series I warrants outstanding. About T3 Motion Costa Mesa, Calif.-based T3 Motion, Inc., develops and manufactures T3 Series vehicles, which are electric three-wheel stand-up vehicles that are directly targeted to the public safety and private security markets. After auditing the 2011 results, KMJ Corbin & Company LLP, in Costa Mesa, California, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred significant operating losses and has had negative cash flows from operations since inception, and at Dec. 31, 2011, has an accumulated deficit of $54.9 million. The Company reported a net loss of $5.50 million in 2011, compared with a net loss of $8.32 million in 2010. The Company's balance sheet at March 31, 2012, showed $3.37 million in total assets, $2.47 million in total liabilities and $903,439 in total stockholders' equity. TEAM FINANCIAL: U.S. Trustee Seek to Convert Case to Ch. 7 ---------------------------------------------------------- BankruptcyData.com reports that the U.S. Trustee assigned to the Team Financial case filed with the U.S. Bankruptcy Court a motion to appoint a Chapter 11 Trustee or, in the alternative, convert the Chapter 11 reorganization proceeding to a Chapter 7 liquidation. The U.S. Trustee asserts, "These cases require independent fiduciary management by a Chapter 11 Trustee to propose Chapter 11 Plans, direct and continue litigation with the FDIC, to manage the winding-up of the assets of the business to maximize payments to t creditors, and to take other appropriate measures..." About Team Financial Team Financial Inc. is a financial holding company. The Company offers a range of community banking and financial services through 21 locations in Kansas, Missouri, Nebraska and Colorado through its banking subsidiaries, Team Bank and Colorado National Bank. Its presence in Kansas consists of nine locations in the Kansas City metropolitan area and three locations in southeast Kansas. The Company operates at two locations in south-western Missouri, three in metropolitan Omaha, Nebraska, and four in metropolitan Colorado Springs, Colorado. The Company offers financial services to its retail and commercial banking customers including personal and corporate banking services, mortgage banking, trust and estate planning, and personal investment financial counseling services. Team Financial and its subsidiaries sought Chapter 11 bankruptcy protection (Bankr. D. Kansas Case Nos. 09-10925 to 09-10927). Edward J. Nazar, Esq., at W. Thomas Gilman, Esq., at Redmond & Nazar, L.L.P., in Wichita, Kansas, represent the Debtor as counsel. In its petition, the Debtor listed $692,410 in total assets and $26,681,000 in total debts. TEARLAB CORPORATION: Posts $1.97 Million Net Loss in 2nd Quarter ---------------------------------------------------------------- TearLab Corp. filed its quarterly report on Form 10-Q, reporting a net loss of $1.97 million on $716,000 of revenue for the three months ended June 30, 2012, compared with a net loss of $4.81 million on $468,000 of revenue for the comparable period last year. For the six months ended June 30, 2012, the Company had a net loss of $11.07 million on $1.14 million of revenue, compared with a net loss of $6.47 million on $1.29 million of revenue for the same period in 2011. The Company's balance sheet at June 30, 2012, showed $21.59 million in total assets, $7.72 million in total current liabilities, and stockholders' equity of $13.87 million. As reported in the TCR on April 9, 2012, Ernst & Young LLP, in San Diego, California, expressed substantial doubt about TearLab's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that of the Company's recurring losses from operations and working capital deficit. A copy of the Form 10-Q is available for free at: http://is.gd/izd4mw TearLab Corp. is an in-vitro diagnostic company based in San Diego, California. The Company is commercializing a proprietary tear testing platform, the TearLab(R) Osmolarity System that enables eye care practitioners to test for highly sensitive and specific biomarkers using nanoliters of tear film at the point-of- care. TENNESSEE GAS: S&P Raises Corp. Credit Rating From 'BB' to 'BBB' ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit and issue-level ratings on natural gas transport company Tennessee Gas Pipeline Co. (TGP) to 'BBB' from 'BB'. "We removed the ratings from CreditWatch, where they were placed with positive implications on April 27, 2012. In addition, we withdrew our recovery rating on the senior unsecured debt because this debt is now investment grade. The outlook is stable," S&P said. "Our corporate credit rating on TGP reflects the corporate credit rating of parent company KMP," said Standard & Poor's credit analyst William Ferara. "TGP is a wholly owned subsidiary of KMP, and KMP management has a considerable influence over the company's financial and governance policies. Therefore, we align our ratings on TGP with our ratings on KMP." "On Aug. 13, 2012, Kinder Morgan Energy Partners L.P. (KMP) completed the acquisition of 100% of Tennessee Gas Pipeline Co. (TGP; BBB/Stable/--) and a 50% interest in El Paso Natural Gas Co. (EPNG; BB/Stable/--) for about $6.22 billion, including about $1.8 billion in assumed debt at TGP and about $560 million of proportional debt at EPNG," S&P said. "We view TGP as having an 'excellent' business risk profile under our criteria. Credit strengths specific to TGP are its stable customer base, nearly fully contracted volumes, and access to sizable natural gas basins with favorable production cost characteristics. Partly offsetting these strengths are relatively short-duration pipeline contracts. TGP has offset some of this risk by renegotiating most of its expiring near-term contacts with a change in its tariff structure, which should increase reservation revenues," S&P said. "The rating outlook on TGP is stable and reflects our rating outlook on KMP. The company is a wholly owned subsidiary of KMP, and its corporate credit rating will be in line with our rating on KMP. KMP will exert significant control over TGP, especially regarding its financial policies and growth projects," S&P said. TESORO CORP: S&P Affirms 'BB+' Corp. Credit Rating; Outlook Stable ------------------------------------------------------------------ Standard & Poor's Rating Services affirmed its 'BB+' corporate credit rating on Tesoro Corp. and maintained the stable outlook. "We also affirmed our 'BB+' senior unsecured and 'BBB' senior secured issue-level ratings. As of June 30, 2012, Tesoro had nearly $1.7 billion of total debt," S&P said. "The acquisition of the Carson City refinery assets increases Tesoro's refining capacity by about 265,000 barrels per day, while adding production flexibility to Tesoro's West Coast refining operations. The refinery is complex, with a 13.3 Nelson complexity score, but moreover is adjacent to Tesoro's existing Wilmington refinery, which should provide operational efficiencies and allow the combined refineries to produce a greater proportion of distillates (as opposed to gasoline), for which demand is higher," S&P said. "We base the ratings on U.S.-based Tesoro on our view of the company's 'fair' business risk profile as a larger, albeit geographically concentrated independent oil refiner, and its 'intermediate' degree of financial risk," said Standard & Poor's credit analyst Manish Consul. "The stable rating outlook reflects our expectations that Tesoro will successfully integrate the Carson City refining and logistics operations while maintaining moderate financial leverage and managing upcoming carbon tax regulation in California that could pressure profitability. Although greater scale and possible synergies strengthen the credit, we continue to have concerns regarding longer-range profit potential amid a weak economy and the quantitative impact of regulatory issues in California. We currently view the likelihood of a rating upgrade as limited in the near term. In the interim, we believe there is significant leeway in the rating to sustain periods of subpar financial performance owing to cyclical factors, although we could reassess the rating if--contrary to our current expectations--we came to believe that the company's adjusted debt to EBITDA would rise above 3x assuming a normalized refining margin environment," S&P said. THINKFILM INC: Bad Press Hurt Financier in $660MM Miramax Sale -------------------------------------------------------------- Jonathan Randles at Bankruptcy Law360 reports that Hollywood financier David Bergstein testified Friday that The Walt Disney Co. forced him to take a back seat in its $660 million sale of Miramax Films after his former attorney leaked information to the press about his troubled companies, resulting in negative press that Disney worried would taint the deal. Bankruptcy Law360 relates that Mr. Bergstein said attorney Susan Tregub, who is facing potential damages of up to $296 million for allegedly helped Aramid Entertainment Fund Ltd. put five of his companies in involuntary bankruptcy, was The Hollywood Reporter's source. About Thinkfilm, et al. CapCo Group LLC and four other companies controlled by David Bergstein are part of a wider network of entities that distribute and finance films. Among the approximately 1,300 films they have the rights to are "Boondock Saints" and "The Wedding Planner." Several creditors filed for involuntary Chapter 11 bankruptcy against the companies on March 17, 2010 -- CT-1 Holdings LLC (Bankr. C.D. Calif. Case No. 10-19927); CapCo Group, LLC (Bankr. C.D. Calif. Case No. 10-19929); Capitol Films Development LLC (Bankr. C.D. Calif. Case No. 10-19938); R2D2, LLC (Bankr. C.D. Calif. Case No. 10-19924); and ThinkFilm LLC (Bankr. C.D. Calif. Case No. 10-19912). Judge Barry Russell presides over the cases. The Petitioners are represented by David L. Neale, Esq., at Levene Neale Bender Rankin & Brill LLP. Judge Barry Russell formally declared David Bergstein's ThinkFilm LLC and Capitol Films Development bankrupt on Oct. 5, 2010. Mr. Bergstein is being sued for tens of millions of dollars by nearly 30 creditors -- including advertisers, publicists and the Writers Guild West. Five Bergstein controlled companies have been named in the suit. TOM MARTINO: To Pursue Conversion of Chapter 7 Case to Chapter 11 ----------------------------------------------------------------- Heather Draper at Denver Business Journal, citing court documents, reports that Tom Martino has filed a motion to delay his Chapter 7 discharge order until October 5 so that he can pursue conversion of his Chapter 7 case to one under Chapter 11. Mr. Martino said Chapter 7 trustee Simon Rodriguez isn't trying to settle his case. "If meaningful settlement discussions, nay, any discussions, cannot be had with the trustee, debtor contemplates the conversion of his case to one under Chapter 11," the report says, citing the motion filed July 24. "Debtor is entitled to an expeditious resolution of his Chapter 7 proceeding." Mr. Martino filed for Chapter 7 bankruptcy on Sept. 2, 2011, listing assets of $1.37 million and liabilities of $78.6 million. He later amended the bankruptcy filing Oct. 1, listing a total assets of $2.3 million and liabilities of $46.4 million. Mr. Martino has appeared on radio and TV talking about consumer issues for many years and operates the Troubleshooter.com Web site. TRI-VALLEY: Receives Court Approval to Tap Its DIP Loan ------------------------------------------------------- Stephanie Gleason at Dow Jones' DBR Small Cap reports that Tri-Valley Oil and natural-gas company Tri-Valley Corp. received approval during its first Chapter 11 hearing Thursday to tap $1.08 million worth of its bankruptcy financing. As reported in the Aug. 9, 2012 edition of the TCR, the Company has received a debtor-in-possession financing commitment of $11,048,078 by its senior secured lender George T. Gamble 1991 Trust, of which $3,850,000 represents new credit availability, to support the Debtors' business operations during the Chapter 11 cases. According to the motion filed with the bankruptcy court seeking approval of the DIP financing, the loans will mature Nov. 15, 2012 or earlier if milestones are not achieved. The Debtors are required to: * file a motion for approval of the auction procedures within 5 days following the Petition Date; * obtain approval of the auction procedures within 30 days of the Petition Date; * conduct the auction within 75 days of the Petition Date; * obtain approval of the sale within 80 days of the Petition Date; and * close the sale of the assets within 90 days of the Petition Date Tri-Valley already owes Gamble $7,198,079 for secured loans provided prepetition. The Debtors also owe $527,800 under an unsecured promissory note issued to Gary D. Borgna and related entities. The Debtors estimate that the total unsecured debt, including the note, is $9.4 million About Tri-Valley Corp. Tri-Valley Corporation (OTQCB: TVLY) -- http://www.tri-valleycorp.com/-- explores for and produces oil and natural gas in California and has two exploration-stage gold properties in Alaska. Tri-Valley and three affiliates filed Chapter 11 bankruptcy petitions (Bankr. D. Del. Lead Case No. 12-12291) on Aug. 7 with funding from lenders that require a prompt sale of the business. K&L Gates LLP serves as bankruptcy counsel. Attorneys at Landis Rath & Cobb LLP serve as Delaware and conflicts counsel. The Debtors have tapped Epiq Bankruptcy Solutions, LLC, as claims agent. TRIBUNE CO: Says Appeals Could Cause Up to $3 Billion Damage ------------------------------------------------------------ Tribune Co. said a delay in the implementation of the company's Chapter 11 plan of reorganization could cause at least $1.548 billion to $3 billion damage. The statement comes after Tribune creditors have filed appeals to review Judge Kevin Carey's July 23 decision, which confirmed the newspaper chain's restructuring plan. The creditors also want the order suspended temporarily until a higher court hears their appeals. "Sentencing the company to remain in bankruptcy for additional months or years would harm the company in numerous material and distinct ways," argued Norman Pernick, Esq., at Cole Schotz Meisel Forman & Leonard P.A., in Wilmington, Delaware, on behalf of Tribune Co. and its debtor affiliates. Mr. Pernick expressed concern the company would incur significant costs from the delay. He pointed out that during a recent period of relative calm in its bankruptcy case, Tribune spent as much as $4.7 million per month. The creditors' bid for temporary suspension must be denied or conditioned upon the posting of a bond to cover the projected damages from the delay, the lawyer said in court papers. In another filing, Tribune asked Judge Kevin Carey to deny approval of the motions filed by EGI-TRB LLC and a group of bond trustees for certification of their appeals. The objectors are seeking to have their case heard by the 3rd U.S. Circuit Court of Appeals in Philadelphia. Bond trustees, Law Debenture Trust Co. of New York and Deutsche Bank Trust Co., have challenged the July 23 order, saying the restructuring plan undercompensates senior bondholders relative to other, similarly situated creditors. Another bond trustee Wilmington Trust Co. complained the structure for handling creditor claims unfairly discriminates against holders of Tribune notes. The bankruptcy judge's decision also drew flak from junior creditors led by New York-based investment fund Aurelius Capital Management LP. The group said the settlement of claims, which is part of the restructuring plan is unreasonable, pointing out that holders of some $2 billion in Tribune debt stand to recover very little under the settlement, and are being barred from suing the banks that financed the 2007 leveraged buyout of Tribune. Judge Carey of the U.S. Bankruptcy Court for the District of Delaware will hold a hearing on August 17 to consider approval of the motions to suspend the July 23 order. Meanwhile, in a recent filing with the Federal Communications Commission, Tribune said it was legally free to leave bankruptcy as of Monday last week. However, FCC action also is necessary before the company can implement its restructuring plan because its broadcast licenses will be put into the hands of new owners, Dow Jones reported. Tribune said regulatory review could take months and "there is a very real risk" that an appeal delay could impede action before the FCC, according to the report. Bond Trustees Seek More Time to File Records on Appeal In a related development, Law Debenture and Deutsche Bank are seeking additional time to file their record and statement of issues on appeal. The bond trustees asked for approval to file the record until one business day following the bankruptcy court's decision on their motion to suspend its July 23 order and to certify the appeal. "The additional time will allow [the bond trustees] to coordinate the transmission of all of the documents it intends to include in the record. . . in a manner that is most convenient and efficient," said the trustees' lawyer, Garvan McDaniel, Esq., at Bifferato Gentilotti LLC, in Wilmington, Delaware. Another bond trustee, Wilmington Trust, also asked for approval to file its record and statement of issues on appeal until the later of one business day following the filing of the record on appeal by Law Debenture and Deutsche Bank. Meanwhile, Aurelius Capital objected to the motion filed by Tribune and other proponents of the restructuring plan to extend the deadline for filing designation of additional items in connection with the junior creditor's appeal. Aurelius Capital described the move as a "brazen and unfair delay tactic" to prejudice its appellate rights. EGI-TRB EGI-TRB LLC appealed Judge Kevin Carey's order confirming the Chapter 11 plan of reorganization of Tribune Co. and its affiliated debtors. The company is challenging the bankruptcy judge's interpretation of its subordination agreement as well as his ruling that its claims against Tribune's bankruptcy estate are subordinated to nearly all other creditors' claims. EGI-TRB also filed a motion for certification of the appeal. About Tribune Co. Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 08-13141) on Dec. 8, 2008. The Debtors proposed Sidley Austin LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North America LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Chadbourne & Parke LLP and Landis Rath LLP serve as co-counsel to the Official Committee of Unsecured Creditors. AlixPartners LLP is the Committee's financial advisor. Landis Rath Moelis & Company serves as the Committee's investment banker. Thomas G. Macauley, Esq., at Zuckerman Spaeder LLP, in Wilmington, Delaware, represents the Committee in connection with the lawsuit filed against former officers and shareholders for the 2007 LBO of Tribune. Protracted negotiations and mediation efforts and numerous proposed plans of reorganization filed by Tribune Co. and competing creditor groups have delayed Tribune's emergence from bankruptcy. Many of the disputes among creditors center on the 2007 leveraged buyout fraudulence conveyance claims, the resolution of which is a key issue in the bankruptcy case. The bankruptcy court has scheduled a May 16 hearing on Tribune's plan. Judge Kevin J. Carey issued an order dated July 13, 2012, overruling objections to the confirmation of Tribune Co. and its debtor affiliates' Plan of Reorganization. Before it formally emerges from bankruptcy, Tribune must still get approval from the Federal Communications Commission on new broadcast licenses and waivers for overlapping ownership of television stations and newspapers in certain markets. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRIBUNE CO: Wins OK for BofA, Merrill Exit Financing Deal --------------------------------------------------------- Tribune Co. and its affiliated debtors received a go-signal to enter into an agreement with Bank of America and Merrill Lynch, Pierce, Fenner & Smith in connection with exit financing. The agreement authorizes the newspaper chain to pay certain fees and expenses and furnish certain indemnities related to the financing. The funding consists of a $300 million asset-based senior secured credit with a letter of credit sub-facility of up to $100 million. On July 23, 2012, Judge Carey confirmed the Fourth Amended Joint Plan of Reorganization proposed by Tribune, the Official Committee of Unsecured Creditors, Oaktree Capital Management, L.P., Angelo, Gordon & Co., L.P., and JPMorgan Chase Bank N.A. The restructuring plan contemplates that the newspaper chain may, in its discretion, enter into a post-effective date facility. About Tribune Co. Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 08-13141) on Dec. 8, 2008. The Debtors proposed Sidley Austin LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North America LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Chadbourne & Parke LLP and Landis Rath LLP serve as co-counsel to the Official Committee of Unsecured Creditors. AlixPartners LLP is the Committee's financial advisor. Landis Rath Moelis & Company serves as the Committee's investment banker. Thomas G. Macauley, Esq., at Zuckerman Spaeder LLP, in Wilmington, Delaware, represents the Committee in connection with the lawsuit filed against former officers and shareholders for the 2007 LBO of Tribune. Protracted negotiations and mediation efforts and numerous proposed plans of reorganization filed by Tribune Co. and competing creditor groups have delayed Tribune's emergence from bankruptcy. Many of the disputes among creditors center on the 2007 leveraged buyout fraudulence conveyance claims, the resolution of which is a key issue in the bankruptcy case. The bankruptcy court has scheduled a May 16 hearing on Tribune's plan. Judge Kevin J. Carey issued an order dated July 13, 2012, overruling objections to the confirmation of Tribune Co. and its debtor affiliates' Plan of Reorganization. Before it formally emerges from bankruptcy, Tribune must still get approval from the Federal Communications Commission on new broadcast licenses and waivers for overlapping ownership of television stations and newspapers in certain markets. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRIBUNE CO: Taps Paul Weiss as Post-Emergence Financing Attorney ---------------------------------------------------------------- Tribune Co. and its affiliated debtors asked the U.S. Bankruptcy Court for the District of Delaware to approve the hiring of Paul, Weiss, Rifkind, Wharton & Garrison LLP as special counsel. Tribune tapped the firm in connection with certain transactional matters related to the company's entry into post-emergence financing facilities contemplated under its Chapter 11 plan of reorganization. Paul Weiss will be paid for its services on an hourly basis and will be reimbursed for its expenses. The firm's hourly rates range from $830 to $1,120 for partners, $760 to $795 for counsel, $425 to $720 for associates, and $85 to $250 for para- professionals. The firm does not hold or represent interest adverse to Tribune or its estates, according to a declaration by Andrew Rosenberg, Esq., a partner at Paul Weiss. A court hearing to consider approval of the request is scheduled for September 5. Objections are due by August 29. About Tribune Co. Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 08-13141) on Dec. 8, 2008. The Debtors proposed Sidley Austin LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North America LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Chadbourne & Parke LLP and Landis Rath LLP serve as co-counsel to the Official Committee of Unsecured Creditors. AlixPartners LLP is the Committee's financial advisor. Landis Rath Moelis & Company serves as the Committee's investment banker. Thomas G. Macauley, Esq., at Zuckerman Spaeder LLP, in Wilmington, Delaware, represents the Committee in connection with the lawsuit filed against former officers and shareholders for the 2007 LBO of Tribune. Protracted negotiations and mediation efforts and numerous proposed plans of reorganization filed by Tribune Co. and competing creditor groups have delayed Tribune's emergence from bankruptcy. Many of the disputes among creditors center on the 2007 leveraged buyout fraudulence conveyance claims, the resolution of which is a key issue in the bankruptcy case. The bankruptcy court has scheduled a May 16 hearing on Tribune's plan. Judge Kevin J. Carey issued an order dated July 13, 2012, overruling objections to the confirmation of Tribune Co. and its debtor affiliates' Plan of Reorganization. Before it formally emerges from bankruptcy, Tribune must still get approval from the Federal Communications Commission on new broadcast licenses and waivers for overlapping ownership of television stations and newspapers in certain markets. On July 23, 2012, Judge Carey confirmed the Fourth Amended Joint Plan of Reorganization proposed by Tribune, the Official Committee of Unsecured Creditors, Oaktree Capital Management, L.P., Angelo, Gordon & Co., L.P., and JPMorgan Chase Bank N.A. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRONOX FINANCE: Moody's Assigns 'B1' Rating to $650MM Unsec. Notes ------------------------------------------------------------------ Moody's Investors Service assigned a B1 rating to Tronox Limited's proposed senior unsecured notes due 2020. Tronox's Ba3 Corporate Family Rating (CFR) and the Ba2 rating on the term loan were affirmed. Moody's assigned a SGL-1 Speculative Grade Liquidity Rating reflecting the very good liquidity position of Tronox. The proceeds from the notes will be used to fund approximately $400 million of share repurchases and for general corporate purposes. The ratings outlook is stable. The following summarizes the ratings: Ratings affirmed Tronox Ltd. Corporate Family Rating -- Ba3 Probability of Default Rating -- Ba3 Tronox Pigments (Netherlands) BV $700mm sr sec term loan B -- Ba2 (LGD3, 30%) from Ba2 (LGD3, 42%) Ratings assigned Tronox Finance LLC $650mm senior unsecured notes -- B1 (LGD5, 79%) Tronox Ltd. Speculative Grade Liquidity Rating - SGL-1 Outlook - Stable Rating Rationale Tronox's Ba3 CFR reflects its strong operating performance, liquidity and credit metrics, along with Moody's expectation that it will maintain relatively high profit margins during 2012-2013 compared to long-term historical averages. The ratings are supported by Tronox's position as the fifth largest titanium dioxide (TiO2) global producer, geographically diverse production assets, a global sales base, long-standing TiO2 customer relationships, economies of scale at its Hamilton plant, access to its own chloride production technology and backward vertical integration into the production of titanium ore following the June 2012 acquisition of the Exxaro Mineral Sands business. The ratings are limited by the cyclical nature of the TiO2 industry. Moody's believes the TiO2 industry is currently enjoying peak profit margins. However, the demand decline which started in the fourth quarter of 2011 is expected to pressure TiO2 selling prices and margins over the next six months, if global macroeconomic conditions and TiO2 demand do not improve. Thus far the largest global producers have remained disciplined and maintained pricing on TiO2 pigments. The industry has historically not been able to maintain pricing in such an environment for very long. The acquisition of the Exxaro Mineral Sands business resulted in a more favorable business profile and places Tronox in a better position to weather the vagaries of the business cycle with stronger and more stable earnings. The backward vertical integration provides a secure supply of titanium ore when ore supplies are relatively tight, eliminates the negative impact of ore feedstock price increases and allows the company to generate higher margins over the value chain, including planned synergies. The vertical integration into titanium ore is expected to provide a higher level of cash flow over the cycle, allowing for a more levered capital structure. It will have a long ore position, allowing it to capitalize on rising ore prices. However, this acquisition is subject to normal integration risks. While Tronox has some familiarity with the titanium ore business through its Tiwest joint venture in Australia, it does not have experience with operations such as the Exxaro Minerals Sands business in South Africa. The rating outlook is stable. Moody's expects the company to maintain credit metrics supportive of a rating higher than the actual assigned rating, given the peak industry conditions, such that its capital structure will be supportive of the current rating throughout the industry's cycle. The rating could be upgraded should the company maintain less than $1.3 billion of balance sheet debt, continue to generate high margins and macroeconomic conditions supported high TiO2 production capacity utilization rates. There is little downward pressure on the ratings at this time, given the robust profit margins and relatively low leverage for the rating. The rating could be downgraded should Free Cash Flow to Debt fall below 4% and leverage increase above 3.5x on a sustained basis. The principal methodology used in rating Tronox Limited was the Global Chemical 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. Tronox Limited, headquartered in Stamford, CT, is the world's fifth largest producer of titanium dioxide and a producer of titanium ore feedstocks through the recently acquired Exxaro Mineral Sands business. It operates three plants in Hamilton, MS, Botlek, The Netherlands, and Kwinana, Australia. The company is also a producer of electrolytic chemicals (approximately 8% of revenues in 2011 - prior to the Exxaro Mineral Sands acquisition). Tronox's revenues were $2.5 billion for the year ended June 30, 2012 (pro forma for the Exxaro Mineral Sands acquisition). TRONOX FINANCE: S&P Rates $650MM Senior Notes Due 2020 'BB-' ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB-' rating and '5' recovery rating to Tronox Finance LLC's $650 million senior notes due 2020. "The '5' recovery rating indicates our expectation for a modest (10%-30%) recovery in the event of a payment default," S&P said. "We also revised our recovery ratings on Tronox's senior secured term loan to '1' from '2' and raised our issue rating to 'BBB-' from 'BB+'. The '1' recovery rating indicates our expectation for a very high (90%-100%) recovery in the event of a payment default," S&P said. "At the same time, we affirmed our 'BB' corporate credit rating on Tronox Ltd. The outlook is stable," S&P said. "Following Tronox Ltd.'s acquisition of Exxaro Mineral Sands, the company has become the top entity in the corporate structure. As a result, we also withdrew our 'BB' corporate credit rating on Tronox Inc.," S&P said. "The ratings on Tronox reflect the company's focus on the cyclical TiO2 market, the potential for some margin contraction, and exposure to demand variations that reflect economic growth in key markets," said credit analyst Seamus Ryan. "The ratings also reflect the company's good geographic diversity, its position as the only fully vertically integrated global TiO2 producer, and our expectation that favorable industry conditions will support operating performance and cash flow over the next year." "The stable outlook reflects our expectation that operating performance will support Tronox's significant financial risk profile despite an increase in debt in 2012. We expect management will maintain a prudent approach to its capital structure and funding shareholder rewards," S&P said. "We could raise the ratings modestly if weak volume trends turn around and the company can resume double-digit annual TiO2 selling price increases. In this scenario, EBITDA margins would continue to improve and FFO to debt would increase to and remain above 40%," S&P said. "We could lower the ratings if volumes continue to decline over the next year and lead to a double-digit percentage reduction in TiO2 selling prices without offsetting improvements in the titanium feedstock business. In this scenario, FFO to debt could fall below 30% without near-term prospects for improvement," S&P said. US FIDELIS: Committee Resolves Objections to Liquidating Plan ------------------------------------------------------------- The Official Committee of Unsecured Creditors of US Fidelis Inc. filed a Chapter 11 Plan of Liquidation for the Debtor that is based on a global settlement with the Debtors, the unsecured creditors, and WARN litigation claimants, among other key parties. A copy of the Plan dated June 5, 2012, is available at: http://bankrupt.com/misc/US_Fidelis_Comm_Plan_060512.pdf According to a July 13 document, the institutional creditors who had actively participated in the Chapter 11 case, including Mepco Financial Corporation and Warrantech Corporation, supported the Plan, as did the majority of the states attorneys general, including the California Attorney General. No state attorney general opposed confirmation, and neither did the Office of the United States Trustee. Four individual consumer creditors did not support confirmation of the Plan. The first, Mr. Robert Schulz, filed pro se an objection. The remaining three are individuals from California -- named plaintiffs in a U.S. District Court action against Mepco pending in the Northern District of California. The Creditors Committee on July 13 obtained from Judge Charles E. Rendlen approval to amend the Plan to change in the treatment of the claims alleged against the estate by the objectors. Specifically, the UCC is creating a new class for the Objectors? claims and to pay in full their claims (totaling the nominal amount of $11,205) upon the effective date of the Plan. As a result of the changes, the judge held that the objectors are now in an unimpaired class and therefore lacked standing to object to the Plan. The Creditors Committee also said July 14 that Schultz has withdrawn his objection to the Plan. Confirmation hearing on the Plan was held July 16. No confirmation order has been entered so far. The Creditors Committee is represented by: THOMPSON COBURN LLP David A. Warfield, Esq. Brian W. Hockett, Esq. One US Bank Plaza, Suite 2600 St. Louis, MO 63101 Telephone: (314) 552-6000 Telecopier: (314-552-7000 E-mail: bhockett@thompsoncoburn.com dwarfield@thompsoncoburn.com About US Fidelis Wentzville, Missouri-based US Fidelis, Inc., was a marketer of vehicle service contracts developed by independent and unrelated companies. It stopped writing new business in December 2009. The Company filed for Chapter 11 bankruptcy protection (Bankr. E.D. Mo. Case No. 10-41902) on March 1, 2010. Brian T. Fenimore, Esq., Crystanna V. Cox, Esq., James Moloney, Esq, at Lathrop & Gage L.C., in Kansas City, Mo.; and Laura Toledo, Esq., at Lathrop & Gage, in Clayton, Mo., advise the Debtor. GCG, Inc., is the consumer claims and noticing agent. Allison E. Graves, Esq., Brian Wade Hockett, Esq., and David A. Warfield, Esq., at Thompson Coburn LLP, in St. Louis, Mo., represent the Official Unsecured Creditors Committee. The Company scheduled assets of $74.4 million and liabilities of $25.8 million as of the petition date. VANN'S INC: DIP Loan Requires Plan Filing or Sale by October ------------------------------------------------------------ Vann's Inc. obtained interim Court orders authorizing it to: -- obtain postpetition financing from First Interstate Bank or its affiliates to fund, among other things, the Debtor's ongoing working capital needs; -- use "cash collateral" in which First Interstate Bank, GE Commercial Distribution Finance Corporation, and others have or may have an interest; -- grant, as of the Petition Date, adequate protection to the Lenders. The Interim Order permits Vann's to borrow up to $500,000. Pursuant to the Secured Superpriority Debtor-In-Possession Financing Term Sheet, First Interstate Bank has committed to provide up to $2,000,000 in revolving loans. Vann's has stipulated that it owes First Interstate Bank $3,986,423 as of Aug. 4, 2012. The DIP loan bears interest as determined by Wall Street Journal Prime plus 4.75% per annum. Vann's is also required to pay a commitment fee of $40,000 and tail end fee of $40,000 upon the completion of any plan of reorganization approved by the Court, orderly liquidation by the Debtor, or other outcome after which the Debtor emerges from bankruptcy. The DIP loan matures on the earliest of (i) Jan. 30, 2013; or (ii) completion of an orderly liquidation and winding up of the Debtor's operations; or (iii) the effective date of a plan of reorganization for the Debtor. The initial advance under the DIP loan is conditioned, among other things, on: -- the approval of the employment of Gerald McConnell as Chief Executive Officer of the Debtor by the Bankruptcy Court; and -- approval of the employment of Hamstreet and Associates as financial advisors to the Debtor by the Bankruptcy Court. The DIP Term Sheet provides for these restructuring benchmarks: * Vann's will file Chapter 11 on or before Aug. 5, 2012; * The Interim Order will be entered by Aug. 9, 2012; * The Final Order will be entered by Aug. 31, 2012; * Within 10 days of the bankruptcy filing, Vann's Inc. will provide budgets to the DIP Lender along with projected cash flow analysis for a six-month period in a form satisfactory to the Lender in its sole discretion; * Within 30 days of the Petition date and any proposed advance of the DIP Loan once an aggregate of $500,000 has been previously advanced to the Debtor, to the extent GE has a valid debt or claim secured by an interest in property of the estate, the Debtor will have voluntarily surrendered to GE Collateral with a value of $1,500,000 and will receive credit and a corresponding reduction of GE's debt equal to $1,500,000, allowing for a 5% variance. * Within 60 days of the petition date, the Debtor will have filed with the Bankruptcy Court a Chapter 11 Plan approved and consented to by the Lender, and will have delivered to the Lender a plan for an orderly liquidation of all remaining inventory and winding up of its operations should the plan fail to be feasible or otherwise not confirmable. If the Lender does not approve or consent to the Debtor's proposed Chapter 11 Plan, or if the plan proves to be infeasible or otherwise not capable of confirmation, the Debtor will initiate and proceed with its plan for an orderly liquidation. Any of the time periods may be extended by agreement of the Debtor and the Lender, in the Lender's sole discretion. Consent of no other party or the Court is required, but the Debtor will undertake to file notice of any such extension. The DIP Term Sheet also provides for events of default, which include the entry of a Bankruptcy Court order confirming a plan of reorganization or approving a transaction pursuant to which a sale or other liquidation of all or substantially all of the assets of the Debtor is contemplated, which does not (i) contain a provision for the payment in full in cash of all obligations of the Debtor to the DIP Lender on or before the effective date of such plan or such Sale Transaction and (ii) provide for the continuation of the liens and security interests granted to the Lender and priorities until the plan's or Sale Transaction's effective date. GE Commercial Distribution Finance Corporation, which provided inventory financing to Vann's prepetition, objected to the Debtor's request to use cash collateral. According to GE, pursuant to an Intercreditor Agreement between GE and First Interstate Bank, First Interstate has subordinated its interests in the collateral and GE has a valid and enforceable first priority, security interest in the Debtor's inventory. Prepetition, Vann's defaulted on the financing agreement with GE. According to GE, the Debtor's request would give First Interstate a first lien position on the Collateral in violation of the Intercreditor Agreement. The Interim Order, however, provides that objections to the Debtor's request are summarily overruled to the extent not resolved. The Court will hold a final hearing on the request on Aug. 29, 2012 at 11:00 a.m. Objections are due Aug. 24. About Vann's Inc. Vann's Inc. -- http://www.vanns.com/-- a retailer of appliances and consumer electronics with five stores in Montana, filed for Chapter 11 protection (Bankr. D. Mont. Case No. 12-61281) in Butte, Montana, on Aug. 5, 2012. The Debtor also owns outdoor clothing and sports products at http://www.bigskycountry.com/ Vann's is owned by an employee stock ownership plan trust. Vann's Inc. disclosed assets of $17.6 million and liabilities of $14.4 million. Assets include $12.2 million cost-value of inventory plus $1 million in current accounts receivable. The Company owes $4 million to First Interstate Bank. It also owes $4.8 million on an inventory loan from GE Commercial Distribution Finance Corp. Bankruptcy Judge John L. Peterson presides over the case. Vann's hired Perkins Coie LLP's Alan D. Smith, Esq., and Brian A. Jennings, Esq., as counsel; and Hamstreet & Associates, LLC, as turnaround and restructuring advisors. Hamstreet may be reached at: Clyde A. Hamstreet HAMSTREET AND ASSOCIATES, LLC One SW Columbia St., Suite 1000 Portland, OR Tel: (503) 223-6222 Fax: (503) 546-6579 E-mail: info@hamstreet.net GE Commercial Distribution Finance Corporation is represented by: John P. Paul, Esq. LAW OFFICES OF JOHN P. PAUL, PLLC 410 Central Avenue, Suite 519 P. O. Box 533 Great Falls, MT 59403 Tel: 406-761-4422 Fax: 406-761-2009 E-mail: johnpaul@qwestoffice.net - and - Gary L. Vincent, Esq. HUSCH BLACKWELL LLP 190 Carondelet Plaza, Suite 600 St. Louis, MO 63105 Tel: 314-480-1727 Fax: 314-480-1505 E-mail: gary.vincent@huschblackwell.com First Interstate Bank, the DIP Lender, is represented by: Benjamin P. Hursh, Esq. CROWLEY FLECK PLLP 305 S. Fourth St. East, Suite 100 Missoula, MT 59807 E-mail: bhursh@crowleyfleck.com VANN'S INC: Hiring Dye & Moe as Chapter 11 Counsel -------------------------------------------------- Vann's Inc. filed papers with the Bankruptcy Court seeking formal approval to hire as its Chapter 11 counsel: Harold V. Dye, Esq. DYE & MOE, P.L.L.P. 216 W Main St, Ste 200 Missoula, MT 59802 Telephone: (406) 203-4746 Facsimile: (406) 721-1616 Email: hdye@dyemoelaw.com Dye & Moe attests it represents no interest adverse to the Debtor; it has no connection with the creditors, or any other party in interest, or their attorneys and accountants, the United States Trustee, or any person employed in the office of the United States Trustee; and it is a "disinterested person" as defined in 11 U.S.C. 101(14). Notwithstanding, Dye & Moe disclosed it represents John Giuliani, an outside director of the Debtor, in matters that have no connection with the Debtor's case. To counsel's knowledge there are no known adverse relations between the Debtor and Mr. Giuliani. If a dispute were to arise between Mr. Giuliani and the Debtor, the firm said it would recuse itself and not represent either party. The firm's hourly rates are: Harold V. Dye Attorney $300 per hour Ann M. Adler Paralegal $60 per hour The Debtor has paid the firm a $2,500 retainer. All of was applied to pre-petition services. About Vann's Inc. Vann's Inc. -- http://www.vanns.com/-- a retailer of appliances and consumer electronics with five stores in Montana, filed for Chapter 11 protection (Bankr. D. Mont. Case No. 12-61281) in Butte, Montana, on Aug. 5, 2012. The Debtor also owns outdoor clothing and sports products at http://www.bigskycountry.com/ Vann's is owned by an employee stock ownership plan trust. Vann's Inc. disclosed assets of $17.6 million and liabilities of $14.4 million. Assets include $12.2 million cost-value of inventory plus $1 million in current accounts receivable. The Company owes $4 million to First Interstate Bank. It also owes $4.8 million on an inventory loan from GE Commercial Distribution Finance Corp. Bankruptcy Judge John L. Peterson presides over the case. Vann's hired Perkins Coie LLP's Alan D. Smith, Esq., and Brian A. Jennings, Esq., as counsel; and Hamstreet & Associates, LLC, as turnaround and restructuring advisors. GE Commercial Distribution Finance Corporation is represented by Gary Vincent, Esq., at Husch Blackwell LLP, and the Law Offices of John P. Paul, PLLC. First Interstate Bank, the DIP Lender, is represented by Benjamin P. Hursh, Esq., at Crowley Fleck PLLP. VELO HOLDINGS: Court Extends Plan Filing Period to Nov. 28 ---------------------------------------------------------- The Hon. Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York, at the behest of Velo Holdings Inc., et al., extended the Debtors' exclusive periods to file and solicit acceptances for the proposed Chapter 11 plan until Nov. 28, 2012, Jan. 27, 2013, respectively. The Debtors said they need additional time to stabilize and operate their businesses and to engage in further coordinated efforts with the Prepetition Lenders, the Official Committee of Unsecured Creditors and other parties-in-interest to reach plan confirmation. About Velo Holdings, V2V et al. V2V Corp. is a premier direct marketing services company, providing individuals and businesses with access to a wide-variety of consumer benefits in the United States, Canada, and the United Kingdom. V2V was founded in 1989 as a membership services company that marketed its membership programs exclusively via telemarketing and, after having nearly a decade of continued growth, went public in 1996. In 2007, V2V was acquired by a consortium of private equity firms led primarily by investing affiliates of One Equity Partners. Norwalk, Connecticut-based Velo Holdings Inc. and various affiliates, including V2V, filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case Nos. 12-11384 to 12-11386 and 12-11388 to 12-11398) on April 2, 2012. The debtor-affiliates are V2V Holdings LLC, Coverdell & Company, Inc., V2V Corp., LN Inc., FYI Direct Inc., Vertrue LLC, Idaptive Marketing LLC, My Choice Medical Holdings Inc., Adaptive Marketing LLC, Interactive Media Group (USA) Ltd., Brand Magnet Inc., Neverblue Communications Inc., and Interactive Media Consolidated Inc. Judge Martin Glenn presides over the case. Lawyers at Dechert LLP serve as the Debtors' counsel. The Debtors' financial advisors are Alvarez & Marsal Securities LLC. The Debtors' investment banker is Alvarez & Marsal North America, LLC. Quinn Emanuel Urquhart & Sullivan, LLP, serves as the Debtors' special counsel. Epiq Bankruptcy Solutions serves as the Debtors' claims agent. Velo Holdings estimated $100 million to $500 million in assets and $500 million to $1 billion in debts. The petitions were signed by George Thomas, general counsel. Lawyers at Willkie Farr & Gallagher LLP represent Barclays, the First Lien Prepetition Agent and the DIP Agent. The First Lien Prepetition Agent and DIP Agent also has hired FTI Consulting, Inc. Sidley Austin LLP represents the Second Lien Prepetition Agent. Tracy Hope Davis, U.S. Trustee for Region 2, appointed three unsecured creditors to serve on the Official Committee of Unsecured Creditors of Velo Holdings Inc., et al. VENTANA 20/20: Chapter 11 Status Hearing Set for Sept. 6 -------------------------------------------------------- The Bankruptcy Court in Tucson, Arizona, will hold a status hearing in the Chapter 11 case of Ventana 20/20 LP on Sept. 6, 2012, at 10:15 a.m. at 38 S. Scott Avenue, Courtroom 446, in Tucson. A Meeting of Creditors under 11 U.S.C. Sec. 341(a) is scheduled for Sept. 13, 2012 at 11:00 a.m. at U.S. Trustee Meeting Room, James A. Walsh Court, 38 S Scott Ave, St 140, also in Tucson. Ventana 20/20 LP filed bare-bones Chapter 11 petition (Bankr. D. Ariz. Case No. 12-17493) in Tucson on Aug. 3, 2012. The Debtor estimated assets and debts of at least $10 million. John Murphy, as manager of the Debtor, signed the Chapter 11 petition. Mr. Murphy is the founder, chairman and CEO of the 20/20 Group of companies. As a value investor, he has led or participated in over $1 billion of multi-family acquisitions across North America. Bankruptcy Judge Eileen W. Hollowell oversees the case. Frederick J. Petersen, Esq., at Mesch, Clark & Rothschild, P.C., serves as the Debtor's counsel. VERSO PAPER: S&P Affirms 'B' Corp. Credit Rating; Outlook Negative ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Memphis, Tenn.-based Verso Paper Holdings LLC (Verso Paper) to negative from stable and affirmed its ratings on the company, including its 'B' corporate credit rating. "The outlook revision follows Verso Paper's weaker-than-expected second-quarter earnings results resulting from sluggish economic growth and advertising spending," said Standard & Poor's credit analyst Tobias Crabtree. "While we expect seasonal factors to lead to a sequential improvement in Verso Paper's earnings over the second half of 2012, credit measures are now likely to remain weak for the 'B' rating through the remainder of 2012." "The corporate credit rating on Verso Paper reflects Standard & Poor's view of the combination of its 'highly leveraged' financial risk and 'weak' business risk. Our ratings incorporate the company's limited product diversity, substitution risks due to changing customer preferences for greater electronic content, and vulnerability to fluctuations in input costs and selling prices. In addition, despite our expectation that credit measures will remain somewhat weak over the next several quarters, we expect liquidity to remain 'adequate,' attributable to its cash position, credit facilities, and manageable near-term debt maturity profile following the completed exchange offers in the first half of 2012," S&P said. "Verso is the second-largest coated paper manufacturer in North America and accounts for about 15% of total production capacity. A substantial proportion of its sales are to catalogs and magazines end users, which we believe are susceptible to substitution risks due to changing customer preferences for greater electronic content, particularly with increased penetration of e-readers and tablet computers," S&P said. "At this time, our ratings do not take into consideration a potential merger of Verso Paper with bankrupt competitor NewPage Corp. (D/--). If a proposal for a combination were to become more likely, we would reassess any potential ratings impact on Verso Paper, including possible synergy benefits and deleveraging through a business combination of the two largest coated paper manufacturers in North America," S&P said. "The negative rating outlook reflects the possibility that we could downgrade Verso Paper over the next several quarters if the anticipated sequential improvement in the company's EBITDA fails to transpire resulting in interest coverage remaining in the low 1x area. Under this scenario, liquidity would likely weaken and the company would likely need to rely on borrowings under its revolving credit facilities to fund operating requirements," S&P said. "We could revise the rating outlook to stable if Verso Paper were to demonstrate sustained profitability throughout the next several quarters such that we were confident the company will be able to generate positive free cash flow in 2013. In addition, we would expect the company to be able to successfully repay or refinance Verso Paper Finance Holdings LLC's February 2013 term loan maturity," S&P said. VICTORY ENERGY: Re-Engages WilsonMorgan LLP as Accountant --------------------------------------------------------- Victory Energy Corporation, through the Audit Committee of its Board of Directors and with the ratification of its Board of Directors, dismissed Weaver and Tidwell, LLP, as the Company?s independent registered public accounting firm and re-engaged WilsonMorgan LLP as the Company's independent registered accounting firm. Weaver was engaged on June 18, 2012, and had never reviewed or reported on any of the Company's financial statements. WilsonMorgan was previously the Company's independent registered accounting firm and reported on the Company's financial statements for the fiscal years ended Dec. 31, 2011, 2010, 2009, 2008, and 2007, and reviewed the interim financial statements for the quarters ended thereon. WilsonMorgan also reviewed the Company's most recent interim financial statements for the quarter ended March 31, 2012. Prior to engaging WilsonMorgan, the Company did not consult with them regarding the application of accounting principles to a material, specific completed and contemplated transaction regarding the type of audit opinion that might be rendered by WilsonMorgan on the Company's financial statements. There was a disagreement with Weaver on how the Company should present its financial statements for the year ended Dec. 31, 2011, and the quarter ended March 31, 2012, which were not reported on by or reviewed by Weaver, respectively. Weaver asserted that non- controlling interest should be presented in the Company's financial statements. The Company does not believe that the presentation of non-controlling interest on its financial statement is appropriate. The Company dismissed Weaver and re- engaged WilsonMorgan because it was concerned that it could not meet its SEC filing deadline without this change. About Victory Energy Austin, Texas-based Victory Energy Corporation is engaged in the exploration, acquisition, development and exploitation of domestic oil and gas properties. Current operations are primarily located onshore in Texas, New Mexico and Oklahoma. In the auditors' report accompanying the financial statements for year ended Dec. 31, 2011, WilsonMorgan LLP, in Irvine, California, expressed substantial doubt about Victory Energy's ability to continue as a going concern. The independent auditors noted that the Company has experienced recurring losses since inception and has an accumulated deficit. The Company reported a net loss of $3.95 million on $305,180 of revenues for 2011, compared with a net loss of $432,713 on $385,889 of revenues for 2010. The Company's balance sheet at March 31, 2012, showed $2.53 million in total assets, $453,316 in total liabilities and $2.08 million in total stockholders' equity. VIEW SYSTEMS: Errors Found on 2010 and 2011 Periodic Reports ------------------------------------------------------------ View Systems Inc.'s board of directors reports that the Company's previously issued financial statements, covering the year ended Dec. 31, 2010, through the third quarter of 2011, should no longer be relied upon because of errors in those financial statements. In conjunction with the Company's previously reported change of independent accountants, the Company engaged an outside consultant to perform a review of 100% of the Company's 2011 revenue arrangements and to identify any misapplication of US GAAP with respect to those arrangements. As a result of this review, the Company determined to restate its financial statements as of and for the period ended Dec. 31, 2010, to reflect a correction to an understatement of deferred income that resulted from allocating the revenue received under extended warranty arrangements over the life of the warranty. Also, the Company is correcting a revenue overstatement due to recognition of sales prior to the installation of the Company's products. As a result of reducing sales revenue there was a corresponding reduction in cost of sales and accounts payable. In addition, the Company is restating its Dec. 31, 2010, financial statements due to the reclassification of common stock that was issued to a holder of a note payable. The Company had originally recorded the issuance of the stock as a payment in full for the note and related costs however after a further review of the legal documents it was determined that the debt was not satisfied but instead the ultimate resolution of the debt was contingent on events that were still unfolding. Because of the errors that are being corrected, the Company will revise management's report on internal controls over financial reporting to conclude that the Company's internal controls over financial reporting were not effective. The Company will file Amendment No. 2 to its Form 10-K for the year ended Dec. 31, 2010, to disclose the restated financial statements for Dec. 31, 2010, as soon as practicable. The correction and restatement to the Company's financial statements for the year ended Dec. 31, 2010, also results in corrections and restatements to the Company's financial statements included in Forms 10-Q filed for periods ending in 2011. The Company is amending its Forms 10-Q for the periods ending March 31, 2011, June 30, 2011, and Sept. 30, 2011, and will file them as soon as practicable. About View Systems Baltimore, Md.-based View Systems, Inc., develops, produces and markets computer software and hardware systems for security and surveillance applications. The Company reported a net loss of $368,329 on $576,735 of net revenues for the nine months ended Sept. 30, 2011, compared with a net loss of $294,065 on $722,042 of net revenues for the same period during the prior year. The Company's balance sheet at Sept. 30, 2011, showed $1.48 million in total assets, $1.82 million in total liabilities, and a $339,294 total stockholders' deficit. As reported in the TCR on March 15, 2011, Robert L. White & Associates, Inc., in Cincinnati, Ohio, expressed substantial doubt about View Systems' ability to continue as a going concern, following the Company's 2010 results. The independent auditors noted that the Company had a net loss of $513,353 for the year ended Dec. 31, 2010, and has an accumulated deficit of $22,837,787 at Dec. 31, 2010. VILLAGIO PARTNERS: Wants to Use Wells Fargo Cash Collateral ----------------------------------------------------------- Villagio Partners Ltd., and its affiliated debtors at the onset of the case filed papers with the Bankruptcy Court seeking interim and final orders authorizing them to use cash collateral to pay immediate expenses pursuant to 15-day and 90-day budgets. Wells Fargo Bank, N.A., asserts a first lien position, on among other things, the accounts receivable and rents generated at the Debtors' properties. Wells Fargo's security interests are cross collateralized and cross guarantied by the Debtor entities. The Collateral may constitute the cash collateral of Wells Fargo as that term is defined in the Bankruptcy Code. All of the Debtors bills are paid by the non-debtor management company Commercial Real Ventures Management LLC. Monthly, the amounts necessary to pay the Debtors respective bills are withdrawn from the Debtors' respective accounts and placed in CRVM's bank account at Wells Fargo. CRVM is not in bankruptcy; however, the funds in CRVM's bank account at Wells Fargo constitute property of the Debtors' bankruptcy estates. The Debtors said if they are not authorized to spend cash collateral, they would encounter the possibility of being forced to cease operations thereby risking the loss of tenants and the income stream resulting therefrom. The Debtors propose to grant adequate protection to Wells Fargo in the form of replacement liens. The Debtors also said the "result of the proposed expenditures of cash collateral will be stable property operations with a continuing stream of rents, thus providing additional adequate protection to Wells Fargo." A hearing on the request was set for Aug. 8. Monica Susan Blacker filed a Notice of Appearance and Request for Notice on Wells Fargo's behalf. She may be reached at: Monica Susan Blacker, Esq. ANDREWS KURTH LLP 1717 Main Street, Suite 3700 Dallas, TX 75201 Tel: 214-659-4576 Fax: 214-659-4844 E-mail: monicablacker@andrewskurth.com About Villagio Partners et al. Villagio Partners Ltd., along with six affiliates, filed a bare- bones Chapter 11 petition (Bankr. S.D.N.Y. Case Nos. 12-35928, 12-35930 to 12-35932, 12-35934, 12-35936 and 12-35937) in Houston on Aug. 6, 2012. The Debtors are engaged primarily in the business of owning and operating commercial retail shopping centers and offices. The Debtors' commercial real properties are located in and around the Houston Metropolitan area, including Katy, Humble and The Woodlands. The petitions were signed by Vernon M. Veldekens, CEO for The Marcel Group. The Marcel Group -- http://www.themarcelgroup.com/-- is an integrated commercial real estate firm specializing in development, construction, design, engineering, master planning, leasing and property management. Village Partners, a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101(51B), estimated assets and debts of at least $10 million. It says that a real property in Katy, Texas, is worth $24.6 million. The affiliated debtors are Compass Care Holdings Ltd., Cinco Office VWM, Greens Imperial Center, Inc., Marcel Construction & Maintenance, Ltd., Tidwell Properties, Inc., and Research-New Trails Partners, Ltd. Bankruptcy Judge Marvin Isgur presides over the case. The Debtors are represented by: Wayne Kitchens, Esq. Steven Shurn, Esq. Simon Mayer, Esq. Allison D. Byman, Esq. HUGHES WATTERS ASKANASE, LLP 333 Clay Street, 29th Floor Houston, TX 77002 Tel: 713-759-0818 Fax: 713-759-6834 E-mail: sshurn@hwa.com smayer@hwa.com abyman@hwa.com VISUALANT INC: Incurs $737,000 Net Loss in Second Quarter --------------------------------------------------------- Visualant, Incorporated, filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $737,615 on $1.81 million of revenue for the three months ended June 30, 2012, compared with a net loss of $947,758 on $2.10 million of revenue for the same period during the prior year. The Company reported a net loss of $1.92 million on $5.52 million of revenue for the nine months ended June 30, 2012, compared with a net loss of $1.71 million on $7.03 million of revenue for the same period a year ago. Visualant reported a net loss of $2.39 million for the year ended Sept. 30, 2011, compared with a net loss of $1.14 million during the previous year. The Company's balance sheet at June 30, 2012, showed $6.84 million in total assets, $7.03 million in total liabilities, $28,350 in noncontrolling iterest, and a $220,669 total stockholders' deficit. The Company anticipates that it will record losses from operations for the foreseeable future. As of June 30, 2012, the Company's accumulated deficit was $13.1 million. The Company has limited capital resources, and operations to date have been funded with the proceeds from private equity and debt financings. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The audit report prepared by the Company's independent registered public accounting firm relating to the Company's financial statements for the year ended Sept. 30, 2011, includes an explanatory paragraph expressing the substantial doubt about the Company's ability to continue as a going concern. The audit report prepared by the Company's independent registered public accounting firm relating to its financial statements for the year ended Sept. 30, 2011, includes an explanatory paragraph expressing the substantial doubt about the Company's ability to continue as a going concern. Bankruptcy Warning The Securities Purchase Agreement dated June 17, 2011, with Ascendiant Capital Partners, LLC, will terminate if the Company's common stock is not listed on one of several specified trading markets (which include the OTCBB and Pink Sheets, among others), if the Company files protection from its creditors, or if a Registration Statement on Form S-1 or S-3 is not effective. If the price or the trading volume of the Company's common stock does not reach certain levels, the Company will be unable to draw down all or substantially all of its $3,000,000 equity line of credit with Ascendiant. The maximum draw down amount every 8 trading days under the Company's equity line of credit facility is the lesser of $100,000 or 20% of the total trading volume of the Company's common stock for the 10-trading-day period prior to the draw down multiplied by the volume-weighted average price of the Company's common stock for that period. If the Company stock price and trading volume decline from current levels, the Company will not be able to draw down all $3,000,000 available under the equity line of credit. "If we are not able to draw down all $3,000,000 available under the equity line of credit or if the Securities Purchase Agreement is terminated, we may need to restructure our operations, divest all or a portion of our business, or file for bankruptcy," the Company said in its quarterly report for the period ended June 30, 2012. A copy of the Form 10-Q is available for free at: http://is.gd/X2xf9k About Visualant Inc. Seattle, Wash.-based Visualant, Inc., was incorporated under the laws of the State of Nevada on October 8, 1998. The Company develops low-cost, high speed, light-based security and quality control solutions for use in homeland security, anti- counterfeiting, forgery/fraud prevention, brand protection and process control applications. VITRO SAB: Takes Appeal From Court Ruling Denying Mexican Plan -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Vitro SAB urged a federal circuit court of appeals to reverse a ruling by a U.S. bankruptcy judge in Fort Worth, Texas, to avoid a "far reaching negative effect" on relations with Mexico. According to the report, Vitro is appealing a June ruling from the bankruptcy judge who concluded that Vitro's Mexican reorganization plan was "manifestly contrary" to U.S. law and public policy because it reduced the liability of subsidiaries on $1.2 billion in defaulted bonds even though the subsidiaries weren't in bankruptcy in the U.S. or Mexico. The report relates Vitro appealed to the 5th U.S. Circuit Court of Appeals in New Orleans and filed its brief on Aug. 10. The company opened its brief by quoting Benjamin Cardozo, an early 20th century Supreme Court justice, who said that "we are not so provincial as to say that every solution to a problem is wrong because we deal with it otherwise at home." The report discloses that Vitro proceeded to explain why, in its view, it was permissible for the court in Mexico to reduce the debt of non-bankrupt subsidiaries even if the same result might not have been possible in the U.S. unless the subsidiaries likewise filed bankruptcy. Vitro made a point numerous times in its filing that objecting bondholders were afforded due process in "extensively but unsuccessfully fighting approval" of the company's Mexican reorganization plan. Vitro, according to the report, argues that sophisticated creditors, like the bondholders who bought the bonds in the secondary market, shouldn't be allowed to appeal to U.S. courts "to shield themselves from the effects" of Mexican law that allowed non-bankrupt subsidiaries to ride the coattails of the parent. The report relates the appeal is scheduled for argument in New Orleans during the week of Oct. 1. The bondholders will file their brief supporting the ruling by the bankruptcy court on Aug. 30. Vitro can file another brief in reply on Sept. 7. According to the report, the appeal in the Circuit Court is Vitro SAB de CV v. Ad Hoc Group of Vitro Noteholders (In re Vitro SAB de CV), 12- 10689, U.S. 5th Circuit Court of Appeals (New Orleans). The suit in bankruptcy court where the judge decided not to enforce the Mexican reorganization in the U.S. is Vitro SAB de CV v. ACP Master Ltd. (In re Vitro SAB de CV), 12-03027, U.S. Bankruptcy Court, Northern District Texas (Dallas). The bondholders' previous appeal in the circuit court is Ad Hoc Group of Vitro Noteholders v. Vitro SAB de CV (In re Vitro SAB de CV), 11-11239, U.S. 5th Circuit Court of Appeals (New Orleans). Opening Brief Casey Neeley at glassBYTEs reports that Vitro SAB has filed its opening brief to appeal a recent decision by the U.S. Bankruptcy Court for the District of Northern Texas not to enforce the company's Mexican plan of reorganization in the U.S. The appeal brief was filed in the U.S. Court of Appeals for the Fifth Circuit last week. The company had announced its intention to appeal the case in late June. According to the report, counsel for Vitro argues in the brief that, "because the Bankruptcy Court misinterpreted and misapplied chapter 15 in its consideration of the enforceability of the Concurso Plan, this court must reverse the enforcement denial order, direct entry of an order enforcing the Concurso Approval Order and the Concurso Plan in the United States, and grant Vitro SAB such further relief as it deems just and proper." "It should not impede enforcement of a foreign reorganization plan in a chapter 15 case when it would not even impede confirmation of the same plan in a chapter 11 case," the report quotes Vitro as saying in the appeal brief. "Whether the Bankruptcy Court erred as a matter of law when, after it concluded that the Concurso Approval Order was the product of a process that was not corrupt or unfair to the appellees, it refused to enforce the Concurso Approval Order solely because the Concurso Plan novated guarantee obligations of non-debtor parties and replaced them with new obligations of substantially the same parties." The report notes the company further argues that "the relevant policies and provisions of chapter 15 mandate that the Concurso Plan and the Concurso Approval Order be enforced." The report relates the appeal also discusses the weight of the court's decision. "This appeal -- the culmination of the most heavily litigated case under Bankruptcy Code chapter 15 since Congress adopted the Model Law on Cross-Border Insolvency 'to facilitate cooperation between U.S. courts and foreign bankruptcy proceedings' -- presents this Court with the opportunity to embrace the immutable truth expressed by Justice Cardozo a century ago," writes Vitro. "The outcome of this appeal is crucial to international cooperation in cross-border insolvency proceedings, which the United States has long championed, and to the continued survival of one of Mexico's largest manufacturing enterprises with more than 17,000 employees worldwide." The report adds Vitro officials are hopeful about the strength of the appeals argument since the company previously was granted injunctive relief by the appeals court. The noteholders must file their reply brief by August 30. Vitro will have until September 7 to respond. Oral arguments are scheduled for the first week of October, the report says. The appellate case follows a June ruling by a Texas bankruptcy court, which ruled against the enforcement of Vitro's Mexican Plan of Reorganization in the United States in June, according to the report. In his ruling, the judge stated, "such [an] order manifestly contravenes the public policy of the United States and is also precluded from enforcement under 1507, 1521 and 1522 of the Bankruptcy Code." About Vitro SAB Headquartered in Monterrey, Mexico, Vitro, S.A.B. de C.V. (BMV: VITROA; NYSE: VTO), through its two subsidiaries, Vitro Envases Norteamerica, SA de C.V. and Vimexico, S.A. de C.V., is a global glass producer, serving the construction and automotive glass markets and glass containers needs of the food, beverage, wine, liquor, cosmetics and pharmaceutical industries. Vitro is the largest manufacturer of glass containers and flat glass in Mexico, with consolidated net sales in 2009 of MXN23,991 million (US$1.837 billion). Vitro defaulted on its debt in 2009, and sought to restructure around US$1.5 billion in debt, including US$1.2 billion in notes. Vitro launched an offer to buy back or swap US$1.2 billion in debt from bondholders. The tender offer would be consummated with a bankruptcy filing in Mexico and Chapter 15 filing in the United States. Vitro said noteholders would recover as much as 73% by exchanging existing debt for cash, new debt or convertible bonds. Concurso Mercantil & Chapter 15 Proceedings Vitro SAB on Dec. 13, 2010, filed its voluntary petition for a pre-packaged Concurso Plan in the Federal District Court for Civil and Labor Matters for the State of Nuevo Leon, commencing its voluntary concurso mercantil proceedings -- the Mexican equivalent of a prepackaged Chapter 11 reorganization. Vitro SAB also commenced parallel proceedings under Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-16619) in Manhattan on Dec. 13, 2010, to seek U.S. recognition and deference to its bankruptcy proceedings in Mexico. Early in January 2011, the Mexican Court dismissed the Concurso Mercantil proceedings. But an appellate court in Mexico reinstated the reorganization in April 2011. Following the reinstatement, Vitro SAB on April 14, 2011, re-filed a petition for recognition of its Mexican reorganization in U.S. Bankruptcy Court in Manhattan (Bankr. S.D.N.Y. Case No. 11- 11754). The Vitro parent received sufficient acceptances of its reorganization by using the US$1.9 billion in debt owing to subsidiaries to vote down opposition by bondholders. The holders of US$1.2 billion in defaulted bonds opposed the Mexican reorganization plan because shareholders could retain ownership while bondholders aren't being paid in full. Vitro announced in March 2012 that it has implemented the reorganization plan approved by a judge in Monterrey, Mexico. In the present Chapter 15 case, the Debtor seeks to block any creditor suits in the U.S. pending the reorganization in Mexico. Chapter 11 Proceedings A group of noteholders opposed the exchange -- namely Knighthead Master Fund, L.P., Lord Abbett Bond-Debenture Fund, Inc., Davidson Kempner Distressed Opportunities Fund LP, and Brookville Horizons Fund, L.P. Together, they held US$75 million, or approximately 6% of the outstanding bond debt. The Noteholder group commenced involuntary bankruptcy cases under Chapter 11 of the U.S. Bankruptcy Code against Vitro Asset Corp. (Bankr. N.D. Tex. Case No. 10-47470) and 15 other affiliates on Nov. 17, 2010. Vitro engaged Susman Godfrey, L.L.P. as U.S. special litigation counsel to analyze the potential rights that Vitro may exercise in the United States against the ad hoc group of dissident bondholders and its advisors. A larger group of noteholders, known as the Ad Hoc Group of Vitro Noteholders -- comprised of holders, or investment advisors to holders, which represent approximately US$650 million of the Senior Notes due 2012, 2013 and 2017 issued by Vitro -- was not among the Chapter 11 petitioners, although the group has expressed concerns over the exchange offer. The group says the exchange offer exposes Noteholders who consent to potential adverse consequences that have not been disclosed by Vitro. The group is represented by John Cunningham, Esq., and Richard Kebrdle, Esq. at White & Case LLP. A bankruptcy judge in Fort Worth, Texas, denied involuntary Chapter 11 petitions filed against four U.S. subsidiaries. On April 6, 2011, Vitro SAB agreed to put Vitro units -- Vitro America LLC and three other U.S. subsidiaries -- that were subject to the involuntary petitions into voluntary Chapter 11. The Texas Court on April 21 denied involuntary petitions against the eight U.S. subsidiaries that didn't consent to being in Chapter 11. Kurtzman Carson Consultants is the claims and notice agent to Vitro America, et al. Alvarez & Marsal North America LLC, is the Debtors' operations and financial advisor. The official committee of unsecured creditors appointed in the Chapter 11 cases of Vitro America, et al., has selected Sarah Link Schultz, Esq., at Akin Gump Strauss Hauer & Feld LLP, in Dallas, Texas, and Michael S. Stamer, Esq., Abid Qureshi, Esq., and Alexis Freeman, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, as counsel. Blackstone Advisory Partners L.P. serves as financial advisor to the Committee. The U.S. Vitro companies sold their assets to American Glass Enterprises LLC, an affiliate of Sun Capital Partners Inc., for US$55 million. U.S. subsidiaries of Vitro SAB are having their cases converted to liquidations in Chapter 7, court records in January 2012 show. In December, the U.S. Trustee in Dallas filed a motion to convert the subsidiaries' cases to liquidations in Chapter 7. The Justice Department's bankruptcy watchdog said US$5.1 million in bills were run up in bankruptcy and hadn't been paid. On June 13, 2012, U.S. Bankruptcy Judge Harlin "Cooter" Hale in Dallas entered a ruling that precluded Vitro from enforcing its Mexican reorganization plan in the U.S. The judge ruled that the Mexican reorganization was "manifestly contrary" to U.S. public policy because it bars the bondholders from holding Vitro operating subsidiaries liable to pay on their guarantees of the bonds. The Mexican plan reduced the debt of subsidiaries on $1.2 billion in defaulted bonds even though they weren't in bankruptcy in any country. VYSTAR CORPORATION: Had $584,500 Net Loss in Second Quarter ----------------------------------------------------------- Vystar Corporation filed its quarterly report on Form 10-Q, reporting a net loss of $584,525 on $20,419 of revenues for the three months ended June 30, 2012, compared with a net loss of $1.26 million on $125,892 of revenues for the same period last year. For the six months ended June 30, 2012, the Company had a net loss of $1.27 million on $144,447 of revenues, compared with a net loss of $2.32 million on $244,931 of revenues for the same period of 2011. The Company's balance sheet at June 30, 2012, showed $1.01 million in total assets, $1.96 million in total liabilities, and a stockholders' deficit of $950,081. Bankruptcy Warning According to the regulatory filing, there can be no assurances that the Company will be able to achieve its projected level of revenues in 2012 and beyond. "If the Company is unable to achieve its projected revenues and is not able to obtain alternate additional financing of equity or debt, the Company would need to significantly curtail or reorient its operations during 2012, which could have a material adverse effect on the Company's ability to achieve its business objectives and as a result may require the Company to file for bankruptcy or cease operations." Habif, Arogeti & Wynne, LLP, in Atlanta, Georgia, expressed substantial doubt about Vystar's ability to continue as a going concern, following its results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has recurring losses from operations, a capital deficit, and limited capital resources. A copy of the Form 10-Q is available for free at: http://is.gd/pxwJ2t Duluth, Ga.-based Vystar Corporation is the creator and exclusive owner of the innovative technology to produce Vytex(R) Natural Rubber Latex ("NRL"). This technology reduces antigenic protein in natural rubber latex products to virtually undetectable levels in both liquid NRL and finished latex products. WAVE SYSTEMS: To Complete $1.66 Million Class A Stock Offering -------------------------------------------------------------- Wave Systems Corp. is selling to investors 2,587,824 shares of its Class A common stock at a price of $0.6425 per share, yielding gross proceeds of approximately $1,662,677. Investors in the offering will also receive three-year warrants to purchase an aggregate of 1,293,912 shares of Wave's Class A common stock for $0.58 per share. The net proceeds of the financing will be used to fund Wave's ongoing operations. Security Research Associates acted as placement agent in connection with the offering. The shares and shares underlying the warrants in this offering are being issued under a $30 million shelf registration statement declared effective by the Securities and Exchange Commission on July 22, 2011. A prospectus supplement related to the public offering will be filed with the Securities and Exchange Commission. A copy of the Placement Agency Agreement is available for free at: http://is.gd/XM8fMs About Wave Systems Lee, Massachusetts-based Wave Systems Corp. (NASDAQ: WAVX) -- http://www.wave.com/-- develops, produces and markets products for hardware-based digital security, including security applications and services that are complementary to and work with the specifications of the Trusted Computing Group, an industry standards organization comprised of computer and device manufacturers, software vendors and other computing products manufacturers. The Company reported a net loss of $10.79 million in 2011, a net loss of $4.12 million in 2010, and a net loss of $3.34 million in 2009. The Company's balance sheet at June 30, 2012, showed $24.59 million in total assets, $19.26 million in total liabilities and $5.32 million in total stockholders' equity. Going Concern The Company said in its annual report for the year ended Dec. 31, 2011, that it will be required to sell additional shares of common stock, preferred stock, obtain debt financing or engage in a combination of these financing alternatives, to raise additional capital to continue to fund its operations for the twelve months ending Dec. 31, 2012. If Wave is not successful in executing its business plan, it will be required to sell additional shares of common stock, preferred stock, obtain debt financing or engage in a combination of these financing alternatives or it could be forced to reduce expenses which may significantly impede its ability to meet its sales, marketing and development objectives, cease operations or merge with another company. No assurance can be provided that any of these initiatives will be successful. Due to its current cash position, capital needs over the next year and beyond, and the uncertainty as to whether it will achieve its sales forecast for its products and services, substantial doubt exists with respect to Wave's ability to continue as a going concern. WAVE SYSTEMS: Incurs $6.5 Million Net Loss in Second Quarter ------------------------------------------------------------ Wave Systems Corp. reported a net loss of $6.52 million on $7.76 million of total net revenues for the three months ended June 30, 2012, compared with a net loss of $1.82 million on $8.09 million of total net revenues for the same period during the prior year. The Company reported a net loss of $14.83 million on $14.74 million of total net revenues for the six months ended June 30, 2012, compared with a net loss of $4.08 million on $15.57 million of total net revenues for the same period a year ago. The Company's balance sheet at June 30, 2012, showed $24.59 million in total assets, $19.26 million in total liabilities and $5.32 million in total stockholders' equity. "Wave has had a productive yet challenging first half of 2012," said Wave CEO Steven Sprague. "Enthusiasm remains strong for the benefits of trusted computing technology within important industry sectors. However, converting interest into steady sales growth remains one of our biggest challenges. Q2 revenues were slightly better than those in the first quarter of this year, but were not as strong compared to Q2 '11, which benefitted from revenue recognized from two large enterprise orders. Expenses have also increased as a result of the substantial investment Wave has made to grow its sales infrastructure throughout Europe, expand its sales force in the US and consolidate the personnel and resources from the Q3 '11 acquisition of Safend." A copy of the press release is available for free at: http://is.gd/TNlhZa About Wave Systems Lee, Massachusetts-based Wave Systems Corp. (NASDAQ: WAVX) -- http://www.wave.com/-- develops, produces and markets products for hardware-based digital security, including security applications and services that are complementary to and work with the specifications of the Trusted Computing Group, an industry standards organization comprised of computer and device manufacturers, software vendors and other computing products manufacturers. The Company reported a net loss of $10.79 million in 2011, a net loss of $4.12 million in 2010, and a net loss of $3.34 million in 2009. Going Concern The Company said in its annual report for the year ended Dec. 31, 2011, that it will be required to sell additional shares of common stock, preferred stock, obtain debt financing or engage in a combination of these financing alternatives, to raise additional capital to continue to fund its operations for the twelve months ending Dec. 31, 2012. If Wave is not successful in executing its business plan, it will be required to sell additional shares of common stock, preferred stock, obtain debt financing or engage in a combination of these financing alternatives or it could be forced to reduce expenses which may significantly impede its ability to meet its sales, marketing and development objectives, cease operations or merge with another company. No assurance can be provided that any of these initiatives will be successful. Due to its current cash position, capital needs over the next year and beyond, and the uncertainty as to whether it will achieve its sales forecast for its products and services, substantial doubt exists with respect to Wave's ability to continue as a going concern. WM SIX FORKS: Windsor Manor in Raleigh Files Chapter 11 ------------------------------------------------------- WM Six Forks, LLC, filed a Chapter 11 petition (Bankr. E.D.N.C. Case No. 12-05854) on Aug. 12, 2012. The Debtor disclosed assets of $33.36 million and liabilities of $49.8 million. The Debtor owns a 6.61-acre apartment complex known as Windsor Manor Subdivision in Raleigh, North Carolina, which property is valued at $32.54 million. The Debtor also owns a 15.15-acre property, the value of which is not yet determined. The Debtors' property serves as collateral to a $39 million debt to Lenox Mortgage XVI, LLC. A copy of the schedules filed together with the petition is available at http://bankrupt.com/misc/nceb12-05854.pdf The Debtor on the petition date filed motions to hire Northen Blue, LLP as counsel, use cash collateral of the prepetition lender, continue services by utilities, and continue employment of property managers. WM SIX FORKS: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: WM Six Forks, LLC 1003-B Red Banks Road Greenville, NC 27858 Bankruptcy Case No.: 12-05854 Chapter 11 Petition Date: August 12, 2012 Court: U.S. Bankruptcy Court Eastern District of North Carolina (Wilson) Debtor's Counsel: John A. Northen, Esq. NORTHEN BLUE, LLP P.O. Box 2208 Chapel Hill, NC 27515-2208 Tel: (919) 968-4441 Fax: (919) 942-6603 E-mail: jan@nbfirm.com - and ? Vicki L. Parrott, Esq. NORTHEN BLUE, LLP P.O. Box 2208 Chapel Hill, NC 27515-2208 Tel: (919) 968-4441 Fax: (919) 942-6603 E-mail: vlp@nbfirm.com Scheduled Assets: $33,694,906 Scheduled Liabilities: $49,753,702 The petition was signed by William G. Garner, manager of WM6F Completion & Performance Assoc., LLC. Debtor's List of Its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Lenox Mortgage XVII, LLC Apartment Complex $39,000,000 Attn: John Harrelson Aspen Square Management, Inc. 380 Union Street, Suite 300 West Springfield, MA 01089 Horizon, Inc. Windsor Manor $899,738 1619 Fairway Drive Reidsville, NC 27320 Shelco, Inc. -- $700,754 5016 Parkway Plaza Boulevard, Suite 100 Charlotte, NC 28217 Tindall Corporation Windsor Manor $355,200 P.O. Box 1778 Spartanburg, SC 29304 Southeastern Electrical -- $187,707 Distributors, Inc. Hughes Metal Works, LLC Windsor Manor $88,433 Abacus Management Group, LLC Property Management $64,727 Services Time Warner (Fayetteville) -- $7,423 Petrucelli Construction -- $6,788 Steven Woodlief -- $6,350 Progressive Plumbing & Piping, Inc.-- $3,896 Carolina Appliance Corporation -- $3,888 Baker Roofing Company -- $3,084 Thyssenkrupp Elevator Corp. -- $2,160 Dreamscapes, LLC -- $2,085 Pacific General, LLC -- $2,025 Manning Fulton & Skinner, P.A. -- $1,934 Taps & Latches -- $1,772 SimplexGrinnell -- $1,458 Neuwave Systems, Inc. -- $1,397 WPCS INTERNATIONAL: First Wilshire Hikes Equity Stake to 11.2% -------------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, First Wilshire Securities Management, Inc., disclosed that, as of June 30, 2012, it beneficially owns 785,616 shares of common stock of WPCS International Inc. representing 11.2% of the shares outstanding. First Wilshire previously reported beneficial ownership of 477,928 common shares or a 6.6% equity stake as of Dec. 31, 2011. A copy of the amended filing is available for free at http://is.gd/ycno46 About WPCS International Exton, Pennsylvania-based WPCS International Incorporated provides design-build engineering services that focus on the implementation requirements of communications infrastructure. The Company provides its engineering capabilities including wireless communication, specialty construction and electrical power to the public services, healthcare, energy and corporate enterprise markets worldwide. As reported by the TCR on Dec. 8, 2011, WPCS International and its United Stated based subsidiaries, previously entered into a loan agreement, dated April 10, 2007, as extended, modified and amended several times, with Bank of America, N.A. The Company is seeking alternative debt financing and has conducted discussions with other senior lenders to replace the Loan Agreement. The Company may not be successful in obtaining alternative debt financing or additional financing sources may not be available on acceptable terms. If the Company is required to repay the Loan Agreement, the Company has sufficient working capital to repay the outstanding borrowings. J.H. COHN LLP, in Eatontown, New Jersey, issued a "going concern" qualification on the consolidated financial statements for the fiscal year ended April 30, 2012. The independent auditors noted that the Company is in default of certain covenants of its credit agreement and has incurred operating losses, negative cash flows from operating activities and has a working capital deficiency as of April 30, 2012. These matters raise substantial doubt about the Company's ability to continue as a going concern. The Company's balance sheet at April 30, 2012, showed $35.79 million in total assets, $29.91 million in total liabilities, and stockholders' equity of $5.88 million. WPCS reported a net loss attributable to the Company of $20.54 million for the year ended April 30, 2012, compared to a net loss attributable to the Company of $36.83 million during the prior fiscal year. WISP RESORT: Has Two or Three Potential Buyers ---------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the owner of the Wisp Resort in western Maryland reported to the bankruptcy judge that two potential buyers already submitted letters of intent to buy the business. There are talks with a third, the resort operator said in court papers seeking an enlargement of the exclusive right to propose a Chapter 11 reorganization plan. According to the report, the resort agreed with the creditors' committee and secured lenders that so-called exclusivity could be extended until Sept. 10. The agreement allows the lenders and creditors to hold direct talks with potential buyers. About Wisp Resort Recreational Industries, Inc., D.C. Development, LLC, Wisp Resort Development, Inc., and The Clubs at Wisp, LLC, operate a ski resort and real estate development companies located in Garrett County, Maryland generally known as Wisp Resort. The Wisp Resort comprises approximately 2,200 acres of master planned and fully entitled land, 32 ski trails covering 132 acres of skiable terrain with 12 lifts and two highly-rated golf courses. Financial problems were caused by a guarantee given to Branch Banking & Trust Co. to secure a $29.6 million judgment the bank obtained on a real estate development within the property. Recreational Industries, D.C. Development, Wisp Resort Development and The Clubs at Wisp filed for Chapter 11 bankruptcy (Bankr. D. Md. Lead Case No. 11-30548) on Oct. 15, 2011. D.C. Development disclosed $91,155,814 in assets and $46,141,245 in liabilities as of the Chapter 111 filing. The Debtors engaged Logan, Yumkas, Vidmar & Sweeney LLC as counsel and tapped Invotex Group as financial restructuring consultant. SSG Capital Advisors, LLC, serves as exclusive investment banker to the Debtors. The Official Committee of Unsecured Creditors has tapped Cole, Schotz, Meisel, Forman & Leonard, P.A. as counsel. YERMO WATER: Utilities Commission to Put Firm in Receivership ------------------------------------------------------------- Sam Pearson at desertdispatch.com reports that after years of complaints, the California Public Utilities Commission said it expects to file papers at Barstow Superior Court this week to place Yermo Water Company in receivership, spokesperson Andrew Kotch said. The move would allow the court to take control of the troubled water utility and force its sale to another buyer or to the Yermo Community Services District, according to desertdispatch.com. The report notes that the move is the culmination of a decades- long effort by local residents in response to continued complaints about the company's water service. desertdispatch.com relates that the CPUC's ruling in May to seek receivership for the company said that the company had given no indication it would fix the problems associated with its system. The Yermo CSD signed a $259,000 contract with Walker to purchase the company in March 2010, but the parties have been unable to complete the deal more than two years later, desertdispatch.com says. desertdispatch.com notes that records show state and local officials spent more than a decade talking about how to fix the water company, but have not been able to force changes. The company had a record of being "slow, and in some cases, even recalcitrant," to fix its system, a state engineer wrote 12 years ago, desertdispatch.com says. desertdispatch.com discloses that a report prepared by Davis' office in 1999 detailed complaints about the company, including an inspector's visit that found that the maintenance manager at the time lived in Big Bear and that the company was using swimming pool chlorine in its wells in violation of state regulations. Yermo Water Company is owned by Donald Walker, who operates it remotely from his home in Florida. * Fitch Updates Rating Definitions ---------------------------------- Fitch issued a correction of a release originally issued on Aug. 10, 2012. It revises the numer of issue ratings that may be affected by the updated rating definitions to 220. Effective Aug. 10, 2012, Fitch Ratings updated its Ratings Definitions, expanding the application of '+/-' to corporate issue ratings at the 'CCC' level and defining a rating action 'Under Review'. Fitch Ratings added 'CCC+' and 'CCC-' debt instrument ratings to its rating scale. These designations are limited to instrument ratings and will not be used for Issuer Default Ratings, leaving 'CCC' as the sole issuer rating within the 'CCC' category. The new designations provide greater comparability to debt instruments and recovery ratings in the lower end of the speculative-grade rating scale. Fitch will update its 'Recovery Rating and Notching Criteria for Non-Financial Corporates' to reflect these changes. Fitch will conduct a review of the issues impacted by this change and will update any issue ratings, if necessary. Potentially up to 220 issue ratings may be modified with a mix of upgrades and downgrades. Ratings are expected to move within two notches of their current levels. Fitch assigns Recovery Ratings to issuers rated 'B+' or below. Fitch also added the rating action 'Under Review'. This action signals the potential change in a rating due to a change in the scale or definition of the scale. It is not an indication of a change resulting from a change in credit quality. The final action will be designated as a 'Rating Revision' rather than an upgrade or downgrade. The action is also considered to fulfil an annual rating review requirement. * Weekend Deadlines in Court Orders Are Binding ----------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that U.S. District Judge Kenneth A. Marra in Miami ruled on Aug. 8 that if a deadline prescribed by a court order falls on a weekend, the deadline isn't extended until the next business day. The case is Dillworth v. Obregon, 12-20075, U.S. District Court, Southern District of Florida (Miami). * Manager Bonuses Are Beneficial in Bankruptcies, Study Says ------------------------------------------------------------ Linda Chiem at Bankruptcy Law360 reports that incentive bonus plans for managers of bankrupt companies can significantly improve outcomes for creditors and expedite bankruptcy proceedings, according to a new study released Wednesday by two finance professors in Hong Kong and Canada. The study -- co-authored by Vidhan K. Goyal, a professor of finance at the Hong Kong University of Science and Technology, and Wei Wang, an assistant professor of business at Queen?s University in Ontario -- defended the use of retention or incentive bonuses to keep top brass from bolting bankrupt firms. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- November 1-3, 2012 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Westin Copley Place, Boston, Mass. Contact: http://www.turnaround.org/ Nov. 26, 2012 BEARD GROUP, INC. 19th Annual Distressed Investing Conference The Helmsley Park Lane Hotel, New York City Contact: 1-240-629-3300 Nov. 29 - Dec. 2, 2012 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference JW Marriott Starr Pass Resort & Spa, Tucson, Ariz. Contact: 1-703-739-0800 ; http://www.abiworld.org/ April 10-12, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference JW Marriott Chicago, Chicago, Ill. Contact: http://www.turnaround.org/ October 3-5, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Wardman Park, Washington, D.C. Contact: http://www.turnaround.org/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers" public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed Chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors" Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine Tumanda, Howard C. Tolentino, Joseph Medel C. Martirez, Denise Marie Varquez, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Sheryl Joy P. Olano, Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2012. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***