/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/120919.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, September 19, 2012, Vol. 16, No. 261 Headlines AGRIPROCESSORS INC: Clawback Suit Against NY Lawyer Goes to Trial ADVANCED EQUITIES: Chicago Firm Charged With Misleading Investors AMERICAN AIRLINES: Retirees Committee Proposes Zolfo as Advisor AMERICAN AIRLINES: Retiree Committee Can Hire Segal as Consultant AMERICAN AIRLINES: Asks Court to Bar Lawsuit Against Manager AMERICAN AIRLINES: Wants to Preclude Suit Against Flight Director AMERICAN AIRLINES: Unsecureds Join in Retirees Suit AMPAL-AMERICAN: Initial Case Conference Set for Oct. 16 AMTRUST FINANCIAL: 6th Circ. Says FDIC Can't Recover $765MM APPALACHIAN FUELS: Business Aircraft Leasing Fails to Dismiss Suit APPALACHIAN FUELS: Court Trims Lawsuit Against Machinery Sales APPALACHIAN FUELS: Frost Brown Todd's Bid to Dismiss Suit Denied APPALACHIAN FUELS: Suit Against Jet Support Survives Dismissal Bid APOLLO MEDICAL: Incurs $3.2 Million Net Loss in July 31 Quarter ARS INTERMEDIATE: Moody's Cuts Corp. Family Rating to 'Caa1' ATOM INSTRUMENT: Court Rejects Summary Judgment Bid in Patent Suit ATP OIL: U.S. Trustee Appoints 3-Member Creditors Committee ATP OIL: Creditors Committee Opposes DIP Financing Motion ATP OIL: Seeks to Hire PwC as Auditors, Blackhill for CRO ATP OIL: Common Stock Delisted from NASDAQ BARNES BAY: Judge Denies Appeal on Cap on Attorneys' Fees BELLMARK RECORDS: Producer Wins $2MM in Copyright Suit BENDER SHIPBUILDING: Henry Marine Has Plan Relief to Pursue Claims BERNARD L. MADOFF: Trustee Says Daughters-in-Law Can Be Sued BERNARD L. MADOFF: Trustee Not Biased, GAO Says BIG SKY FARMS: Feed Suppliers Want Prompt Payments BIG SKY FARMS: Files Amendment to List of Creditors BLACK ELK: S&P Cuts Corp. Credit Rating to 'CCC+'; Outlook Neg BOOMERANG SYSTEMS: Files Form S-1, Registers $6.2MM Conv. Notes BROADKILL REALTY: Voluntary Chapter 11 Case Summary BROADVIEW NETWORKS: Has Final Approval on $25 Million Loan BROADVIEW NETWORKS: Pares Conflicts Over Prepackaged Ch. 11 BRUNO'S ISLAND: Case Summary & 20 Largest Unsecured Creditors BULLY'S SPORTS BAR: Nears Bankruptcy Exit CAVALIER HOTEL: Sec. 341 Creditors' Meeting on Sept. 27 CAVAN MANAGEMENT: Case Summary & Two Unsecured Creditors CHINA TEL GROUP: Issues Shares to Ironridge, Isaac and AO CHRYSLER LLC: Federal Circuit Upholds Laserfacturing Patent Ruling CITIZEN REPUBLIC: Fitch Puts 'B' IDR on Rating Watch Positive CLINICA REAL: Case Summary & 8 Largest Unsecured Creditors COMARCO INC: Reports $151,000 Net Income in July 31 Quarter DEER LAKE INN: Chapter 7 Bankruptcy Halts Auction DESIGNER HOMES: Voluntary Chapter 11 Case Summary DEWEY & LEBOEUF: Ex-Leaders Object to Proposed $71MM Clawback Deal DIGITAL DOMAIN: Section 341(a) Meeting Scheduled for Oct. 19 DIGITAL DOMAIN: Sued by Former Employee for WARN Act Violations DIGITAL DOMAIN: Can Act as Representative in Canadian Proceedings DIGITAL DOMAIN: Can Employ KCC as Claims and Noticing Agent DIGITAL DOMAIN: Court OKs Searchlight Led Auction for Sept. 21 DIGITAL DOMAIN: Has Interim Nod to Borrow Up to $11.79 Million DIGITAL DOMAIN: Notification Procedures for Stock Transfers Okayed DIGITAL DOMAIN: John Nichols Resigns from Board of Directors DJL TRUCKING: Case Summary & 20 Largest Unsecured Creditors DRINKS AMERICAS: Kenny Out as CEO; Tequilla Vet Cabo Takes Over EASTMAN KODAK: Says Retirement Income Plan 74% Funded EASTMAN KODAK: Sale Hearing Adjourned Until Further Notice EDIETS.COM INC: Terminates Office Lease Agreement with Radice EPAZZ INC: Issues 1.1 Billion Class A Shares to Majority Owner EPL OIL: Moody's Alters Outlook to Negative on $550MM Deal ER GASTON: Case Summary & 7 Unsecured Creditors FARMINGDALE HOUSING: Voluntary Chapter 11 Case Summary FIRSTFED FINANCIAL: U.S. Trustee Objects to Amended Ch. 11 Plan GENERAL CABLE: Moody's Rates Senior Unsecured Notes 'B1' GENT UNIFORM: Case Summary & 20 Largest Unsecured Creditors GLOBAL AVIATION: Union Deals Not Binding on Creditors GLOBAL AVIATION: Files Plan to Reduce Debt by $168 Million GLOBAL AVIATION: Seeks Extension of Exclusivity Period to Dec. 31 GREEN ACRES: Voluntary Chapter 11 Case Summary HENRY VOGT: Case Summary & 20 Largest Unsecured Creditors HOSTESS BRANDS: Bakery Workers Turn Down Contract Concessions HUDSON HEALTHCARE: Liquidating Plan Declared Effective HUDSON HEALTHCARE: Vacation Pay Claim Gets Gen. Unsecured Status ICEWEB INC: To Issue 25 Million Shares Under 2012 Equity Plan IMAGING3, INC: 3D Medical Images Provider in Chapter 11 INTEGRATED FREIGHT: Unit to Face Waste Spill Suit in Calif. JAMES KEENAN: Calif. Appeals Court Affirms Surcharge Order JHK INVESTMENTS: Sec. 341 Creditors' Meeting Set for Dec. 31 K-V PHARMACEUTICAL: Wins OK to Use Cash Collateral KYANITE MINING: Tries To Stave Off Receivership KENNEDY PLAZA: Case Summary & 3 Largest Unsecured Creditors LEHMAN BROTHERS: Elliott Says Navigator Price Too Low LEHMAN BROTHERS: CPT Drops Bid for Relief From Plan Order LEHMAN BROTHERS: Suit Against Right Management Consultants Nixed LEHMAN BROTHERS: Fontainebleau Unjust Enrichment Claims Denied LIGHTSQUARED INC: Lenders Seek Permission to Sue Harbinger LOCATION BASED TECHNOLOGIES: Six Directors Elected to Board LOCATION BASED TECHNOLOGIES: Gregg Haugen Has $400,000 Investment NAT'L INSTRUMENT SUPPLY: Centro Offers to Buy Biz for $1.2MM NAVISTAR INT'L: Liquidity Risk Cues Fitch to Cut IDR to 'CCC' NUVILEX INC: Delays Form 10-Q for July 31 Quarter OMEGA NAVIGATION: Files First Amended Joint Plan OFF DOCK: Case Summary & 20 Largest Unsecured Creditors OPTIONS MEDIA: Scott Frohman Resigns as CEO, All Other Positions PALMENTERE BROS: Case Summary & 20 Largest Unsecured Creditors PATRIOT COAL: U.S. Trustee Objects to Security Holders Committee PATRIOT COAL: Coal Production Cut to Affect 250 Employees PEREGRINE FINANCIAL: Wasendorf to Remain in Jail PINNACLE AIR: Wants to Scrap Pilot, Flight Attendant Contracts PINNACLE AIRLINES: Negotiating CBA Modifications with Unions PHYSICIANS TOTAL: Voluntary Chapter 11 Case Summary R&B RECEIVABLES: Case Summary & 20 Largest Unsecured Creditors RESIDENTIAL CAPITAL: Seeks to Establish Foreclosure Protocol RESIDENTIAL CAPITAL: Proposes Hudson to Review Loan Files RESIDENTIAL CAPITAL: Pepper Hamilton Tapped for Foreclosure Review RESIDENTIAL CAPITAL: Committee Hiring Analytic Focus as Consultant RESIDENTIAL CAPITAL: Committee to Retain Coherent Economics RITZ CAMERA: Inability to Find Buyer Cues Liquidation ROUTE 88 OFFICE: Case Summary & 10 Largest Unsecured Creditors SANTEON GROUP: Incurred $240,000 Net Loss in Q2 of 2011 SKILLSOFT LTD: S&P Cuts 1st Lien Sr. Secured Debt Rating to 'B+' SKY GROWTH: Moody's Says Par Upsized Term Loan Credit Negative SKOWHEGAN HOUSING: Voluntary Chapter 11 Case Summary SSI INVESTMENTS: Moody's Assigns 'B2' Corp. Family Rating SOLYNDRA LLC: GOP Reps. Pass 'No More Solyndras' Bill SYMS CORP: Emerges from Chapter 11 as Trinity Place Holdings TERRA-GEN FINANCE: S&P Cuts CCR to 'B' on Weaker Credit Measures THOMAS REAL ESTATE: Case Summary & 2 Unsecured Creditors TWG CAPITAL: Finance Firm Files Ch. 11 to Sell Assets TWG CAPITAL: Case Summary & 20 Largest Unsecured Creditors VAL-MID ASSOCIATES: Case Summary & 19 Largest Unsecured Creditors VALENCE TECHNOLOGY: Common Stock Delisted from NASDAQ WASHINGTON MUTUAL: Liquidating Trust Wants $29M Tax Claim Junked WINDSOR QUALITY: Moody's Affirms 'B1' Corp. Family Rating WISP RESORT: Bank's Objection Deadline Extended Anew WOLVERINE ACQUISITION: Voluntary Chapter 11 Case Summary WPCS INTERNATIONAL: Reports $993,700 Net Income in July 31 Qtr. ZAMBRANO CORP: Court Rules on Ch.7 Trustee's Suits v. Principals * Moody's Says Durables Sector have Low Risk From EU Crisis * Grassley, Franken Seek to Overturn Supreme Court Farmer Ruling * Failed St. Louis Bank Bring Year's Total to 42 * Upcoming Meetings, Conferences and Seminars ********* AGRIPROCESSORS INC: Clawback Suit Against NY Lawyer Goes to Trial ----------------------------------------------------------------- Chief Bankruptcy Judge Thad J. Collins denied the defendant's request to dismiss the avoidance lawsuit, Joseph E. Sarachek, in his Capacity as Chapter 7 Trustee of Agriprocessors, Inc., Plaintiff, v. Zalman Schochet, Defendant, Adv. Proc. No. 10-09190 (Bankr. N.D. Iowa). The Chapter 7 Trustee filed about 150 adversary proceedings in the bankruptcy case. In numerous hearings and filings with the Court, Trustee has noted the many challenges and difficulties investigating the claims, most resulting from the raid and subsequent proceedings. Key people were incarcerated and/or were unwilling to talk. Documents were difficult to locate and to understand without the availability and cooperation of many key plant employees. The Chapter 7 Trustee sued Mr. Schochet, a licensed New York attorney, on Nov. 1, 2010, to avoid fraudulent conveyances and preferential transfers made by the Debtor to the Defendant. The Complaint alleges the Defendant received payments totaling $43,000 in the two-year period before Agriprocessors' bankruptcy filing. The Trustee alleges the Debtor was insolvent at the time and that the payments constituted recoverable fraudulent conveyances under 11 U.S.C. Sec. 548. The Trustee sought to recover the value of the fraudulent conveyances. The Defendant filed a Motion to Dismiss arguing that the Complaint insufficiently pled the causes of action because it did not allege that Defendant was the initial transferee of the funds. The Defendant argues this omission establishes that the Defendant did not have sufficient dominion and control over the funds to be liable for the transfer under 11 U.S.C. Sec. 550(a). The Defendant also argues that should the Court find the Complaint is adequate the Court should treat the Motion to Dismiss as a Motion for Summary Judgment, taking into consideration the Defendant's affidavit. The affidavit states that he never exercised dominion and control over the funds, but instead placed them in a client trust account and awaited further instructions from the Defendant before paying the funds to someone else. Judge Collins denied the Motion to Dismiss and request for summary judgment, saying the Complaint adequately pleads both fraudulent conveyance and preferential transfer claims. The record needs to be further developed to reflect whatever additional evidence there is supporting and/or contradicting the Defendant's "initial transferee" defense. A copy of the Court's Sept. 14, 2012 Order is available at http://is.gd/Be33pWfrom Leagle.com. About Agriprocessors Inc. Headquartered in Postville, Iowa, Agriprocessors once produced half the kosher beef and 40% of the kosher poultry in the U.S. It filed for bankruptcy following a raid by immigration authorities in May 2008 on the plant in Postville, Iowa, where 389 workers were arrested for having forged immigration documents. The raid led to numerous federal criminal charges, including a high-profile case against Agriprocessors' President, Sholom Rubashkin. The Company filed a Chapter 11 petition (Bankr. E.D.N.Y. Case No. 08-47472) on Nov. 4, 2008. The case was later transferred to Iowa (Bankr. N.D. Iowa Case No. 08-02751). Kevin J. Nash, Esq., at Finkel Goldstein Rosenbloom & Nash, represented the Company in its restructuring effort. The Debtor estimated assets and debts of $100 million to $500 million in its Chapter 11 petition. SHF Industries Inc. purchased substantially all of the Debtor's assets for $8.5 million in July 2009, and renamed the company Agri Star. The Court approved the sale free and clear of all liens. Agriprocessors' case was then converted to liquidation under Chapter 7, at the consent of the Chapter 11 trustee appointed to take over the estate. The Chapter 11 trustee became the trustee in the Chapter 7 case to liquidate the Debtor's remaining assets and provide distributions to creditors. ADVANCED EQUITIES: Chicago Firm Charged With Misleading Investors ----------------------------------------------------------------- The Securities and Exchange Commission on Tuesday charged the co- founder of a Chicago-based investment firm with misleading investors in two private equity offerings, and charged the other co-founder with supervisory failures related to the offerings. Advanced Equities Inc. -- a broker-dealer and investment advisory firm -- and co-founders Dwight O. Badger and Keith G. Daubenspeck were charged in connection with private offerings in 2009 and 2010 on behalf of an alternative energy company in Silicon Valley, Calif., which was not identified by name in the SEC's administrative proceeding. Badger led the sales effort for the offerings and made misstatements about the energy company's finances that Daubenspeck did not correct, thus failing to reasonably supervise Badger. Daubenspeck co-founded Advanced Equities with Badger and was the former chief executive of its parent company. Daubenspeck is the chairman of the parent company's board. Badger, Daubenspeck, and their firm agreed to settle the SEC's charges. According to the SEC's order, Badger said in the 2009 offering that the energy company had more than $2 billion of order backlogs when the backlog never exceeded $42 million. He also said it had a $1 billion order from a national grocery store chain even though the store only had placed a $2 million order and signed a non- binding letter of intent for future purchases. Badger said that the company had been granted a U.S. Department of Energy loan exceeding $250 million when it had applied for a $96.8 million loan, and he again misstated the information about the loan application during the follow-up offering in 2010. "Dwight Badger misled investors by embellishing key facts about the energy company's sales orders and its loan application to the Department of Energy," said Merri Jo Gillette, Director of the SEC's Chicago Regional Office. "The SEC will continue to be vigilant in uncovering fraud in private securities offerings and holding registered securities professionals accountable." According to the SEC's order, Daubenspeck participated in at least two internal sales calls with Advanced Equities brokers during the 2009 offering and remained silent after he heard Badger make misstatements about the company's order backlog, grocery store order, and Department of Energy loan application. Despite the red flags raised by the misstatements and the obvious risk that false information would be repeated to investors, Daubenspeck did not take reasonable steps to correct the misstatements and thus failed reasonably to supervise Badger. Advanced Equities agreed to pay a $1 million penalty, and agreed to be censured and to cease and desist from committing or causing any future violations of the securities laws it was found to have violated. The firm also agreed to numerous undertakings including hiring an independent consultant to review its sales policies and procedures. Badger agreed to pay a $100,000 penalty and be barred for one year from association with any broker, dealer, investment adviser, municipal securities dealer or transfer agent. Daubenspeck agreed to pay a $50,000 penalty and a one-year supervisory suspension. Advanced Equities, Badger, and Daubenspeck consented to the entry of the cease-and-desist order without admitting or denying the SEC's charges. The SEC's investigation was conducted in the Chicago Regional Office by investigative attorneys Richard Stoltz and Anne McKinley and litigation counsel Steven Seeger and John Birkenheier with assistance from Jennifer Gladfelter, Christopher Caprio, George Jacobus, and Dan Gregus of the broker-dealer examinations staff and Daryl Hartman, Anne Salvador, Magdaline Gavas, Erik Lillya, Andrew Schuster, and David Mueller of the investment management examinations staff. AMERICAN AIRLINES: Retirees Committee Proposes Zolfo as Advisor --------------------------------------------------------------- The committee representing AMR Corp.'s retired workers has filed an application to hire Zolfo Cooper LLC as its bankruptcy consultant and financial adviser. Zolfo will help the retirees committee in analyzing AMR's business plans, operating results, financial statements and other information provided by the company. The firm will also provide testimonies and participate in meetings and negotiations regarding any proposed retiree benefit modifications. Zolfo will be paid on an hourly basis for its services and will be reimbursed of work-related expenses. The firm's hourly rates range from $800 to $860 for managing directors, $245 to $780 for professional staff, and $55 to $310 for support personnel. The firm does not hold or represent interest adverse to AMR and its affiliated debtors, according to a declaration by David MacGreevey, Zolfo senior director. A court hearing to consider approval of the application is scheduled for September 20. Objections are due by September 13. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Retiree Committee Can Hire Segal as Consultant ----------------------------------------------------------------- The committee of AMR Corp.'s retired workers obtained approval from the U.S. Bankruptcy Court for the Southern District of New York to hire The Segal Company as its consultant. AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Asks Court to Bar Lawsuit Against Manager ------------------------------------------------------------ AMR Corp. asked the U.S. Bankruptcy Court for the Southern District of New York to extend the automatic stay to an employee of American Eagle Airlines Inc., who was sued for alleged discriminatory action. The move comes after Kerry Maynard, who filed the lawsuit in a Michigan court, refused the airline's request that the stay be also applied to its general manager Mitch Felkey. American Eagle's bankruptcy filing automatically stayed the lawsuit against the airline but not against the other defendant. The automatic stay is an injunction that halts actions by creditors against a company in bankruptcy protection. AMR lawyer Stephen Youngman, Esq., at Weil Gotshal & Manges LLP, in New York, said there is an "identity of interest" between the airline and its general manager that warrants the extension of the stay. "Continued prosecution of the action against Felkey will irreparably harm Eagle because any judgment or settlement of the action will likely give rise to an indemnification claim by Felkey against Eagle," Mr. Youngman said in a seven-page complaint filed on September 10. The lawsuit is AMR Corp., et al., v. Kerry Maynard, 12-01862, U.S. Bankruptcy Court, Southern District of New York. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Wants to Preclude Suit Against Flight Director ----------------------------------------------------------------- AMR Corp. asked the U.S. Bankruptcy Court for the Southern District of New York to extend the automatic stay to an employee of American Airlines Inc. who is facing a lawsuit pending before the California Superior Court. Brian Ostrom, a former employee of the airline, sued Greg Smith, Director of Flights for American Airlines at the Los Angeles International Airport, for slander and defamation. In a seven-page complaint, Stephen Youngman, Esq., at Weil Gotshal & Manges LLP, in New York, said there is an "identity of interest" between American Airlines and Mr. Smith although the airline is not a defendant of the lawsuit. "Continued prosecution of the action against Smith will irreparably harm the debtors because any judgment or settlement of the action will likely give rise to an indemnification claim by Smith against American," Mr. Youngman said. The lawsuit is AMR Corp., et al., v. Brian Ostrom, 12-01863, U.S. Bankruptcy Court, Southern District of New York. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Unsecureds Join in Retirees Suit --------------------------------------------------- Judge Sean Lane authorized the participation of the committee of AMR Corp.'s unsecured creditors in the lawsuit filed by the company against the retirees committee. The creditors committee has to comply with the August 8 scheduling order should it elect to take discovery or file papers in connection with the lawsuit, the judge said in a September 10 order. AMR and its subsidiaries, including American Airlines Inc., filed the lawsuit early last month seeking court declaration that they are under no legal compulsion to continue providing health and welfare benefits to retirees. The case is AMR Corp. v. Committee of Retired Employees, 12-01744, U.S. Bankruptcy Court, Southern District of New York (Manhattan). About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMPAL-AMERICAN: Initial Case Conference Set for Oct. 16 ------------------------------------------------------- The U.S. Bankruptcy Court in Manhattan will hold an initial case conference in the Chapter 11 case of Ampal - American Israel Corporation with hearing to be held on Oct. 16, 2012, at 10:00 a.m. at Courtroom 723. On Aug. 30, 2012, the Court granted the Debtor's motion to impose the automatic stay in the case. About Ampal-American Ampal-American Israel Corporation and its subsidiaries -- http://www.ampal.com/-- acquired interests primarily in businesses located in Israel or that are Israel-related. Ampal is seeking opportunistic situations in a variety of industries, with a focus on energy, chemicals and related sectors. Ampal's goal is to develop or acquire majority interests in businesses that are profitable and generate significant free cash flow that Ampal can control. Ampal-American filed a voluntary petition for Chapter 11 reorganization (Bankr. S.D.N.Y. Case No. 12-13689) on Aug. 29, 2012. The Company is pursuing a plan to restructure the Company's Series A, Series B and Series C debentures. Bankruptcy Judge Stuart M. Bernstein presides over the case. Lawyers at Bryan Cave LLP, in New York, serves as counsel to the Debtor. As of June 30, 2012, the Company had US$542.3 million in total assets and US$775.2 million in total liabilities. The petition was signed by Irit Eluz, chief financial officer, senior vice president. AMTRUST FINANCIAL: 6th Circ. Says FDIC Can't Recover $765MM ----------------------------------------------------------- Carolina Bolado at Bankruptcy Law360 reports that the Federal Deposit Insurance Corp. was dashed in its effort to recover $765 million from AmFin Financial Corp. when the Sixth Circuit on Friday affirmed a ruling that the bankrupt company did not commit to providing capital to prop up its commercial banking unit. Bankruptcy Law360 relates that the appeals court rejected the FDIC's take on how to read a 2008 cease-and-desist order from the Office of Thrift Supervision to AmFin and its subsidiary AmTrust Bank after they failed to maintain minimum capital requirements. About AmTrust Financial AmTrust Financial Corp. was the owner of the AmTrust Bank. AmTrust was the seventh-largest holder of deposits in South Florida, with $4.7 billion in deposits and 21 branches. In November 2008, the Office of Thrift Supervision issued a cease and desist order requiring AmTrust to improve its capital ratios. AmTrust Financial, together with affiliates that include AmTrust Management Inc., filed for Chapter 11 bankruptcy protection (Bankr. N.D. Ohio Case No. 09-21323) on Nov. 30, 2009. The debtor subsidiaries include AmFin Real Estate Investments, Inc., formerly AmTrust Real Estate Investments, Inc. (Case No. 09-21328). G. Christopher Meyer, Esq., Christine M. Piepont, Esq., and Sherri L. Dahl, Esq., at Squire Sanders & Dempsey (US) LLP, in Cleveland, Ohio; and Stephen D. Lerner, Esq., at Squire Sanders & Dempsey (US) LLP, in Cincinnati, Ohio, served as counsel to the Debtors. Kurtzman Carson Consultants served as claims and notice agent. Attorneys at Hahn Loeser & Parks LLP serve as counsel to the Official Committee of Unsecured Creditors. AmTrust Management estimated $100 million to $500 million in assets and debts in its Chapter 11 petition. AmTrust Bank was not part of the Chapter 11 filings. On Dec. 4, 2009, AmTrust Bank was closed by regulators and the Federal Deposit Insurance Corporation was named receiver. New York Community Bank, in Westbury, New York, assumed all of the deposits of AmTrust Bank pursuant to a deal with the FDIC. AmTrust, nka AmFin Financial Corp., obtained confirmation of its Amended Joint Plan of Reorganization on Nov. 3, 2011. The plan was declared effective in December. APPALACHIAN FUELS: Business Aircraft Leasing Fails to Dismiss Suit ------------------------------------------------------------------ Bankruptcy Judge Joseph M. Scott, Jr., denied the request of Business Aircraft Leasing, Inc., to dismiss the lawsuit filed by the liquidating trustee of Appalachian Fuels, LLC. The 164-page Amended Complaint, filed Aug. 19, 2011, asserts 107 separately denominated causes of action against 37 defendants. The claims asserted against BAL are based on allegations that Debtor made actual or constructively fraudulent transfers to BAL. The Plaintiff seeks to avoid transfers under the Bankruptcy Code's fraudulent transfer provisions, 11 U.S.C. Sec. 548(a)(1)(A) or (B) (Claim Nos. 83-84), and by invoking Sec. 544(b) to avoid transfers under Kentucky's fraudulent transfer statutes, K.R.S. Sec. 378.010 and Sec. 378.020 (Claim Nos. 85-86). The Plaintiff also seeks to recover the value of any avoided transfers under 11 U.S.C. Sec. 550 (Claim No. 87). BAL argues that the BAL Claims should be dismissed because (i) the Amended Complaint fails to satisfy applicable pleading standards regarding "actual" fraudulent conveyance claims where the Plaintiff fails to allege facts to support any "badges of fraud," and (ii) the Plaintiff fails to allege facts sufficient to utilize the state law avoidance claims because it does not allege a "triggering creditor" under Sec. 544(b). The judge said neither argument is persuasive. The Plaintiff alleges that Addington Aviation, owned by Larry Addington, the key "Insider", originally leased a Hawker aircraft from CIT Group Equipment Financing, Inc., on a two-year lease beginning Jan. 14, 2005. On Dec. 12, 2005, CIT sold the aircraft and the Addington Lease to BAL. Although the Addington Lease expired in 2007, it was extended by Addington Aviation through 2010 with Larry Addington acting as the personal guarantor. The Plaintiff alleges that although the Debtor was neither the owner nor lessor of the aircraft, it paid the Addington Lease payments. According to the allegations, the aircraft was not used for the Debtor's business but for the "Insiders'" personal use, such as traveling to Mr. Addington's island in Belize. According to Judge Scott, taking the factual allegations as true, the Plaintiff has alleged facts sufficient to show certain badges of fraud from which the Court may infer an actual fraudulent intent. Badges of fraud under Kentucky law that support a finding of actual intent include (1) inadequacy of consideration; (2) secret or hurried transactions not in the usual mode of doing business; (3) the use of dummy or fictitious parties; (4) reservation of benefits by the transferor; (5) control or dominion of property by the debtor; (6) transfers between persons who are related or occupy a confidential relationship; (7) transfers which contain false statements and recitals as consideration; and (8) a transfer by a debtor in anticipation of suit against him or after suit has begun or is pending against him. "When taking the factual allegations as true, there are sufficient factual allegations that could establish, beyond a speculative level, certain of these badges of fraud and, thus, give rise to right of relief for actual fraud," the judge said. The Court also held that BAL's argument that the Amended Complaint fails to sufficiently allege or name the existence of a creditor holding an unsecured claim allowable under 11 U.S.C. Sec. 502 also must fail. The judge pointed out that Section 544(b)(1) allows the Plaintiff to stand in the shoes of an existing unsecured creditor and bring state law fraudulent conveyance and other similar actions that such a creditor could bring. While an unsecured creditor with an allowable claim under Sec. 502 must exist at the time of the transfers for the Plaintiff to prevail, the unsecured creditor "need not exist at the time the action is filed" nor must the Plaintiff "identify a specific creditor by name." The lawsuit is, THE LIQUIDATING TRUSTEE OF APP FUELS CREDITORS TRUST Plaintiff, v. ENERGY COAL RESOURCES, et al. Defendants, Adv. Proc. No. 11-1041 (Bankr. E.D. Ky.). A copy of Judge Scott's Sept. 14, 2012 Memorandum Opinion and Order is available at http://is.gd/zE10COfrom Leagle.com. About Appalachian Fuels Ashland, Kentucky-based Appalachian Fuels, LLC, a coal mining company, produced and sold coal for electric utilities and coking coal plants. It had surface mines and underground mining operations in eastern Kentucky and West Virginia. Appalachian Fuels operated as a subsidiary of Energy Coal Resources, Inc. An involuntary petition for liquidation under Chapter 7 was filed against Appalachian Fuels (Bankr. E.D. Ky. 09-10343) on June 11, 2009. On June 29, 2009, the Bankruptcy Court converted the Debtor's Chapter 7 bankruptcy to a Chapter 11. Some of Appalachian Fuels' affiliates filed Chapter 11 petitions and on July 17, 2009, the Court ordered that the Debtor's Chapter 11 bankruptcy be jointly administered with the bankruptcies of its affiliates. The cases being jointly administered with Appalachian Fuels include: Appalachian Holding Company, Inc. (Case No. 09-10372); Appalachian Premium Fuels, LLC (Case No. 09-10373); Appalachian Environmental, LLC (Case No. 09-10374); Kanawha Development Corporation (Case No. 09-10375); Appalachian Coal Holdings, Inc. (Case No. 09-10405); and Southern Eagle Energy, LLC (Case No. 09-10406). On July 14, 2009, the Court appointed the Official Committee of Unsecured Creditors. On Dec. 19, 2011, the Court entered an Agreed Order of Confirmation of the Debtors' and Committees' Plan of Orderly Liquidation and Distribution. Pursuant to the terms of the Plan, on the Jan. 3, 2012, effective date, the Official Committee of Unsecured Creditors was dissolved and the App Fuels Creditors Trust was established. A Liquidating Trustee was appointed to continue pursuit of causes of action on behalf of the Debtor. Larry Addington, which owns a 30% stake in Energy Coal Resources Inc., filed for personal Chapter 11 bankruptcy (Bankr. E.D. Ky. Case No. 12-10029) on Jan. 26, 2012. APPALACHIAN FUELS: Court Trims Lawsuit Against Machinery Sales -------------------------------------------------------------- Bankruptcy Judge Joseph M. Scott, Jr., dismissed portions of the lawsuit filed by the liquidating trustee of Appalachian Fuels, LLC against Machinery Sales and Service LLC, John C. Smith Jr., and Jeffrey Muncy. The MSS Defendants sought dismissal of the lawsuit, arguing that several of the claims asserted against them in the Amended Complaint are either not recognized under Kentucky law, are time- barred as a matter of law, or should be dismissed for the failure to plead such claims with particularity as required by the Federal Rules of Civil Procedure. In support of the alternative relief sought in the Motion for More Definite Statement, the MSS Defendants argue that the Plaintiff "lumped numerous Defendants into the general category of 'Insiders'" without providing any distinction as to which tortious acts were committed by each defendant. In further support, the MSS Defendants state the Plaintiff's use of the terms "Insiders" and "Defendants" interchangeably is inconsistent with the pleading requirements of Rule 8 of the Federal Rules of Civil Procedure, incorporated in the proceeding by Rule 7008 of the Federal Rules of Bankruptcy Procedure. The Bankruptcy Court, however, held that there are sufficient factual allegations, when accepted as true, to place the MSS Defendants on notice of the misconduct for which they are charged and the Motion to Dismiss will be denied to the extent the alleged claims are sufficiently plead and not barred by the applicable statute of limitations. The 164-page Amended Complaint, filed Aug. 19, 2011, asserts 107 separately denominated causes of action against 37 defendants. The Plaintiff seeks damages for claims of breach of fiduciary duty and corporate waste against John Smith (Claim Nos. 1 and 7), and claims of aiding and abetting breach of fiduciary duty and corporate waste, unjust enrichment and civil conspiracy against the MSS Defendants (Claim Nos. 3, 6, 9 and 12). The Plaintiff seeks to avoid transfers made by Debtor under the Bankruptcy Code's fraudulent transfer provisions, 11 U.S.C. Sec. 548(a)(1)(A) and/or (B) (Claim Nos. 14-15, 27-28, 78-79), and by invoking Sec. 544(b) to avoid any such transfers under Kentucky's fraudulent transfer statutes, K.R.S. Sec. 378.010 and Sec. 378.020 (Claim Nos. 16-17, 29-30, 80-81). The Plaintiff seeks to avoid transfers made by the Debtor under the Bankruptcy Code's preferential transfer provision, 11 U.S.C. Sec. 547 (Claim No. 98). The Plaintiff seeks to recover the value of any avoided transfers under 11 U.S.C. Sec. 550 (Claim Nos. 18, 31-32, 47, 82, 98, 105-106). The Plaintiff alleges the MSS Defendants, as a part of the group defined as "Insiders," extracted cash from the Debtor "for their personal benefit." The MSS Defendants allegedly leased equipment to the Debtor at "well above the prevailing market rate for similar equipment leases" as a method to transfer funds out of the Debtor for the MSS Defendants and other Insiders' benefit. Eventually, the Debtor purchased most of the leased equipment from MSS. According to the Amended Complaint, at the direction of the MSS Defendants as members of the group "Insiders," some of the same equipment was transferred to Bowie Resources, LLC for no consideration and then resold to MSS for "well below the value the machinery had been appraised for just a year and a half earlier." MSS allegedly took the equipment "with full knowledge that the original transfer of the equipment to Bowie was fraudulent." Pursuant to the Court's ruling, the Motion to Dismiss filed by the Defendants is granted with respect to the claims for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, corporate waste, and aiding and abetting corporate waste to the extent the claims rely on acts of the MSS Defendants that occurred before June 11, 2004; granted with respect to the claim for civil conspiracy to the extent the claim relies on acts of the MSS Defendants that occurred before June 11, 2008; granted with respect to the request for attorneys' fees; and denied in all other respects. The Court also ruled the Defendants' Motion for More Definite Statement is granted. The Court granted the Plaintiff 14 days from the date of the order to file an amended complaint. The lawsuit is, THE LIQUIDATING TRUSTEE OF APP FUELS CREDITORS TRUST Plaintiff, v. ENERGY COAL RESOURCES, et al. Defendants, Adv. Proc. No. 11-1041 (Bankr. E.D. Ky.). A copy of Judge Scott's Sept. 14, 2012 Memorandum Opinion and Order is available at http://is.gd/uf461Pfrom Leagle.com. About Appalachian Fuels Ashland, Kentucky-based Appalachian Fuels, LLC, a coal mining company, produced and sold coal for electric utilities and coking coal plants. It had surface mines and underground mining operations in eastern Kentucky and West Virginia. Appalachian Fuels operated as a subsidiary of Energy Coal Resources, Inc. An involuntary petition for liquidation under Chapter 7 was filed against Appalachian Fuels (Bankr. E.D. Ky. 09-10343) on June 11, 2009. On June 29, 2009, the Bankruptcy Court converted the Debtor's Chapter 7 bankruptcy to a Chapter 11. Some of Appalachian Fuels' affiliates filed Chapter 11 petitions and on July 17, 2009, the Court ordered that the Debtor's Chapter 11 bankruptcy be jointly administered with the bankruptcies of its affiliates. The cases being jointly administered with Appalachian Fuels include: Appalachian Holding Company, Inc. (Case No. 09-10372); Appalachian Premium Fuels, LLC (Case No. 09-10373); Appalachian Environmental, LLC (Case No. 09-10374); Kanawha Development Corporation (Case No. 09-10375); Appalachian Coal Holdings, Inc. (Case No. 09-10405); and Southern Eagle Energy, LLC (Case No. 09-10406). On July 14, 2009, the Court appointed the Official Committee of Unsecured Creditors. On Dec. 19, 2011, the Court entered an Agreed Order of Confirmation of the Debtors' and Committees' Plan of Orderly Liquidation and Distribution. Pursuant to the terms of the Plan, on the Jan. 3, 2012, effective date, the Official Committee of Unsecured Creditors was dissolved and the App Fuels Creditors Trust was established. A Liquidating Trustee was appointed to continue pursuit of causes of action on behalf of the Debtor. Larry Addington, which owns a 30% stake in Energy Coal Resources Inc., filed for personal Chapter 11 bankruptcy (Bankr. E.D. Ky. Case No. 12-10029) on Jan. 26, 2012. APPALACHIAN FUELS: Frost Brown Todd's Bid to Dismiss Suit Denied ---------------------------------------------------------------- Frost Brown Todd LLC failed in its bid to dismiss a lawsuit filed by the liquidating trustee of Appalachian Fuels, LLC. The firm is among 37 defendants named in a 164-page Amended Complaint, filed Aug. 19, 2011. The complaint asserts 107 separately denominated causes of action. Two types of claims are asserted against Frost Brown Todd: (1) state law tort claims of aiding and abetting breach of fiduciary duty, unjust enrichment, aiding and abetting corporate waste, legal malpractice, breach of fiduciary duty and civil conspiracy (Claim Nos. 3, 6, 9, 10, 11 and 12); and (2) statutory avoidance claims under the Bankruptcy Code's fraudulent transfer provisions, 11 U.S.C. Sec. 548(a)(1)(A) and/or (B) (Claim Nos. 73 and 74), and by invoking Sec. 544(b) to avoid transfers under Kentucky's fraudulent transfer statutes, K.R.S. Sec. 378.010 and Sec. 378.020 (Claim Nos. 75 and 76). The Plaintiff also seeks to avoid transfers made by the Debtor under the Bankruptcy Code's preferential transfer provision, 11 U.S.C. Sec. 547 (Claim No. 98); and recover the value of any avoided transfers under 11 U.S.C. Sec. 550 (Claim No. 77). Frost Brown Todd argues that the Plaintiff's causes of action asserted in six claims should be dismissed for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, incorporated in the proceeding by Rule 7012 of the Federal Rules of Bankruptcy Procedure. Frost Brown Todd relies on the affirmative defense of in pari delicto as a total bar to the Plaintiff's recovery under the state law tort claims alleged in the Amended Complaint. The in pari delicto defense "refers to the plaintiff's participation in the same wrongdoing as the defendant." The Plaintiff raises the adverse interest exception to application of the in pari delicto defense which provides, if the agent was acting adversely to the interests of its principal then the agent's bad acts are not imputed to the principal. If an adverse interest exception is present, the in pari delicto defense fails. The Plaintiff also argues the removal of the alleged wrongdoers who conducted the affairs of the Debtor and the presence of an assignee for the Debtor while in the state court assignment for benefit of creditors was sufficient to purge the Debtor of the taint from the alleged wrongdoers' actions. "When read in the light most favorable to Plaintiff, the Amended Complaint alleges Frost Brown Todd is an insider and co- conspirator with some of the alleged wrongdoers who conducted the affairs of Debtor and Energy Coal Resources; Frost Brown Todd did not disclose unwaivable conflicts; Frost Brown Todd did not disclose the alleged wrongdoers' wrongdoings to the Independent Directors; Frost Brown Todd did not explain the impact of filing an assignment for benefit of creditors action or offer a complete picture of other alternatives. The Amended Complaint does not conclusively establish that Frost Brown Todd is entitled to the in pari delicto defense," said Bankruptcy Judge Joseph M. Scott, Jr. According to Judge Scott, the record of the proceeding will greatly benefit by further development of the facts and presentation of evidence. Frost Brown Todd will have an opportunity to offer evidence of entitlement to the in pari delicto defense. The lawsuit is, THE LIQUIDATING TRUSTEE OF APP FUELS CREDITORS TRUST Plaintiff, v. ENERGY COAL RESOURCES, et al. Defendants, Adv. Proc. No. 11-1041 (Bankr. E.D. Ky.). A copy of Judge Scott's Sept. 14, 2012 Memorandum Opinion and Order is available at http://is.gd/CvjMCDfrom Leagle.com. About Appalachian Fuels Ashland, Kentucky-based Appalachian Fuels, LLC, a coal mining company, produced and sold coal for electric utilities and coking coal plants. It had surface mines and underground mining operations in eastern Kentucky and West Virginia. Appalachian Fuels operated as a subsidiary of Energy Coal Resources, Inc. An involuntary petition for liquidation under Chapter 7 was filed against Appalachian Fuels (Bankr. E.D. Ky. 09-10343) on June 11, 2009. On June 29, 2009, the Bankruptcy Court converted the Debtor's Chapter 7 bankruptcy to a Chapter 11. Some of Appalachian Fuels' affiliates filed Chapter 11 petitions and on July 17, 2009, the Court ordered that the Debtor's Chapter 11 bankruptcy be jointly administered with the bankruptcies of its affiliates. The cases being jointly administered with Appalachian Fuels include: Appalachian Holding Company, Inc. (Case No. 09-10372); Appalachian Premium Fuels, LLC (Case No. 09-10373); Appalachian Environmental, LLC (Case No. 09-10374); Kanawha Development Corporation (Case No. 09-10375); Appalachian Coal Holdings, Inc. (Case No. 09-10405); and Southern Eagle Energy, LLC (Case No. 09-10406). On July 14, 2009, the Court appointed the Official Committee of Unsecured Creditors. On Dec. 19, 2011, the Court entered an Agreed Order of Confirmation of the Debtors' and Committees' Plan of Orderly Liquidation and Distribution. Pursuant to the terms of the Plan, on the Jan. 3, 2012, effective date, the Official Committee of Unsecured Creditors was dissolved and the App Fuels Creditors Trust was established. A Liquidating Trustee was appointed to continue pursuit of causes of action on behalf of the Debtor. Larry Addington, which owns a 30% stake in Energy Coal Resources Inc., filed for personal Chapter 11 bankruptcy (Bankr. E.D. Ky. Case No. 12-10029) on Jan. 26, 2012. APPALACHIAN FUELS: Suit Against Jet Support Survives Dismissal Bid ------------------------------------------------------------------ Bankruptcy Judge Joseph M. Scott, Jr., denied the request of Jet Support Services, Inc., to dismiss the lawsuit filed by the liquidating trustee of Appalachian Fuels, LLC. The 164-page Amended Complaint, filed Aug. 19, 2011, asserts 107 separately denominated causes of action against 37 defendants. The claims asserted against JSSI are based on allegations that Debtor made actual or constructively fraudulent transfers to JSSI. The Plaintiff seeks to avoid the transfers under the Bankruptcy Code's fraudulent transfer provisions, 11 U.S.C. Sec. 548(a)(1)(A) and/or (B) (Claim Nos. 88-89), and by invoking Sec. 544(b) to avoid any transfers under Kentucky's fraudulent transfer statutes, K.R.S. Sec. 378.010 and Sec. 378.020 (Claim Nos. 90-91). The Plaintiff also seeks to recover the value of any avoided transfers under Sec. 550 (Claim No. 92). JSSI seeks dismissal of the Claims pursuant to Fed. R. Civ. P. 12(b). JSSI argues that Plaintiff has "pled itself out of court" by pleading facts that prove a defense that preclude the JSSI claims. The Plaintiff alleges that the "Insiders" as defined in the Amended Complaint caused the Debtor to make over $400,000 in maintenance payments on a Gulfstream jet to JSSI despite (i) the Debtor having no ownership interest, and (ii) Addington Aviation, owned by Insider Larry Addington, having the responsibility to make the financing payments on the Gulfstream directly. The Plaintiff further alleges that despite making the maintenance payments, the Gulfstream was used by the Insiders for personal travel rather than for a legitimate business purpose for the Debtor. According to Judge Scott, the Plaintiff's allegation that the jet was used by Insiders for personal use rather than for the Debtor's legitimate business purposes, when taken as true, is sufficient to satisfy the pleading standards necessary to withstand a motion to dismiss. "Moreover, there are sufficient factual allegations that could establish, beyond a speculative level, certain of the badges of fraud and, thus, give rise to right of relief for actual fraud," the judge said. The lawsuit is, THE LIQUIDATING TRUSTEE OF APP FUELS CREDITORS TRUST Plaintiff, v. ENERGY COAL RESOURCES, et al. Defendants, Adv. Proc. No. 11-1041 (Bankr. E.D. Ky.). A copy of Judge Scott's Sept. 14, 2012 Memorandum Opinion and Order is available at http://is.gd/F7DN0Dfrom Leagle.com. About Appalachian Fuels Ashland, Kentucky-based Appalachian Fuels, LLC, a coal mining company, produced and sold coal for electric utilities and coking coal plants. It had surface mines and underground mining operations in eastern Kentucky and West Virginia. Appalachian Fuels operated as a subsidiary of Energy Coal Resources, Inc. An involuntary petition for liquidation under Chapter 7 was filed against Appalachian Fuels (Bankr. E.D. Ky. 09-10343) on June 11, 2009. On June 29, 2009, the Bankruptcy Court converted the Debtor's Chapter 7 bankruptcy to a Chapter 11. Some of Appalachian Fuels' affiliates filed Chapter 11 petitions and on July 17, 2009, the Court ordered that the Debtor's Chapter 11 bankruptcy be jointly administered with the bankruptcies of its affiliates. The cases being jointly administered with Appalachian Fuels include: Appalachian Holding Company, Inc. (Case No. 09-10372); Appalachian Premium Fuels, LLC (Case No. 09-10373); Appalachian Environmental, LLC (Case No. 09-10374); Kanawha Development Corporation (Case No. 09-10375); Appalachian Coal Holdings, Inc. (Case No. 09-10405); and Southern Eagle Energy, LLC (Case No. 09-10406). On July 14, 2009, the Court appointed the Official Committee of Unsecured Creditors. On Dec. 19, 2011, the Court entered an Agreed Order of Confirmation of the Debtors' and Committees' Plan of Orderly Liquidation and Distribution. Pursuant to the terms of the Plan, on the Jan. 3, 2012, effective date, the Official Committee of Unsecured Creditors was dissolved and the App Fuels Creditors Trust was established. A Liquidating Trustee was appointed to continue pursuit of causes of action on behalf of the Debtor. Larry Addington, which owns a 30% stake in Energy Coal Resources Inc., filed for personal Chapter 11 bankruptcy (Bankr. E.D. Ky. Case No. 12-10029) on Jan. 26, 2012. APOLLO MEDICAL: Incurs $3.2 Million Net Loss in July 31 Quarter --------------------------------------------------------------- Apollo Medical Holdings, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $3.20 million on $1.64 million of revenue for the three months ended July 31, 2012, compared with a net loss of $122,833 on $1.09 million of revenue for the same period during the prior year. The Company reported a net loss of $3.36 million on $3.28 million of revenue for the six months ended July 31, 2012, compared with a net loss of $351,764 on $2.13 million of revenue for the same period a year ago. The Company's balance sheet at July 31, 2012, showed $1.46 million in total assets, $5.07 million in total liabilities, and a $3.61 million total stockholders' deficit. A copy of the Form 10-Q is available for free at: http://is.gd/M5VywY About Apollo Medical Glendale, Calif.-based Apollo Medical Holdings, Inc., provides hospitalist services in the Greater Los Angeles, California area. Hospitalist medicine is organized around the admission and care of patients in an inpatient facility such as a hospital or skilled nursing facility and is focused on providing, managing and coordinating the care of hospitalized patients. The Company reported a net loss of $720,346 for the year ended Jan. 31, 2012, compared with a net loss of $156,331 during the prior year. Kabani & Company, Inc., in Los Angeles, California, issued a "going concern" qualification on the consolidated financial statements for the year ended Jan. 31, 2012, citing accumulated deficit of $2,117,708 as of Jan. 31, 2012, negative working capital of $266,044 and cash flows used in operating activities of $385,455, which raised substantial doubt about the Company's ability to continue as a going concern. . ARS INTERMEDIATE: Moody's Cuts Corp. Family Rating to 'Caa1' ------------------------------------------------------------ Moody's Investors Service downgraded ARS Intermediate Holdings LLC's Corporate Family Rating ("CFR") to Caa1 from B3, Probability of Default Rating to Caa1 from B3, and Senior Secured Second Lien Notes to B3 from B2. Moody's also affirmed the Caa2 rating on the company's Senior Secured PIK Notes. These actions follow weaker- than-expected operating performance and a very thin margin of covenant compliance in the second quarter of 2012 despite a covenant amendment the company had obtained earlier this year. Moody's has concluded that unpredictable weather-related demand and highly competitive markets will continue to create volatility in ARS' operating performance and liquidity that is more in line with a Caa1 CFR when considering the company's narrow operating margins and highly leveraged capital structure. Expectations for soft consumer spending trends could also limit ARS' ability to improve operating performance. The rating outlook is stable. The actions: Issuer: ARS Intermediate Holdings LLC Corporate Family Rating, Downgraded to Caa1 from B3 Probability of Default Rating, Downgraded to Caa1 from B3 $50 million Senior Secured PIK Notes, Affirmed at Caa2 (LGD5 82%; adjusted from 83%) Issuer: American Residential Services LLC $165 million Second Lien Senior Secured Notes, Downgraded to B3 (LGD3 41%) from B2 Ratings Rationale The Caa1 CFR is principally constrained by weak credit metrics, tight covenants, and an aggressive financial philosophy. Moody's estimates adjusted financial leverage near 7 times Debt/EBITDA and interest coverage near 1 time (EBITDA-CapEx)/Interest for the twelve months ended June 30, 2012. These metrics incorporate Moody's standard adjustments to capitalize operating leases and consider management fees as operating expenses, and also incorporate payment-in-kind loans held at the holding company level; for comparative purposes, Moody's estimates leverage in the low-to-mid 5 times range and interest coverage in the low 1 times range using credit agreement definitions. The rating is also constrained by high competition in the fragmented HVAC and plumbing services industry, seasonal demand patterns, and exposure to fluctuations in demand due to unpredictable weather conditions. Notwithstanding these concerns, the CFR considers favorably the company's good market positions, moderate geographic diversity, good track record of acquiring and integrating strategic businesses, and expectations that operating performance could improve in the near-term with a return to more normalized weather conditions. The stable outlook assumes that ARS will maintain interest coverage at or above 1 time, generate at least breakeven free cash flow, and maintain access to its revolving credit facility. Moody's could take a negative action with expectations for interest coverage below 1 time, negative free cash flow, or deterioration in the company's liquidity position. Conversely, a rating upgrade is unlikely absent an evidenced ability to both improve credit metrics and reduce debt. Moody's could consider a positive action with expectations for leverage sustained below 6 times, interest coverage sustained above 1.5 times, free cash flow sustained above 2 % of debt, and improved cushion under financial maintenance covenants. The principal methodology used in rating ARS Intermediate was the Global Business & Consumer Service Industry Methodology, published October 2010. Other methodologies used include Loss Given Default for Speculative Grade Issuers in the US, Canada, and EMEA, published June 2009. ARS, headquartered in Memphis, Tennessee, is one of the largest providers of HVAC, plumbing, sewer, drain cleaning, and energy efficiency services in the United States. The company serves both residential and commercial customers through a network of 70 service center locations in 23 states. CI Capital Partners LLC owns a majority of the equity interests in ARS. ARS reported revenues of approximately $622 million for the twelve months ended June 30, 2012. ATOM INSTRUMENT: Court Rejects Summary Judgment Bid in Patent Suit ------------------------------------------------------------------ Bankruptcy Judge Marvin Isgur denied a motion for summary filed by Franek Olstowski and ATOM Instrument Corporation in the lawsuit, Franek Olstowski, et al, Plaintiff(s), v. Petroleum Analyzer Company, L.P., et al, Defendant(s), Adv. Proc. No. 12-3141 (Bankr. S.D. Tex.). The dispute involves ownership of the excimer technology developed by Mr. Olstowski. Mr. Olstowski was a consultant for Petroleum Analyzer from 2001 to 2006. On June 15, 2001, he signed a Consultant Agreement with Antek Instruments, L.P. for personal consulting services. The Consultant Agreement provided that all confidential information, technology, prototypes, and products developed by Mr. Olstowski while providing service for Antek would be Antek's exclusive property. Antek merged with Petroleum Analyzer in 2004. Petroleum Analyzer is the surviving entity. On Sept. 29, 2003, Mr. Olstowski applied to the United States Patent and Trademark Office for a patent -- 395 Patent -- entitled "Apparatus For Trace Sulfur Detections Using UV Fluorescence". On July 17, 2008, the USPTO granted him the 395 Patent. On Oct. 21, 2004, Mr. Olstowski applied to the USPTO for a patent -- 381 Patent -- entitled "Combustion Apparatus And Methods for Making And Using Same". The USPTO granted Olstowski the 381 Patent on Aug. 5, 2008. Mr. Olstowski filed an assignment of the 381 and 395 Patents to ATOM with the USPTO on Aug. 17, 2009, and assignment was effective on March 2, 2009. Petroleum Analyzer sued Mr. Olstowski and ATOM in state court in 2006 for declaratory relief and damages for breach of contract and conversion. PAC's prayer in its arbitration demand requested a declaration that, "PAC is the owner of all technology, prototypes and products developed by Olstowski since June 2001 while providing consultant's service for PAC." The 2006 litigation was resolved by an Arbitration Award which among other things (1) declared Mr. Olstowski the owner of the excimer technology; (2) declared the Consultant Agreement binding on both Petroleum Analyzer and Mr. Olstowski; and (3) omitted any declaration as to whether Petroleum Analyzer was the owner of all technology developed by Mr. Olstowski between 2001 and 2006. In 2009, Petroleum Analyzer contacted Mr. Olstowski to have him assign the 381 and 395 Patents to Petroleum Analyzer. Following Mr. Olstowski's failure to respond, Petroleum Analyzer filed a new lawsuit against Mr. Olstowski and ATOM in state court in 2011 seeking a declaratory judgment that Petroleum Analyzer owned the 381 and 395 Patents pursuant to the Consultant Agreement, and seeking damages for breach of contract and conversion. Mr. Olstowski filed his own complaint on Dec. 21, 2010, requesting a declaratory judgment that ATOM was the owner of the 381 and 395 Patents. The parties agreed to consolidate the causes of action. Following ATOM's bankruptcy filing, Mr. Olstowski and ATOM on March 15, 2012, removed the 2011 litigation to the Bankruptcy Court. On June 28, 2012, the parties filed Stipulated Summary Judgment Documents. Excimer technology refers to (1) technology and methods embodied in the patent applications styled "Improved Ozone Generator with Duel Dielectric Barrier Discharge, Improved Closed-Loop Light Intensity Control and Related Fluorescence Application Method, and Excimer UV Fluorescence Detection; (2) all accompanying drawings, blueprints, schematics and formulas created or drawn by either Olstowski or Virgil Stamps of the application identified or in support of (1) and (2); and (3) issued patents and/or Patent Applications pending entitled: Ozone Generator with Dual Dielectric Barrier Discharge and Methods for Using Same, Improved Closed-Loop Light Intensity Control and Related Fluorescence Application Method, and Excimer UV Fluorescence (as amended). A copy of the Court's Sept. 14, 2012 Memorandum Opinion is available at http://is.gd/3MVPlOfrom Leagle.com. ATOM Instrument Corporation, dba Excitron Corporation, filed for Chapter 11 bankruptcy (Bankr. S.D. Texas Case No. 12-31184) on Feb. 10, 2012, disclosing under $1 million in both assets and debts. Melissa Anne Haselden, Esq., at Hoover Slovacek LLP, serves as the Debtor's bankruptcy counsel. ATP OIL: U.S. Trustee Appoints 3-Member Creditors Committee ------------------------------------------------------------ Judy A. Robbins, the United States Trustee for Region 7, formed a three-member Official Committee of Unsecured Creditors of ATP Oil & Gas Corporation. The Committee members are: 1. Michael L. Spolan, for Capital Ventures International c/o Heights Capital Management Inc. 101 California Street, Suite 3250 San Francisco, CA 94111, Tel: (415) 403-6500 Fax: (415) 403-6525 E-mail: michael.spolan@sig.com 2. Edward Kovalik, for Burnham Securities Inc. c/o KLR Group, 510 Madison Ave., 10th Floor New York, NY 10022 Tel: (212) 642-0423 Fax: (646) 576-8630 E-mail: ek@klrgroup.com 3. Susan Benoit, for Deep South Chemical, Inc. P.O. Box 80657 Lafayette, LA 70598, Tel: (337) 837-9931 E-mail: susanbenoit@deep-south-chemical.com 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. ATP Oil & Gas filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-36187) on Aug. 17, 2012. Attorneys at Mayer Brown LLP, serve as bankruptcy counsel. Munsch Hardt Kopf & Harr, P.C., is the conflicts counsel. Opportune LLP is the financial advisor and Jefferies & Company is the investment banker. Kurtzman Carson Consultants LLC is the claims and notice agent. The company disclosed $3.64 billion in assets and $3.49 billion in liabilities as of March 31, 2012. Debt includes $365 million on a first-lien loan, $1.5 billion on second-lien notes with Bank of New York Mellon Trust Co. as agent, $35 million on convertible notes and $23.4 million owing to third parties for their shares of production revenue. ATP reported a net loss of $145.1 million in the first quarter on revenue of $146.6 million. Income from operations in the quarter was $11.8 million. For 2011, the net loss was $210.5 million on revenue of $687.2 million. ATP OIL: Creditors Committee Opposes DIP Financing Motion --------------------------------------------------------- The Official Committee of Unsecured Creditors of ATP Oil & Gas Corporation has objected to ATP Oil's emergency motion for entry of interim and final orders (1) approving postpetition financing, (2) authorizing use of cash collateral, (3) granting liens and providing superpriority administrative expense status, (4) granting adequate protection, (5) modifying automatic stay, (6) authorizing Debtor to file the fee letter under seal and (7) scheduling a final hearing. The Committee states: 1. The Court approved a DIP Facility that included a complete "roll-up" of approximately $365 million of prepetition indebtedness. This roll-up, however, did not simply convert prepetition debt into postpetition debt, but also substantially increased the collateral supporting the formerly prepetition indebtedness removing any ability to seek alternative financing at least in the near term. To date, only limited incremental liquidity has been made available under the DIP Facility. 2. If the additional liquidity is not available, it is a near certainty that the Debtor will be forced to liquidate immediately based on the projections introduced at the first day hearings in this case. 3. As currently drafted, the DIP Facility is essentially an option to lend rather than a committed financing, providing the DIP Lenders with a potential quick path to exit the case unscathed and with advantageous positioning and control of the estate. Accordingly, this Court should not enter the final order unless it is conditioned on certain critical modifications to the DIP Facility. Other Objectors Gulf Offshore Logistics, L.L.C. (owed $3,427,905.64), Martin Holdings, L.L.C. (owed $253,937.12), C-Port/Stone, L.L.C. (owed $1,501,053.66), Offshore Service Vessels, L.L.C. (owed $122,650), and Barry Graham Oil Service, LLC (owed $896,605.33), also filed a joint objection to the DIP financing motion. Prior to the filing of the bankruptcy case, each of the movants provided pre-petition services for the Debtor's operations and have statutory liens on property owned by the Debtor. Gulf Offshore, et al., do not oppose the DIP financing generally, but want to ensure that the DIP financing order includes language which (i) preserves their valid liens and privileges (ii) provides, to the extent required by law, them with adequate protection. BEE MAR, LLC, and ERA Helicopters, LLC, Harvey Gulf International Marine, LLC, Ken-Vac Corp., and other parties also filed joinders to the objections raised by Gulf Offshore. Warrior Energy Services Corporation and Superior Energy Services, L.L.C., also oppose the entry of a final order on the DIP financing motion. Warrior and Superior are trade creditors of ATP. Warrior is owed $1,255,717 while Superior is owed $819,895. Warrior and Superior argue that: A. "New Money" Facility may never be fully funded. B. The Final DIP Order should make clear that the definition of Senior Statutory Liens expressly includes all Statutory Liens that are timely perfected, regardless of whether a lien affidavit or notice of perfection under Section 546 was filed after the Petition Date. Moreover, the Final DIP Order should make clear that the DIP Liens will be subordinsted to all Senior Statutory Liens encumbering both the Previously-Encumbered Property and the Previously- Unencumbered Property. Finally, the Objecting Parties object to the DIP Motion insofar as it affords to provide adequate protection in favor of the holders of Senior Statutory Liens with respect to any diminution in the value of the cash collateral subject to the Senior Statutory Liens. The Final hearing on the DIP Motion is presently scheduled for Sept. 20, 2012, at 1:30 p.m. 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. ATP Oil & Gas filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-36187) on Aug. 17, 2012. Attorneys at Mayer Brown LLP, serve as bankruptcy counsel. Munsch Hardt Kopf & Harr, P.C., is the conflicts counsel. Opportune LLP is the financial advisor and Jefferies & Company is the investment banker. Kurtzman Carson Consultants LLC is the claims and notice agent. The company disclosed $3.64 billion in assets and $3.49 billion in liabilities as of March 31, 2012. Debt includes $365 million on a first-lien loan, $1.5 billion on second-lien notes with Bank of New York Mellon Trust Co. as agent, $35 million on convertible notes and $23.4 million owing to third parties for their shares of production revenue. ATP reported a net loss of $145.1 million in the first quarter on revenue of $146.6 million. Income from operations in the quarter was $11.8 million. For 2011, the net loss was $210.5 million on revenue of $687.2 million. ATP OIL: Seeks to Hire PwC as Auditors, Blackhill for CRO --------------------------------------------------------- ATP Oil & Gas Corporation has filed with the U.S. Bankruptcy Court for the Southern District of Texas applications to: -- employ PricewaterhouseCoopers LLP as Debtor's independent auditors and tax advisors. -- employ Blackhill Partners, LLC, and designate James R. Latimer, III as chief restructuring officer to the Debtor, nunc pro tunc to Sept. 14, 2012. As compensation for its services as independent auditors of the Debtor's consolidated financial statements for the year ended Dec. 31, 2012, PwC will receive a fixed fee of $1,870,000. As compensation for its services as tax advisors to the Debtor, PwC will receive a fixed fee of $58,000. Pursuant to the engagment letter, the fees and expenses of Blackhill Partners are: a. Fee Retainer: $75,000 b. Expense Retainer: $25,000 c. Professional Fees: no more than $125,000 will be paid in a given month ("Fee Cap") (unless approved by the Board of Directors); any fees incurred in excess of the Fee Cap will be paid in a subsequent month where the Fee Cap has not been met: i. Latimer's Rate: $550 per hour ii. Blackhill's managing directors and executive advisory team members: $400-$475 per hour iii. Blackhill's vice presidents and senior staff members: $250 -$400 per hour d. Success Fee: $250,000 in the event that a Plan is confirmed and effective (pursuant to conditions set forth in the Engagement Letter). 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. ATP Oil & Gas filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-36187) on Aug. 17, 2012. Attorneys at Mayer Brown LLP, serve as bankruptcy counsel. Munsch Hardt Kopf & Harr, P.C., is the conflicts counsel. Opportune LLP is the financial advisor and Jefferies & Company is the investment banker. Kurtzman Carson Consultants LLC is the claims and notice agent. The company disclosed $3.64 billion in assets and $3.49 billion in liabilities as of March 31, 2012. Debt includes $365 million on a first-lien loan, $1.5 billion on second-lien notes with Bank of New York Mellon Trust Co. as agent, $35 million on convertible notes and $23.4 million owing to third parties for their shares of production revenue. ATP reported a net loss of $145.1 million in the first quarter on revenue of $146.6 million. Income from operations in the quarter was $11.8 million. For 2011, the net loss was $210.5 million on revenue of $687.2 million. ATP OIL: Common Stock Delisted from NASDAQ ------------------------------------------ The NASDAQ Stock Market LLC filed with the U.S. Securities and Exchange Commission a Form 25-NSE notifying the Commission regarding the removal from listing or registration of ATP Oil & Gas Corp.'s common stock on NASDAQ. On Aug. 20, 2012, ATP Oil received a letter from NASDAQ notifying the Company that in accordance with Listing Rules 5101, 5110(b), and IM-5101-1, NASDAQ has determined that the Company's common stock will be delisted. The Company did not appeal the NASDAQ staff's determination to delist its common stock. 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. ATP Oil & Gas filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-36187) on Aug. 17, 2012. Attorneys at Mayer Brown LLP, serve as bankruptcy counsel. Munsch Hardt Kopf & Harr, P.C., is the conflicts counsel. Opportune LLP is the financial advisor and Jefferies & Company is the investment banker. Kurtzman Carson Consultants LLC is the claims and notice agent. The company disclosed $3.64 billion in assets and $3.49 billion in liabilities as of March 31, 2012. Debt includes $365 million on a first-lien loan, $1.5 billion on second-lien notes with Bank of New York Mellon Trust Co. as agent, $35 million on convertible notes and $23.4 million owing to third parties for their shares of production revenue. ATP reported a net loss of $145.1 million in the first quarter on revenue of $146.6 million. Income from operations in the quarter was $11.8 million. For 2011, the net loss was $210.5 million on revenue of $687.2 million. BARNES BAY: Judge Denies Appeal on Cap on Attorneys' Fees --------------------------------------------------------- Jamie Santo at Bankruptcy Law360 reports that U.S. District Judge Richard G. Andrews Tuesday denied the appeal of three law firms seeking to collect millions in additional fees from Barnes Bay Development Ltd.'s dismissed Chapter 11 plan, ruling the bankruptcy judge correctly capped the professionals' pay at $6.3 million as set out in the debtor-in-possession financing. According to Bankruptcy Law360, Judge Andrews denied the appeal of Akin Gump Strauss Hauer & Feld LLP, the debtor's attorney, and Brown Rudnick LLP and Womble Carlyle Sandridge & Rice LLP, which represented the official committee of unsecured creditors. About Barnes Bay Beverly Hills, California-based Barnes Bay Development Ltd., owns the Viceroy Anguilla Resort & Residences on the British West Indies island of Anguilla. Barnes Bay and two affiliates filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Lead Case No. 11-10792) on March 17, 2011, to facilitate the sale of the resort. Barnes Bay disclosed $3,331,282 in assets and $481,840,435 in liabilities as of the Chapter 11 filing. Akin Gump Straus Hauer & Feld LLP is the Debtors' bankruptcy counsel, and Keithley Lake & Associates is the Debtors' special Anguillan counsel. Kurtzman Carson Consultants LLC is the Debtors' claims, noticing, solicitation and balloting agent. The U.S. Trustee appointed five members to the official committee of unsecured creditors in the Debtors' cases. Brown Rudnick LLP serves as the Committee's co-counsel, and Womble Carlyle Sandridge & Rice, PLLC, as its Delaware co-counsel. C.R. Hodge & Associates is the Committee's foreign counsel. FTI Consulting, Inc., serves as the Committee's financial advisors. U.S. Bankruptcy Judge Peter J. Walsh in Delaware in September said that he wouldn't approve the resort's reorganization plan because it unfairly discriminated among creditors who put down deposits to buy units. Barnes Bay has not filed a revised plan. Starwood Capital Group LLC was the winner of a July auction to determine who would sponsor the reorganization plan. It called for Starwood to assume ownership on account of its US$370 million secured claim. When the plan failed, Starwood took ownership through foreclosure. BELLMARK RECORDS: Producer Wins $2MM in Copyright Suit ------------------------------------------------------ Carolina Bolado at Bankruptcy Law360 reports that a Texas federal jury on Wednesday awarded music producer Alvertis Isbell $2.4 million for copyright infringement of hip-hop songs "Dazzey Duks" and "Whoomp! (There It Is)" by publisher DM Records Inc., which claimed Isbell had sold his rights in a bankruptcy sale. The jury in the Eastern District of Texas found that DM had infringed Isbell's copyright of both songs, which Isbell said he had transferred to his publishing company, Alvert Music, before selling the assets of his bankrupt Bellmark Records to DM in 1999, according to Bankruptcy Law360. During the early 1990's, Bellmark entered into writers agreements to obtain composition rights to the Compositions for its affiliated publishing company, Alvert Music. Bellmark retained for itself the two sound recordings. In 1997, DM Records secured licenses from both of Mr. Isbell's companies to exploit both the musical compositions and sound recordings. In April of that year, Bellmark filed a Chapter 11 bankruptcy petition, which was later converted into a Chapter 7 petition. In October 1999, DM purchased the assets of Bellmark from the bankruptcy estate, including all of Bellmark's rights in the Compositions. Alvert Music has not sought bankruptcy protection. Since that time, DM allegedly has proceeded with regard to the Compositions in a manner inconsistent with Alvert Music's ownership rights. In 2002, Mr. Isbell filed the lawsuit in the Northern District of Texas. In 2004, that court transferred the matter, and the magistrate judge referred it to the bankruptcy court in that same year. In 2007, the bankruptcy court issued a report and recommendation that the magistrate judge's referral be withdrawn, and the undersigned judge agreed. Following an appeal of a December 2008 order by the District Court, this case is now pending once more before the District Court. BENDER SHIPBUILDING: Henry Marine Has Plan Relief to Pursue Claims ------------------------------------------------------------------ Bankruptcy Judge Margaret A. Mahoney granted the request of Henry Marine Services, Inc. and Henry Properties, LLC, for additional relief from the Court's order confirming Bender Shipbuilding and Repair Co., Inc.'s joint plan of liquidation, permitting Henry Marine to amend its proof of claim against Bender to include Henry Properties. Judge Mahoney also allowed Henry Marine and Henry Properties to proceed in their state court suit with Bender and the state court may determine the amount of damages, if any, that are owed to Henry Marine and Henry Properties and reduce that amount to judgment. Any judgment obtained may only be collected against any available insurance or by virtue of the unsecured claim filed in Bender's bankruptcy case. Bender sued Henry Marine on Jan. 10, 2008 in Mobile County Circuit Court in case No. CV-2008-900048. The suit claimed that Henry Marine's drydock sunk on Jan. 19, 2006 and slid underneath Bender's drydock. Henry Marine countered that Bender's dredging harmed Henry Marine's "riparian and/or property rights." Henry Marine alleged that the violations caused erosion of Henry Marine's property and made the river bank "unstable and unsafe." Henry Marine sought damages to compensate for or to repair the erosion caused by Bender's dredging. Bender then sued the dredging companies with whom it contracted for damages if Bender was held liable in any manner to Henry Marine. On March 29, 2010, Henry Marine filed in Bender's Chapter 11 case a proof of claim seeking $432,455 in compensatory damages including costs associated with "recovering its dry dock and costs related to repairing its dry dock." Henry Marine also sought an undetermined amount of compensatory damages for "lost profits, business opportunities, and use of its dry dock;" an undetermined amount of compensatory damages to "restore its shoreline and to secure its shoreline from eroding in the future;" and an undetermined amount of compensatory damages "for the decrease of its property value." A copy of the Court's Sept. 17 Order is available at http://is.gd/uVDq5dfrom Leagle.com. About Bender Shipbuilding On June 9, 2009, three creditors filed an involuntary Chapter 7 petition (Bankr. S.D. Ala. Case No. 09-12616) against Mobile, Ala.-based Bender Shipbuilding & Repair Co. -- http://www.bendership.com/-- and on July 1, 2009, Bender consented to voluntary conversion of the involuntary chapter 7 proceeding to a chapter 11 proceeding. The Debtor sold substantially all of its assets in late-2009 to Dallas-based SunTX Capital Partners. The Court confirmed the Debtor's Plan of Liquidation on Dec. 9, 2010. The Plan became effective Dec. 27, 2010. BERNARD L. MADOFF: Trustee Says Daughters-in-Law Can Be Sued ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the trustee liquidating Bernard L. Madoff Investment Securities LLC said in filings in U.S. District Court that the wives of Bernard Madoff's two sons shouldn't be allowed to keep a combined $54.6 million under a judge-made law known as the in pari delicto defense. According to the report, in May, trustee Irving Picard revised his complaint against the Madoff family by adding a wife, a widow, and a former wife of sons of Bernard Madoff as defendants on $57.5 million in claims. The claims against spouses Deborah Madoff and Stephanie Mack were part of an existing $255 million complaint against the Madoff family. U.S. District Judge Jed Rakoff took the family suit out of bankruptcy court to decide what parts could survive and what should be thrown out without a trial. Stephanie Mack, Mark Madoff's widow, and Deborah Madoff, Andrew Madoff's wife, argued in papers filed Aug. 3 with Judge Rakoff that the in pari delicto defense bars the trustee's claims brought under state law. The report relates that they contend that the defense is applicable unless they were insiders exercising "de facto control" of the company. In his opposition papers, Picard found no case where the in pari delicto defense protected a spouse of someone who participated in fraudulent conduct. He said that the spouses were "unjustly enriched by the same transfers which unjustly enriched" their spouses. The spouses admit that they can be sued for receipt of actually fraudulent transfers going back two years before bankruptcy. They said they can't be sued under state law for receipt of fraudulently obtained property going back years earlier. The report notes that the in pari delicto defense is judge-made equity law first created centuries ago. The defense bars someone who participated in fraud from using a court to sue anyone else involved in the fraud. The defense has been applied to bar suits by bankruptcy trustees because they step into shoes of the company committing the fraud. The U.S. Government Accountability Office published a report on the Madoff liquidation regarding the trustee's suits, settlements and activities in customer accounts. The report relays that the study found that 60% of individual customers took more cash out of their accounts than they invested, thus making them "net winners." Only 50% of institutional investors were net winners, the GAO said. When it comes to accepting or rejecting claims, the trustee's decisions were "similar" for individual and institutional accounts, the GAO said. Net losers, those who took out less cash than they invested, had "most" of their claims allowed, again regardless of whether the customer was an individual or an institution. The family lawsuit is Picard v. Estate of Mark Madoff, 09-01503, U.S. District Court, Southern District of New York (Manhattan). About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. The District Court's Protective Order (i) appointed Irving H. Picard, Esq., as trustee for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and (iii) removed the SIPA Liquidation proceeding to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789) (Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims agent. On April 13, 2009, former BLMIS clients filed an involuntary Chapter 7 bankruptcy petition against Bernard Madoff (Bankr. S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The petitioning creditors -- Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert US$64 million in claims against Mr. Madoff based on the balances contained in the last statements they got from BLMIS. On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff Securities International Limited in London under bankruptcy protection pursuant to Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. 09-16751). The Chapter 15 case was later transferred to Manhattan. In June 2009, Judge Lifland approved the consolidation of the Madoff SIPA proceedings and the bankruptcy case. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors in United States v. Madoff, No. 09-CR-213 (S.D.N.Y.) The SIPA Trustee has said that as of March 31, 2012, through prepetition litigation and other settlements, he has successfully recovered, or reached agreements to recover, more than $9 billion -- over 50% of the principal lost in the Ponzi scheme by those who filed claims -- for the benefit of all customers of BLMIS. The liquidation has so far has cost the Securities Investor Protection Corp. $1.3 billion, including $791 million to pay a portion of customers' claims. Mr. Picard has so far made only one distribution in October of $325 million for 1,232 customer accounts. Uncertainty created by the appeals has limited Mr. Picard's ability to distribute recovered funds. Outstanding appeals include the $5 billion Picower settlement and the $1.025 billion settlement. BERNARD L. MADOFF: Trustee Not Biased, GAO Says ----------------------------------------------- Eric Hornbeck at Bankruptcy Law360 reports that Irving Picard, the trustee unwinding Ponzi schemer Bernard L. Madoff's trading firm, hasn't treated individual investors differently from institutions when making decisions about accepting or rejecting claims, according to a U.S. Government Accountability Office report released Thursday. Mr. Picard, a partner at BakerHostetler, rejected most claims from the scheme's "net winners" ? those investors who withdrew more money from their Madoff accounts than they deposited with him ? but accepted most claims from net losers, regardless of whether the investors were individuals or institutions, the GAO found. 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. BIG SKY FARMS: Feed Suppliers Want Prompt Payments -------------------------------------------------- Feed suppliers DEL-uxe Feeds, Inc., and Farmers Cooperative Company, Hinton, Iowa, object to the request for provisional relief in the Chapter 15 bankruptcy case of Big Sky Farms Inc., to the extent that any order for provisional relief: (a) requires feed suppliers to supply feed to the Debtor in the future. They assert that they have the right under Iowa law to terminate their business relationship with Big Sky; (b) prohibits feed suppliers from perfecting feed liens for post-petition sales. Feed suppliers are entitled to perfect liens under the Bankruptcy Code; (c) prohibits feed suppliers from requesting that their names be put on checks issued by hog buyers; and (d) fails to recognize the feed suppliers' pre-existing lien rights. Prior to the Petition Date, the Debtor purchased agricultural supplies from DEL-uxe for the benefit of the Debtor's hogs. The Debtor accumulated feed and supply bills of roughly $265,000. DEL-uxe properly perfected an agricultural supply lien in the Debtor's hogs for its sale of agricultural supplies pursuant to Chapter 570A of the Code of Iowa. DEL-uxe believes the Debtor is in possession of checks for sale of hogs which are co-payable to DEL-uxe due to its perfected liens. In the immediate future DEL- uxe intends to continue to deliver feed so long as it is paid currently from funds other than proceeds of hogs sold pre- petition, in which DEL-uxe already has a lien. However, DEL-uxe states that it has no written agreement or verbal agreement to supply feed and supplements on an ongoing basis. Prior to the Petition Date, the Debtor also purchased livestock feed as defined by Iowa Code Sec. 570A.5(3) from FCC-Hinton for the benefit of the Debtor's hogs. The Debtor accumulated livestock feed bills of $127,165 for livestock feed supplied by FCC-Hinton to the Debtor's hogs. FCC-Hinton properly perfected an Iowa feed supplier lien in the Debtor's hogs for the sale of the livestock feed previously delivered to Debtor's hogs. FCC-Hinton believes that the Debtor is in possession of checks for sales of hogs but those checks are also made co-payable to FCC-Hinton due to its perfected liens. In the immediate future, FCC-Hinton intends that it may continue to deliver feed so long as the feed is paid at the time of delivery, and paid from funds other than the proceeds of hogs sold pre-petition in which FCC-Hinton already has a lien. However, FCC-Hinton states that it has no written feed agreement or oral agreement to supply livestock feed to the Debtor on an ongoing basis. DEL-uxe is represented by: Daniel E. DeKoter, Esq. DEKOTER, THOLE & DAWSON, P.L.C. 315 9th St. P.O. Box 253 Sibley, IA 51249 Tel: (712) 754-4601 Fax: (712) 754-2301 E-mail: dandekoter@sibleylaw.com FCC-Hinton is represented by: Lance D. Ehmcke, Esq. Allyson C. Dirksen, Esq. Peter J. Leo, Esq. HEIDMAN LAW FIRM, LLP 1128 Historic Fourth Street P.O. Box 3086 Sioux City, IA 51102 Telephone: (712)255-8838 Facsimile: (712)258-6714 E-mail: Lance.Ehmcke@heidmanlaw.com Allyson.Dirksen@heidmanlaw.com Peter.Leo@heidmanlaw.com Big Sky Farms Inc., Canada's second-biggest hog producer, filed a voluntary petition (Bankr. N.D. Iowa Case No. 12-01711) for relief and recognition of foreign proceeding under Chapter 15 of the United States Bankruptcy Code on Sept. 12, 2012. Big Sky Farms owns hogs located in facilities in the United States and in the Northern District of Iowa. Big Sky Farms is the subject of receivership proceedings in the Court of Queen's Bench for Saskatchewan, Judicial Centre of Saskatoon under the Bankruptcy Insolvency Act. Ernst & Young is Big Sky Farms' receiver in the Canadian proceeding. The Bank of Nova Scotia, as agent for lenders of Big Sky, sought the receivership. Bankruptcy Judge Thad J. Collins presides over the Chapter 15 case. Julie Johnson McLean, Esq., at Davis, Brown, Koehn, Shors & Roberts, P.C., represents Kevin Blair Brennan, Senior VP at Ernst & Young, the receiver. The Chapter 15 petition filed in Cedar Rapids, Iowa, estimated US$50 million to US$100 million in assets and liabilities. BIG SKY FARMS: Files Amendment to List of Creditors --------------------------------------------------- Ernst & Young Inc., the receiver for Big Sky Farms Inc., filed with the Bankruptcy Court in Cedar Rapids, Iowa, an "Amendment to List of Creditors." The list discloses the Debtor's creditors, but does not mention any amounts owed. The creditors are: * Adek Industrial Computers of Raymond, NH; * B&B Hog Management of Glidden, IA; * Dustar Express Inc., of Ireton, IA; * Gabel Family Farms Inc. of Akron, IA; * Hedges Farms Trucking of Bagley, IA; * JBS USA LLC of Greeley, CO; * Midwest Livestock Systems Inc. of Beatrice, NE; * Producers Livestock Marketing Association of Omaha, NE; and * R&J Staiert Inc. of Coon Rapids, MN About Big Sky Farms Big Sky Farms Inc., Canada's second-biggest hog producer, filed a voluntary petition (Bankr. N.D. Iowa Case No. 12-01711) for relief and recognition of foreign proceeding under Chapter 15 of the United States Bankruptcy Code on Sept. 12, 2012. Big Sky Farms owns hogs located in facilities in the United States and in the Northern District of Iowa. Big Sky Farms is the subject of receivership proceedings in the Court of Queen's Bench for Saskatchewan, Judicial Centre of Saskatoon under the Bankruptcy Insolvency Act. Ernst & Young is Big Sky Farms' receiver in the Canadian proceeding. The Bank of Nova Scotia, as agent for lenders of Big Sky, sought the receivership. Bankruptcy Judge Thad J. Collins presides over the Chapter 15 case. Julie Johnson McLean, Esq., at Davis, Brown, Koehn, Shors & Roberts, P.C., represents Kevin Blair Brennan, Senior VP at Ernst & Young, the receiver. The Chapter 15 petition filed in Cedar Rapids, Iowa, estimated US$50 million to US$100 million in assets and liabilities. BLACK ELK: S&P Cuts Corp. Credit Rating to 'CCC+'; Outlook Neg -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit ratings on Houston-based Black Elk Offshore Operations LLC (Black Elk) to 'CCC+' from 'B-'. The outlook is negative. "We also lowered our rating on the company's senior secured notes to 'B-' from 'B'. The recovery rating on these notes is '2', indicating our expectation of substantial (70% to 90%) recovery in the event of a default," S&P said.( "The ratings on Black Elk reflect our view of its 'vulnerable' business risk and 'highly-leveraged' financial risk, incorporating the company's small reserve and production base, high operating costs, and acquisitive growth strategy," said Standard & Poor's credit analyst Ben Tsocanos. The company is geographically concentrated in the Gulf of Mexico region, and operates in a highly cyclical, capital-intensive, and competitive industry. "We view Black Elk's reserve and production base as small relative to many of its E&P peers. As of year-end 2011, proved reserves were about 45.2 million barrels of oil equivalent (mmboe), 60% natural gas, and nearly 57% proved developed. These reserves are concentrated in the shallow-water Gulf of Mexico, which Standard & Poor's views as a challenging region due its typically steep decline curves, and resulting high reinvestment requirements to maintain reserve and production levels. The company has made five significant acquisitions since the fourth quarter of 2009 to replace and increase production and reserves. As of year-end 2011, Black Elk had a proved developed reserve life of less than five years, which we view as short," S&P said. "Black Elk also has a relatively high cost structure, with cash operating costs (lease operating expenses, workover expense, production taxes, and general and administrative expenses) of about $38 per boe. With depreciation, depletion, and amortization at $8.57 per boe, Black Elk's all-in unlevered cost is about $46.14 per boe or $7.69 per mcfe for the first half of 2012. To buffer itself from higher costs and provide cash flow stability, we expect Black Elk will continue to hedge a material amount of its projected production," S&P said. "The negative outlook reflects the potential for Black Elk's liquidity to deteriorate further. We would consider a negative rating action if the company faces additional weakening of its liquidity resulting from failure to curtail capital spending, operational problems that reduce production, or materially lower crude oil prices. We would consider a positive rating action if the company is able to improve liquidity to about $40 million while maintaining production. Given its current low level, the company's leverage is not an impediment to positive rating actions," S&P said. BOOMERANG SYSTEMS: Files Form S-1, Registers $6.2MM Conv. Notes --------------------------------------------------------------- Boomerang Systems, Inc., filed with the U.S. Securities and Exchange Commission a Form S-1 registration statement registering up to $6,200,000 aggregate principal amount of 6% convertible notes due 2017 and warrants to purchase up to 1,294,800 shares of common stock and shares of common stock issuable upon conversion of the notes and the warrants. The Company issued $6,200,000 aggregate principal amount of its 6% convertible notes due 2017 and warrants to purchase 1,240,000 shares of the Company's common stock in a private placement. In connection with the private placement, the Company also issued to the placement agent, warrants to purchase 54,800 shares of the Company's common stock. Alexandria Equities, LLC, Bancroft Investments, Michael and Sarah Berman, et al., may use this prospectus to resell the notes, warrants and shares of common stock issuable upon conversion of the notes or exercise of the warrants. The Company will not receive any of the proceeds from the securities sold by these selling securityholders. The Company will, however, receive the exercise price from the exercise of warrants to the extent the cashless exercise provision is not utilized. The notes are initially convertible into common stock at $5.00 per share, subject to adjustment. The notes are due on June 14, 2017. Interest accrues on the Notes at 6% per annum. The warrants are exercisable at $5.00 per share, subject to adjustment. The Company's common stock is quoted on the OTCQB tier of the OTC Markets under the symbol "BMER." The last closing bid price of the Company's common stock on Sept. 12, 2012, was $3.80 per share. A copy of the prospectus is available for free at: http://is.gd/UXK5RC About Boomerang Systems Headquartered in Morristown, New Jersey, Boomerang Systems, Inc. (Pink Sheets: BMER) through its wholly owned subsidiary, Boomerang Utah, is engaged in the design, development, and marketing of automated racking and retrieval systems for automobile parking and automated racking and retrieval of containerized self-storage units. The Company reported a net loss of $19.10 million for 2011 and a net loss of $15.78 million during the prior year. The Company's balance sheet at June 30, 2012, showed $7.77 million in total assets, $20.58 million in total liabilities and a $12.81 million total stockholders' deficit. Bankruptcy Warning In the Form 10-K for the year ended Dec. 31 2011, the Company said its operations may not generate sufficient cash to enable it to service its debt. If the Company were to fail to make any required payment under the notes and agreements governing its indebtedness or fail to comply with the covenants contained in the notes and agreements, the Company would be in default. The Company's debt holders would have the ability to require that the Company immediately pay all outstanding indebtedness. If the debt holders were to require immediate payment, the Company might not have sufficient assets to satisfy its obligations under the notes or the Company's other indebtedness. In that event, the Company could be forced to seek protection under bankruptcy laws, which could have a material adverse effect on its existing contracts and its ability to procure new contracts as well as its ability to recruit or retain employees. Accordingly, a default could have a significant adverse effect on the market value and marketability of the Company's common stock. BROADKILL REALTY: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Broadkill Realty, LLC, Delaware Limited Liability Company 1035 Andrew Drive West Chester, PA 19380 Bankruptcy Case No.: 12-12586 Chapter 11 Petition Date: September 11, 2012 Court: U.S. Bankruptcy Court District of Delaware (Delaware) Debtor's Counsel: Francis A. Monaco, Jr., Esq. WOMBLE CARLYLE SANDRIDGE & RICE 222 Delaware Avenue, Suite 1501 Wilmington, DE 19801 Tel: (302) 252-4340 Fax: (302) 661-7730 E-mail: fmonaco@wcsr.com Debtor's General Bankruptcy Counsel: BRESSET & SANTORA, LLC Debtor's Accounting Agent: JLP & ASSOCIATES, LLC Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company's list of its largest unsecured creditors filed with the petition does not contain any entry. The petition was signed by Louis A. Deantonio, managing member of Crazy Horse, LLC. BROADVIEW NETWORKS: Has Final Approval on $25 Million Loan ---------------------------------------------------------- Broadview Networks Holdings Inc. received final bankruptcy-court approval Friday to spend a $25 million loan meant to keep the company running normally during its Chapter 11 case. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Broadview Networks encountered no opposition and was given final permission from the bankruptcy court on Sept. 14 to borrow $25 million from CIT Group/Business Credit Inc. as agent. According to the Bloomberg report, shortly after Broadview began a prepackaged Chapter 11 reorganization on Aug. 22, the U.S. Bankruptcy Court in New York approved an interim loan of $16.5 million. The Debtors' obligations under the DIP facility are subject to a "carve-out". All professional expenses must not exceed an aggregate amount of $2 million. U.S. trustee, and fees and expenses incurred by a Chapter 7 trustee must not exceed an aggregate amount of $75,000. Stephanie Gleason at Dow Jones Daily Bankruptcy Review relates the financing includes a $13.9 million "roll-up" loan. This portion of the loan will pay off the $13.9 million Broadview owed CIT Group prior to filing for bankruptcy -- transforming this debt into an administrative expense that will be paid in full. Broadview's reorganization plan comes to the bankruptcy judge for approval at an Oct. 3 confirmation hearing. According to Bloomberg, the plan was negotiated and voted on by creditors before the Chapter 11 petition was filed. According to DBR, the plan eliminates half of the company's debt, Broadview said in a July news release, and will lower its interest payments by $18 million a year. The company plans to complete the restructuring in the fourth quarter. The Bloomberg report relates that if the reorganization is approved by the judge, holders of $300 million in 11.375% first- lien senior secured notes maturing on Sept. 1 will receive $150 million in new five-year 10.5% secured notes and 97.5% of the new common stock. Preferred shareholders, the only other class voting on the plan, are to receive warrants. The 2.5% of the stock not going to senior noteholders is earmarked for management. Bloomberg notes that Carl Icahn's High River LP unsuccessfully opposed interim financing. High River proposed an alternative reorganization and still has time to object to approval of the plan. Objections to approval of the plan are due by Sept. 25. The secured notes last traded at 3:43 p.m. Sept. 17 for 70 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. About Broadview Networks Rye Brook, N.Y.-based Broadview Networks Holdings, Inc., is a communications and IT solutions provider to small and medium sized business ("SMB") and large business, or enterprise, customers nationwide, with a historical focus on markets across 10 states throughout the Northeast and Mid-Atlantic United States, including the major metropolitan markets of New York, Boston, Philadelphia, Baltimore and Washington, D.C. Broadview Networks and 27 affiliates on Aug. 22, 2012, sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 12-13579) with a plan that will eliminate half of the debt under the Company's existing senior secured notes and lower interest expense by roughly $17 million annually. The Company's restructuring counsel is Willkie Farr & Gallagher LLP and its financial advisor is Evercore Group, L.L.C. Kurtzman Carson Consultants is the claims and notice agent. The restructuring counsel for the ad hoc group of noteholders is Dechert LLP and their financial advisor is FTI Consulting. BROADVIEW NETWORKS: Pares Conflicts Over Prepackaged Ch. 11 ----------------------------------------------------------- Natalie Rodriguez at Bankruptcy Law360 reports that Broadview Networks Holdings Inc. on Friday broke an impasse with creditor Carl Icahn's High River LP over a claims-trading motion and a discovery conflict in its New York bankruptcy court case. Bankruptcy Law360 relates that U.S. bankruptcy Judge Shelly C. Chapman said in a hearing that she would sign off on a revised motion requiring High River, which owns about 11 percent of Broadview's senior secured notes due this year, to give the bankrupt company 20 days' notice before entering a deal. About Broadview Networks Rye Brook, N.Y.-based Broadview Networks Holdings, Inc., is a communications and IT solutions provider to small and medium sized business ("SMB") and large business, or enterprise, customers nationwide, with a historical focus on markets across 10 states throughout the Northeast and Mid-Atlantic United States, including the major metropolitan markets of New York, Boston, Philadelphia, Baltimore and Washington, D.C. Broadview Networks and 27 affiliates on Aug. 22, 2012, sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 12-13579) with a plan that will eliminate half of the debt under the Company's existing senior secured notes and lower interest expense by roughly $17 million annually. The Company's restructuring counsel is Willkie Farr & Gallagher LLP and its financial advisor is Evercore Group, L.L.C. Bingham McCutchen LLP is the special regulatory counsel. Kurtzman Carson Consultants is the claims and notice agent. The restructuring counsel for the ad hoc group of noteholders is Dechert LLP and their financial advisor is FTI Consulting. BRUNO'S ISLAND: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Bruno's Island Yacht Harbor Inc. dba Bruno's Island 2715 West Kettleman Way Suite 203-355 Lodi, CA 95242 Bankruptcy Case No.: 12-36453 Chapter 11 Petition Date: September 11, 2012 Court: U.S. Bankruptcy Court Eastern District of California (Sacramento) Judge: Thomas Holman Debtor's Counsel: Thomas B. Sheridan, Esq. ABS LAW GROUP, A PROF CORP. 3511 Del Paso Road, Suite 160, PMB #228 Sacramento, CA 95835 Tel: (916) 520-1737 Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/caeb12-36453.pdf The petition was signed by David Snodderly, president. BULLY'S SPORTS BAR: Nears Bankruptcy Exit ----------------------------------------- John Seelmeyer at Northern Nevada Business Weekly reports that the Bully's Sports Bar & Grill chain is nearing bankruptcy exit. The report recounts how Jo Sonner, ex-wife of Paul Sonner, the chain's owner, took over management a few days before Christmas in 2009. Paul Sonner had just died suddenly the day before, barely two weeks after he'd filed for Chapter 11 bankruptcy protection for Bully's Sports Bar. According to the report, in the first mad days after the company's bankruptcy filing, no one was certain that Bully's would survive very long at all. The report notes the company now employs more than 230 people in seven Bully's locations in Reno, Sparks and Carson City as well as four Smokin' locations at which adult patrons can play video poker, order food from a Bully's Sports Bar next door and have an after-dinner cigarette. The report relates that, as the reorganization plan of Bully's Sports Bar came together this spring, a competing plan was filed with the bankruptcy court by a group including John Klacking of Reno, a longtime restaurant and gaming investor and entrepreneur. The report notes attorneys representing both plans negotiated hard with City National Bank, the biggest creditor in the Bully's bankruptcy. The bank ultimately voted in favor of the plan proposed by Ms. Sonner, in part because she pledged to put more of her own cash into Bully's as part of the reorganization. Bully's Sports Bar & Grill Inc., filed for Chapter 11 bankruptcy (Bankr. D. Nev. Case No. 09-54325) on Dec. 4, 2009, in Reno. The petition says assets and debt are both less than $10 million. CAVALIER HOTEL: Sec. 341 Creditors' Meeting on Sept. 27 ------------------------------------------------------- The U.S. Trustee for the Soutghern District of Florida in Miami will convene a Meeting of Creditors under 11 U.S.C. Sec. 341 in the Chapter 11 cases of Ocean Drive Investment LLC and Cavalier Hotel LLC on Sept. 27, 2012, at 1:30 p.m. at 51 SW First Ave Room 1021, Miami. The deadline to file a complaint objecting to the discharge of the Debtor is Nov. 26. Proofs of claim are due in the case by Dec. 26. About the Cavalier Hotel Ocean Drive Investment LLC and Cavalier Hotel LLC filed for Chapter 11 protection (Bankr. S.D. Fla. Case No. 12-30448 and 12-30451) on Aug. 28, 2012, in Miami to halt foreclosure scheduled the next day. Ridge-Hill Holdings-Miami LLC, the owner of the mortgage, was foreclosing a $9.9 million debt. The Debtors own the Cavalier Hotel located directly Ocean Drive, in Miami's South Beach, facing the Atlantic Ocean. Cavalier has 46 rooms and is just within walking distance to bars, shops, dining, nightlife, and the nonstop action of South Beach. The Debtors also operates the restaurant, known as Crab Shack. Ocean Drive estimated at least $10 million in assets and liabilities. Cavalier Hotel estimated under $50,000 in assets and at least $10 million in liabilities. Bankruptcy Judge Robert A. Mark presides over the cases. The Debtors are represented by Nicholas B. Bangos, Esq., at Diaz Reus LLP. CAVAN MANAGEMENT: Case Summary & Two Unsecured Creditors -------------------------------------------------------- Debtor: Cavan Management Services, LLC 15300 N. 90th Street, Suite 200 Scottsdale, AZ 85260 Bankruptcy Case No.: 12-20222 Chapter 11 Petition Date: September 11, 2012 Court: U.S. Bankruptcy Court District of Arizona (Phoenix) Judge: Charles G. Case, II Debtor's Counsel: Cindy Lee Greene, Esq. CARMICHAEL & POWELL, P.C. 7301 N. 16th Street, Suite 103 Phoenix, AZ 85020 Tel: (602) 861-0777 Fax: (602) 870-0296 E-mail: c.greene@cplawfirm.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 The Company's list of its two unsecured creditors filed with the petition is available for free at http://bankrupt.com/misc/azb12-20222.pdf The petition was signed by David V. Cavan, sole member. CHINA TEL GROUP: Issues Shares to Ironridge, Isaac and AO --------------------------------------------------------- Since its most recent report filed on any of Forms 8-K, 10-K or 10-Q, VelaTel Global Communications, Inc., formerly known as formerly known as China Tel Group Inc., has made sales of unregistered securities, namely shares of the Company's Series A common stock. The Company filed a Form 8-K because the aggregate number of Shares sold exceeds 5% of the total number of Shares issued and outstanding as of the Company's latest filed Report, on Form 10-Q filed on Aug. 20, 2012. On Sept. 13, 2012, the Company issued 2,250,000 Shares to Ironridge Global IV, Ltd. The Second Issuance was pursuant to an Order for Approval of Stipulation for Settlement of Claims between the Company and Ironridge, in settlement of $1,367,693 of accounts payable of the Company which Ironridge had purchased from certain creditors of the Company, in an amount equal to the Assigned Accounts, plus fees and costs. Ironridge demonstrated to the Company's satisfaction that it was entitled to an Additional Issuance, and that following the Second Issuance Ironridge will own less than 9.99% of the total shares then outstanding. On Sept. 13, 2012, the Company issued 1,153,961 Shares and 1,153,961 warrants to Isaac Organization, Inc., in partial payment of a promissory note in the amount of $500,000 due June 30, 2012. Each warrant has an exercise price of $0.0276 and an exercise term of three years. This sale of Shares resulted in a principal reduction of $5,000 in notes payable of the Company, and payment of accrued interest of $26,849. On Sept. 13, 2012, the Company issued 928,309 Shares and 928,309 warrants to America Orient, LLC, in partial payment of a promissory note in the amount of $500,000 due May 31, 2012, in favor of Isaac and assigned to America Orient. Each warrant has an exercise price of $ 0.0299 and an exercise term of three years. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company, and payment of accrued interest of $2,756. In addition, the Company issued 8,354,081 registered Shares pursuant to a Form S-8 Registration Statement filed on Aug. 30, 2012. As of Sept. 13, 2012, the Company has 24,954,563 shares of its Series A common stock outstanding, with a par value of $0.001, and 199,999,999 shares of its Series B common stock outstanding, with a par value of $0.001. About China Tel Based in San Diego, California, and Shenzhen, China, China Tel Group, Inc. (OTC BB: CHTL) -- http://www.ChinaTelGroup.com/-- provides high speed wireless broadband and telecommunications infrastructure engineering and construction services. Through its controlled subsidiaries, the Company provides fixed telephony, conventional long distance, high-speed wireless broadband and telecommunications infrastructure engineering and construction services. ChinaTel is presently building, operating and deploying networks in Asia and South America: a 3.5GHz wireless broadband system in 29 cities across the People's Republic of China with and for CECT-Chinacomm Communications Co., Ltd., a PRC company that holds a license to build the high speed wireless broadband system; and a 2.5GHz wireless broadband system in cities across Peru with and for Perusat, S.A., a Peruvian company that holds a license to build high speed wireless broadband systems. After auditing the 2011 results, Kabani & Company, Inc., in Los Angeles, California, expressed substantial doubt as to the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred a net loss for the year ended Dec. 31, 2011, cumulative losses of $254 million since inception, a negative working capital of $16.4 million and a stockholders' deficiency of $9.93 million. The Company reported a net loss of $21.79 million in 2011, compared with a net loss of $66.62 million in 2010. The Company's balance sheet at June 30, 2012, showed $15.91 million in total assets, $20.01 million in total liabilities and a $4.09 million total stockholders' deficiency. CHRYSLER LLC: Federal Circuit Upholds Laserfacturing Patent Ruling ------------------------------------------------------------------ The U.S. Court of Apeals for the Federal Circuit upheld a decision by the U.S. District Court for the Southern District of Texas, which, on summary judgment, determined that DaimlerChrysler Corporation did not infringe U.S. Patent No. 5,595,670 owned by Laserfacturing Inc. and The Twentyfirst Century Corporation d/b/a TC Arts & Laserfactures. The Federal Circuit said the trial court correctly construed the claim term "sheet" and properly discerned no infringement. The '670 patent discloses a method of welding using a laser or electron beam. The invention discloses ways to weld more quickly and with fewer defects by focusing the welding beam in an oblong shape. Laserfacturing alleges that three of DaimlerChrysler's laser welding stations at its transmission manufacturing plants infringe the '670 patent. The appeal was stayed as a result of Chrysler LLC's Chapter 11 bankruptcy. Chrysler LLC, which became known as Old Carco, and Laserfacturing later filed a joint stipulation requesting the Federal Circuit to proceed with the appeal. The bankruptcy court approved that stipulation. The appellate case is LASERFACTURING, INC. AND THE TWENTYFIRST CENTURY CORPORATION (doing business as TC Arts & Laserfactures), Plaintiffs-Appellants, v. OLD CARCO LIQUIDATION TRUST, Defendant- Appellee, No. 2009-1013 (Federal Circuit). A copy of the Appeals Court's Sept. 17, 2012 decision is available at http://is.gd/M52diKfrom Leagle.com. About Chrysler Chrysler Group LLC, formed in 2009 from a global strategic alliance with Fiat Group, produces Chrysler, Jeep(R), Dodge, Ram Truck, Mopar(R) and Global Electric Motorcars (GEM) brand vehicles and products. Headquartered in Auburn Hills, Michigan, Chrysler Group LLC's product lineup features some of the world's most recognizable vehicles, including the Chrysler 300, Jeep Wrangler and Ram Truck. Fiat will contribute world-class technology, platforms and powertrains for small- and medium-sized cars, allowing Chrysler Group to offer an expanded product line including environmentally friendly vehicles. Chrysler LLC and 24 affiliates on April 30, 2009, sought Chapter 11 protection from creditors (Bankr. S.D.N.Y (Mega-case), Lead Case No. 09-50002). Chrysler hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. As of Dec. 31, 2008, Chrysler had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. In connection with the bankruptcy filing, Chrysler reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Under the terms approved by the Bankruptcy Court, the company formerly known as Chrysler LLC on June 10, 2009, formally sold substantially all of its assets, without certain debts and liabilities, to a new company that will operate as Chrysler Group LLC. Fiat acquired a 20% equity interest in Chrysler Group as part of the deal. The U.S. and Canadian governments provided Chrysler with $4.5 billion to finance its bankruptcy case. Those loans were repaid with the proceeds of the bankruptcy estate's liquidation. The Debtor changed its corporate name to Old CarCo following the sale. CITIZEN REPUBLIC: Fitch Puts 'B' IDR on Rating Watch Positive ------------------------------------------------------------- Fitch Ratings has placed Citizen Republic Bancorp's (CRBC) ratings including its long- and short-term Issuer Default Ratings (IDRs) of 'B' on Rating Watch Positive. The action follows the announcement that CRBC and Akron, OH based First Merit (FMER) have entered into a definitive merger agreement. The all-stock deal creates a company with approximately $24 billion in assets, $15 billion in loans and over 400 branches in five contiguous states in the Great Lakes Region. The merger is expected to close before Sept. 12, 2013 in a stock for stock transaction valued at $912 million. While Fitch does not currently rate FMER, Fitch believes the combined company's rating would exceed CRBC's current rating. Fitch expects CRBC's outstanding trust preferred shares to become current and FMER's is expected to repay CRBC's $345 million of TARP preferred stock and dividends at closing of the transaction. CRBCs ratings had a Positive Outlook (as opposed to watch) prior to this announcement due to positive earnings, asset quality and capital trends and if the deal does not close as expected, Fitch would still anticipate positive rating momentum consistent with the Positive Outlook. CRBC is a $9.7 billion holding company based in Flint, MI with branches in Michigan, Wisconsin and Ohio. First Merit is a $15 billion holding company headquartered in Akron, OH with branches in Indiana, Ohio, and Illinois. The following ratings have been placed on Rating Watch Positive: Citizens Republic Bancorp, Inc. -- Long term IDR 'B'; -- Short-term IDR 'B'; -- Viability 'b'; -- Subordinated debt 'C/RR6'; -- Pre ferred stock at 'C/RR6'; Citizens Bank -- Long term IDR 'B'; -- Long-term deposits 'B+/RR3'; -- Short-term IDR 'B'; -- Short-term deposits 'B'; -- Viability 'b'; Citizens Funding Trust I -- Preferred stock 'C/RR6'. The following ratings have been affirmed: Citizens Republic Bancorp, Inc. -- Support '5'; -- Support floor 'NF'. Citizens Bank -- Support '5'; -- Support floor 'NF'. CLINICA REAL: Case Summary & 8 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Clinica Real, LLC dba Clinica Real Rehabilitation & Chiropractic 1726 East Thomas Road, Suite A Phoenix, AZ 85016-7604 Bankruptcy Case No.: 12-20451 Chapter 11 Petition Date: September 13, 2012 Court: U.S. Bankruptcy Court District of Arizona (Phoenix) Judge: Sarah Sharer Curley Debtor's Counsel: Mark J. Giunta, Esq. LAW OFFICE OF MARK J. GIUNTA 245 W. Roosevelt Street, Suite A Phoenix, AZ 85003 Tel: (602) 307-0837 Fax: (602) 307-0838 E-mail: markgiunta@giuntalaw.com Scheduled Assets: $10,480,661 Scheduled Liabilities: $29,761,955 The petition was signed by Keith M. Stone, member. Debtor's List of Its Eight Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ State Farm Mutual -- $29,000,000 Automobile Ins Co. c/o Steven D. Smith 1850 North Central Avenue, Suite 2400 Phoenix, AZ 85004-4527 Allstate Insurance Settlement $305,000 c/o Smith & Brinks Agreement 350 Granite Street, Suite 2303 Braintree, MA 02184 Allstate Insurance Membership $305,000 c/o Smith & Brinks Interest 350 Granite Street, Suite 2303 Braintree, MA 02184 Mahaffy Law Firm, P.C. Attorney's Fees $93,790 Delsys LLC Advertising $18,486 Southwest Visa Card Credit Card $14,094 La Revista Ideas Advertising $13,000 Farmers Insurance Flood Insurance $2,585 COMARCO INC: Reports $151,000 Net Income in July 31 Quarter ----------------------------------------------------------- Comarco, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing net income of $151,000 on $1.68 million of revenue for the three months ended July 31, 2012, compared with a net loss of $1.93 million on $1.92 million of revenue for the same period during the prior year. The Company reported a net loss of $561,000 on $3.88 million of revenue for the six months ended July 31, 2012, compared with a net loss of $3.19 million on $4.87 million of revenue for the same period a year ago. The Company's balance sheet at July 31, 2012, showed $5.23 million in total assets, $7.05 million in total liabilities and a $1.82 million total stockholders' deficit. A copy of the Form 10-Q is available for free at: http://is.gd/3kEE2k About Comarco Inc. Based in Lake Forest, California, Comarco, Inc. (OTC: CMRO) -- http://www.comarco.com/-- is a provider of innovative, patented mobile power solutions that can be used to power and charge notebook computers, mobile phones, and many other rechargeable mobile devices with a single device. Comarco reported a net loss of $5.31 million for the year ended Jan. 31, 2012, compared with a net loss of $5.97 million during the prior year. After auditing the fiscal 2012 financial results, Squar, Milner, Peterson, Miranda & Williamson, LLP, in Newport Beach, California, 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 negative cashflow from operations, has had declining working capital and uncertainties surrounding the Company's ability to raise additional funds. DEER LAKE INN: Chapter 7 Bankruptcy Halts Auction ------------------------------------------------- Amy Marchiano at Republic Herald reports that The Deer Lake Inn is off the market after it filed for Chapter 7 bankruptcy liquidation in the U.S. Bankruptcy Court for the Middle District of Pennsylvania on July 13, 2012. According to the report, a notice of bankruptcy stay was received by the Schuylkill County Court of Common Pleas July 16. The report notes the property at 1567 Centre Turnpike, which dates back to the 1780s, was for sale at auction July 11, 2011. According to the report, Nelson Ebersole, auctioneer for the July 11 sale, said this week he did not know what was going on with the property. The last contact he had with its owners, Pam and Warren Scheib Jr., was July 11. The report notes the bankruptcy action taken by the Mr. Scheibs stays a lawsuit filed by the First National Bank of Fredericksburg versus the couple filed in the Schuylkill County Court of Common Pleas on July 5. The complaint against the Scheibs states that the bank loaned the couple $168,000 on Oct. 20, 2006, with payments due in 240 installments. The suit states the Scheibs are in default because they have failed to pay some required payments. The suit seeks the entire balance due of $150,790.87 including interest, plus attorney's fees of $2,000 and costs of the suit and additional daily interest of $16.904 per day after May 22, the report adds. DESIGNER HOMES: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Designer Homes, Inc. t/a American Home Builders, Inc. American Home Builders P.O. Box 309 Analomink, PA 18320 Bankruptcy Case No.: 12-05339 Chapter 11 Petition Date: September 11, 2012 Court: U.S. Bankruptcy Court Middle District of Pennsylvania (Wilkes-Barre) Judge: John J. Thomas Debtor's Counsel: John J. Martin, Esq. LAW OFFICES JOHN J. MARTIN 1022 Court Street Honesdale, PA 18431 Tel: (570) 253-6899 Fax: (570) 253-6988 E-mail: jmartin@martin-law.net 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 Charles A. Poalillo DEWEY & LEBOEUF: Ex-Leaders Object to Proposed $71MM Clawback Deal ------------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the top three former executives at Dewey & LeBoeuf LLP, the defunct law firm, filed objections to aspects of the proposed settlements with about 400 partners designed to bring in $71 million. According to the report, Steven Davis, the former chairman; Stephen DiCarmine, the former executive director, and Joel Sanders, the ex-chief financial officer, said last week that it's improper that releases under the settlements end up making them solely liable for the firm's failure. The law doesn't permit the settlements to eliminate their rights to have liability for only their "proportionate share" of damages, the three ex-executives said in a filing in U.S. Bankruptcy Court in Manhattan. They also object to making secret the identities of the settling partners, saying they need to know who settled in preparing their defenses. The Bloomberg report discloses that the firm's former leaders also want the bankruptcy judge to strike a provision that would prevent settling partners from helping them fight lawsuits. The settlements come up for approval at a Sept. 20 hearing. Several former partners have a motion scheduled for hearing that day asking the judge to appoint a Chapter 11 trustee. The official committee representing partners instead advocates having an examiner perform an investigation before settlements are approved. About Dewey & LeBoeuf New York-based law firm Dewey & LeBoeuf LLP sought Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 12-12321) to complete the wind-down of its operations. The firm had struggled with high debt and partner defections. Dewey disclosed debt of $245 million and assets of $193 million in its chapter 11 filing late evening on May 29, 2012. Dewey & LeBoeuf was formed by the 2007 merger of Dewey Ballantine LLP and LeBoeuf, Lamb, Greene & MacRae LLP. At its peak, Dewey employed about 2,000 people with 1,300 lawyers in 25 offices across the globe. When it filed for bankruptcy, only 150 employees were left to complete the wind-down of the business. Dewey's offices in Hong Kong and Beijing are being wound down. The partners of the separate partnership in England are in process of winding down the business in London and Paris, and administration proceedings in England were commenced May 28. All lawyers in the Madrid and Brussels offices have departed. Nearly all of the lawyers and staff of the Frankfurt office have departed, and the remaining personnel are preparing for the closure. The firm's office in Sao Paulo, Brazil, is being prepared for closure and the liquidation of the firm's local affiliate. The partners of the firm in the Johannesburg office, South Africa, are planning to wind down the practice. The firm's ownership interest in its practice in Warsaw, Poland, was sold to the firm of Greenberg Traurig PA on May 11 for $6 million. The Pension benefit Guaranty Corp. took $2 million of the proceeds as part of a settlement. Judge Martin Glenn oversees the case. Albert Togut, Esq., at Togut, Segal & Segal LLP, represents the Debtor. Epiq Bankruptcy Solutions LLC serves as claims and notice agent. The petition was signed by Jonathan A. Mitchell, chief restructuring officer. JPMorgan Chase Bank, N.A., as Revolver Agent on behalf of the lenders under the Revolver Agreement, hired Kramer Levin Naftalis & Frankel LLP. JPMorgan, as Collateral Agent for the Revolver Lenders and the Noteholders, hired FTI Consulting and Gulf Atlantic Capital, as financial advisors. The Noteholders hired Bingham McCutchen LLP as counsel. The U.S. Trustee formed two committees -- one to represent unsecured creditors and the second to represent former Dewey partners. The creditors committee hired Brown Rudnick LLP led by Edward S. Weisfelner, Esq., as counsel. The Former Partners hired Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt & Winters, LLP, as counsel. DIGITAL DOMAIN: Section 341(a) Meeting Scheduled for Oct. 19 ------------------------------------------------------------ The U.S. Trustee for Region 3 will convene a Meeting of Creditors under U.S.C. Sec. 341(a) in the Chapter 11 case of Digital Domain Media Group, Inc., et al., on Oct. 19, 2012, at 10:30 a.m. at the J. Caleb Boggs Federal Building, 844 King Street, in Wilmington, Delaware. About Digital Domain Digital Domain Media Group, Inc. -- http://www.digitaldomain.com/ -- engages in the creation of original content animation feature films, and development of computer-generated imagery for feature films and transmedia advertising primarily in the United States. Digital Domain Media Group, Inc. and 13 affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-12568) on Sept. 11 to sell its business for $15 million to Searchlight Capital Partners LP. The Debtors have also sought ancillary relief in Canada, pursuant to the Companies' Creditors Arrangement Act in the Supreme Court of British Columbia, Vancouver Registry. Port St. Lucie, Florida-based Digital Domain disclosed assets of $205 million and liabilities totaling $214 million. DDMG also announced that it has entered into a purchase agreement with Searchlight Capital Partners L.P. to acquire Digital Domain Productions Inc. and its operating subsidiaries in the United States and Canada, including Mothership Media, subject to the receipt of higher and better offers and Court approval. DDPI and Mothership, with studios in California and Vancouver, are focused on creating digital visual effects, CG animation and digital production for the entertainment and advertising industries and are led by recently promoted Chief Executive Officer Ed Ulbrich. Attorneys at Pachulski Stang Ziehl & Jones serve as counsel to the Debtors. FTI Consulting, Inc.'s Michael Katzenstein is the chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. DIGITAL DOMAIN: Sued by Former Employee for WARN Act Violations --------------------------------------------------------------- Minh-Tam Frye, on behalf of herself and 350 other similarly situated former employees who were terminated in the mass layoff or plant closing from Digital Domain Media Group, Inc.'s Port St. Lucie, Florida facility from about Sept. 7, 2012, and in the days thereafter, has filed a class action complaint in the U.S. Bankruptcy Court for the District of Delaware against Digital Domain Media Group, Inc., et al. (Case No. 12-12568). The Plaintiff alleges that the former employees of the Debtors were not provided 60 days' advance notice of their terminations by the Defendant Debtors, as required by the Worker Adjustment and Retraining Notification Act, 29 U.S.C. Section 2101 et seq. According to the Complaint, Defendants failed to pay the Plaintiff and each of the Class Members their respective wages, salary, commissions, bonuses, accrued holiday pay and accrued vacation for 60 days following their respective terminations, and failed to make the pension and 401(k) contributions and provide employee benefits under ERISA, other than health insurance, for 60 days from and after the dates of their respective terminations. Plaintiffs seek to recover 60 days' wages and benefits, pursuant to 29 U.S.C. Section 2104, from Defendants. Plaintiffs' claims, according to the Complaint, are entitled to administrative expense priority status pursuant to the 11 U.S.C. Section 503(b)(1)(A) or, in the alternative, a priority status pursuant to the 11 U.S.C. Section 507(a)(4),(5). Plaintiff Minh-Tam Frye was employed by Defendants and worked at the Defendants' facility located at 10250 S.W. Village Parkway, Port St. Lucie, Fla. until her termination on or about Sept. 7, 2012. Plaintiffs have requested the Bankruptcy Court to approve the appointment of The Rosner Law Group LLC, Wilmington, Del. and Outten & Golden LLP, in New York, N.Y., as Class Counsel. A copy of the Class Action Complaint is available at: http://bankrupt.com/misc/digitaldomain.classaction.doc18.pdf About Digital Domain Digital Domain Media Group, Inc. -- http://www.digitaldomain.com/ -- engages in the creation of original content animation feature films, and development of computer-generated imagery for feature films and transmedia advertising primarily in the United States. Digital Domain Media Group, Inc. and 13 affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-12568) on Sept. 11, 2012, to sell its business for $15 million to Searchlight Capital Partners LP. The Debtors have also sought ancillary relief in Canada, pursuant to the Companies' Creditors Arrangement Act in the Supreme Court of British Columbia, Vancouver Registry. Port St. Lucie, Florida-based Digital Domain disclosed assets of $205 million and liabilities totaling $214 million. DDMG also announced that it has entered into a purchase agreement with Searchlight Capital Partners L.P. to acquire Digital Domain Productions Inc. and its operating subsidiaries in the United States and Canada, including Mothership Media, subject to the receipt of higher and better offers and Court approval. DDPI and Mothership, with studios in California and Vancouver, are focused on creating digital visual effects, CG animation and digital production for the entertainment and advertising industries and are led by recently promoted Chief Executive Officer Ed Ulbrich. Attorneys at Pachulski Stang Ziehl & Jones serve as counsel to the Debtors. FTI Consulting, Inc.'s Michael Katzenstein is the chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. DIGITAL DOMAIN: Can Act as Representative in Canadian Proceedings ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has authorized Digital Domain Media Group, Inc., to act as foreign representative on behalf of the estates of Digital Domain Media Group, Inc., et al., in any judicial or other proceedings in a foreign country, including in the ancillary proceeding of the Debtors to be commenced in the Supreme Court of British Columbia under the Companies' Creditors Arrangement Act (Canada). DDMG will be authorized and will have the power to act in any way permitted by applicable foreign law, including, but not limited to: (i) seeking recognition of the Debtors' Chapter 11 Cases in the Canadian Proceedings; (ii) requesting that the Canadian Court lend assistance to the Delaware Bankruptcy Court in protecting the property of the Debtors' estates; and (iii) seeking any other appropriate relief from the Canadian Court that DDMG deems just and proper in the furtherance of the Debtors' estates. As disclosed in the motion, in addition to their operations in the United States, the Debtors also have certain assets and operations in Canada. In connection with the commencement of the Debtors' Chapter 11 Cases, the Debtors have filed a Chapter 11 petition for Digital Domain Productions (Vancouver) Ltd., a legal entity incorporated in Canada and an indirect subsidiary of DDMG. About Digital Domain Digital Domain Media Group, Inc. -- http://www.digitaldomain.com/ -- engages in the creation of original content animation feature films, and development of computer-generated imagery for feature films and transmedia advertising primarily in the United States. Digital Domain Media Group, Inc. and 13 affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-12568) on Sept. 11, 2012, to sell its business for $15 million to Searchlight Capital Partners LP. The Debtors have also sought ancillary relief in Canada, pursuant to the Companies' Creditors Arrangement Act in the Supreme Court of British Columbia, Vancouver Registry. Port St. Lucie, Florida-based Digital Domain disclosed assets of $205 million and liabilities totaling $214 million. DDMG also announced that it has entered into a purchase agreement with Searchlight Capital Partners L.P. to acquire Digital Domain Productions Inc. and its operating subsidiaries in the United States and Canada, including Mothership Media, subject to the receipt of higher and better offers and Court approval. DDPI and Mothership, with studios in California and Vancouver, are focused on creating digital visual effects, CG animation and digital production for the entertainment and advertising industries and are led by recently promoted Chief Executive Officer Ed Ulbrich. Attorneys at Pachulski Stang Ziehl & Jones serve as counsel to the Debtors. FTI Consulting, Inc.'s Michael Katzenstein is the chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. DIGITAL DOMAIN: Can Employ KCC as Claims and Noticing Agent ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has granted Digital Domain Media Group, Inc., et al., permission to employ Kurtzman Carson Consultants LLC as claims and noticing agent. The Debtors are authorized to compensate KCC in accordance with the terms of the Services Agreement upon the receipt of reasonably detailed invoices setting forth the services provided by KCC and the rates charged for each, and to reimburse KCC for all reasonable and necessary expenses it may incur, upon the presentation of appropriate documentation, subject to the court approved procedures, without the need for KCC to file fee applications or otherwise seek Court approval for the compensation of its services and reimbursement of its expenses. To the best of the Debtors' knowledge, KCC (a) is a "disinterested person" within the meaning of section 101(14) of the Bankruptcy Code, except that KCC was employed by the Debtors prior to the Petition Date as allowed by Section 1107(b) of the Bankruptcy Code, and (b) does not hold or represent an interest materially adverse to the Debtors' estates. About Digital Domain Digital Domain Media Group, Inc. -- http://www.digitaldomain.com/ -- engages in the creation of original content animation feature films, and development of computer-generated imagery for feature films and transmedia advertising primarily in the United States. Digital Domain Media Group, Inc. and 13 affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-12568) on Sept. 11 to sell its business for $15 million to Searchlight Capital Partners LP. The Debtors have also sought ancillary relief in Canada, pursuant to the Companies' Creditors Arrangement Act in the Supreme Court of British Columbia, Vancouver Registry. Port St. Lucie, Florida-based Digital Domain disclosed assets of $205 million and liabilities totaling $214 million. DDMG also announced that it has entered into a purchase agreement with Searchlight Capital Partners L.P. to acquire Digital Domain Productions Inc. and its operating subsidiaries in the United States and Canada, including Mothership Media, subject to the receipt of higher and better offers and Court approval. DDPI and Mothership, with studios in California and Vancouver, are focused on creating digital visual effects, CG animation and digital production for the entertainment and advertising industries and are led by recently promoted Chief Executive Officer Ed Ulbrich. Attorneys at Pachulski Stang Ziehl & Jones serve as counsel to the Debtors. FTI Consulting, Inc.'s Michael Katzenstein is the chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. DIGITAL DOMAIN: Court OKs Searchlight Led Auction for Sept. 21 -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has approved bid procedures to govern the sale of substantially all the assets of Digital Domain Media Group, Inc., et al. The Debtors have sought Court approval for the transfer to VFX Holdings LLC, and Searchlight Capital, L.P. substantially all of their assets, including the Debtors' right to receive amounts owed to them from the motion pictures Titanic and Ender's Game, as well as other assets set forth in the Asset Purchase Agreement, dated as of Sept. 11, 2012. The purchase price under the Purchase Agreement is $15,000,000 plus the aggregate amount of Post-Sale Order Operating Expenses. The approved bid procedures provide that if the Debtors sell the assets to another party, Searchlight would receive a break-up fee of $375,000 (2.5% of the purchase price) and reimbursement of up to $375,000 in expenses. The deadline for the submission of bids is Sept. 20, 2012, at 8:00 p.m. ET. The auction date is Sept. 21, 2012, at 10:00 a.m. ET. Objections to the relief requested by the Sale Motion will be filed with the Court by 4:00 p.m. (prevailing Eastern time) on Sept. 21, 2012. A hearing on the Sale Motion (among other things, to confirm the results of the Auction and approve the sale to the Successful bidder) will be held on Sept. 24, 2012, at 12:00 p.m. (prevailing Eastern time). Carl Stork, owed approximately $5,000,000 and the holder of the largest unsecured claim against the Debtors, had objected to the bid procedures motion, citing that the motion should be denied pending the appointment of a creditors' committee. In his objection, Mr. Stork tells the Court that he believes that the assets are worth substantially more than the $15,000,000. OddLot Entertainment, LLC, a significant equity investor in the motion picture Enders' Game, filed a limited objection to the bid procedures motion. OLE tells the Court that it is generally supportive of the Debtors' efforts to sell their assets but states that the bid procedures proposed by the Debtors lack important protections for OLE and other parties-in-interest. OLE requested that the Bid Procedures be modified to provide that (a) the deadline to object to the Sale Motion be three days after the Auction, (b) all potential bidders are put on notice that it is OLE's position that the series of agreements defining the Debtors' rights and obligations in connection with Ender's Game form a single agreement and must all be assumed together, (c) a bidder may not remove contracts from the list of contracts to be assumed and assigned following the closing of the Auction, (d) OLE be permitted to attend the Auction, (e) copies of all bid materials be provided to OLE, and (f) OLE be given consultation rights with respect to the sale, including the determination of the winning bidder. Summit Entertainment, LLC, also a significant investor in Ender's Game, submitted a joinder in support of OLE's limited objection to the bid procedures motion. Summit, thus, requests the Court that it also be permitted to attend the Auction, be provided copies of all bid materials, and be given consultation rights with respect to the sale, including the determination of the winning bidder. About Digital Domain Digital Domain Media Group, Inc. -- http://www.digitaldomain.com/ -- engages in the creation of original content animation feature films, and development of computer-generated imagery for feature films and transmedia advertising primarily in the United States. Digital Domain Media Group, Inc. and 13 affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-12568) on Sept. 11 to sell its business for $15 million to Searchlight Capital Partners LP. The Debtors have also sought ancillary relief in Canada, pursuant to the Companies' Creditors Arrangement Act in the Supreme Court of British Columbia, Vancouver Registry. Port St. Lucie, Florida-based Digital Domain disclosed assets of $205 million and liabilities totaling $214 million. DDMG also announced that it has entered into a purchase agreement with Searchlight Capital Partners L.P. to acquire Digital Domain Productions Inc. and its operating subsidiaries in the United States and Canada, including Mothership Media, subject to the receipt of higher and better offers and Court approval. DDPI and Mothership, with studios in California and Vancouver, are focused on creating digital visual effects, CG animation and digital production for the entertainment and advertising industries and are led by recently promoted Chief Executive Officer Ed Ulbrich. Attorneys at Pachulski Stang Ziehl & Jones serve as counsel to the Debtors. FTI Consulting, Inc.'s Michael Katzenstein is the chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. DIGITAL DOMAIN: Has Interim Nod to Borrow Up to $11.79 Million -------------------------------------------------------------- In a second interim order dated Sept. 12, 2012, the U.S. Bankruptcy Court for the District of Delaware authorized Digital Domain Media Group, Inc., et al., to obtain secured postpetition superpriority financing of up to $11,789,000 from Hudson Bay Master Fund Ltd., as DIP Agent, for itself and the DIP Lenders. The final hearing to consider the $20,083,000 financing package will be held on Oct. 1, 2012, at 12:00 p.m. The first interim DIP financing order, also dated Sept. 12, 2012, granted Debtors authorization to borrow up to the aggregate amount of $4,137,000 solely for the purpose of funding the Debtors' obligations on Sept. 14, 2012. The Debtors are also authorized to use cash collateral of the Senior Noteholders and the Subordinated Noteholders, subject to terms of the approved budget and approved cash flow projection. As of the Petition Date, the aggregate amount of the Senior Note Obligations owed to (a) the Initial Senior Noteholders is $70,262,882.97, and (b) the PBC Senior Subordinated Noteholder is $5,000,000. A copy of the second interim DIP order is available at: http://bankrupt.com/misc/ddmg.2ndinterimfinancingorder.pdf About Digital Domain Digital Domain Media Group, Inc. -- http://www.digitaldomain.com/ -- engages in the creation of original content animation feature films, and development of computer-generated imagery for feature films and transmedia advertising primarily in the United States. Digital Domain Media Group, Inc. and 13 affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-12568) on Sept. 11, 2012, to sell its business for $15 million to Searchlight Capital Partners LP. The Debtors have also sought ancillary relief in Canada, pursuant to the Companies' Creditors Arrangement Act in the Supreme Court of British Columbia, Vancouver Registry. Port St. Lucie, Florida-based Digital Domain disclosed assets of $205 million and liabilities totaling $214 million. DDMG also announced that it has entered into a purchase agreement with Searchlight Capital Partners L.P. to acquire Digital Domain Productions Inc. and its operating subsidiaries in the United States and Canada, including Mothership Media, subject to the receipt of higher and better offers and Court approval. DDPI and Mothership, with studios in California and Vancouver, are focused on creating digital visual effects, CG animation and digital production for the entertainment and advertising industries and are led by recently promoted Chief Executive Officer Ed Ulbrich. Attorneys at Pachulski Stang Ziehl & Jones serve as counsel to the Debtors. FTI Consulting, Inc.'s Michael Katzenstein is the chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. DIGITAL DOMAIN: Notification Procedures for Stock Transfers Okayed ------------------------------------------------------------------ On Sept. 12, 2012, the U.S. Bankruptcy Court for the District of Delaware entered an interim order establishing notification and hearing procedures for certain transfers of common stock of Digital Domain Media Group, Inc., or any beneficial interest therein, including options to acquire such stock, that must be complied with before transfers of such stock are deemed effective. The procedures for trading in common stock are necessary to protect and preserve the Debtors' Tax Attributes, including net operating loss carryforwards ("NOLs") and certain other tax and business credits. Prior to any transfer of Beneficial Ownership of Common Stock that would result in an increase in the amount of Common Stock of which a Substantial Holder (any entity or person that has Beneficial Ownership of at least 2.05 million shares of Common Stock) has Beneficial Ownership or would result in an entity or person becoming a Substantial Shareholder, such Substantial Shareholder or potential Substantial Shareholder must file with the Court, and serve upon counsel to the Debtors, an advance written declaration of the intended transfer of Common Stock. Prior to any transfer of Beneficial Ownership of Common Stock that would result in a decrease in the amount of Common Stock of which a Substantial Holder has Beneficial Ownership or would result in an entity or person ceasing to be a Substantial Shareholder, such Substantial Shareholder must file with the Court, and serve upon counsel to the Debtors, an advance written declaration of the intended transfer of Common Stock. Any purchase, sale, or other transfer of the Common Stock in violation of the procedures (including the notice requirements) will be null and void ab initio. A copy of the approved notification and hearing procedures is available at http://bankrupt.com/misc/ddmg.doc58.pdf About Digital Domain Digital Domain Media Group, Inc. -- http://www.digitaldomain.com/ -- engages in the creation of original content animation feature films, and development of computer-generated imagery for feature films and transmedia advertising primarily in the United States. Digital Domain Media Group, Inc. and 13 affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-12568) on Sept. 11 to sell its business for $15 million to Searchlight Capital Partners LP. The Debtors have also sought ancillary relief in Canada, pursuant to the Companies' Creditors Arrangement Act in the Supreme Court of British Columbia, Vancouver Registry. Port St. Lucie, Florida-based Digital Domain disclosed assets of $205 million and liabilities totaling $214 million. DDMG also announced that it has entered into a purchase agreement with Searchlight Capital Partners L.P. to acquire Digital Domain Productions Inc. and its operating subsidiaries in the United States and Canada, including Mothership Media, subject to the receipt of higher and better offers and Court approval. DDPI and Mothership, with studios in California and Vancouver, are focused on creating digital visual effects, CG animation and digital production for the entertainment and advertising industries and are led by recently promoted Chief Executive Officer Ed Ulbrich. Attorneys at Pachulski Stang Ziehl & Jones serve as counsel to the Debtors. FTI Consulting, Inc.'s Michael Katzenstein is the chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. DIGITAL DOMAIN: John Nichols Resigns from Board of Directors ------------------------------------------------------------ John M. Nichols resigned from his position as a member of the Board of Directors of Digital Domain Media Group, Inc., effective Sept. 10, 2012. About Digital Domain Digital Domain Media Group, Inc. -- http://www.digitaldomain.com/ -- engages in the creation of original content animation feature films, and development of computer-generated imagery for feature films and transmedia advertising primarily in the United States. Digital Domain Media Group, Inc. and 13 affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-12568) on Sept. 11 to sell its business for $15 million to Searchlight Capital Partners LP. The Debtors have also sought ancillary relief in Canada, pursuant to the Companies' Creditors Arrangement Act in the Supreme Court of British Columbia, Vancouver Registry. Port St. Lucie, Florida-based Digital Domain disclosed assets of $205 million and liabilities totaling $214 million. DDMG also announced that it has entered into a purchase agreement with Searchlight Capital Partners L.P. to acquire Digital Domain Productions Inc. and its operating subsidiaries in the United States and Canada, including Mothership Media, subject to the receipt of higher and better offers and Court approval. DDPI and Mothership, with studios in California and Vancouver, are focused on creating digital visual effects, CG animation and digital production for the entertainment and advertising industries and are led by recently promoted Chief Executive Officer Ed Ulbrich. Attorneys at Pachulski Stang Ziehl & Jones serve as counsel to the Debtors. FTI Consulting, Inc.'s Michael Katzenstein is the chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. DJL TRUCKING: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: DJL Trucking, Inc. 3060 Sherman Road Perris, CA 92570 Bankruptcy Case No.: 12-31323 Chapter 11 Petition Date: September 14, 2012 Court: United States Bankruptcy Court Central District of California (Riverside) Judge: Deborah J. Saltzman Debtor's Counsel: Stephen R. Wade, Esq. THE LAW OFFICES OF STEPHEN R WADE 400 N Mountain Ave Ste 214B Upland, CA 91786 Tel: (909) 985-6500 Fax: (909) 985-2865 E-mail: laurel@srwadelaw.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/cacb12-31323.pdf The petition was signed by David J. Lonsdale, president. DRINKS AMERICAS: Kenny Out as CEO; Tequilla Vet Cabo Takes Over --------------------------------------------------------------- Pursuant to a separation and release agreement, Patrick Kenny resigned his positions as the Company's Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer, as well as his position serving on the Company's board of directors. Mr. Kenny's resignation was not due to any disagreement with the Company on any matter relating to the Company's operations, policies or practices. On Sept. 14, 2012, Federico Cabo was appointed to serve as the Company's Chief Executive Officer and President. Concurrently, Steven Dallas was appointed to serve as the Company's interim Chief Financial Officer. Mr. Cabo joined the Company's Board of Directors in June 2011. Mr. Cabo is an industry veteran with over 35 years of experience as a brewer and master distiller. He is highly seasoned expert with experience in manufacturing, sales and marketing of beverages in the U.S. and International markets. Mr. Cabo has spent the last 10 years developing and perfecting his company's tequila distilling processes and expanding his distribution network. Mr. Cabo's background as an engineer is evident in his state-of-the- art, highly efficient distillery, which he designed to allow for modular growth accordance with the needs of the company up to three times present production capacity. Mr. Cabo has served as the Chief Executive Officer of Fabrica De Tequilas Finos S.A. de C.V. since 1981. Mr. Cabo has also served as the Chief Executive Officer of Cerveceria Mexicana, S. de R.L. de C.V since 2006. Mr. Cabo has also served as a director for Xact Aid, Inc., from 2004 to 2005. Mr. Federico Cabo is the father of Mr. Richard Cabo, who serves on the Company's board of directors. Mr. Federico Cabo has not been involved in any transaction with the Company that would require disclosure under Item 404(a) of the Regulation S-K. Steven Dallas joined the Company's Board of Directors on Oct. 13, 2011. Mr. Dallas has over 30 years' experience in mortgage operations, loan originations, loan administration and servicing. He also has an extensive background in finance, capital and business operations. Since 2009, Mr. Dallas has been the owner of the Dallas Finance Group, which focuses on the brokerage of high quality real estate and commercial transactions, real estate finance, commercial business finance, accounts receivable & inventory lending, equipment finance and leasing, real estate equity and mezzanine transactions. Since 2007, Mr. Dallas has also served as a board member of the USAM Fund, which focuses on funding short term, low loan-to-value commercial real estate loans and building a strong, diversified, long-term investment portfolio for the benefit of founders and investors. From 1994 until 2007, Mr. Dallas served as the president of DV Capital, Incorporated, a venture capital firm specializing in finance, real estate and entertainment related endeavors. There is no family relationship between Mr. Dallas and any other executive officer or director of the Company. Delays Form July 31 Form 10-Q In a regulatory filing with the U.S. Securities and Exchange Commission, the Company said the compilation, dissemination and review of the information required to be presented in the Form 10-Q for the quarter ended July 31, 2012, has imposed time constraints that have rendered timely filing of the Form 10-Q impracticable without undue hardship and expense. The Company undertakes the responsibility to file that quarterly report no later than five days after its original due date. About Drinks Americas Headquartered in Wilton, Conn., Drinks Americas Holdings, Ltd. -- http://www.drinksamericas.com/-- through its majority-owned subsidiaries, Drinks Americas, Inc., Drinks Global, LLC, D.T. Drinks, LLC, and Olifant U.S.A Inc., imports, distributes and markets unique premium wine and spirits and alcoholic beverages associated with icon entertainers, celebrities and destinations, to beverage wholesalers throughout the United States. The Company reported a net loss of $4.58 million on $497,453 of net sales for the year ended April 30, 2011, compared with a net loss of $5.61 million on $890,380 of net sales during the prior year. After auditing the fiscal 2011 financial statements, Bernstein & Pinchuk, in New York, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred significant losses from operations since its inception and has a working capital deficiency. The Company's balance sheet at Jan. 31, 2012, showed $6.74 million in total assets, $4.39 million in total liabilities, and $2.35 million in total stockholders' equity. EASTMAN KODAK: Says Retirement Income Plan 74% Funded ----------------------------------------------------- Matthew Daneman at Democrat and Chronicle reports that, in a letter to its U.S. workers on Sept. 17, 2012, Eastman Kodak Co. said a new evaluation of the Kodak Retirement Income Plan shows that it is 74% funded. Kodak said, as long as the company is in Chapter 11 bankruptcy, it cannot pay out pensions as lump sums until the fund is at 100%. Democrat and Chronicle relates federal highway legislation could end up putting Kodak's pension plan on somewhat more solid footing. According to the report, the Moving Ahead for Progress in the 21st Century Act, which was signed into law in July, included completely unrelated provisions having to do with how employer pension plans have to calculate their funding contributions. With interest rates at a historic low, the net effect of the changes is that companies' required plan contributions should drop, the report adds. According to the report, in its employee letter, Kodak said it opted not to use this new valuation this year, though it would have meant the pension plan was 100% funded and thus could have resumed paying out lump-sum benefits to retiring workers. But if Kodak had resumed such payments this year, the federal Pension Benefit Guaranty Corp. indicated it would take over Kodak's pension program. This not only would result in no lump-sum payments but also the likelihood that many Kodakers would see a cut in pension benefits. Democrat and Chronicle says, for pensions the PBGC is overseeing, people who retire this year at age 65 can receive a maximum of $4,653 per month, or $55,836 a year. The report further relates Kodak said it would conduct a separate evaluation of its pension plan related to benefit restrictions next year. The company said that if at some point it reinstates the lump sum, people who left the company in the interim would have a chance to quit receiving regular pension payments and go instead with a lump sum. According to the report, for the first six months of 2012, Kodak spent $17 million on its pension plans worldwide. As of the end of 2011, Kodak employed 8,300 people in the United States, including 5,100 locally. The report relates the assets of Kodak's KRIP pension plan are kept in a separate trust. The Kodak Excess Retirement Income Plan and Kodak Unfunded Retirement Income Plan -- a pair of supplemental pension plans for highly compensated retirees -- were paid for directly out of company assets. Both of those supplemental pension plans were eliminated in January when the company filed for Chapter 11 bankruptcy protection. About Eastman Kodak Rochester, New York-based Eastman Kodak Company and its U.S. subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan. Subsidiaries outside of the U.S. were not included in the filing and are expected to continue to operate as usual. Kodak, founded in 1880 by George Eastman, was once the world's leading producer of film and cameras. Kodak sought bankruptcy protection amid near-term liquidity issues brought about by steeper-than-expected declines in Kodak's historically profitable traditional businesses, and cash flow from the licensing and sale of intellectual property being delayed due to litigation tactics employed by a small number of infringing technology companies with strong balance sheets and an awareness of Kodak's liquidity challenges. In recent years, Kodak has been working to transform itself from a business primarily based on film and consumer photography to a smaller business with a digital growth strategy focused on the commercialization of proprietary digital imaging and printing technologies. Kodak has 8,900 patent and trademark registrations and applications in the United States, as well as 13,100 foreign patents and trademark registrations or pending registration in roughly 160 countries. As of July 31, 2012, the Company had total assets of $3.93 billion, total liabilities of $5.32 billion and total stockholders' deficit of $1.39 billion. Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. FTI Consulting, Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is the investment banker. Kurtzman Carson Consultants LLC is the claims agent. The Official Committee of Unsecured Creditors has tapped Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel. Michael S. Stamer, Esq., David H. Botter, Esq., and Abid Qureshi, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the Unofficial Second Lien Noteholders Committee. Robert J. Stark, Esq., Andrew Dash, Esq., and Neal A. D'Amato, Esq., at Brown Rudnick LLP, represent Greywolf Capital Partners II; Greywolf Capital Overseas Master Fund; Richard Katz, Kenneth S. Grossman; and Paul Martin. EASTMAN KODAK: Sale Hearing Adjourned Until Further Notice ---------------------------------------------------------- BankruptcyData.com reports that Eastman Kodak filed with the U.S. Bankruptcy Court a notice stating that, although discussions with participants in the auction continue, the Debtors (after consulting with the reviewing creditors) are adjourning the sale hearing until further notice rather than file additional serial extensions of the sale hearing date. The Company explains, "The Debtors have been engaged in extensive ongoing negotiations of a potential sale and licensing transaction with respect to the Digital Imaging Patent Assets. Consistent with the terms of the Conditional Sale Order, the Debtors have been sharing drafts of the proposed transaction documents with the Reviewing Creditors (or their professionals) on a confidential basis. If the deal for the assignment or licensing of the Digital Imaging Patent Assets is concluded, the Debtors anticipate filing and serving a supplemental sale motion consistent with the terms of the Conditional Sale Order and their Case Management Procedures outlining the terms of the proposed transaction, scheduling a Sale Hearing, and establishing an appropriate objection deadline. The Debtors are continuing to explore other alternatives with respect to the Digital Imaging Patent Assets, and their intellectual property more broadly, and may not reach acceptable terms with parties via the Auction process. In the event that a potential transaction does not occur, the Debtors are consulting with the Reviewing Creditors with respect to the retention of the Digital Imaging Patent Assets and the creation of a newly-formed licensing company as a source of recovery for creditors in the plan of reorganization." About Eastman Kodak Rochester, New York-based Eastman Kodak Company and its U.S. subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan. Subsidiaries outside of the U.S. were not included in the filing and are expected to continue to operate as usual. Kodak, founded in 1880 by George Eastman, was once the world's leading producer of film and cameras. Kodak sought bankruptcy protection amid near-term liquidity issues brought about by steeper-than-expected declines in Kodak's historically profitable traditional businesses, and cash flow from the licensing and sale of intellectual property being delayed due to litigation tactics employed by a small number of infringing technology companies with strong balance sheets and an awareness of Kodak's liquidity challenges. In recent years, Kodak has been working to transform itself from a business primarily based on film and consumer photography to a smaller business with a digital growth strategy focused on the commercialization of proprietary digital imaging and printing technologies. Kodak has 8,900 patent and trademark registrations and applications in the United States, as well as 13,100 foreign patents and trademark registrations or pending registration in roughly 160 countries. As of July 31, 2012, the Company had total assets of $3.93 billion, total liabilities of $5.32 billion and total stockholders' deficit of $1.39 billion. Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. FTI Consulting, Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is the investment banker. Kurtzman Carson Consultants LLC is the claims agent. The Official Committee of Unsecured Creditors has tapped Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel. Michael S. Stamer, Esq., David H. Botter, Esq., and Abid Qureshi, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the Unofficial Second Lien Noteholders Committee. Robert J. Stark, Esq., Andrew Dash, Esq., and Neal A. D'Amato, Esq., at Brown Rudnick LLP, represent Greywolf Capital Partners II; Greywolf Capital Overseas Master Fund; Richard Katz, Kenneth S. Grossman; and Paul Martin. EDIETS.COM INC: Terminates Office Lease Agreement with Radice ------------------------------------------------------------- eDiets.com, Inc., on Sept. 13, 2012, entered into a Termination Agreement with Radice III, LLC, providing for the termination of its June 2006 Office Lease Agreement with Radice. Under the Office Lease, the Company leased 20,206 square feet of office space at Suite 600, 1000 Corporate Drive in Fort Lauderdale, Florida, for a 10-year term. Under the Termination Agreement, Radice will retain a $544,000 security deposit provided under the Office Lease and the Company will issue two non-interest-bearing promissory notes to Radice. One note, in the original principal amount of $306,197, is payable in 36 equal monthly installments and represents the aggregate rent the Company would have paid Radice during the remaining term of the Office Lease minus the aggregate rent Radice is anticipated to receive during the same period under a new lease for the Premises to be concluded with Education Training Corporation, d/b/a/ Florida Career College. The second note, in the original principal amount of $45,482, relates to real estate commissions and is payable upon the first to occur of (i) completion of the Company's previously announced acquisition by As Seen On TV, Inc., (ii) receipt by the Company of any break-up fee payable upon termination of that acquisition, and (iii) Dec. 31, 2012. Under the Termination Agreement, the Company also agreed to convey to FCC furniture and certain equipment located at the Premises. The effective date of termination will be Sept. 30, 2012, provided that on or before that date Radice has entered into a new lease with FCC; otherwise, the Termination Agreement will be null and void. The Company expects to conclude an agreement for new office space prior to Sept. 30, 2012. A copy of the Termination Agreement is available at: http://is.gd/HPNb6N About eDiets eDiets.com, Inc. is a leading provider of personalized nutrition, fitness and weight-loss programs. eDiets currently features its award-winning, fresh-prepared diet meal delivery service as one of the more than 20 popular diet plans sold directly to members on its flagship site, http://www.eDiets.com Following the 2011 results, Ernst & Young 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 incurred recurring operating losses, was not able to meet its debt obligations in the current year and has a working capital deficiency. The Company's balance sheet at June 30, 2012, showed $1.99 million in total assets, $4.26 million in total liabilities, all current, and a $2.26 million total stockholders' deficit. Bankruptcy Warning On Aug. 10, 2012, the Company entered into a letter of intent with As Seen On TV, Inc., a direct response marketing company, whereby ASTV agreed to acquire all of the Company's outstanding shares of common stock in exchange for 16,185,392 newly issued shares of ASTV common stock, representing an acquisition price of approximately $0.80 per share of the Company's common stock. Under the Letter of Intent, all of the Company's other outstanding securities exercisable or exchangeable for, or convertible into, the Company's capital stock would be deemed converted into, and exchanged for securities of ASTV on an as converted basis immediately prior to the record date of the acquisition. Both before and after consummation of the transactions described in the Letter of Intent, and if those transactions are never consummated, the continuation of the Company's business is dependent upon raising additional financial support. "In light of our results of operations, management has and intends to continue to evaluate various possibilities to the extent these possibilities do not conflict with our obligations under the Letter of Intent," the Company said in its quarterly report for the period ended June 30, 2012. "These possibilities include: raising additional capital through the issuance of common or preferred stock, securities convertible into common stock, or secured or unsecured debt, selling one or more lines of business, or all or a portion of the our assets, entering into a business combination, reducing or eliminating operations, liquidating assets, or seeking relief through a filing under the U.S. Bankruptcy Code." EPAZZ INC: Issues 1.1 Billion Class A Shares to Majority Owner -------------------------------------------------------------- Epazz, Inc., agreed to issue the Company's Chief Executive Officer, Chief Financial Officer, President, sole director and majority shareholder, Shaun Passley an aggregate of 1,073,801,000 shares of the Company's Class A common stock, subject to forfeiture, in connection with Mr. Passley's entry into the Employment Agreement with the Company. Effective Sept. 6, 2012, the Company entered into an Executive Employment Agreement with Mr. Passley, pursuant to which Mr. Passley agreed to serve as Chief Executive Officer, Chief Financial Officer and President of the Company for a term of 10 years. Pursuant to the Employment Agreement, the Company agreed to pay Mr. Passley a base salary equal to $180,000 per year of which $30,000 is payable in cash and $150,000 in shares of the Company's Class A common stock. The Company will also grant Mr. Passley bonuses. On Sept. 12, 2012, Mr. Passley, the Company's majority shareholder, holding more than two-thirds voting power of the Company's voting stock, voted to amend the Company's Articles of Incorporation and increase the number of authorized shares of the Company's Class A common stock from 300 million shares to 2 billion shares. Mr. Passley also approved an amendment to the Company's Articles of Incorporation to increase the number of voting shares the Company's Class B common stock are able to vote from 100 votes per share to 1,000 votes per share. Accordingly, the Articles of Incorporation were subsequently amended by the filing of Articles of Amendment on Sept. 12, 2012. As a result of the issuance of the Shares to Mr. Passley in connection with the Employment Agreement and the increase in the number of shares of voting stock that the Class B common stock can vote, Mr. Passley now holds an aggregate of 1,073,801,000 shares of Class A common stock; 5,500,000 shares of Class B common stock and 1,000 shares of the Company's Convertible Series A Preferred Stock, which in aggregate provide him the right to vote 6,573,801,000 voting shares on any and all shareholder matters, representing 99% of the Company's total outstanding voting shares as of the filing of this report. A copy of the Employment Agreement is available for free at: http://is.gd/GdDNzI About EPAZZ Inc. Chicago, Ill.-based EPAZZ, Inc., was incorporated in the State of Illinois on March 23, 2000, to create software to help college students organize their college information and resources. The idea behind the Company was that if the information and resources provided by colleges and universities was better organized and targeted toward each individual, the students would encounter a personal experience with the college or university that could lead to a lifetime relationship with the institution. This concept is already used by business software designed to retain relationships with clients, employees, vendors and partners. In its report on the financial statements for 2011, Lake & Associates CPA's LLC, in Schaumburg, Illinois, expressed substantial doubt as to the Company's ability to continue as a going concern. The independent auditors noted that the Company has a significant accumulated deficit and continues to incur losses. The Company's viability is dependent upon its ability to obtain future financing and the success of its future operations. The Company reported a net loss of $336,862 in 2011, compared with net income of $120,785 in 2010. The Company's balance sheet at June 30, 2012, showed $1.60 million in total assets, $2.22 million in total liabilities and a $624,881 total stockholders' deficit. Bankruptcy Warning The Company said in its 2011 annual report that it cannot be certain that any financing will be available on acceptable terms, or at all, and the Company's failure to raise capital when needed could limit its ability to continue and expand its business. The Company intends to overcome the circumstances that impact its ability to remain a going concern through a combination of the commencement of additional revenues, of which there can be no assurance, with interim cash flow deficiencies being addressed through additional equity and debt financing. The Company's ability to obtain additional funding for the remainder of the 2012 year and thereafter will determine its ability to continue as a going concern. There can be no assurances that these plans for additional financing will be successful. Failure to secure additional financing in a timely manner to repay the Company's obligations and supply the Company sufficient funds to continue its business operations and on favorable terms if and when needed in the future could have a material adverse effect on its financial performance, results of operations and stock price and require the Company to implement cost reduction initiatives and curtail operations. Furthermore, additional equity financing may be dilutive to the holders of the Company's common stock, and debt financing, if available, may involve restrictive covenants, and strategic relationships, if necessary to raise additional funds, and may require that the Company relinquish valuable rights. In the event that the Company is unable to repay its current and long-term obligations as they come due, the Company could be forced to curtail or abandon its business operations, or file for bankruptcy protection; the result of which would likely be that the Company's securities would decline in value or become worthless. EPL OIL: Moody's Alters Outlook to Negative on $550MM Deal ---------------------------------------------------------- Moody's Investors Service lowered EPL Oil & Gas, Inc.'s rating outlook to negative from stable on its announcement that the company has entered into an agreement to acquire certain Gulf of Mexico (GoM) shallow water assets from Hilcorp Energy for a cash price of $550 million. Concurrent with this outlook change, Moody's affirmed EPL's B3 Corporate Family Rating (CFR) and its Caa1 senior unsecured note rating. The Speculative Grade Liquidity rating was lowered to SGL-3 from SGL-2. "While this transformational acquisition will essentially double EPL's production and proved reserves, the company will see a dramatic increase in debt burden as it funds the purchase with roughly $490 million of new debt," commented Sajjad Alam, Moody's Analyst. "The sharp deterioration in leverage metrics will outweigh the benefits of scale enhancement, and therefore, the CFR will be weakly positioned within the B3 rating category following this transaction. The company will also remain fully concentrated in one geographic basin and have to contend with the steep decline curves, and operational, regulatory and weather related challenges inherent in GoM shelf properties despite achieving better wellbore risk diversification." Issuer: EPL Oil & Gas, Inc. Outlook Actions: Outlook, Changed To Negative From Stable Downgrades: Speculative Grade Liquidity Rating, Downgraded to SGL-3 from SGL-2 Ratings Rationale The B3 Corporate Family Rating reflects EPL's small-scale E&P operations, overriding concentration in the Gulf of Mexico, high plugging and abandonment (P&A) costs, weak reserve replacement through the drill-bit, and acquisitive nature. The rating is restrained by the company's limited track record after emerging from bankruptcy in September 2009, as it continues to grow mostly through acquisitions. The rating is positively impacted by the company's oily production profile (~71% exit rate in 2012), low risk behind-the-pipe drilling opportunities and relatively high working interest in properties that allow flexible capital allocation. In light of the company's increased debt level and heightened concentration in the GoM, the B3 rating has minimal flexibility for any material increases in leverage. EPL's proforma debt to average daily production will jump to $31,500 barrels of oil equivalent (boe) per day from $17,200 per day while debt to proved developed (PD) reserves will increase to $12.50 per boe from $6.40 per boe based on roughly 10,000 boe per day of production and 36.3 million boe of proved reserves contribution from the acquired assets. Moody's expects the transaction to be ultimately funded with approximately $250-$300 million of permanent financing (unsecured notes) and $200-$250 million of revolver borrowings (secured debt), which was upsized to $450 million from $200 million in conjunction with this acquisition. Since the growth in the level of secured debt and unsecured debt is expected to be similar, the note rating remains unchanged at Caa1, a notch below the B3 CFR, under Moody's Loss Given Default Methodology. EPL should have adequate liquidity through 2013 which is captured in the SGL-3 Speculative Grade Liquidity Rating. The lowering of the SGL rating reflects the company's increased reliance on external financing. Proforma for the acquisition, the company would have roughly $200 million of availability under the $450 million revolver, which expires in February, 2015. EPL is expected to cover its development capex and P&A expenditures from internal cash flows through 2013. However, any additional acquisition will likely necessitate further revolver borrowings. The negative outlook reflects increased leverage, higher reliance on external funding and acquisition and execution risks. If EPL reduces its debt to average daily production below $28,000 per boe while maintaining production above 20,000 boe per day, the outlook could move back to stable. There is limited upside in the current ratings through 2013. Over the longer term, increased scale and capital efficiency supported by consistent organic reserve replacement and operational execution could be positive for the ratings, assuming the growth was achieved with competitive costs and financial leverage was sufficiently low. The rating could be downgraded if the debt to average daily production ratio rises above $33,000 per boe or the company experiences a significant deterioration in liquidity. The principal methodology used in rating EPL was the Global Independent Exploration and Production Industry Methodology published in December 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. EPL Oil & Gas, Inc., is an independent exploration and production company with primary operations in the U.S. Gulf of Mexico shelf. ER GASTON: Case Summary & 7 Unsecured Creditors ------------------------------------------------- Debtor: ER Gaston, Ltd. 3010 Gaston Avenue Dallas, TX 75226 Bankruptcy Case No.: 12-35913 Chapter 11 Petition Date: September 11, 2012 Court: U.S. Bankruptcy Court Northern District of Texas (Dallas) Judge: Harlin DeWayne Hale Debtor's Counsel: Jeff A. Wells, Esq. HODGES, WELLS, ESH AND CROSLAND 6060 N. Central Expressway, Suite 560 Dallas, TX 75206 Tel: (214) 810-5529 Fax: (866) 277-4589 E-mail: jeff.wells@hweclaw.com Scheduled Assets: $101,272 Scheduled Liabilities: $1,153,326 A copy of the Company's list of its seven largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/txnb12-35913.pdf The petition was signed by Edward Sigmond, partner. Affiliate that filed separate Chapter 11 petition: Entity Case No. Petition Date ------ -------- ------------- ER Gaston, Ltd. 11-31397 02/28/11 FARMINGDALE HOUSING: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: Farmingdale Housing Limited Partnership 245 Commercial Street, 4th Floor Portland, ME 04101 Bankruptcy Case No.: 12-21123 Chapter 11 Petition Date: September 11, 2012 Court: U.S. Bankruptcy Court District of Maine (Portland) Debtor's Counsel: George J. Marcus, Esq. MARCUS, CLEGG & MISTRETTA, PA One Canal Plaza, Suite 600 Portland, ME 04101-4102 Tel: (207) 828-8000 E-mail: bankruptcy@mcm-law.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 A. Liberty, general partner. FIRSTFED FINANCIAL: U.S. Trustee Objects to Amended Ch. 11 Plan --------------------------------------------------------------- BankruptcyData.com reports that the U.S. Trustee assigned to the FirstFed Financial case filed with the U.S. Bankruptcy Court an objection to the Second Amended Chapter 11 Plan of Reorganization proposed by the Debtors and Holdco Advisors. The U.S. Trustee states, "The Plan contains numerous provisions that provide for non-debtor releases, broad exculpations and indemnifications that cannot and should not be confirmed as a matter of controlling Ninth Circuit law." The Court has scheduled an Oct. 2, 2012 confirmation hearing. About FirstFed Financial Irvine, Calif.-based FirstFed Financial Corp. is the bank holding company for First Federal Bank of California and its subsidiaries. The Bank was closed by federal regulators on Dec. 18, 2009. FirstFed Financial Corp. filed for Chapter 11 protection (Bankr. C.D. Calif. Case No. 10-10150) on Jan. 6, 2010. Jon L. Dalberg, Esq., at Landau Gottfried & Berger LLP, represents the Debtor in its restructuring effort. Garden City Group is the claims and notice agent. The Debtor disclosed assets at $1 million and $10 million, and debts at $100 million and $500 million. The Debtor's exclusive period to propose a plan expired in January 2011. The Debtor has proposed a Plan of Liquidation, which proposes an orderly liquidation of the Debtor's estate. Holdco Advisors L.P., submitted a competing plan of reorganization. GENERAL CABLE: Moody's Rates Senior Unsecured Notes 'B1' -------------------------------------------------------- Moody's Investors Service assigned a B1 rating to General Cable Corporation's proposed Senior Unsecured Notes due 2022, the proceeds of which will be used to retire the existing Senior Convertible Notes due 2013 and Senior Unsecured Notes due 2017. The proposed notes will rank pari passu to the company's existing Notes due 2015. In a related rating action, General Cable's speculative-grade liquidity rating was also upgraded to SGL-1 from SGL-3. In addition, Moody's affirmed the Ba3 corporate family and probability of default ratings. The rating outlook is stable. The following ratings/assessments were affected by this action: Corporate Family Rating affirmed at Ba3; Probability of Default Rating affirmed at Ba3; 1.00% Sr. Unsec. Conv. Notes due 2012 affirmed at B1 (LGD5, 71%); Floating Rate Sr. Unsec. Notes due 2015 affirmed at B1 (LGD5, 71%); Senior Unsecured Notes due 2022 rated B1 (LGD5, 71%); 4.5% Sr. Sub. Conv. Notes due 2029 affirmed at B2 (LGD6, 93%); and, The speculative grade liquidity rating upgraded to SGL-1 from SGL-3. Ratings Rationale General Cable's Ba3 Corporate Family Rating incorporates Moody's view that the company's business profile is a credit strength. The company's large size and strong geographic diversification position it well among its peers. The debt-financed acquisitions of Alcan Cable (former wire/cable business of Rio Tinto plc) and a 60% interest in Procables, S.A. will improve its ability to compete in a very fragmented industry that offers few opportunities for product differentiation. As a global manufacturer, slowdowns in any specific geographic region may be offset by strength in others. General Cable derives slightly more than 60% of its revenues from outside of the US. However, the company's key credit metrics are currently weak for the rating. For the 12 months ended June 29, 2012, the General Cable had adjusted debt-to-EBITDA of 5.0 times, adjusted EBITA interest coverage of 1.9 times and adjusted free cash flow-to-debt of 2.9%. Moody's expects some improvement in these credit metrics as the company improves its operations and integrates its acquisitions. The upgrade of General Cable's speculative-grade liquidity rating to SGL-1 from SGL-3 reflects the strengthening of the company's liquidity profile following the proposed refinancing of $550 million of long-term debt with the new Notes due 2022. Further supporting the upgrade is the extension of the revolving credit facility maturity. Moody's views the maturity of the revolver as being extended to July 2017 from August 2013 since General Cable is effectively removing the revolver's springing maturity by refinancing the Notes due 2013. The change in the rating outlook to stable from negative also reflects the improvement in General Cable's liquidity profile. The proposed refinancing transaction will address Moody's concerns about the looming maturity of its $355 million senior convertible notes due 2013, which would have become current liabilities in November 2012. The B1 rating assigned to the proposed Sr. Unsecured Notes due 2022 is one notch below the corporate family rating, as the new notes will rank pari passu to the company's existing Floating Rate Sr. Unsec. Notes due 2015. Proceeds from the proposed notes issuance will be used to retire the existing Senior Convertible Notes due 2013 and Senior Unsecured Notes due 2017, at which time Moody's will withdraw the ratings assigned to these debt instruments. The unsecured notes are structurally subordinated to the company's asset-based revolving credit facility. Additionally, the large amount of 20-day trade payables, which have the highest recovery rates in the capital structure, as well as the foreign trade payables and drawn lines of credit, which are commitments of General Cable's non-guarantor subsidiaries and are likely to be repaid from these subsidiaries' cash flows before cash is repatriated to the US, provide downward pressures on the Notes' ratings, as well. The ratings could be upgraded if General Cable demonstrates the ability to generate meaningful earnings and significant levels of free cash flow resulting in adjusted debt-to-EBITDA sustained below 4.5 times or EBITA-to-interest trending towards 3.5 times (all ratios incorporate Moody's standard accounting adjustments). The ratings could come under pressure if the liquidity profile weakens, for instance, as a result sizeable drawdowns under the revolving credit facility to finance future acquisitions. Continued weakness in operating performance such that adjusted debt-to-EBITDA is sustained above 4.5 times or EBITA-to-interest expense remains below 3.0 times could result in negative rating actions (all ratios incorporate Moody's standard accounting adjustments). Also, the failure of the company to successfully integrate the Alcan Cable and Procables acquisitions may introduce additional ratings pressure. The principal methodology used in rating General Cable was the Global Manufacturing Industry Methodology published December in 2010. Other methodologies used include Loss Given Default for Speculative Grade Issuers in the US, Canada, and EMEA, published June 2009. General Cable Corporation, headquartered in Highland Heights, TN, is a global manufacturer of copper, aluminum and fiber optic and power cable products. Primary end markets served include electrical utility, electrical infrastructure, and construction. Revenues for the twelve months through June 29, 2012 totaled about $5.8 billion. GENT UNIFORM: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Gent Uniform Rental Corp. 5680 Merrick Road Massapequa, NY 11758 Bankruptcy Case No.: 12-75601 Chapter 11 Petition Date: September 14, 2012 Court: United States Bankruptcy Court Eastern District of New York (Central Islip) Judge: Dorothy Eisenberg Debtor's Counsel: John H. Hall, Jr., Esq. PRYOR & MANDELUP, LLP 675 Old Country Road Westbury, NY 11590 Tel: (516) 997-0999 Fax: (516) 333-7333 E-mail: jh@pryormandelup.com Scheduled Assets: $727,145 Scheduled Liabilities: $2,158,873 A copy of the Company's list of its 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/nyeb12-75601.pdf The petition was signed by Frank J. Urbinati, Sr., president. Affiliates that simultaneously filed for Chapter 11: Debtor Case No. ------ -------- 5680 Realty Corp. 12-75602 Stitch Authority Ltd. 12-75603 GLOBAL AVIATION: Union Deals Not Binding on Creditors ----------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Global Aviation Holdings Inc., the parent of World Airways Inc. and North American Airlines Inc., negotiated new contracts with pilots, flight attendants and dispatchers to save $100 million over the five-year term of the agreements. According to the report, the revised contracts were tentatively approved last week by the U.S. bankruptcy judge in Brooklyn, New York. The company said it achieved 90% of the savings it was requesting when negotiations began with the unions. The agreements require Global to win court approval of a reorganization plan giving the unions 25% of the new stock. The agreement also puts limits on debt of the reorganized company. The report relates that there can be no more than $95 million in first-lien debt and $40 million of second-lien debt. No more than half of cash flow may be paid to creditors, and there must be a revolving credit of at least $20 million. Global said it's drafting a Chapter 11 plan to comply with the new union agreements. If a plan isn't implemented as the contracts require, the prior contract will snap back into effect. In addition, the unions will make claims as expenses of the Chapter 11 case for the value of the concession realized during bankruptcy. The report notes that although the new agreements were approved by the judge, they weren't "assumed," a technical term giving rise to damages if later breached. The company's willingness to grant equity to the unions isn't binding on creditors who may oppose a plan with provisions required in the labor agreements. Global filed for Chapter 11 reorganization in February to shed 16 of 30 aircraft. Global said the union agreements were above market. The report relays that new contracts were negotiated without requiring the company to initiate proceedings in bankruptcy court to abrogate collective-bargaining agreements. The petition listed $589.8 million in assets against debt totaling $493.2 million. About Global Aviation Global Aviation Holdings Inc., based in Peachtree City, Ga., is the parent company of North American Airlines and World Airways. Global is the largest commercial provider of charter air transportation for the U.S. military, and a major provider of worldwide commercial global passenger and cargo air transportation services. North American Airlines, founded in 1989 and based in Jamaica, N.Y., operates passenger charter flights using B757-200ER and B767-300ER aircraft. World Airways, founded in 1948 and based in Peachtree City, Ga., operates cargo and passenger charter flights using B747-400 and MD-11 aircraft. Global Aviation, along with affiliates, filed Chapter 11 petitions (Bankr. E.D.N.Y. Case No. 12-40783) on Feb. 5, 2012. Global's lead counsel in connection with the restructuring is Kirkland & Ellis LLP and its financial advisor is Rothschild. Kurtzman Carson Consultants LLC is the claims agent. The Debtors disclosed $589.8 million in assets and $493.2 million in liabilities as of Dec. 31, 2011. Liabilities include $146.5 million on 14% first-lien secured notes and $98.1 million on a second-lien term loan. Wells Fargo Bank NA is agent for both. Global said it will use Chapter 11 to shed 16 of 30 aircraft. In addition, Global said it will use Chapter 11 to negotiate new collective bargaining agreements with its unions and deal with liabilities on multi-employer pension plans. On Feb. 13, 2012, the U.S. Trustee for Region 2 appointed a seven member official committee of unsecured creditors in the case. The Committee tapped Lowenstein Sandler PC as its counsel, and Imperial Capital, LLC as its financial advisor. The Hon. Carla E. Craig has extended the Debtors' exclusive period to file a Chapter 11 plan for each Debtor until Oct. 2, 2012, and the exclusive period to solicit acceptances of a Chapter 11 plan of each Debtor until Dec. 3, 2012. GLOBAL AVIATION: Files Plan to Reduce Debt by $168 Million ---------------------------------------------------------- Jacqueline Palank at Dow Jones' Daily Bankruptcy Review reports that Global Aviation Holdings Inc. filed a restructuring plan that would hand ownership of its charter-airline service to its senior secured bondholders and cut its debt by about $168 million. About Global Aviation Global Aviation Holdings Inc., based in Peachtree City, Ga., is the parent company of North American Airlines and World Airways. Global is the largest commercial provider of charter air transportation for the U.S. military, and a major provider of worldwide commercial global passenger and cargo air transportation services. North American Airlines, founded in 1989 and based in Jamaica, N.Y., operates passenger charter flights using B757-200ER and B767-300ER aircraft. World Airways, founded in 1948 and based in Peachtree City, Ga., operates cargo and passenger charter flights using B747-400 and MD-11 aircraft. Global Aviation, along with affiliates, filed Chapter 11 petitions (Bankr. E.D.N.Y. Case No. 12-40783) on Feb. 5, 2012. Global's lead counsel in connection with the restructuring is Kirkland & Ellis LLP and its financial advisor is Rothschild. Kurtzman Carson Consultants LLC is the claims agent. The Debtors disclosed $589.8 million in assets and $493.2 million in liabilities as of Dec. 31, 2011. Liabilities include $146.5 million on 14% first-lien secured notes and $98.1 million on a second-lien term loan. Wells Fargo Bank NA is agent for both. Global said it will use Chapter 11 to shed 16 of 30 aircraft. In addition, Global said it will use Chapter 11 to negotiate new collective bargaining agreements with its unions and deal with liabilities on multi-employer pension plans. On Feb. 13, 2012, the U.S. Trustee for Region 2 appointed a seven member official committee of unsecured creditors in the case. The Committee tapped Lowenstein Sandler PC as its counsel, and Imperial Capital, LLC as its financial advisor. The Hon. Carla E. Craig has extended the Debtors' exclusive period to file a Chapter 11 plan for each Debtor until Oct. 2, 2012, and the exclusive period to solicit acceptances of a Chapter 11 plan of each Debtor until Dec. 3, 2012. GLOBAL AVIATION: Seeks Extension of Exclusivity Period to Dec. 31 ----------------------------------------------------------------- BankruptcyData.com reports that Global Aviation Holdings filed with the U.S. Bankruptcy Court a motion to extend the exclusive period during which the Company can file a Chapter 11 plan and solicit acceptances thereof through and including Dec. 31, 2012 and March 1, 2013, respectively. The Court scheduled a Sept. 25, 2012 hearing on the matter. About Global Aviation Global Aviation Holdings Inc., based in Peachtree City, Ga., is the parent company of North American Airlines and World Airways. Global is the largest commercial provider of charter air transportation for the U.S. military, and a major provider of worldwide commercial global passenger and cargo air transportation services. North American Airlines, founded in 1989 and based in Jamaica, N.Y., operates passenger charter flights using B757-200ER and B767-300ER aircraft. World Airways, founded in 1948 and based in Peachtree City, Ga., operates cargo and passenger charter flights using B747-400 and MD-11 aircraft. Global Aviation, along with affiliates, filed Chapter 11 petitions (Bankr. E.D.N.Y. Case No. 12-40783) on Feb. 5, 2012. Global's lead counsel in connection with the restructuring is Kirkland & Ellis LLP and its financial advisor is Rothschild. Kurtzman Carson Consultants LLC is the claims agent. The Debtors disclosed $589.8 million in assets and $493.2 million in liabilities as of Dec. 31, 2011. Liabilities include $146.5 million on 14% first-lien secured notes and $98.1 million on a second-lien term loan. Wells Fargo Bank NA is agent for both. Global said it will use Chapter 11 to shed 16 of 30 aircraft. In addition, Global said it will use Chapter 11 to negotiate new collective bargaining agreements with its unions and deal with liabilities on multi-employer pension plans. On Feb. 13, 2012, the U.S. Trustee for Region 2 appointed a seven member official committee of unsecured creditors in the case. The Committee tapped Lowenstein Sandler PC as its counsel, and Imperial Capital, LLC as its financial advisor. The Hon. Carla E. Craig has extended the Debtors' exclusive period to file a Chapter 11 plan for each Debtor until Oct. 2, 2012, and the exclusive period to solicit acceptances of a Chapter 11 plan of each Debtor until Dec. 3, 2012. GREEN ACRES: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Green Acres Limited Partnership 245 New Meadows Road West Bath, ME 04530 Bankruptcy Case No.: 12-21125 Chapter 11 Petition Date: September 11, 2012 Court: U.S. Bankruptcy Court District of Maine (Portland) Debtor's Counsel: George J. Marcus, Esq. MARCUS, CLEGG & MISTRETTA, PA One Canal Plaza, Suite 600 Portland, ME 04101-4102 Tel: (207) 828-8000 E-mail: bankruptcy@mcm-law.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 Kevin J. McCarthy, Sr. vice president, Mainland Development Co., general partner. Affiliates that simultaneously filed for Chapter 11: Debtor Case No. ------ -------- Skowhegan Housing Limited Partnership 12-21126 Fort Halifax Associates Limited Partnership 12-21127 HENRY VOGT: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Henry Vogt Machine Co. 1000 W. Ormsby Ave. Louisville, KY 40210 Bankruptcy Case No.: 12-34186 Chapter 11 Petition Date: September 14, 2012 Court: United States Bankruptcy Court Western District of Kentucky (Louisville) Judge: Joan A. Lloyd Debtor's Counsel: Robert J. Brown, Esq. WYATT, TARRANT & COMBS, LLP 2800 PNC Plaza 500 West Jefferson Street Louisville, KY 40202 Tel: (502) 562-7365 E-mail: loubankruptcy@wyattfirm.com Scheduled Assets: $6,731,566 Scheduled Liabilities: $9,041,254 A copy of the Company's list of its 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/kywb12-34186.pdf The petition was signed by David E. Mack, chief restructuring officer. HOSTESS BRANDS: Bakery Workers Turn Down Contract Concessions ------------------------------------------------------------- Members of the Bakery, Confectionary, Tobacco and Grain Millers International Union (BCTGM) employed by Hostess Brands rejected the company's Last/Best/Final proposal by 92 percent. Union members in every region of the country and every segment of the company's operations overwhelmingly opposed the proposal. In many locations, the vote to reject the proposal was unanimous. In announcing the vote results, BCTGM International President Frank Hurt stated, "Throughout this entire bankruptcy process, I have been crystal clear with Hostess management that our members will determine the outcome. On August 14, the company presented to us their Last, Best, Final and Non-negotiable offer which we sent to our local unions. The results speak for themselves. "Contrary to CEO Rayburn's disingenuous and erroneous public comments, our members did not reject this proposal because of 'bad information' from the International Union. They rejected it because it was an outrageously unfair proposal from a company that has destroyed the trust of its workers through years of mismanagement, greed and unfulfilled promises. "For Mr. Rayburn to state otherwise is an insult to our members' intelligence and the integrity of the BCTGM International Union. It is particularly offensive given that Mr. Rayburn (a 'liquidation specialist') has been with the company for less than a year while many, many of our members have given decades of dedicated service to Hostess Brands and its predecessor companies. "Our members have seen this company squander more than $50 million that it was contractually obligated to put towards our members' pension. They have seen the company fail to invest in product development and new plant and equipment as was promised when the company emerged from its previous bankruptcy and for which our members made significant concessions. "Our members have seen this company attempt to give millions of dollars in unseemly and unjustified bonuses to managers and supervisors in the midst of this bankruptcy. They have seen this company go through numerous CEOs in the last seven years with not one of them having had any significant experience in the wholesale bread and cake baking business. "Our members reviewed the analysis of this company's business plan provided by a highly-respected financial analyst retained by the company which showed that the plan has little or no chance of succeeding in saving the business but would provide the investors with a windfall. "Our members know that this is a company that is controlled by Wall Street private equity and hedge fund firms, whose sole objective is to maximize their own returns, not rebuild a company for the long haul." Hurt concluded, "Our members made an informed decision. The BCTGM International Union respects the will of our members. We encourage Hostess Brands to pay the $50 million in pension contributions it owes our members and come to the bargaining table with a fair and reasonable proposal for its workers and a legitimate business plan that provides the foundation for a future world-class wholesale baking company and not fatter bank accounts for Wall Street investors." Misinformation Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Hostess Brands Inc. Chief Executive Officer Gregory F. Rayburn said teamsters union members at Hostess voted to accept a new contract with 8% in concessions while bakery workers rejected the offer. According to the report, Hostess previously said it would liquidate unless all of its unions accepted the concessions. The company will file papers by Sept. 19 reinstituting procedures to have the bankruptcy judge in White Plains, New York, impose the contract on bakery workers at an Oct. 3 hearing, Mr. Rayburn said. The bakery union "incorrectly informed members that a white knight would step in to buy the company and save their jobs," Mr. Rayburn said Sept. 14 in an interview with Bloomberg News. "There is no white knight." The Teamsters didn't advise members how to vote on the contract, Mr. Rayburn said. Each union represents about 7,000 workers, he said. About Hostess Brands Founded in 1930, Irving, Texas-based Hostess Brands Inc., is known for iconic brands such as Butternut, Ding Dongs, Dolly Madison, Drake's, Home Pride, Ho Hos, Hostess, Merita, Nature's Pride, Twinkies and Wonder. Hostess has 36 bakeries, 565 distribution centers and 570 outlets in 49 states. Hostess filed for Chapter 11 bankruptcy protection early morning on Jan. 11, 2011 (Bankr. S.D.N.Y. Case Nos. 12-22051 through 12-22056) in White Plains, New York. Debtor-affiliates that filed separate Chapter 11 petition are IBC Sales Corporation, IBC Trucking LLC, IBC Services LLC, Interstate Brands Corporation, and MCF Legacy Inc. Hostess Brands disclosed assets of $982 million and liabilities of $1.43 billion as of Dec. 10, 2011. Debt includes $860 million on four loan agreements. Trade suppliers are owed as much as $60 million. The bankruptcy filing was made two years after predecessors Interstate Bakeries Corp. and its affiliates emerged from bankruptcy (Bankr. W.D. Mo. Case No. 04-45814). Ripplewood Holding LLC, after providing $130 million to finance the plan, obtained control of IBC's business following the prior reorganization. Hostess Brands is privately held. The new owners pursued new Chapter 11 cases to escape from what they called "uncompetitive and unsustainable" union contracts, pension plans, and health benefit programs. In 2011, Hostess retained Houlihan Lokey to explore sales of its smaller assets and individual brands. Houlihan Lokey oversaw the sale of Mrs. Cubbison's to Sugar Foods Corporation for $12 million, but was unable to sell any of Hostess' core assets. Judge Robert D. Drain oversees the case. Hostess has hired Jones Day as bankruptcy counsel; Stinson Morrison Hecker LLP as general corporate counsel and conflicts counsel; Perella Weinberg Partners LP as investment bankers, FTI Consulting, Inc. to provide an interim treasurer and additional personnel for the Debtors, and Kurtzman Carson Consultants LLC as administrative agent. Matthew Feldman, Esq., at Willkie Farr & Gallagher, and Harry Wilson, the head of turnaround and restructuring firm MAEVA Advisors, are representing the Teamsters union. Attorneys for The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union and Bakery & Confectionery Union & Industry International Pension Fund are Jeffrey R. Freund, Esq., at Bredhoff & Kaiser, P.L.L.C.; and Ancela R. Nastasi, Esq., David A. Rosenzweig, Esq., and Camisha L. Simmons, Esq., at Fulbright & Jaworski L.L.P. An official committee of unsecured creditors has been appointed in the case. The committee selected New York law firm Kramer Levin Naftalis & Frankel LLP as its counsel. Tom Mayer and Ken Eckstein head the legal team for the committee. HUDSON HEALTHCARE: Liquidating Plan Declared Effective ------------------------------------------------------ Hudson Healthcare, Inc.'s Third Amended Joint Plan of Orderly Liquidation was declared effective Sept. 12. The Plan was confirmed by the Bankruptcy Court in New Jersey on July 31. Hudson Healthcare completed the sale of its New Jersey Hospital in November 2011. HUMC Holdco, a private group that also owns Bayonne Medical Center, was the buyer. Pursuant to the disclosure statement explaining the plan, the purchaser proposed to pay $750,000 for the Debtor's assets and agreed to assume certain liabilities. The Chapter 11 plan, sponsored by the Debtor and the unsecured creditors committee, proposes a liquidating trust that will administer the remaining assets of the Debtor. The Court also approved a settlement among the Debtor, the Hoboken Municipal Hospital Authority, the City of Hoboken, the Hoboken Parking Utility, the Committee and the Purchaser. The settlement secured for the bankruptcy estate a two-tiered payment totaling $10.2 million, consisting of guaranteed contributions fro the state of New Jersey, the Purchaser and the Authority in addition to the proceeds of the asset sale, the proceeds of a large claim and receivable, and the return of a security deposit from Public Service Electric and Gas Company. About Hudson Healthcare Hudson Healthcare Inc. is a non-for-profit corporation formed under the laws of the State of New Jersey. Until the sale of Hoboken University Medical Center by the Hoboken Municipal Hospital Authority, the Debtor owned and managed the day-today operations of the Hospital on the Authority's behalf pursuant to a Manager Agreement dated Feb. 1, 2007. Other than certain contract rights, other intangibles, and approximately 12 vehicles, the Debtor did not own any Hospital assets. Hudson Healthcare filed for Chapter 11 protection (Bankr. D. N.J. Case No. 11-33014) in Newark on Aug. 1, 2011, estimating assets and debt of less than $50 million. Affiliate Hoboken Municipal Hospital Authority also sought Chapter 11 protection. Attorneys at Trenk, DiPasquale, Webster, Della Fera & Sodono, P.C., in West Orange, N.J., serve as counsel to the Debtor. Daniel T. McMurray, the patient care ombudsman, has tapped Neubert, Pepe & Monteith, P.C., as his counsel effective Aug. 25, 2011. The Official Committee of Unsecured Creditors of Hudson Healthcare retained Sills Cummis & Gross P.C., in Newark, N.J., as its counsel, nunc pro tunc to Aug. 12, 2011. JH Cohn LLP serves as Financial Advisor to the Committee. Epiq Bankruptcy Solutions, LLC, is the Claims and Noticing Agent and Solicitation Agent. HUDSON HEALTHCARE: Vacation Pay Claim Gets Gen. Unsecured Status ---------------------------------------------------------------- Bankruptcy Judge Donald H. Steckroth sustained an objection by the Official Committee of Unsecured Creditors of Hudson Healthcare, Inc. on the classification of the proof of claim by Carmella Flett for payment of vacation pay or unused personal time off that accrued prior to the filing of the Debtor's bankruptcy petition. Ms. Flett asserts that, upon termination of her employment with the Debtor in August 2011, she was entitled to payment for accrued and unused PTO from 2010. The Committee objects to the priority classification of the claim and seeks to have it reclassified as a general unsecured claim. The Committee argues that Ms. Flett's claim is neither an administrative expense under 11 U.S.C. Sec. 503(b)(1)(A) as the claim does not represent compensation for services provided post-petition nor a priority claim under Sec. 507(a)(4) since not earned within 180 days prior to the Debtor's filing, respectively. The Court held that the unpaid vacation pay to which Ms. Flett was entitled at the conclusion of her employment with the Debtor was "earned" as it accrued in the 2010 calendar year and, as such, is not entitled to priority under Sec. 507(a)(4)(A). Ms. Flett's claim, therefore, is to be reclassified as a general unsecured claim to the extent that it was earned prior to the 180-day period afforded by the Bankruptcy Code. A copy of the Court's Sept. 17, 2012 letter opinion is available at http://is.gd/lyPLORfrom Leagle.com. About Hudson Healthcare Hudson Healthcare Inc. is a non-for-profit corporation formed under the laws of the State of New Jersey. Until the sale of Hoboken University Medical Center by the Hoboken Municipal Hospital Authority, the Debtor owned and managed the day-today operations of the Hospital on the Authority's behalf pursuant to a Manager Agreement dated Feb. 1, 2007. Other than certain contract rights, other intangibles, and approximately 12 vehicles, the Debtor did not own any Hospital assets. Hudson Healthcare filed for Chapter 11 protection (Bankr. D. N.J. Case No. 11-33014) in Newark on Aug. 1, 2011, estimating assets and debt of less than $50 million. Affiliate Hoboken Municipal Hospital Authority also sought Chapter 11 protection. Attorneys at Trenk, DiPasquale, Webster, Della Fera & Sodono, P.C., in West Orange, N.J., serve as counsel to the Debtor. Daniel T. McMurray, the patient care ombudsman, has tapped Neubert, Pepe & Monteith, P.C., as his counsel effective Aug. 25, 2011. The Official Committee of Unsecured Creditors of Hudson Healthcare retained Sills Cummis & Gross P.C., in Newark, N.J., as its counsel, nunc pro tunc to Aug. 12, 2011. JH Cohn LLP serves as Financial Advisor to the Committee. Epiq Bankruptcy Solutions, LLC, is the Claims and Noticing Agent and Solicitation Agent. Hudson Healthcare completed the sale of its New Jersey Hospital in November 2011. HUMC Holdco, a private group that also owns Bayonne Medical Center, was the buyer. The Chapter 11 plan, sponsored by the Debtor and the unsecured creditors committee, proposes a liquidating trust that will administer the remaining assets of the Debtor. ICEWEB INC: To Issue 25 Million Shares Under 2012 Equity Plan ------------------------------------------------------------- Iceweb, Inc., filed with the U.S. Securities and Exchange Commission a Form S-8 registering 25 million shares of common stock issuable under the Company's 2012 Equity Compensation Plan. The proposed maximum aggregate offering price is $2 million. The Company's common stock is quoted on the OTC Bulletin Board under the symbol IWEB. On Sept. 11, 2012, the last sale price of the Company's common stock was $0.08. A copy of the prospectus is available for free at: http://is.gd/XHpnCK About IceWEB Inc. Sterling, Va.-based IceWEB, Inc., manufactures high performance unified data storage appliances with enterprise storage management capabilities. The Company's balance sheet at June 30, 2012, showed $3.1 million in total assets, $7.9 million in total liabilities, and a stockholders' deficit of $4.8 million. Sherb & Co., LLP, in Boca Raton, Florida, stated in their report on the consolidated financial statements of the Company for the years ended Sept. 30, 2011, and 2010, that the Company had net losses of $4.7 million and $7.0 million respectively, for the years ended Sept. 30, 2011, and 2010, which raise substantial doubt about the Company's ability to continue as a going concern. IMAGING3, INC: 3D Medical Images Provider in Chapter 11 ------------------------------------------------------- Imaging3(TM), Inc., developer of a breakthrough medical imaging device that produces 3D medical diagnostic images of virtually any part of the human body in real-time, disclosed that on Sept. 13, 2012 the company filed a voluntary petition under chapter 11 of the Bankruptcy Code. Dean Janes, the company's chief executive officer and chairman, said, in a regulatory filing, the Company was unable without unreasonable effort and expense to prepare its accounting records and schedules in sufficient time to allow its accountants to complete their review of its financial statements for the period ended June 30, 2012 before the required filing date. The Company said it intends to file the quarterly report on Form 10-Q on or before the fifth calendar day following the prescribed due date, said Mr. Janes. Burbank, Calif.-based Imaging3, Inc. (OTC BB: IMGG) -- http://www.imaging3.com/-- produces and sells medical equipment, parts, and services to hospitals, surgery centers, research labs, physician offices, and veterinarians in the United States. The Company has developed a proprietary medical technology designed to produce 3D medical diagnostic images in real time. INTEGRATED FREIGHT: Unit to Face Waste Spill Suit in Calif. ----------------------------------------------------------- Integrated Freight Corporation anticipates that its wholly owned subsidiary Smith Systems Transportation will be named as a defendant in a suit by a customer related to a hazardous waste spill in Sacramento, CA. The cleanup costs exceeded $1,000,000, of which the customer has paid approximately $850,000 which it may seek to recover from Smith Systems. The Company believes Smith Systems' insurance will cover these costs, net of the deductible. Smith Systems believes it has defenses to the claims which may be made by the customer, including the customer's failure to respond timely to notice of the spill which would cause the customer to be responsible for all cleanup costs. The customer, who accounted for approximately one- third of Smith Systems' business, has terminated its relationship with Smith Systems and is withholding payments in the approximate amount of $350,000 as a claimed offset against its claims against Smith Systems. Smith Systems has pledged these receivables as collateral for its operating line of credit. The Company cannot predict what action Smith Systems' lender may take with respect to the collateral. The Company's only operations at Sept. 13, 2012, are being conducted in its wholly owned subsidiaries, Morris Transportation, Inc. and Smith Systems. Operations of Cross Creek have been terminated. Kimberly K. Bors, one of the Company's directors, has resigned effective March 5, 2012. Ms. Bors was one of the Company's independent directors and served on the Company's board's audit committee. The Company's management is not aware of any dispute expressed by Ms. Bors with the Company's operations, policies or practices. 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. JAMES KEENAN: Calif. Appeals Court Affirms Surcharge Order ---------------------------------------------------------- James Keenan, who served until 2004 as the administrator of the Estate of Paul Rule, deceased, filed an amended final account and petition for settlement of the estate and allowance of fees, under Probate Code1 section 1060 et seq. Objections were filed by the current administrator, Betty Rule, mother of Paul Rule. The probate court conducted a bench trial in 2008 on the disputed issues identified by the parties in their joint trial statement. The probate court's Sept. 16, 2010 order surcharged Mr. Keenan over $1.9 million for his breaches of care and fiduciary duty that took place while he was acting as independent administrator of the Rule Estate. The court approved, only in part, his amended account, while deferring final settlement of the estate until further proceedings were conducted on the requests to allow fees (not involved in this appeal). Mr. Keenan's motion for new trial was denied. Mr. Keenan took an appeal from the orders imposing the surcharges and partially approving the amended account. He contends the probate court utilized an incorrect burden of proof standard, and further, that insufficient evidence supported the imposition of the surcharges as remedies for his breaches of fiduciary duty and the applicable standard of care in his administration of Rule's Estate. A large portion of his Rule Estate administration was carried out while Mr. Keenan was participating in his personal bankruptcy reorganization proceedings, beginning in 1996, in which Rule's Estate was an alleged creditor and debtor. During Mr. Keenan's bankruptcy proceedings, from 1996 to 2002, the trustee for his bankruptcy estate brought several adversary proceedings to determine the respective interests of Mr. Keenan and Rule's Estate in several of their real property ventures, and the results of those proceedings were reflected in the probate court's decision upon Mr. Keenan's amended account. Rule's Estate, acting through Mr. Keenan, entered into a stipulated judgment in favor of Keenan's bankruptcy estate and against the Rule Estate, for $849,392, stemming from "investment loans" that Mr. Keenan represented he had made to Paul Rule, when granting Mr. Rule a percentage interest in certain property ventures. Also, Mr. Keenan as the Rule Estate administrator failed to contest his own bankruptcy trustee's decision to disallow a 1988 promissory note that Mr. Keenan had made in favor of Mr. Rule, which had a balance due in 1993 of $84,590. Having reviewed the record, the Court of Appeals of California, Fourth District, Division One, concluded that the record strongly supports the probate court's orders surcharging Mr. Keenan and accepting, with restrictions, his amended account. Substantial evidence supports the court's determinations that as the Rule Estate administrator, Mr. Keenan breached his fiduciary duties, did not act with due care, and caused losses to that Estate for which he should be surcharged. The probate court did not apply an incorrect burden of proof nor incorrectly assess the evidence, and the orders are affirmed, the appellate court ruled. In the 1980s-1990s, Mr. Keenan ran a real estate management company, Data Property Services, and Mr. Rule was his longtime employee and friend. Mr. Rule had a California real estate broker's license, and Mr. Keenan had a real estate sales agent license. In the 1984-1987 time frame, Mr. Rule and Keenan entered into several oral agreements that Mr. Rule would obtain an unrecorded ownership interest in some of Mr. Keenan's real property partnership or joint venture projects, and Mr. Keenan would be compensated through credits given to Mr. Rule, who sometimes acted as the broker, from the sales proceeds or rents from the various projects. They did not arrange to have Mr. Rule's name added to the title on any of those properties they obtained or managed. On Dec. 6, 1993, Mr. Rule died without leaving a will. His closest survivor and heir, his elderly mother Betty Rule, accepted Mr. Keenan's offer to serve as the independent administrator of his estate, because Mr. Keenan was knowledgeable about Mr. Rule's financial affairs, and Betty was not. Mr. Rule's other family members agreed (brother and girlfriend, Karen Barberio). Mr. Keenan was appointed as administrator in 1994. In January 1996, when Mr. Keenan filed for personal bankruptcy reorganization under Chapter 11, he listed the Rule Estate as one of many creditors and debtors of his bankruptcy estate. For several years beginning in 1996, the bankruptcy trustee (Ross Pyle, represented by attorney Jeffrey Isaacs) litigated two adversary actions he filed to determine the Rule Estate's interests in five real properties, as Mr. Keenan was claiming he was entitled to offsets for monies the Rule Estate owed him from other partnership projects. The case is JAMES KEENAN, Plaintiff and Appellant, v. BETTY M. RULE, Objector and Respondent, No. D058759 (Calif. App. Ct.). A copy of the appellate court's Sept. 14, 2012 decision, which includes a background on the dispute, is available at http://is.gd/1rnvQKfrom Leagle.com. JHK INVESTMENTS: Sec. 341 Creditors' Meeting Set for Dec. 31 ------------------------------------------------------------ The U.S. Trustee in New Haven, Connecticut, will convene a Meeting of Creditors under 11 U.S.C. Sec. 341(a) in the Chapter 11 case of JHK Investments, LLC, on Oct. 1, 2012, at 1:00 p.m. at Office of the UST. Proofs of claim are due by Dec. 31, 2012. JHK Investments, LLC, filed a Chapter 11 petition (Bankr. D. Conn. Case No. 12-51608) in Bridgeport, Connecticut on Aug. 29, estimating under $100 million in assets and more than $10 million in liabilities. On the petition date, JHK Investments quickly commenced an adversary proceeding against Bay City Capital Fund V, L.P., Bay City Captial Fund V Co-Investment Fund, L.P., Eleuthera Administrative Co., LLC. Bankruptcy Judge Alan H.W. Shiff presides over the case. Lawyers at Zeisler & Zeisler PC serve as the Debtor's counsel: Aaron Romney, Esq. Craig I. Lifland, Esq. James Berman, Esq. Lawrence S. Grossman, Esq. ZEISLER & ZEISLER PC 558 Clinton Avenue Bridgeport, CT 06605 Tel: 203-368-4234 Fax: 203-367-9678 E-mail: aromney@zeislaw.com jberman@zeislaw.com lgrossman@zeislaw.com Westport, Connecticut-based JHK is an investment company founded by the former senior management team of United States Surgical Corporation. Founded by Leon C. Hirsch in 1963, USSC became a global medical device manufacturer with sales exceeding $1.2 billion and employing $4,000 Connecticut residents. Following the success of USSC, Mr. Hirsch and two other senior USSC executives created JHK in order to produce and develop new markets and penetrate established markets throughout the worl for high-tech medical devices. JHK owns equity in several start-up medical subsidiaries. The start-ups include Interventional Therapies, LLC, Auditory Licensing Company, LLC, Biowave Corporation, Gorham Enterprises, LLC, and American Bicycle Group, LLC. Bay City claims to be owed $31 million for funding provided to the Debtor since January 2011. The principals at JHK -- Mr. Hirsch, Turi Josefsen, and Robert A. Knarr -- guaranteed JHK's obligations, pledged the property in Wilton, Connecticut to secure obligations under the guaranty, and pledged all equity interests of JHK. In March 2012, Eleuthera, in its capacity as administrative agent for Bay City, declared an event of default as a result of the passage of the maturity date and the failure to pay the entire amount outstanding. On Aug. 28, 2012, Bay City and Eleuthera purported to exercise the pledge agreements insofar as they purported to register the Principals' interest in JHK in the name of Eleuthera, as nominee for Bay City, and purported to reserve their right to exercise voting rights in JHK. K-V PHARMACEUTICAL: Wins OK to Use Cash Collateral -------------------------------------------------- Natalie Rodriguez at Bankruptcy Law360 reports that U.S. bankruptcy Judge Allan L. Gropper on Friday approved K-V Discovery Solutions Inc.'s request to access its cash collateral after the company's largest creditor withdrew its objections to the motion. Judge Gropper signed off on a motion allowing the bankrupt company to access its cash collateral for at least the 75-day period following its Aug. 4 filing for Chapter 11 protection in order to bolster its current operations, according to the order cited by Bankruptcy Law360. About K-V Pharmaceutical KV Pharmaceutical Company (NYSE: KVa/KVb) -- http://www.kvpharmaceutical.com/-- is a fully integrated specialty pharmaceutical company that develops, manufactures, markets, and acquires technology-distinguished branded and generic/non-branded prescription pharmaceutical products. The Company markets its technology distinguished products through ETHEX Corporation, a subsidiary that competes with branded products, and Ther-Rx Corporation, the company's branded drug subsidiary. K-V Pharmaceutical Company and certain domestic subsidiaries on Aug. 4 filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-13346, under K-V Discovery Solutions Inc.) to restructure their financial obligations. K-V has retained the services of Willkie Farr & Gallagher LLP as bankruptcy counsel, Williams & Connolly LLP as special litigation counsel, and SNR Denton as special litigation counsel. In addition, K-V has retained Jefferies & Co., Inc., as financial advisor and investment banker. Epiq Bankruptcy Solutions LLC is the claims and notice agent. The U.S. Trustee appointed five persons to serve in the Official Committee of Unsecured Creditors. KYANITE MINING: Tries To Stave Off Receivership ----------------------------------------------- 1070Wina News reports that the Kyanite Mining Company is asking the Virginia Supreme Court to block a lower court ruling that forces the company into receivership and possible liquidation. Kyanite has about 130 workers in Buckingham, Virginia and more than $160 million in assets, according to the report. 1070Wina News notes that it was ordered into receivership earlier this month. A Fairfax judge denied a stay, saying she had reservations about allowing the Dixon family to keep ownership, the report relates. That Dixon family has maintained control of the operation for about 70 years. The company also owns 280,000 acres of old-growth forest and the Cavalier Hotel waterfront property in Virginia Beac KENNEDY PLAZA: Case Summary & 3 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Kennedy Plaza, LLC 1700 - 66th Street N, Suite 300 Saint Petersburg, FL 33710 Bankruptcy Case No.: 12-13880 Chapter 11 Petition Date: September 11, 2012 Court: U.S. Bankruptcy Court Middle District of Florida (Tampa) Debtor's Counsel: Buddy D. Ford, Esq. BUDDY D. FORD, P.A. 115 N. MacDill Avenue Tampa, FL 33609-1521 Tel: (813) 877-4669 Fax: (813) 877-5543 E-mail: Buddy@tampaesq.com Scheduled Assets: $1,203,076 Scheduled Liabilities: $3,116,268 The Company's list of its three largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/flmb12-13880.pdf The petition was signed by Lester M. Porter, III, vice president. LEHMAN BROTHERS: Elliott Says Navigator Price Too Low ----------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the $110.2 million that WL Ross & Co. LLC will pay the trustee for the defunct brokerage Lehman Brothers Inc. in return for 34% of the stock of Navigator Holdings Ltd. isn't enough, according to Elliott Management Corp. According to the report, Lehman brokerage trustee James W. Giddens has a hearing today, Sept. 19, in U.S. Bankruptcy Court in Manhattan for permission to sell the Navigator stock to Ross. If approved, Ross will control 61% of Navigator. The brokerage unit of Lehman Brothers Holdings Inc. was a pre-bankruptcy lender and acquired the stock in 2006 through Navigator's Chapter 11 reorganization. Ross acquired 27% of the Navigator stock in 2011 and 2012 for $25 a share, the same price Mr. Giddens would be paid for the 4.4 million shares he is selling. New York-based Elliott contended in papers filed last week that Mr. Giddens "gave up too easily" by not suing Navigator to eliminate a so-called poison pill. In smaller transactions on Sept. 11, Navigator stock sold for $29 to $29.50 a share in over-the-counter trading, according to data compiled by Bloomberg. The report relates that Mr. Giddens previously said his holding is so large that selling to anyone else isn't feasible since Ross has a waiver of the poison pill. Without a waiver, so many new shares would be issued under the poison pill that a sale would become infeasible. London-based Navigator has a fleet of 14 liquefied gas tankers. The Bloomberg report discloses that the Chapter 11 plan for the Lehman companies other than the broker was confirmed in December and implemented in March, with a first distribution in April. The Lehman brokerage has yet to make a first distribution to non- customers. 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: CPT Drops Bid for Relief From Plan Order --------------------------------------------------------- Credit Protection Trusts 207 and 283 abandoned their motion for relief from the court order confirming Lehman Brothers Holdings Inc.'s Chapter 11 plan. The trusts filed the motion late last month following a notice from Lehman, informing them about the assumption of their swap agreements with the company's special financing unit pursuant to the court order, and that they would recover nothing of their claims. The trusts filed $44 million in claims for damages after the swap agreements were terminated as a result of its failure to make necessary payments. 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: Suit Against Right Management Consultants Nixed ---------------------------------------------------------------- The trustee liquidating Lehman Brothers Holdings Inc.'s brokerage entered into an agreement, which calls for the dismissal of a lawsuit it filed against Right Management Consultants, Inc. The trustee filed the lawsuit in September 2010, in which he asserted a claim against RMI for transfers totaling $710,200 made by the brokerage. The agreement requires RMI to pay $142,040 to the trustee in exchange for the dismissal of the lawsuit. A copy of the agreement is available without charge at http://is.gd/ulN1W9 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: Fontainebleau Unjust Enrichment Claims Denied -------------------------------------------------------------- Judge James Peck dismissed unjust enrichment counterclaims that developer Jeffrey Soffer and his Fontainebleau Resorts LLC filed against Lehman Brothers Holdings Inc. over a $400 million construction loan, saying the claims relied on a voluntarily withdrawn fraudulent inducement counterclaim, Lisa Uhlman of BankruptcyLaw360 reported. Mr. Soffer and his Fontainebleau resort filed the fraud counterclaims in September, alleging Lehman's misrepresentations about its financial condition before its bankruptcy filing induced them to enter into a loan arrangement with the lender, which in turn caused Fontainebleau and related properties to fold. 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. LIGHTSQUARED INC: Lenders Seek Permission to Sue Harbinger ---------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that holders of $1.08 billion in secured debt in LightSquared LP said LightSquared Inc. received a faulty $263.8 million loan last year. According to the report, the July 2011 loan should be recharacterized as an equity investment by Harbinger Capital Partners LLC, which contributed $183.8 million of the total, the so-called LP lenders said. Affiliates committed fraudulent transfers when they guaranteed the loan without receiving anything of value in return, the lenders contend. The report relates that the LP lenders made the filing on Sept. 15 to beat a Sept. 28 deadline for challenging the validity of secured claims. The lenders arranged a Sept. 26 hearing to ask the U.S. Bankruptcy Court in Manhattan for permission to sue Harbinger and its co-lender, UBS AG Stamford Branch. The loan, unsecured when it was made, was given security interests in late August 2011, the LP lenders said. The almost two-month delay in giving liens amounted to a preference the bankruptcy court can set aside, they said. The report relates that the lenders said the transactions "diverted massive value" from other creditors. About LightSquared Inc. LightSquared Inc. and 19 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on May 14, 2012, as the Company seeks to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network. LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements. LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties, prompting the bankruptcy filing. As of the Petition Date, the Debtors employed roughly 168 people in the United States and Canada. As of Feb. 29, 2012, the Debtors had $4.48 billion in assets (book value) and $2.29 billion in liabilities. LightSquared also sought ancillary relief in Canada on behalf of all of the Debtors, pursuant to the Companies' Creditors Arrangement Act (Canada) R.S.C. 1985, c. C-36 as amended, in the Ontario Superior Court of Justice (Commercial List) in Toronto, Ontario, Canada. The purpose of the ancillary proceedings is to request the Canadian Court to recognize the Chapter 11 cases as a "foreign main proceeding" under the applicable provisions of the CCAA to, among other things, protect the Debtors' assets and operations in Canada. The Debtors named affiliate LightSquared LP to act as the "foreign representative" on behalf of the Debtors' estates. Judge Shelley C. Chapman presides over the Chapter 11 case. Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to the Debtors. Kurtzman Carson Consultants LLC serves as claims and notice agent. Counsel to UBS AG as agent under the October 2010 facility is Melissa S. Alwang, Esq., at Latham & Watkins LLP. The ad hoc secured group of lenders under the Debtors' October 2010 facility was formed in April 2012 to negotiate an out-of- court restructuring. The members are Appaloosa Management L.P.; Capital Research and Management Company; Fortress Investment Group; Knighthead Capital Management LLC; and Redwood Capital Management. Counsel to the ad hoc secured group is Thomas E. Lauria, Esq., at White & Case LLP. Philip Falcone's Harbinger Capital Partners indirectly owns 96% of LightSquared's outstanding common stock. Harbinger and certain of its managed and affiliated funds and wholly owned subsidiaries, including HGW US Holding Company, L.P., Blue Line DZM Corp., and Harbinger Capital Partners SP, Inc., are represented in the case by Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP. The Office of the U.S. Trustee has not appointed a statutory committee of unsecured creditors. LOCATION BASED TECHNOLOGIES: Six Directors Elected to Board ----------------------------------------------------------- Location Based Technologies, Inc., held its annual meeting of shareholders on Sept. 12, 2012. The shareholders elected six directors to serve until the next annual meeting, namely: (1) Desiree Mejia, (2) Dave Morse, (3) Charles Smith, (4) Greggory Haugen, (5) David Meyers and (6) Ronald Warner. The Company's Amended and Restated 2007 Stock Option Plan was also approved. A copy of the transcript of meeting is available for free at: http://is.gd/xJUbQG About Location Based Technologies Irvine, Calif.-based Location Based Technologies, Inc., designs, develops, and sells leading-edge personal locator devices and services. The Company's balance sheet at May 31, 2012, showed $7.64 million in total assets, $5.44 million in total liabilities, $499,387 of commitments and contingencies, and stockholders' equity of $1.70 million. "The Company has incurred net losses since inception, and as of May 31, 2012, had an accumulated deficit of $42,125,209. These conditions raise substantial doubt as to the Company's ability to continue as a going concern," the Company said in its quarterly report for the period ended May 31, 2012. As reported in the TCR on Dec. 2, 2011, Comiskey & Company, in Denver Colorado, expressed substantial doubt about the Company's ability to continue as a going concern, following the Company's results for the fiscal year ended Aug. 31, 2011. The independent auditors noted that the Company has incurred recurring losses since inception and has an accumulated deficit in excess of $37,000,000. "There is no established sales history for the Company's products, which are new to the marketplace." LOCATION BASED TECHNOLOGIES: Gregg Haugen Has $400,000 Investment ----------------------------------------------------------------- Location Based Technologies, Inc., on Sept. 10, 2012, entered into a Convertible Note Agreement with Board Member, Gregg Haugen in exchange for an investment for $400,000. The Note is convertible at $0.20, bears a coupon of 10% per annum and has a term of 1 year. Meanwhile, Location Based's PocketFinder Personal and PocketFinder Vehicle products are available for purchase at Amazon.com. LBT has been expanding its retail presence and is aligning itself with the most reputable retail outlets in the country, including Apple, Best Buy, Crutchfield and now Amazon.com (AMZN). "Expanding our consumer presence through the best-known retailers in the world is part of our strategy for growth," said Dave Morse, CEO of Location Based Technologies. "We will continue to focus heavily on commercial applications for our products, but when we do go after a retail channel, it's important that we work with elite companies like Amazon." About Location Based Technologies Irvine, Calif.-based Location Based Technologies, Inc., designs, develops, and sells leading-edge personal locator devices and services. The Company's balance sheet at May 31, 2012, showed $7.64 million in total assets, $5.44 million in total liabilities, $499,387 of commitments and contingencies, and stockholders' equity of $1.70 million. "The Company has incurred net losses since inception, and as of May 31, 2012, had an accumulated deficit of $42,125,209. These conditions raise substantial doubt as to the Company's ability to continue as a going concern," the Company said in its quarterly report for the period ended May 31, 2012. As reported in the TCR on Dec. 2, 2011, Comiskey & Company, in Denver Colorado, expressed substantial doubt about the Company's ability to continue as a going concern, following the Company's results for the fiscal year ended Aug. 31, 2011. The independent auditors noted that the Company has incurred recurring losses since inception and has an accumulated deficit in excess of $37,000,000. "There is no established sales history for the Company's products, which are new to the marketplace." NAT'L INSTRUMENT SUPPLY: Centro Offers to Buy Biz for $1.2MM ------------------------------------------------------------ Annie Johnson, staff reporter at Nashville Business Journal, citing court documents, reports that Centro has made an offer to purchase National Instrument Supply for up to $1.2 million. According to the report, National Instrument has outlined terms of the deal with Centro. National Instrument said Centro would now be responsible for providing the funding needed to pay suppliers and purchase inventory. The report adds the deal is subject to final approval from the bankruptcy court. National Instrument Supply distributes pressure gauges, thermometers and steam valves, among other products. The Company filed for Chapter 11 bankruptcy protection early in September 2012, listing between $1 million to $10 million in both assets and liabilities. The top 20 largest unsecured creditors in the case represent more than $900,000 in liabilities. NAVISTAR INT'L: Liquidity Risk Cues Fitch to Cut IDR to 'CCC' ------------------------------------------------------------- Fitch Ratings has downgraded the Issuer Default Ratings (IDR) for Navistar International Corporation (NAV) and Navistar Financial Corporation (NFC) to 'CCC' from 'B-'. The rating Outlook is Negative. The rating downgrades and Negative Rating Outlook reflect the company's heightened liquidity risk and negative manufacturing free cash flow (FCF) which could continue into 2013. A significant number of challenges will need to be addressed to avoid liquidity pressures, and FCF could be impaired in the near term by costs related to the implementation of NAV's revised engine strategy, workforce reductions, and possible additional restructuring. Other items that could reduce FCF include lower sales volumes expected in the fourth quarter, and lower margins related to the use of Cummins SCR technology, higher warranty expense for NAV's emissions compliant engines, and the cost of non-conformance penalties (NCPs). Industry demand and the pace of a possible recovery in NAV's market share are difficult to estimate and could potentially lead to significant negative FCF if economic conditions and customer confidence in NAV's strategy are worse than anticipated. Industry data indicate NAV's market share declined in August. These factors, together with the effectiveness and timing of NAV's transition to its revised emissions technology, will be important in determining the company's near-term financial position and any future rating actions. Manufacturing debt/EBITDA increased materially to 5.7x as of July 31, 2012, and above 7x adjusted for a new $1 billion term loan in August 2012. Leverage could remain quite high through the next 12-18 months before NAV's revised engine strategy and other potential changes to NAV's operations and strategy become fully effective. NAV's transition to SCR emissions technology (In-Cylinder Technology Plus, or ICT+) involves execution risk related to integrating the technology with NAV's engines, and with integrating Cummins' 15-liter engine in NAV's trucks. Much of the transition should be completed by mid-fiscal 2013, but delays or higher-than-expected costs could further pressure NAV's liquidity. This risk is mitigated by the fact that NAV's heavy duty engines do not need to be redesigned, with the exception of one sensor. Also, Cummins engineers are co-located at NAV's facilities to assist with the process. This should benefit NAV as Cummins has done similar work to integrate SCR technology for other engine makers. NAV uses Cummins engines in some trucks sold to export markets. Other risks include emissions credits which NAV estimates will be depleted in 2013 rather than 2012, partly due to lower-than- expected sales volumes, but a gap in timing between depletion and full production of NAV's ICT+ engines could hurt the company's market share and financial results, at least temporarily. This is a particular concern in 10 states that use California Air Resources Board (CARB) standards which do not allow the use of NCPs. In addition, NAV will require approval by the EPA of its reconfigured emissions equipment. NAV's $1 billion term loan provided additional liquidity while NAV implements its revised engine strategy. A portion of the term loan proceeds were used to repay $238 million outstanding under NAV's ABL facility which was simultaneously reduced to $175 million. NAV's cash at July 31, 2012, adjusted to include the term loan, was slightly more than $1.3 billion. This level of cash should be sufficient to offset negative FCF through the end of fiscal 2012 and into early 2013 while providing an adequate cash cushion. However, NAV's FCF and liquidity could be pressured by the second quarter of fiscal 2013 if industry demand for trucks does not improve, the company's market share does not recover, or costs for the engine transition are substantially larger than offsetting reductions planned by NAV in product development and capital expenditures. In order to rebuild its operating performance and preserve cash, NAV plans to reduce capital spending, cut back on investments associated with NAV's global expansion, and redirect product development to its engine strategy. Restructuring should also help control NAV's cost structure over the long term, including workforce reductions. NAV estimates these actions will reduce its cost structure by $150 million-$175 million. Immediate benefits will be offset by approximately $50 million-$75 million of restructuring charges. Fitch could take a negative rating action if NAV's transition to SCR emissions technology is delayed or requires substantial cash expenditures, or FCF does not recover by early fiscal 2013. If sales volumes are low or margins remain pressured, FCF could be impaired, making it difficult to fund capital expenditures, pension contributions and higher interest expense associated with the increase in debt. In addition, four investors have accumulated approximately 56% of NAV's common shares, which introduces uncertainty about long-term operating and financial policies. The ratings could also be negatively affected depending on the outcome of the SEC's investigation of the company's accounting and disclosure practices. Fitch could take a positive rating action if manufacturing FCF returns toward a breakeven level by the beginning of fiscal 2013, NAV's new engine strategy is implemented on time and at moderate cost, the company's market share begins to recover, and leverage declines materially. Manufacturing sales increased slightly during the first nine months of 2012, but quarterly trends have been weakening through the year due to economic uncertainty and customer concerns about NAV's engine strategy. NAV's heavy-duty truck orders increased through the first quarter of fiscal 2012 but have since declined, consistent with declines across the industry. Medium-duty truck orders have also been weak. NAV's market share was 24% in the third fiscal quarter, including heavy- and medium-duty trucks and buses, and remains well below the peak level of 36% in 2009. Military sales have also fallen as U.S. defense spending declines. EBITDA as calculated by Fitch was slightly below break-even through the first nine months of fiscal 2012. The loss reflects higher warranty costs, adjustments of $353 million to pre-existing warranties, commodity costs for steel and rubber, OPEB/drug benefit costs, and advertising expenses. Other charges include restructuring and impairments, ongoing costs to integrate the engine and truck businesses, and the relocation of NAV's headquarters. Margins have also been negatively affected by lower military revenue (trucks and parts), lower engine volumes in Brazil related to pre-buying in the year-earlier period ahead of tighter emissions standards, and a transition to contract manufacturing by the engine business in Brazil for one of its large customers (MAN). NAV's manufacturing FCF is constrained by recurring pension contributions. NAV estimates it will be required to contribute at least $141 million annually from 2013 to 2015. The estimate is lower than earlier estimates as a result of MAP-21 legislation passed in July 2012 which defers required contributions but does not reduce the obligation. Any reduction in near-term contributions would lead to higher contributions in subsequent years depending on future asset returns and discount rates. NAV contributed $112 million during the first nine months of 2012 and expects to contribute $45 million in the fourth quarter. It also expects to make OPEB contributions of $17 million in the quarter. NAV's net pension obligations totaled nearly $1.8 billion (approximately 57% funded) at the end of 2011. The Recovery Rating (RR) of '1' for Navistar Inc.'s $1 billion term loan supports a rating of 'B', three levels above NAV's IDR, as the loan can be expected to recover more than 90% in a distressed scenario based on a strong collateral position. The '5' RR for NAV's senior unsecured debt results in a rating of 'CCC-', one notch below the IDR, and reflects poor recovery prospects in a distressed scenario. An RR of '6' for the senior subordinated convertible notes reflects a lower priority relative to NAV's senior unsecured debt. The downgrades of NFC's IDR and bank facility rating reflect the direct rating linkage between NFC and NAV, given their inter- related activities and the core nature of NFC's business to that of NAV. Furthermore, the linkage reflects the potential that under a severe stress scenario, NAV may seek to extract capital and/or unencumbered assets from NFC. Fitch views NFC's performance, asset quality and leverage levels as neutral to NAV's rating. NFC's performance has not changed materially compared to Fitch's expectations, but its financial profile is likely to be affected over the long term by lower than expected volumes at NAV, and NFC's strong linkage to its manufacturing parent. Profitability continued its slight decline in the nine months ended July 31, 2012 due to the run-off of NFC's retail portfolio. Fitch believes future profitability at NFC will be directly affected by the general operating and financial condition of NAV, as well as the performance of the wholesale receivables portfolio going forward. Asset quality continues to improve and provisioning has declined as NFC focuses on its wholesale portfolio, which historically has experienced lower loss rates relative to the retail portfolio. Absent material dividends upstreamed to the parent, Fitch expects NFC's leverage to improve and stay below historical levels due to reduced overall financing needs. In June 2012, NFC completed a $501.6 million securitization and the proceeds were used to repay outstanding borrowings on a previous securitization and a portion of its revolving bank credit facility. In addition, NFC completed the refinancing of a $750 million wholesale facility in August 2012. Fitch believes the refinancing of NFC's debt facilities may help to mitigate potential near-term liquidity concerns at NFC. Fitch believes NFC is core to NAV's overall franchise, and the IDR of the finance subsidiary is directly linked to that of its ultimate parent due to the close operating relationship and importance to NAV, as substantially all of NFC's business is connected to the financing of new and used trucks sold by NAV and its dealers. The relationship between NAV and NFC is formally governed by the Master Intercompany Agreement. Also, there is a requirement referenced in NFC's credit agreement requiring Navistar, Inc. or NAV to own 100% of NFC's equity at all times. As of July 31, 2012, Fitch's ratings cover approximately $3 billion of debt at NAV, adjusted for the new $1 billion term loan and ABL repayment, and $2.3 billion of outstanding debt at the Financial Services segment, the majority of which is at NFC. Fitch has downgraded the following ratings: Navistar International Corporation -- Long-term IDR to 'CCC' from 'B-'; -- Senior unsecured notes to 'CCC-'/'RR5' from 'CCC+'/ 'RR5'; -- Senior subordinated notes to 'CC'/'RR6' from 'CCC'/'RR6'. Navistar, Inc. -- Long-term IDR to 'CCC' from 'B-'; -- Senior secured bank term loan to 'B'/'RR1' from 'BB-'/'RR1'. Cook County, Illinois -- Recovery zone revenue facility bonds (Navistar International Corporation Project) series 2010 to 'CCC-' from 'CCC+'. Illinois Finance Authority (IFA) -- Recovery zone revenue facility bonds (Navistar International Corporation Project) series 2010 to 'CCC-' from 'CCC'. Navistar Financial Corporation -- Long-term IDR to 'CCC' from 'B-'; -- Senior secured bank credit facilities to 'CCC-'/'RR5' from 'CCC'/ 'RR5'. NUVILEX INC: Delays Form 10-Q for July 31 Quarter ------------------------------------------------- Nuvilex, Inc., was unable to file its quarterly report on Form 10-Q within the prescribed time period because the assessments to complete the review for the quarter ended July 31, 2012, and the work necessary to carry out submissions in conjunction with the ongoing company activities and audit requirements prevented that filing. About Nuvilex Inc. Silver Spring, Md.-based Nuvilex, Inc., Nuvilex, Inc. operates independently and through wholly-owned subsidiaries. The Company is dedicated to bringing to market scientifically derived products designed to improve the health and well-being of those who use them. The Company's current strategy is to focus on developing and marketing products in the biotechnology arena it believes have potential for long-term corporate growth. The Company reported a net loss of $1.89 million on $66,558 of total revenue for the year ended April 30, 2012, compared with a net loss of $1.39 million on $125,997 of total revenue during the prior year. The Company's balance sheet at April 30, 2012, showed $2.08 million in total assets, $3.78 million in total liabilities, $580,000 in preferred stock, and a $2.27 million total stockholders' deficit. Robison, Hill & Co., issued a "going concern" qualification on the consolidated financial statements for the year ended April 30, 2012, citing recurring losses from operations which raises substantial doubt about the Company's ability to continue as a going concern. OMEGA NAVIGATION: Files First Amended Joint Plan ------------------------------------------------ BankruptcyData.com reports that Omega Navigation Enterprises filed with the U.S. Bankruptcy Court a First Amended Joint Plan of Reorganization and related Disclosure Statement. According to the Disclosure Statement, "the key components of the Plan are as follows: payment in full of all Allowed Administrative Expenses, Priority Tax Claims and Priority Non-Tax Claims; a new value equity investment of $2,500,000 or $2,600,000 (depending on the circumstances), and replacement of the Old Senior Facilities Agreement with the New Facilities Agreement, which will include a Working Capital Tranche of up to $7,500,000 to be used for Working Capital Purposes, all of which will provide the Debtors with critical cash to operate their business after the Effective Date; the opportunity for Junior Lenders (if they accept the Plan) and Holders of Allowed General Unsecured Claims to participate in a Rights Offering at the same price as the new value equity investment; as to (and only as to) each Holder of an Allowed General Unsecured Claim who accepts the Plan and is in a Class that accepts the Plan, the payment to such Holder of its Pro Rata share of $300,000; and the pursuit of the Consensual Wind-Down as to the Vessels in the event a Consensual Wind-Down Trigger occurs, including the failure of the Plan to be confirmed by November [16], 2012 or the failure of the Plan Effective Date to occur by November [27], 2012 or the failure of the Consummation Date to occur by December 31, 2012." About Omega Navigation Athens, Greece-based Omega Navigation Enterprises Inc. and affiliates, owner and operator of tankers carrying refined petroleum products, filed for Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 11-35926) on July 8, 2011, in Houston, Texas in the United States. Omega is an international provider of marine transportation services focusing on seaborne transportation of refined petroleum products. The Debtors disclosed assets of US$527.6 million and debt totaling US$359.5 million. Together, the Debtors wholly own a fleet of eight high-specification product tankers, with each vessel owned by a separate debtor entity. Judge Karen K. Brown presides over the case. Bracewell & Giuliani LLP serves as counsel to the Debtors. Jefferies & Company, Inc., is the financial advisor and investment banker. The Official Committee of Unsecured Creditors has tapped Winston & Strawn as local counsel; Jager Smith as lead counsel; and First International as financial advisor. OFF DOCK: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------- Debtor: Off Dock USA, Inc. 22700 South Alameda Street Carson, CA 90810 Bankruptcy Case No.: 12-41328 Chapter 11 Petition Date: September 14, 2012 Court: United States Bankruptcy Court Central District of California (Los Angeles) Judge: Thomas B. Donovan Debtor's Counsel: Jerome Bennett Friedman, Esq. FRIEDMAN LAW GROUP, P.C. 1900 Ave of the Stars 11th Flr Los Angeles, CA 90067-4409 Tel: (310) 552-8210 Fax: (310) 733-5442 E-mail: jfriedman@jbflawfirm.com Estimated Assets: $100,001 to $500,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/cacb12-41328.pdf The petition was signed by Michael Sullivan, president. OPTIONS MEDIA: Scott Frohman Resigns as CEO, All Other Positions ---------------------------------------------------------------- Scott Frohman resigned as the Chief Executive Officer, Secretary, a director and all other positions at Options Media Group Holdings, Inc., and its subsidiaries. Mr. Frohman advised the Company that his resignation was not due to any disagreement with the Company relating to its operations, policies or practices. About Options Media Boca Raton, Fla.-based Options Media Group Holdings, Inc., had historically been an Internet marketing company providing e-mail services to corporate customers. Additionally, Options Media has a lead generation business and disposed of its SMS text messaging delivery business. In 2010, Options Media transitioned by changing its focus to smart phones and acquiring a robust anti- texting program that prohibits people in vehicles from texting, e- mailing, and reading such communications while moving. As part of its focus on mobile software applications, Options Media has also broadened its suite of products by continuing to improve the features of its Drive Safe(TM) anti-texting software. In conjunction with this change of focus, in February 2011, Options Media sold its e-mail and SMS businesses. Options Media retains its lead generation business. The Company reported a net loss of $12.67 million in 2011, compared with a net loss of $9.86 million in 2010. In its audit report for the 2011 results, Salberg & Company, P.A., in Boca Raton, Florida, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has a net loss available to common stockholders of $12.75 million, and net cash used in continuing operations of $3.60 million for the year ended Dec. 31, 2011, and a working capital deficit, stockholders' deficit and accumulated deficit of $4.11 million, $3.56 million and $35.5 million, respectively at Dec. 31, 2011. The Company has also discontinued certain operations. The Company's balance sheet at June 30, 2012, showed $1.03 million in total assets and $8.34 million in total liabilities. PALMENTERE BROS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Palmentere Bros. Leasing, LLC dba Thunderbird Trucking, Inc. fdba Palmentere Bros. Carage, Inc. fdba Mid America Brokers, Inc. 801 Forest Kansas City, MO 64106 Bankruptcy Case No.: 12-43864 Chapter 11 Petition Date: September 14, 2012 Court: United States Bankruptcy Court Western District of Missouri (Kansas City) Judge: Jerry W. Venters Debtor's Counsel: Daniel L. Allen, Esq. ALLEN & ASSOCIATES 6506 N. Oak Trafficway Gladstone, MO 64118 Tel: (816) 842-3328 Fax: (816) 842-4489 E-mail: lawoffice@bankruptcylawyerkc.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/mowb12-43864.pdf The petition was signed by Joseph Palmentere, president. PATRIOT COAL: U.S. Trustee Objects to Security Holders Committee ---------------------------------------------------------------- BankruptcyData.com reports that the U.S. Trustee assigned to the Patriot Coal case filed with the U.S. Bankruptcy Court an objection to the motion seeking appointment of an official committee of equity security holders. BankruptcyData.com relates that CompassPoint Partners, Frank Williams and Eric Wagoner, an informal group of holders of common stock of Patriot Coal, filed the motion; and the Trustee states, "The Motion should be denied because the Interested Shareholders have failed to meet their burden to establish that equity security holders' interests are not adequately represented or that there is a substantial likelihood of a meaningful recovery to them." About Patriot Coal St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer and marketer of coal in the eastern United States, with 13 active mining complexes in Appalachia and the Illinois Basin. The Company ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls roughly 1.9 billion tons of proven and probable coal reserves. Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11 petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y. Lead Case No. 12-12900) on July 9, 2012. Patriot said it had $3.57 billion of assets and $3.07 billion of debts, and has arranged $802 million of financing to continue operations during the reorganization. Davis Polk & Wardwell LLP is serving as legal advisor, Blackstone Advisory Partners LP is serving as financial advisor, and AP Services, LLC is providing interim management services to Patriot in connection with the reorganization. Ted Stenger, a Managing Director at AlixPartners LLP, the parent company of AP Services, has been named Chief Restructuring Officer of Patriot, reporting to the Chairman and CEO. GCG, Inc. serves as claims and noticing agent. The case has been assigned to Judge Shelley C. Chapman. The U.S. Trustee appointed a seven-member creditors committee. PATRIOT COAL: Coal Production Cut to Affect 250 Employees --------------------------------------------------------- Patriot Coal Corporation announced temporary curtailments of approximately 85,000 tons of metallurgical coal production per month in response to further weakening of market demand. The production cuts will occur at three Southern West Virginia mine complexes, Kanawha Eagle, Rocklick and Wells, over the next 60 days. In total, approximately 250 employee and contractor positions will be impacted by these actions. "Metallurgical coal demand and pricing declined rapidly over the last two months as a result of slowdowns in economies around the world," stated Patriot President and Chief Operating Officer Bennett K. Hatfield. "These actions are designed to bring our production in line with expected sales and focus capital resources on our lowest cost operations as we proceed with our reorganization." About Patriot Coal St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer and marketer of coal in the eastern United States, with 13 active mining complexes in Appalachia and the Illinois Basin. The Company ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls roughly 1.9 billion tons of proven and probable coal reserves. Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11 petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y. Lead Case No. 12-12900) on July 9, 2012. Patriot said it had $3.57 billion of assets and $3.07 billion of debts, and has arranged $802 million of financing to continue operations during the reorganization. Davis Polk & Wardwell LLP is serving as legal advisor, Blackstone Advisory Partners LP is serving as financial advisor, and AP Services, LLC is providing interim management services to Patriot in connection with the reorganization. Ted Stenger, a Managing Director at AlixPartners LLP, the parent company of AP Services, has been named Chief Restructuring Officer of Patriot, reporting to the Chairman and CEO. GCG, Inc. serves as claims and noticing agent. The case has been assigned to Judge Shelley C. Chapman. The U.S. Trustee appointed a seven-member creditors committee. PEREGRINE FINANCIAL: Wasendorf to Remain in Jail ------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Russell R. Wasendorf Sr., the former chief executive of liquidating commodity broker Peregrine Financial Group Inc., didn't leave prison Sept. 17 after all. According to the report, when Mr. Wasendorf decided to cooperate with prosecutors and agreed to plead guilty, a federal magistrate judge ruled last week that he could be released from prison and confined to his pastor's home, monitored by a global-positioning device. The report relates that the government appealed to U.S. District Judge Linda R. Reade in Cedar Rapids, Iowa, who stayed the magistrate's ruling Sept. 17 and directed that Mr. Wasendorf remain in jail until she passes on the government's request to keep him incarcerated. The government told Judge Reade in papers that only the "smallest portion" of customers' missing $200 million has been located. If the money "were hidden away, it could be all incentive and means that defendant might need to flee." Since his sentence carries a "likelihood he may die in prison," the government contends there is flight risk because "a lifetime abroad may be a relatively appealing option." The report notes that Mr. Wasendorf has been jailed since arrest on July 13. He hadn't previously requested bail. Mr. Wasendorf admitted the fraud began in the early 1990s and that he misappropriated more than $100 million in customers' funds. 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 CEO 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 is the regulated unit of the brokerage PFGBest. At a quickly-convened hearing on July 13, the bankruptcy judge authorized the Chapter 7 trustee to operate Peregrine's business on a "limited basis" through Sept. 13. PINNACLE AIR: Wants to Scrap Pilot, Flight Attendant Contracts -------------------------------------------------------------- Matthew Heller at Bankruptcy Law360 reports that with negotiations for labor concessions apparently stalled, Pinnacle Airlines Corp. met a self-imposed deadline on Thursday and asked a New York bankruptcy court judge to scrap its contracts with its pilots and flight attendants. About Pinnacle Airlines Pinnacle Airlines Corp. (NASDAQ: PNCL) -- http://www.pncl.com/-- a $1 billion airline holding company with 7,800 employees, is the parent company of Pinnacle Airlines, Inc.; Mesaba Aviation, Inc.; and Colgan Air, Inc. Flying as Delta Connection, United Express and US Airways Express, Pinnacle Airlines Corp. operating subsidiaries operate 199 regional jets and 80 turboprops on more than 1,540 daily flights to 188 cities and towns in the United States, Canada, Mexico and Belize. Corporate offices are located in Memphis, Tenn., and hub operations are located at 11 major U.S. airports. Pinnacle Airlines Inc. and its affiliates, including Colgan Air, Mesaba Aviation Inc., Pinnacle Airlines Corp., and Pinnacle East Coast Operations Inc. filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Lead Case No. 12-11343) on April 1, 2012. Judge Robert E. Gerber presides over the case. Lawyers at Davis Polk & Wardwell LLP, and Akin Gump Strauss Hauer & Feld LLP serve as the Debtors' counsel. Barclays Capital and Seabury Group LLC serve as the Debtors' financial advisors. Epiq Systems Bankruptcy Solutions serves as the claims and noticing agent. The petition was signed by John Spanjers, executive vice president and chief operating officer. Pinnacle Airlines' balance sheet at Sept. 30, 2011, showed $1.53 billion in total assets, $1.42 billion in total liabilities and $112.31 million in total stockholders' equity. Debtor-affiliate Colgan Air, Inc. disclosed $574,482,867 in assets and $479,708,060 in liabilities as of the Chapter 11 filing. Delta Air Lines, Inc., the Debtors' major customer and post- petition lender, is represented by David R. Seligman, Esq., at Kirkland & Ellis LLP. The official committee of unsecured creditors tapped Morrison & Foerster LLP as its counsel, and Imperial Capital, LLC, as financial advisors. Pinnacle has the exclusive right to propose a reorganization plan until Jan. 25. PINNACLE AIRLINES: Negotiating CBA Modifications with Unions ------------------------------------------------------------ Pinnacle Airlines Corp. is currently negotiating modifications of its collective bargaining agreements with Air Line Pilots Association, Int'l, and the Association of Flight Attendants-CWA, according to a letter from Pinnacle CEO John Spanjers filed with the U.S. Securities and Exchange Commission. The proposed modifications are intended to help Pinnacle emerge from Chapter 11 with a competitive cost structure. Mr. Spanjers said that if the Company will be unable to reach agreement with ALPA and the AFA, the Company will ask the Bankruptcy Court in October to reject the existing agreements with these unions and approve new terms reflecting the changes the Company needs. To that end, the Company filed a motion last week under Section 1113 of the U.S. Bankruptcy Code to begin the process of seeking Court authorization to reject its current collective bargaining agreements with ALPA and the AFA. "There is no denying the significance of the requested cuts and the hardship they will impose," Mr. Spanjers wrote. "Given that we have already extracted all feasible savings from the other areas of our business, we firmly believe that these labor concessions are the best and only remaining way to ensure Pinnacle's survival and preserve as many jobs as possible." The Company must achieve approximately $76 million in annual cost savings, the majority of which will need to be realized through modifications to its collective bargaining agreements. Earlier this week, Pinnacle has finalized an agreement with the TWU, which represents the Company's Dispatchers. About Pinnacle Airlines Pinnacle Airlines Corp. (NASDAQ: PNCL) -- http://www.pncl.com/-- a $1 billion airline holding company with 7,800 employees, is the parent company of Pinnacle Airlines, Inc.; Mesaba Aviation, Inc.; and Colgan Air, Inc. Flying as Delta Connection, United Express and US Airways Express, Pinnacle Airlines Corp. operating subsidiaries operate 199 regional jets and 80 turboprops on more than 1,540 daily flights to 188 cities and towns in the United States, Canada, Mexico and Belize. Corporate offices are located in Memphis, Tenn., and hub operations are located at 11 major U.S. airports. Pinnacle Airlines Inc. and its affiliates, including Colgan Air, Mesaba Aviation Inc., Pinnacle Airlines Corp., and Pinnacle East Coast Operations Inc. filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Lead Case No. 12-11343) on April 1, 2012. Judge Robert E. Gerber presides over the case. Lawyers at Davis Polk & Wardwell LLP, and Akin Gump Strauss Hauer & Feld LLP serve as the Debtors' counsel. Barclays Capital and Seabury Group LLC serve as the Debtors' financial advisors. Epiq Systems Bankruptcy Solutions serves as the claims and noticing agent. The petition was signed by John Spanjers, executive vice president and chief operating officer. Pinnacle Airlines' balance sheet at Sept. 30, 2011, showed $1.53 billion in total assets, $1.42 billion in total liabilities and $112.31 million in total stockholders' equity. Debtor-affiliate Colgan Air, Inc. disclosed $574,482,867 in assets and $479,708,060 in liabilities as of the Chapter 11 filing. Delta Air Lines, Inc., the Debtors' major customer and post- petition lender, is represented by David R. Seligman, Esq., at Kirkland & Ellis LLP. The official committee of unsecured creditors tapped Morrison & Foerster LLP as its counsel, and Imperial Capital, LLC, as financial advisors. Pinnacle has the exclusive right to propose a reorganization plan until Jan. 25. PHYSICIANS TOTAL: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Physicians Total Care, Inc. 12515 E. 55th Street Tulsa, OK 74146-6233 Tel: (405) 235-7700 Bankruptcy Case No.: 12-12502 Chapter 11 Petition Date: September 11, 2012 Court: U.S. Bankruptcy Court Northern District of Oklahoma (Tulsa) Debtor's Counsel: Lysbeth L. George, Esq. CROWE & DUNLEVY PC 20 North Broadway, Suite 1800 Oklahoma City, OK 73102 Tel: (405) 234-3245 Fax: (405) 272-5203 E-mail: lysbeth.george@crowedunlevy.com Estimated Assets: $100,001 to $500,000 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 Warren Moseley, chief executive officer. R&B RECEIVABLES: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: R&B Receivables Management, Inc. dba R&B Solutions 860 S. Northpoint Blvd. Waukegan, IL 60085-8211 Bankruptcy Case No.: 12-36479 Chapter 11 Petition Date: September 14, 2012 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: Donald R. Cassling Debtor's Counsel: Scott R. Clar, Esq. CRANE HEYMAN SIMON WELCH & CLAR 135 S Lasalle Suite 3705 Chicago, IL 60603 Tel: (312) 641-6777 Fax: (312) 641-7114 E-mail: sclar@craneheyman.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ilnb12-36479.pdf The petition was signed by Dennis Brebner, president/CEO. RESIDENTIAL CAPITAL: Seeks to Establish Foreclosure Protocol ------------------------------------------------------------ Residential Capital LLC and its affiliates estimate that they service more than 170,000 mortgage loans with an aggregate unpaid principal balance in excess of $5.9 billion that are subordinate to a third party senior lien on the underlying property. The Debtors also own approximately 25,700 mortgage loans with an aggregate unpaid principal balance of approximately $696 million that are subordinate to Senior Liens. In those circumstances where the borrower on the property defaults on the Senior Lien, the holder of the Senior Lien typically will commence an action to foreclose on the property. As a result of the commencement of the Chapter 11 cases, all pending and future Senior Lien Foreclosure Actions are stayed pursuant to Section 362(a) of the Bankruptcy Code. In this regard, the Debtors seek the Court's authority to establish procedures by which third parties that hold mortgages on real property in which the Debtors own or service an interest that is subordinate to the third party's interest may request and, if certain requirements are met, obtain stipulated relief from the automatic stay in order to foreclose on the property. The Debtors propose that: (1) Any party seeking to continue or commence a Senior Lien Foreclosure Action must serve a written request for relief from the automatic stay on the Debtors; Morrison & Foerster LLP; Kramer Levin Naftalis & Frankel LLP, as counsel for the Official Committee of Unsecured Creditors; the U.S. Trustee; and (e) any other party of which the Requesting Party is aware that holds or claims to hold an interest in the Property. Nationstar Mortgage LLC or Berkshire Hathaway Inc. may elect at any time to be added as a Notice Party. (2) The Request must be accompanied by a completed questionnaire, which includes relevant information, including, among others, the address of the property, name of the borrower under the Senior Lien, nature of the Debtors' purported interest in the Property; and value of the Property on which the foreclosure bid is based. (3) Notice parties will have 20 days to review and evaluate a Request. If the Debtors do not consent to the Request or a Notice Party objects to the Request, the Requesting Party may file a motion with the Bankruptcy Court seeking relief from the automatic stay to foreclose on a Senior Lien. (4) If the Debtors consent to the Request and no other Notice Party has objected, the Debtors will execute a stipulation with the Requesting Party and submit the stipulation to the Court for approval. The stipulation will provide that the automatic stay is modified to allow the Requesting Party to foreclose on a Senior Lien. According to Gary S. Lee, Esq., at Morrison & Foerster LLP, in New York, the request is intended to address the most pressing issues facing the Debtors by allowing the Debtors to proceed with foreclosures on senior mortgage loans in their capacity as servicer in cases where they are contractually bound to do so, even where foreclosure might adversely impact the Debtors' subordinate interest in the underlying 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. Following a hearing in June, the bankruptcy judge scheduled auctions for Oct. 23. A hearing to approve the sales was set for Nov. 5. Fortress Investment Group LLC will make the first bid for the mortgage-servicing business, while Berkshire Hathaway Inc. will serve as stalking-horse bidder for the remaining portfolio of mortgages. Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Residential Capital LLC and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). RESIDENTIAL CAPITAL: Proposes Hudson to Review Loan Files --------------------------------------------------------- Hudson Cook, LLP, began representing Debtor GMAC Mortgage, LLC, and Ally Financial Inc. in connection with a review of foreclosure and loan files in June 2011, focusing on four operational Foreclosure Review "workstreams." Since that time, Hudson Cook has been instrumental in providing legal advice and assistance to PricewaterhouseCoopers LLP with respect to the Foreclosure Review, the Debtors tell the Court. In the course of that work, the Debtors note, Hudson Cook has developed significant familiarity with the issues specific to the Foreclosure Review. The Debtors now seek the Court's authority to employ Hudson Cook, nunc pro tunc to May 14, 2012, for the firm to continue its Foreclosure Review services. Hudson Cook is providing legal assistance in connection with PwC's review of loan files. Hudson Cook will be paid a monthly pay of the greater of $50,000 and the dollar value of the time billed at the firm's rates. The firm's hourly rates range from $400 to $665 for partners; $240 to $375 for associates; and $185 to $230 for legal assistants. The firm will also be reimbursed for any out-of- pocket expenses it incurs. Dana Frederick Clarke, a partner at Hudson Cook, LLP, assures the Court that her firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors and their estates. Ms. Clarke discloses that as of the Petition Date, Hudson Cook holds a prepetition claim for approximately $131,454 for services rendered on behalf of GMAC Mortgage and AFI. 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. 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: Pepper Hamilton Tapped for Foreclosure Review ------------------------------------------------------------------ Residential Capital LLC and its affiliates seek the Court's authority to employ Pepper Hamilton LLP to continue to its performance of legal services in connection with the foreclosure review "workstream" related to bankruptcy issues. The Debtors seek to employ the firm nunc pro tunc to May 14, 2012. Pepper Hamilton partner Gary Apfel, Esq., began representing Debtor GMAC Mortgage, LLC, and Ally Financial Inc. in connection with the Foreclosure Review in October 2011. Since that time, Mr. Apfel has been instrumental in providing legal advice and assistance to the independent consultant with respect to the bankruptcy workstream, the Debtors tell the Court. Pepper Hamilton will work with PricewaterhouseCoopers LLP to continue developing and refining the processes for the Foreclosure Review, and provide legal advice and assistance to PwC in connection with bankruptcy issues related to the Foreclosure Review. Pepper Hamilton will be paid according to its hourly rates of $675 to $850 for partners, $235 to $500 for associates, and $210 to $220 for paraprofessionals. Pepper Hamilton will also be reimbursed for any out-of-pocket expenses it incurs. Robert S. Hertzberg, Esq., a partner at Pepper Hamilton LLP, assures the Court that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors or their estates. Mr. Hertzberg discloses that as of the Petition Date, Pepper Hamilton holds a prepetition claim for approximately $23,524 for services rendered on behalf of GMAC Mortgage and AFI. 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. 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: Committee Hiring Analytic Focus as Consultant ------------------------------------------------------------------ The Official Committee of Unsecured Creditors seeks the Court's authority to retain as its consultant Analytic Focus, LLC, nunc pro tunc to August 28, 2012. Analytic Focus' services will include reviewing and organizing underwriting guidelines for loans; re-underwrite a sample loan, selected by the Committee's other RMBS consultants and experts, of up to 1,500 loans; and provide the Committee with a data file and data dictionary. The Committee tells the Court that it will be utilizing other professionals to assist in the analysis of the proposed RMBS Settlement and Analytic Focus will work closely with the other professionals to ensure there is no unnecessary duplication of services. Analytic Focus will be paid in accordance with its current hourly rates: $525/hour for Dr. Adrian Cowan; $425/hour for other senior professionals; $225 to $325/hour for research associates; $125/hour for research assistants; and $125 to $245/ hour for underwriters. The firm will also be reimbursed for any out-of- pocket expenses it incurs. Adrian Cowan, chief operations member at Analytic Focus, LLC, assures the Court that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Committee, the Debtors or their estates. 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. 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: Committee to Retain Coherent Economics ----------------------------------------------------------- The Official Committee of Unsecured Creditors informed the Bankruptcy Court that, at the request of the Office of the U.S. Trustee, San Marino Business Partners LLC will not subcontract with Coherent Economics LLC. Instead, the Committee will separately retain Coherent Economics to work with other Committee professionals, particularly Professor Cornell and SMBP with its analysis of the RMBS Settlement. As reported in the Sept. 4, 2012 edition of the Troubled Company Reporter, the Creditors Committee has filed an application to employ San Marino Business Partners LLC as its consultant, nunc pro tunc to August 11, 2012. The services to be provided by San Marino include the estimation of put-back liabilities of the Debtors, and the analysis of their loan files. The firm is also tasked to make an expert report and opinion about the proposed settlement of $8.7 billion in claims held by securitization trusts. The Committee is currently investigating the merits of the RMBS Settlement, which resolves potential representation and warranty claims and other claims against certain of the Debtors held by up to 392 securitization trusts for an $8.7 billion allowed claim. 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. 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). RITZ CAMERA: Inability to Find Buyer Cues Liquidation ----------------------------------------------------- Catherine Lutz at The Aspen Business Journal reports that Ritz Camera and Image LLC, the parent company of the Wolf Camera store in Aspen that abruptly closed up shop in April, is being liquidated after it failed to find a buyer at a bankruptcy auction last week. According to the report, the bankruptcy "absolutely" had something to do with Wolf's abrupt spring departure, said Rob Snyder, property manager for the Kandycom Building, who had not been notified about the retailer's closing at the time. The report notes Ritz held a bankruptcy auction on Sept. 6, hoping to find a buyer who would keep the business going, or as a secondary option, liquidate it. The latter happened, and a bankruptcy judge approved a plan on Sept. 10 to turn over most of the company's assets to Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC, who are liquidation specialists. The report adds the new owners will close Ritz's remaining 137 stores. The family-owned company had been struggling for some time due to the shift to digital photography and reduced reliance on in-store services. RitzPix.com, the company's online component, announced a going-out-of-business sale on Sept. 14. 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. ROUTE 88 OFFICE: Case Summary & 10 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Route 88 Office Associates, Ltd. 237 South Street P.O. Box 2049 Morristown, NJ 07982 Bankruptcy Case No.: 12-32431 Chapter 11 Petition Date: September 11, 2012 Court: U.S. Bankruptcy Court District of New Jersey (Trenton) Judge: Michael B. Kaplan Debtor's Counsel: Morris S. Bauer, Esq. NORRIS MCLAUGHLIN & MARCUS, PA P.O. Box 5933 Bridgewater, NJ 08807-5933 Tel: (908) 722-0700 Fax: (908) 722-0755 E-mail: msbauer@nmmlaw.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 10 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/njb12-32431.pdf The petition was signed by Lawrence S Berger, authorized agent. Affiliates that filed separate Chapter 11 petitions: Entity Case No. Petition Date ------ -------- ------------- 400 Blair Realty Holdings, LLC 11-37887 09/23/11 Berley Associates, Ltd. 12-32032 09/05/12 Princeton Office Park, LP 08-27149 09/09/08 SANTEON GROUP: Incurred $240,000 Net Loss in Q2 of 2011 ------------------------------------------------------- Santeon Group, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $239,790 on $426,391 of revenue for the three months ended June 30, 2011, compared with a net loss of $81,925 on $350,625 of revenue for the same period during the prior year. The Company reported a net loss of $362,430 on $936,444 of revenue for the six months ended June 30, 2011, compared with a net loss of $86,435 on $556,247 of revenue for the same period a year ago. The Company's balance sheet at June 30, 2011, showed $786,127 in total assets $966,611 in total liabilities and a $180,484 total stockholders' deficit. A copy of the Form 10-Q is available for free at: http://is.gd/939ypN The Company was late in filing its annual report on Form 10-K for the period ended Dec. 31, 2011. The Company reported a net loss of $475,333 for 2011, compared with a net loss of $699,993 for 2010. The Company's balance sheet at Dec. 31, 2011, showed $1.0 million in total assets, $1.2 million in total liabilities, all current, and a stockholders' deficit of $173,180. As a result, the Company was also late in filing its Form 10-Qs for the three months ended March 31, 2011, June 30, 2011, Sept. 30, 2011, March 31, 2012, and June 30, 2012. As of Sept. 18, 2012, the Company has not yet filed its quarterly reports for the periods ended Sept. 30, 2011, March 31, 2012, and June 30, 2012. About Santeon Reston, Va.-based Santeon Group, Inc., is a diversified software products and services company specializing in the transformation and optimization of business through the deployment or the development of innovative products and services using Agile mindsets in the information systems/technology, healthcare, environmental/energy and media sectors. The Company's innovative software solutions enable organizations to optimize performance and maximize revenues. The Company's clients include state and local governments, federal agencies and numerous private sector customers. In the auditors' report accompanying the consolidated financial statements for the year ended Dec. 31, 2011, RBSM LLP, in New York, N.Y., expressed substantial doubt about Santeon's ability to continue as a going concern. The independent auditors noted that the Company has suffered losses from operations and is experiencing difficulty in generating sufficient cash flows to meet its obligations and sustain its operations. SKILLSOFT LTD: S&P Cuts 1st Lien Sr. Secured Debt Rating to 'B+' ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its issue-level rating on Nashua, N.H.-based SkillSoft Ltd.'s first-lien senior secured debt to 'B+' from 'BB-'. "We also revised the recovery rating on the debt to '2' from '1'. The '2' recovery rating reflects our expectation of substantial (70%-90%) recovery of principal in the event of payment default. The proposed addition of first-lien debt to SkillSoft's capital structure results in lower first-lien recovery prospects, but does not alter our negligible recovery expectations for the senior unsecured debt," S&P said. "We also affirmed our 'B' corporate credit rating and the existing 'CCC+' issue-level rating on the outstanding $310 million of senior unsecured notes. The '6' recovery rating on the notes remains unchanged as well and indicates expectations for negligible (0%-10%) recovery of principal in the event of payment default," S&P said. "The ratings on SkillSoft reflect the company's 'highly leveraged' financial profile and 'weak' business risk profile," S&P said. "Although the proposed acquisition of MindLeaders, also an e- learning company, will expand SkillSoft's customer base and geographic diversity, ratings continue to reflect the company's narrow business profile and niche market position," said Standard & Poor's credit analyst Jacob Schlanger. "The stable outlook reflects our expectation that the company will successfully integrate MindLeaders and realize cost synergies over the next 12 months. Pro forma leverage somewhat high for the rating, ongoing margin pressures, and uncertainty surrounding SkillSoft's ability to accelerate revenue growth and improve margins all currently limit a possible upgrade. As a result, we do not expect leverage to return to fiscal year 2011 levels over the outlook horizon," S&P said. "On the other hand, we could lower the rating if additional acquisitions, integration issues, or further margin pressure caused leverage to exceed the mid-7x level for a sustained period," S&P said. SKY GROWTH: Moody's Says Par Upsized Term Loan Credit Negative -------------------------------------------------------------- Moody's Investors Service commented that the upsized term loan of Sky Growth Acquisition Corp. (d/b/a Par Pharmaceuticals, Inc.) is credit negative, but does not impact the ratings Moody's recently assigned including the B2 Corporate Family Rating, the B1 senior secured rating and the Caa1 senior unsecured rating. Moody's understands that the company is contemplating upsizing the senior secured Term Loan B to $1.055 billion from $980 million, with proceeds to be used for general corporate purposes. The principal methodology used in rating Par Pharmaceutical Companies was the Global Pharmaceutical Industry Methodology published in October 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Woodcliff Lake, New Jersey, Par Pharmaceutical Companies, Inc. is a specialty generic and branded pharmaceutical company operating primarily in the United States. The company reported $926 million of total revenues in 2011. SKOWHEGAN HOUSING: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Skowhegan Housing Limited Partnership 245 Commercial Street, 4th Floor Portland, ME 04101 Bankruptcy Case No.: 12-21126 Chapter 11 Petition Date: September 11, 2012 Court: U.S. Bankruptcy Court District of Maine (Portland) Debtor's Counsel: George J. Marcus, Esq. MARCUS, CLEGG & MISTRETTA, PA One Canal Plaza, Suite 600 Portland, ME 04101-4102 Tel: (207) 828-8000 E-mail: bankruptcy@mcm-law.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 Kevin J. McCarthy, Sr. vice president, Mainland Development Co., general partner. Affiliates that simultaneously filed for Chapter 11: Debtor Case No. ------ -------- Green Acres Limited Partnership 12-21125 Fort Halifax Associates Limited Partnership 12-21127 SSI INVESTMENTS: Moody's Assigns 'B2' Corp. Family Rating --------------------------------------------------------- Moody's Investors Service affirmed SSI Investments II Limited's (SSI) B2 Corporate Family Rating (CFR) and probability of default rating, and assigned a Ba3 rating to the $50 million of incremental Tranche C term loans being raised by Skillsoft Corporation ("SkillSoft" or the "Company"), an indirect wholly- owned subsidiary of SSI. The ratings outlook is stable. SkillSoft will use the net proceeds from the incremental term loans and a portion of its cash on hand to complete the acquisition of ThirdForce Group plc (MindLeaders) for approximately $65 million in cash. In addition, the Company is proposing to re-price its existing senior credit facilities. Ratings Rationale The acquisition of MindLeaders will consolidate a smaller competitor and enhance SkillSoft's position in its highly fragmented industry. The acquisition will grow SkillSoft's presence in the small and medium size business segment of the market and expand its courseware offerings focused on compliance and regulatory matters. At the same time, the acquisition will increase SkillSoft's total debt-to-EBITDA leverage from approximately 5.7x to slightly over 6.0x, excluding approximately $11 million of targeted synergies (incorporating Moody's analytical adjustments). However, Moody's expects SkillSoft's leverage to decline toward 5.5x over the next twelve months from debt repayment and EBITDA growth driven by the synergies from the MindLeaders acquisition and as the synergies from the Element K acquisition are fully reflected in the earnings. The ratings agency's view is supported by SkillSoft's good track record of integrating acquisitions and realizing cost savings from its previous acquisitions. Nonetheless, Moody's believes that SkillSoft's acquisitive growth strategy and its slow organic growth in a challenging economic environment will likely preclude any meaningful deleveraging in the next 12 to 24 months. The B2 CFR reflects SkillSoft's high financial leverage, relatively small scale in a highly competitive and fragmented corporate training market with low barriers to entry, and the discretionary nature of demand for the Company's products. The rating is supported by SkillSoft's competitive market position and growing scale relative to independent on-demand e-learning providers, its large and highly diverse customer base, and the predictability of its revenues from customers under contracts. The rating also reflects SkillSoft's prospective free cash flow of about 5% to 8%, resulting from its good EBITDA margins and low capital expenditure requirements. The stable rating outlook incorporates Moody's expectations that SkillSoft's credit metrics should improve over the next 12 months driven by the realization of cost synergies and organic revenue growth, and that the Company should maintain good liquidity. Given the expectations of high financial leverage persisting in the 12 to 18 months, a rating upgrade is unlikely over this period. However, Moody's could raise SkillSoft's rating if the Company generates good organic revenue growth with increasing profitability, and if Moody's believes that the Company could sustain Debt/EBITDA below 4.0x and maintain free cash flow/Debt above 10%, incorporating potential for increases in debt as a result of the Company's shareholder-friendly financial policies. Conversely, the rating could be lowered if SkillSoft experiences market share losses, declining profitability, and the Company is unable to sustain Debt/EBITDA leverage below 6.0x and free cash flow approaches the low single digit percentages of total debt. The rating or the outlook could also be lowered if the Company pursues aggressive financial policies which result in a weaker balance sheet or if SkillSoft undertakes large debt-financed acquisitions which increase execution risks. Ratings assigned: $50 million incremental Tranche C term loan due 2017 -- Assigned Ba3, LGD2 (28%) Moody's affirmed the following ratings: Issuer: SSI Investments II Limited Corporate Family rating -- B2 Probability-of-default rating -- B2 $310 million senior unsecured notes due 2018 -- Caa1 LGD5 (83%, changed from 82%) Issuer: SkillSoft Corporation $40 million senior secured revolving credit facility due 2015 -- Ba3 LGD2 (28%, changed from 27%) $408 million senior secured Term Loan B due 2017 - Ba3 LGD2 (28%, changed from 27%) $90 million Tranche C senior secured Term Loan due 2017 -- Ba3 LGD2 (28%, changed from 27%) Outlook: Stable The principal methodology used in rating SkillSoft Corporation was the Global Software Industry Methodology published in May 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. SkillSoft provides on-demand e-learning and performance support solutions for global enterprises, government, education and small to medium-sized businesses. For the last twelve month ended July 31, 2012, SkillSoft reported $356 million in revenues under U.S. GAAP. SOLYNDRA LLC: GOP Reps. Pass 'No More Solyndras' Bill ----------------------------------------------------- Kelly Rizzetta at Bankruptcy Law360 reports that the Republican- dominated House on Friday approved the "No More Solyndras Act," a bill that would pull the plug on the U.S. Department of Energy's much-maligned programs that have provided more than $30 billion in loans to dozens of renewable energy projects, some of which have gone bankrupt. 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. The Plan is designed to pay 2.5% to 6% to unsecured creditors with claims totaling as much as $120 million. Unsecured creditors with $27 million in claims against the holding company are projected to have a 3% dividend. SYMS CORP: Emerges from Chapter 11 as Trinity Place Holdings ------------------------------------------------------------ Syms Corp. successfully completed its financial restructuring and has emerged from Chapter 11 as Trinity Place Holdings Inc. The emergence completes a 10 month bankruptcy process in which Syms and its subsidiaries, including Filene's Basement, LLC, closed their retail stores, liquidated their inventories and redeemed all shares of company stock owned by Marcy Syms and her related trusts. Trinity Place Holdings will seek to maximize the value of its commercial real estate and the intellectual property owned by Filene's Basement for the benefit of all stakeholders under the company's plan of reorganization. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the Debtors implemented the Chapter 11 reorganization plan Sept. 17. According to the Bloomberg report, unsecured creditors of Syms are to be paid in full over time. Filene's aren't. Creditors retained their stock, other than Marcy Syms who will sell her shares to the company for $2.49 a share, or a total of $19.5 million. She owned about 54.7% of the stock. Syms changed its name to Trinity Place Holdings Inc., named after what was the company's flagship store in lower Manhattan. "Today marks the launch of an entirely new company with attractive real estate and intellectual property assets," said Lauren Krueger, the new chief executive officer of Trinity Place Holdings and managing member of Esopus Creek Advisors LLC. "We expect that the company will satisfy the negotiated payments to creditors in accordance with the terms of the plan of reorganization. We are excited about the ability to create value for shareholders. Most of the funds necessary to emerge from bankruptcy were raised through the sale of $25 million of new shares of common stock, reflecting the shareholders' strong belief in the future equity value of the company." The company's current business plan includes the monetization of 16 commercial real estate properties and the development of 28-42 Trinity Place in Lower Manhattan. The company also plans to explore the licensing of its intellectual property, including its rights to the Filene's Basement trademark, the Stanley Blacker and Maine Bay brands, the intellectual property associated with the well-known Running of the Brides event, and An Educated Consumer is Our Best Customer slogan. The 16 commercial real estate properties include: 4400 Forest Hill Blvd., West Palm Beach, FL 1340 Swedesford Rd., Berwyn, PA 4615 NW 77th Ave., Miami, FL (sold) 21700 Telegraph Rd., Southfield, MI 5775 Jimmy Carter Blvd., Norcross, GA 10770 Westheimer, Houston, TX 652 Commerce Dr., Fairfield, CT 1803 Roswell Rd., Marietta, GA 280 West North Ave., Addison, IL 1865 East Marlton Pike, Cherry Hill, NJ 8075 Sheridan Dr., Williamsville, NY 5300 Powerline, Ft. Lauderdale, FL 1 Syms Way, Secaucus, NJ 695 Merrick Ave., Westbury, NY 330 Route 17 North, Paramus, NJ 295 Tarrytown Rd., Elmsford, NY As part of its emergence from Chapter 11, Trinity Place Holdings has reincorporated in Delaware. It is expected that the common stock of the company will continue to be quoted over-the-counter, but that the ticker symbol will change to TPHS. The $25 million offering of new stock was backstopped by DS Advisors LLC, Esopus Creek Value Series Fund LP-Series A and Marcato Capital Management LLC. The Board of Directors of Trinity Place Holdings consists of Alan Cohen, Mark Ettenger, Andrew L. Sole, and Marina Shevyrtalova. Alvarez & Marsal is providing certain interim management services to the new company and Munger, Tolles & Olson LLP is acting as its legal counsel. About Filene's Basement & Syms Corp. Massachusetts-based Filene's Basement, also called The Basement, is the oldest off-price retailer in the United States. The Basement focuses on high-end goods and is known for its distinctive, low-technology automatic markdown system. Filene's Basement first filed for Chapter 11 bankruptcy protection in August 1999. Filene's Basement was bought by a predecessor of Retail Ventures, Inc., the following year. Retail Ventures in April 2009 transferred the unit to Buxbaum. Filene's Basement, Inc. and its affiliates filed for Chapter 22 (Bankr. D. Del. Case No. 09-11525) on May 4, 2009, represented by lawyers at Pachulski Stang Ziehl & Jones LLP. Epiq Bankruptcy Solutions serves as claims and notice agent. The Debtors disclosed assets of $236 million, including real estate of $97.7 million, and liabilities of $94 million, including $31.1 million owing on a revolving credit with Bank of America NA as agent. In addition, there were $11.1 million in letters of credit outstanding on the revolver. The 2009 Debtor was formally renamed FB Liquidating Estate, following the sale of all of its assets to Syms Corp. in June 2009. Pursuant to the Liquidating Plan confirmed in January 2010, secured creditors in the Chapter 11 case have been paid in full, and holders of priority, administrative and convenience class claims have received 100% of their allowed claims. As reported by the Troubled Company Reporter on Dec. 20, 2010, Alan Cohen, Chairman of Abacus Advisors LLC and Chief Restructuring Officer for FB Liquidating Estate disclosed that a second distribution of dividend checks to Filene's unsecured creditors amounting to 12.5% of approved claims has been made, bringing the cumulative distributions on unsecured claims to 62.5%. On Nov. 2, 2011, Syms Corp. placed itself, Filene's Basement and two other units in Chapter 11 bankruptcy (Bankr. D. Del. Case Nos. 11-13511 to 11-13514) after a failed bid to sell the business. The two units are Syms Clothing Inc. and Syms Advertising Inc. Judge Kevin J. Carey presides over the case. Lawyers at Skadden Arps Slate Meagher & Flom LLP serve as the Debtors' counsel. The Debtors tapped Rothschild Inc. as investment banker and Cushman and Wakefield Securities, Inc., as real estate financial advisors. Syms shuttered its namesake and Filene's Basement outlets upon the bankruptcy filing and tapped a joint venture of Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC to run the going-out-of-business sales. The sale may continue until Jan. 31, 2012. Filene's Basement estimated $1 million to $10 million in assets and $50 million to $100 million in debts. The petitions were signed by Gary Binkoski, authorized representative of Filene's Basement. The official committee of unsecured creditors appointed in the 2011 case has retained Hahn & Hessen LLP as legal counsel. Holders of equity in Syms Corp. pushed for an official shareholders' committee and separation of the Syms and Filene's Basement bankruptcy estates. Gordon Brothers and Hilco are represented by Goulston & Storrs, P.C. and Ashby & Geddes, P.A. TERRA-GEN FINANCE: S&P Cuts CCR to 'B' on Weaker Credit Measures ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Terra-Gen Finance LLC (TG Finance) to 'B' from 'BB-'. The outlook is stable. "We also lowered our rating on the company's $250 million secured term loan due 2017 and secured $60 million working capital facility due 2016 to 'B+' from 'BB'. We also removed the ratings from CreditWatch negative, where we placed them on June 29, 2012. The recovery rating on the term loan and working capital facility is '2', reflecting our anticipation of substantial (70% to 90%) recovery of principal if a payment default occurs. The outlook is stable," S&P said. "The rating action reflects our view that the credit measures have fallen below levels that support the current rating. This deterioration stems from an error in our original analysis and significant reductions in short-run avoided costs (SRACs) that dictate project payments under four of the power purchase agreements at TG Finance's portfolio of nine power projects," S&P said. "The error occurred in the development of our base case financial forecast. We did not use a P90 wind generation assumption for key assets--out of accordance with our criteria--and did not deduct subordinated debt payments from the distributions from one of the projects. As a result, our projections overstated power plant production and, thus, cash flows. In updating our projections, we are also incorporating changes in SRAC pricing under which four of the projects are paid. Following discussions with management, we were informed that they did not plan to address these weaknesses and as such we have resolved the CreditWatch listing," S&P said. "Our ratings on TG Finance reflect its reliance on distributions from its underlying portfolio of renewable energy projects that benefit from purchase power agreements with largely investment- grade counterparties, mostly in California, which has shown considerable support for renewable energy resources," said Standard & Poor's credit analyst Trevor D'Olier-Lees. "The outlook is stable. We expect credit measures to remain supportive of the rating under our base-case scenario, where the distributable cash flow available to support interest payments at TG Finance averages about 1.3x with a quality of cash flow score (QCF) of between 4 and 5. Lower-than-expected availability or generation or higher O&M costs, especially at the wind projects given their majority contribution to cash flow, could cause us to lower ratings. In addition, potential lower revenues from projects with recontracting and/or SRAC exposure could pressure ratings, because these projects represent about 19% of distributable cash flow. At the current QCF score, this would be reflected in an average distributable cash flow/interest coverage of about 1x. Improved recovery prospects, material improvements in the risk profiles of several assets, or significant debt reduction through the cash sweep could result in an upgrade. At the current QCF score, this would be reflected in an average distributablecash flow/interest coverage of about 1.8x," S&P said. THOMAS REAL ESTATE: Case Summary & 2 Unsecured Creditors -------------------------------------------------------- Debtor: Thomas Real Estate Holdings LP 684 Parkridge Norco, CA 92860 Bankruptcy Case No.: 12-31252 Chapter 11 Petition Date: September 14, 2012 Court: United States Bankruptcy Court Central District of California (Riverside) Judge: Deborah J. Saltzman Debtor's Counsel: Todd C. Ringstad, Esq. RINGSTAD & SANDERS LLP 2030 Main St #1200 Irvine, CA 92614 Tel: (949) 851-7450 E-mail: becky@ringstadlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 Affiliates that simultaneously filed Chapter 11 petitions: Debtor Case No. ------ -------- Thomas Next Gen LLC 12-31257 Assets: $1,000,001 to $10,000,000 Debts: $1,000,001 to $10,000,000 Thomas Management KLJ Temecula, Inc. 12-31258 Assets: $1,000,001 to $10,000,000 Debts: $1,000,001 to $10,000,000 The petitions were signed by EM Thomas Management Inc., general partner. A copy of Thomas Real Estate's list of its two largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/cacb12-31252.pdf A copy of Thomas Next Gen's list of its two largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/cacb12-31257.pdf A copy of Thomas Management KLJ's list of its two largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/cacb12-31258.pdf Affiliate that previously sought Chapter 11 protection. Petition Debtor Case No. Date ------ -------- ---- EM Thomas Management, Inc. 11-32988 07/15/11 TWG CAPITAL: Finance Firm Files Ch. 11 to Sell Assets ----------------------------------------------------- Katy Stech at Dow Jones' DBR Small Cap reports that Indianapolis finance firm TWG Capital Inc. filed for bankruptcy Friday to sell its business, which buys the stream of future commission payments that flow to insurance agents, after the recession and two expensive lawsuits forced the company to burn through its cash. TWG CAPITAL: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: TWG Capital, Inc. 7434 Shadeland Station Way, Ste 500 Indianapolis, IN 46256 Bankruptcy Case No.: 12-11019 Chapter 11 Petition Date: September 14, 2012 Court: United States Bankruptcy Court Southern District of Indiana (Indianapolis) Judge: Basil H. Lorch III Debtor's Counsel: Jay Jaffe, Esq. Kayla D. Britton, Esq. Wendy W. Ponader, Esq. FAEGRE BAKER DANIELS LLP 600 East 96th Street, Suite 600 Indianapolis, IN 46240 Tel: (317) 237-0300 Fax: (317) 237-1000 E-mail: jay.jaffe@faegrebd.com kayla.britton@faegrebd.com wendy.ponader@faegrebd.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/insb12-11019.pdf The petition was signed by Mark Nondorf, president. VAL-MID ASSOCIATES: Case Summary & 19 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Val-Mid Associates, LLC 13098 N. High Hawk Marana, AZ 85653 Bankruptcy Case No.: 12-20519 Chapter 11 Petition Date: September 14, 2012 Court: United States Bankruptcy Court District of Arizona (Tucson) Judge: James M. Marlar Debtor's Counsel: John R. Clemency, Esq. GALLAGHER & KENNEDY PA 2575 East Camelback Road Suite 1100 Phoenix, AZ 85016 Tel: (602) 530-8040 E-mail: john.clemency@gknet.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 19 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/azb12-20519.pdf The petition was signed by James F. Alderson, managing member. VALENCE TECHNOLOGY: Common Stock Delisted from NASDAQ ----------------------------------------------------- The NASDAQ Stock Market LLC notified the U.S. Securities and Exchange Commission regarding the removal from listing or registration of Valence Technology Inc.'s common stock under the Exchange. On Sept. 10, 2012, Valence Technology received a letter from NASDAQ notifying that its common stock will be subject to delisting. About Valence Technology Valence Technology, Inc., filed a Chapter 11 petition (Bankr. W.D. Tex. Case No. 12-11580) on July 12, 2012, in its home-town in Austin. Founded in 1989, Valence develops lithium iron magnesium phosphate rechargeable batteries. Its products are used in hybrid and electric vehicles, as well as hybrid boats and Segway personal transporters. The Debtor disclosed debt of $82.6 million and assets of $31.5 million as of March 31, 2012. Chairman Carl E. Berg and related entities own 44.4% of the shares. ClearBridge Advisors, LLC owns 5.5%. Valence expects to complete its restructuring during 2012. Judge Craig A. Gargotta presides over the case. The Company is being advised by Streusand, Landon & Ozburn, LLP with respect to bankruptcy matters. The petition was signed by Robert Kanode, CEO. The U.S. Trustee for Region 7 has appointed five creditors to the Committee of Unsecured Creditors in the bankruptcy case of the Debtor. WASHINGTON MUTUAL: Liquidating Trust Wants $29M Tax Claim Junked ---------------------------------------------------------------- Lance Duroni at Bankruptcy Law360 reports that the liquidating trust for Washington Mutual Inc. asked a Delaware bankruptcy court Thursday to throw out a $29.3 million claim from Oregon tax authorities, arguing the holding company never conducted any business in the state. Bankruptcy Law360 relates that the tax liabilities claimed by the state were actually incurred by WMI's defunct savings and loan Washington Mutual Bank, according to a brief filed with the court. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- was the holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. Washington Mutual Bank was taken over on Sept. 25, 2008, by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). WaMu owns 100% of the equity in WMI Investment. When WaMu filed for protection from its creditors, it disclosed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment estimated assets of $500 million to $1 billion with zero debts. WaMu is represented by Brian Rosen, Esq., at Weil, Gotshal & Manges LLP in New York City; Mark D. Collins, Esq., at Richards, Layton & Finger P.A. in Wilmington, Del.; and Peter Calamari, Esq., and David Elsberg, Esq., at Quinn Emanuel Urquhart Oliver & Hedges, LLP. The Debtor tapped Valuation Research Corporation as valuation service provider for certain assets. Fred S. Hodara, Esq., at Akin Gump Strauss Hauer & Fled LLP in New York, and David B. Stratton, Esq., at Pepper Hamilton LLP in Wilmington, Del., represent the Official Committee of Unsecured Creditors. Stephen D. Susman, Esq., at Susman Godfrey LLP and William P. Bowden, Esq., at Ashby & Geddes, P.A., represent the Equity Committee. The official committee of equity security holders also tapped BDO USA as its tax advisor. Stacey R. Friedman, Esq., at Sullivan & Cromwell LLP and Adam G. Landis, Esq., at Landis Rath & Cobb LLP in Wilmington, Del., represent JPMorgan Chase, which acquired the WaMu bank unit's assets prior to the Petition Date. Records filed Jan. 24, 2012, say that Washington Mutual Inc., former owner of the biggest U.S. bank to fail, has spent $232.8 million on bankruptcy professionals since filing its Chapter 11 case in September 2008. In March 2012, the Debtors' Seventh Amended Joint Plan of Affiliated, as modified, and as confirmed by order, dated Feb. 23, 2012, became effective, marking the successful completion of the chapter 11 restructuring process. The Plan is based on a global settlement that removed opposition to the reorganization and remedy defects the judge identified in September. The plan is designed to distribute $7 billion. Under the reorganization plan, WaMu established a liquidating trust to make distributions to parties-in-interest on account of their allowed claims. WINDSOR QUALITY: Moody's Affirms 'B1' Corp. Family Rating --------------------------------------------------------- Moody's Investors Service has affirmed the ratings of Windsor Quality Food Company, Ltd.'s, including its B1 Corporate Family Rating following the successful amendment to its $470 million senior secured credit agreement. Moody's revised the rating outlook to stable from positive. Ratings Rationale The B1 rating reflects Windsor's modest financial leverage, adequate liquidity profile and ongoing execution risk related to the restructuring of some of its plant operations. The rating also reflects Moody's expectation that elevated operating costs and rising commodity input costs for grains and proteins will cause profit margins to decline over that next six to nine months before recovering in the second half of 2013. Recent amendments under its credit agreement should give the company ample cushion under financial covenants; however, the potential for near-term earnings volatility makes an upgrade within the next 12 months unlikely. As a result, Moody's has revised its rating outlook to stable from positive. Windsor Quality Food Company Ltd.: The following ratings have been affirmed: Corporate Family Rating at B1; Probability of Default Rating at B2; $80 million senior secured revolving credit facility due February 16, 2016 at B1; $140 million senior secured term loan A due February 16, 2016 at B1; and $250 million senior secured term loan B due February 16, 2017 at B1. LGD Rates are revised as follows: LGD senior secured bank credit facilities to LGD3 - 35% from LGD3 - 37%. The rating outlook has been revised to stable from positive. The B1 rating of the senior secured revolver and term loans reflect their first lien security interest in the assets of Windsor and its subsidiaries, upstream and downstream guarantees and their size in relation to Windsor's overall capital structure. Further, the ratings reflect an expected family recovery rate of 65% and a Probability of Default Rating of B2. Windsor's acquisition in February 2011 of Discovery Foods, a manufacturer of Asian-branded frozen foods, further established its leading position in the growing frozen ethnic foods category. While the mainstream single-serve frozen entrees category has become less attractive due to heavy competition, the authentic ethnic frozen foods category has maintained relatively stable pricing and strong demand growth. Moody's expects that Windsor will experience pressure on profit margins and cash flows next year due to high operating costs related to its Riverside plant and rising commodity costs -- challenges that its bank lenders have accommodated by temporarily relaxing financial covenants. The company will still need to meet fairly aggressive leverage step-downs -- about a quarter of a turn per quarter after June 2013 -- so further operational problems or another leveraged acquisition could tighten the cushion again. However, Moody's is comfortable that the company will maintain a conservative financial strategy and that the banks will remain supportive. Positive ratings momentum could build if Windsor demonstrates stability in its plant operations and maintains stable operating margin and cash flow. Maintenance of leverage below 4.5x and Free Cash Flow-to-debt above 5% would be supportive of an upgrade. Moody's would consider a ratings downgrade if debt/EBITDA exceeded 5.0 times and free cash flow turned negative. The principal methodologies used in this rating were Global Packaged Goods Industry published in July 2009, and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Windsor, headquartered in Houston, Texas, is a manufacturer of branded and private label frozen foods to the foodservice, retail grocery and club, national account and industrial segments of the food industry. Net revenues for the twelve months ended June 30, 2012 were approximately $800 million. WISP RESORT: Bank's Objection Deadline Extended Anew ---------------------------------------------------- Bankruptcy Judge Wendelin I. Lipp on Friday signed off on another stipulation and consent order wherein First United Bank and Trust was given through and including Sept. 17, 2012, to file its response to the Motion for Fourth Extension of Exclusive Periods to File Plan of Reorganization and Obtain Acceptances Thereto by 60 Days filed by D.C. Development, LLC, Recreational Industries, Inc., Wisp Resort Development, Inc., and The Clubs at Wisp, LLC. Joel I. Sher, Esq., at Shapiro Sher Guinot & Sandler, in Baltimore, Maryland, represents First United Bank and Trust. The Debtors have filed a motion are asking the U.S. Bankruptcy Court to extend the exclusive periods within which only they can file a plan through and including Nov. 9, 2012, and the period to secure acceptance of a plan through and including Dec. 9, 2012. About Wisp Resort et al. 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. WOLVERINE ACQUISITION: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: Wolverine Acquisition Company 1707 Heaher Heights Drive Crescent, PA 15046-3805 Bankruptcy Case No.: 12-24562 Chapter 11 Petition Date: September 11, 2012 Court: U.S. Bankruptcy Court Western District of Pennsylvania (Pittsburgh) Judge: Judith K. Fitzgerald Debtor's Counsel: Gary H. Simone, Esq. RISHOR SIMONE Suite 208, 101 E. Diamond Street Butler, PA 16001 Tel: (724) 283-7215 Fax: (724) 283-0229 E-mail: rishor.simone1@1stcounsel.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 Gordon Adam Hall, president. WPCS INTERNATIONAL: Reports $993,700 Net Income in July 31 Qtr. --------------------------------------------------------------- WPCS International Incorporated filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing net income attributable to the Company of $993,701 on $13.44 million of revenue for the three months ended July 31, 2012, compared with a net loss attributable to the Company of $34,677 on $18.61 million of revenue for the same period during the prior year. The Company's balance sheet at July 31, 2012, showed $25.95 million in total assets, $18.78 million in total liabilities and $7.16 million in total equity. Going Concern On Jan. 27, 2012, WPCS and its United States-based subsidiaries Suisun City Operations, Seattle Operations, Portland Operations, Hartford Operations, Lakewood Operations, and Trenton Operations, entered into a loan and security agreement with Sovereign Bank, N.A. on July 12, 2012, the Company executed the Surety Financing and Confession of Judgment Agreement with Zurich American Insurance Company. The Company is not in compliance with the terms of the Zurich Agreement. As a result of the Company's noncompliance, the Company instructed the owner of this project to make at all current and future payments directly to Zurich. The Company's failure to comply with the terms of the Credit Agreement and the Zurich Agreement, as well as the Company's losses from operations for the three months ended July 31, 2012, raise substantial doubt about the Company's ability to continue as a going concern. At July 31, 2012, the Company had cash and cash equivalents of $1,257,920 and working capital of $1,412,252, which consisted of current assets of $20,145,533 and current liabilities of $18,733,281. As of Sept. 12, 2012, the Company had remaining availability under the Credit Agreement of $1,554,500. Andrew Hidalgo, CEO of WPCS, commented, "I am pleased to report a substantial improvement in financial performance quarter over quarter. For the first quarter, our operation centers generated $695,000 in EBITDA on revenue of $13.4 million. Even our Trenton Operations, which is coming off a difficult year of losses, generated positive EBITDA of $208,000 in the first quarter. The projects that generated the losses are behind us. We have strengthened the balance sheet and income statement. Our challenge continues to be cash flow. The current debt facility of $2 million with Sovereign Bank is not sufficient to meet our future operating requirements. We need to replace this debt facility as a priority. If we are able to obtain an adequate debt facility, we believe we will be in a better position for growth and increased shareholder value." A copy of the Form 10-Q is available for free at: http://is.gd/RoQx12 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. 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. ZAMBRANO CORP: Court Rules on Ch.7 Trustee's Suits v. Principals ---------------------------------------------------------------- Bankruptcy Judge Jeffery A. Deller ruled on three jointly tried adversary proceedings commenced by Rosemary C. Crawford, Chapter 7 trustee of the estate of Zambrano Corporation, against: * Eugene Zambrano III -- EZIII; * Hillcrest Development Associates, LP; and * Eugene Zambrano, Jr. -- EZJr -- and his wife, Mary Zambrano The Chapter 7 Trustee contends that EZIII breached his fiduciary duty to the Debtor under Pennsylvania law and that EZIII deepened the Debtor's insolvency under Pennsylvania law. The Chapter 7 Trustee contends that Hillcrest was the transferee of an avoidable fraudulent transfer from the Debtor under 11 U.S.C. Sec. 548. The Chapter 7 Trustee contends that EZJr and Mary were the beneficiaries of avoidable fraudulent transfers from the Debtor under 11 U.S.C. Sections 548 and 550. The Court finds EZIII liable for the Chapter 7 Trustee's count of breach of fiduciary duty to the Debtor. However, the Court finds the Trustee's argument concerning EZIII's liability as to deepening insolvency unpersuasive. Additionally, the Court finds Hillcrest liable for the value of the fraudulent transfer it received from the Debtor, and the Court finds EZJr liable for the value of the fraudulent transfers, from which he benefited, from the Debtor. Lastly, the Court finds the Trustee's argument that Mary is also liable as a beneficiary of the fraudulent transfers from the Debtor unpersuasive. The cases are ROSEMARY C. CRAWFORD, Trustee of the Estate of Zambrano Corporation, Plaintiff, v. EUGENE ZAMBRANO, III, Defendant; ROSEMARY C. CRAWFORD, Trustee of the Estate of Zambrano Corporation, Plaintiff, v. HILLCREST DEVELOPMENT ASSOCIATES, LP, Defendant; ROSEMARY C. CRAWFORD, Trustee of the Estate of Zambrano Corporation, Plaintiff, v. EUGENE ZAMBRANO, JR., Individually and Jointly with MARY ZAMBRANO, his wife, Defendants, Adv. Proc. Nos. 09-2045JAD, 11-2123JAD, and 11-2122JAD (Bankr. W.D. Pa.). A copy of the Court's Sept. 17, 2012 Memorandum Opinion is available at http://is.gd/hlXamcfrom Leagle.com. About Zambrano Corp. Zambrano Corporation's unsecured creditors placed the Company in Chapter 11 bankruptcy (Bankr. W.D. Pa. Case No. 09-20453) on Jan. 26, 2009. Zambrano is a Pennsylvania corporation that previously engaged in the business of general contracting, construction, and real estate development. Eugene Zambrano, Jr., was the principal of the Debtor from the Debtor's inception until 2003. In December 2003, Eugene Zambrano III purchased his father's interest in the Debtor and several related entities by means of a private annuity contract between Hillcrest and EZJr. EZIII was the principal of the Debtor and the Debtor's 100% shareholder from 2003 through the bankruptcy filing on Jan. 26, 2009. The petitioners are represented by David K. Rudov, Esq., at Rudov & Stein. After the entry of an order for relief, the Debtor's bankruptcy case was later converted from a Chapter 11 reorganization to a Chapter 7 liquidation on June 26, 2009. Rosemary C. Crawford was appointed as Chapter 7 trustee. * Moody's Says Durables Sector have Low Risk From EU Crisis ----------------------------------------------------------- The US-rated consumer durables sector's low exposure to Europe- derived revenue will insulate companies from sluggish revenue growth or declines stemming from cutbacks in European consumers' discretionary spending, says Moody's Investors Service in a new special comment, "Consumer Durables Companies' Revenue Exposure to Europe Is Low, Limiting Risk." Moody's examined 29 US-rated consumer durable companies and identified 23 that derive a portion of revenues from Europe. The six companies Moody's identified as having the largest European exposure are: SRAM Corporation, Steinway Musical Instruments, Fender Musical Instruments, Gibson Guitar, Targus Group International and PlayPower Inc. "But overall, US-rated consumer durables companies generate just under 15% of their total revenue from Europe, and this low percentage limits their exposure," said Moody's Vice President Kevin Cassidy. "We expect divergence by country will be significant." A number of the 23 companies reported a 5% to 10% decline in second-quarter European revenues, compared to the second quarter of 2011, says Moody's. That said, boat-maker Brunswick's European revenue contracted almost 25%, while piano manufacturer Steinway's European revenue shrank more than 20%. Moody's expects the performance divergence between the southern periphery countries such as Portugal, Italy, Space and Greece, and northern states such as Germany and Austria to persist in 2012 and 2013. The report notes that 19 of the 23 companies covered in the report have some exposure to at least one of the southern periphery countries, but that only Brunswick generates more than 10% of its European revenues from Portugal, Italy, Spain and Greece. * Grassley, Franken Seek to Overturn Supreme Court Farmer Ruling ---------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Republican Senator Charles Grassley from Iowa and Democrat Al Franken from Minnesota introduced a bill last week to overturn a 5-4 ruling in June from the U.S. Supreme Court affecting family farmers. According to the report, the Supreme Court ruled that capital gains taxes arising from sale of property after an individual family farmer's Chapter 12 bankruptcy filing aren't discharged as a general unsecured debt. Many small farmers will be unable to reorganize in bankruptcy given inability to pay the gains tax that must be paid in full as a result of the ruling. In view of the Supreme Court decision, farmers can treat capital gains as general unsecured claims only if the sale took place before bankruptcy. The report relates that many farmers can't sell before bankruptcy because the sale may not generate enough to pay a secured lender in full. Sen. Grassley said that the Supreme Court's ruling didn't accomplish what he intended with a 2005 amendment to law governing farmer bankruptcies. The Grassley-Franken bill would allow farmers to treat capital gains taxes as general unsecured claims if the sale takes place during the Chapter 12 farmer reorganization. The bill would also give the same treatment to some sales after bankruptcy that are contemplated by the reorganization plan. The report notes that Sen. Grassley said his bill would "remove the Internal Revenue Service's veto power over a bankruptcy reorganization plan's confirmation." Chapter 12 of the U.S. Bankruptcy Code contains special reorganization provisions for farmers with less than $3.8 million in debt. The Bloomberg report discloses that the bill, S. 3545, was referred to the Senate Finance Committee. Although the senators would like the bill to be considered this year, they said they "will press for full consideration in the new Congress." * Failed St. Louis Bank Bring Year's Total to 42 ------------------------------------------------ Truman Bank, Saint Louis, Missouri, was closed Friday by the Missouri Division of Finance, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Simmons First National Bank, Pine Bluff, Arkansas, to assume all of the deposits of Truman Bank. As of June 30, 2012, Truman Bank had approximately $282.3 million in total assets and $245.7 million in total deposits. In addition to assuming all of the deposits of the failed bank, Simmons First National Bank agreed to purchase essentially all of the failed bank's assets. Truman Bank is the 42nd FDIC-insured institution to fail in the nation this year, and the second in Missouri. The last FDIC- insured institution closed in the state was Glasgow Savings Bank, Glasgow, on July 13, 2012. 2012 Failed Banks List The FDIC was appointed as receiver for the closed banks. To protect the depositors, the FDIC entered into a purchase and assumption agreement with various banks that agreed to assume the deposits of most of the closed banks. The FDIC also entered into loss-share transactions on assets bought by the banks. For this year, the failed banks are: Loss-Share Transaction Party FDIC Cost Assets of Bank That Assumed to Insurance Closed Bank Deposits & Bought Fund Closed Bank (millions) Certain Assets (millions) ----------- ----------- ----------------- ------------ Truman Bank $282.3 Simmons First National $34.0 First Commercial Bank $215.9 Republic Bank & Trust $63.9 Waukegan Savings Bank $88.9 First Midwest Bank $19.8 Jasper Banking Company $216.7 Stearns Bank, N.A. $58.1 Second Federal Savings $199.1 Hinsdale Bank & Trust $76.9 Heartland Bank $110.0 Metcalf Bank $3.1 Georgia Trust Bank $119.8 Community & Southern $20.9 The Royal Palm Bank $87.0 First National Bank $13.5 First Cherokee State $222.7 Community & Southern $36.9 Glasgow Savings Bank $24.8 Regional Missouri $0.1 Montgomery Bank & Trust $173.6 Ameris Bank $75.2 The Farmers Bank $163.9 Clayton Bank and Trust $28.3 Security Exchange Bank $151.0 Fidelity Bank $34.3 Putnam State Bank $169.5 Harbor Community Bank $37.4 Waccamaw Bank $533.1 First Community Bank $51.1 Farmers' and Traders' $43.1 First State Bank $8.9 First Capital Bank $46.1 F & M Bank $5.6 Carolina Federal $54.4 Bank of North Carolina $15.2 Alabama Trust Bank $51.6 Southern States Bank $8.9 Security Bank, N.A. $101.0 Banesco USA $10.8 Plantation Federal $486.4 First Federal Bank $76.0 Inter Savings Bank $473.0 Great Southern Bank $117.5 Bank of the Est. Shore $166.7 [No Acquirer] $41.8 Palm Desert Nat'l $125.8 Pacific Premier Bank $20.1 HarVest Bank of Md. $164.3 Sonabank $17.2 Fort Lee Federal $51.9 Alma Bank $14.0 Fidelity Bank $818.2 The Huntington Nat'l $92.8 Premier Bank $268.7 Int'l Bank of Chi. $64.1 Covenant Bank $95.7 Stearns Bank, N.A. $31.5 New City Bank $71.2 [No Acquirer] $17.4 Global Commerce Bank $143.7 Metro City Bank $17.9 Central Bank of Georgia $278.9 Ameris Bank $67.5 Home Savings of Amer. $434.1 [No Acquirer] $38.8 Charter National Bank $93.9 Barrington Bank $17.4 SCB Bank $182.6 First Merchants Bank $33.9 Patriot Bank $111.3 First Resource Bank $32.6 BankEast $272.6 U.S. Bank N.A. $75.6 Tennessee Commerce $1,185.0 Republic Bank & Trust $416.8 First Guaranty Bank $377.9 CenterState Bank $82.0 American Eagle $19.6 Capital Bank, N.A. $3.2 The First State Bank $416.8 Hamilton State Bank $416.8 Central Florida $79.1 CenterState Bank $24.4 In 2011 there were 92 failed banks, compared with 157 in 2010, 140 in 2009 and just 25 for 2008. The failures in 2010 were the most since 1992, when 179 institutions were taken over by regulators. A complete list of banks that failed since 2000 is available at: http://www.fdic.gov/bank/individual/failed/banklist.html 813 Banks in Problem List The FDIC's Quarterly Banking Profile for Dec. 31, 2011, says that The number of institutions on the FDIC's "Problem List" declined from 844 to 813 during the quarter, and total assets of "problem" institutions fell from $339 billion to $319.4 billion. The number of institutions in the "problem list" has decreased for the third consecutive quarter. The FDIC defines "problem" institutions as those with financial, operational or managerial weaknesses that threaten their viability. The deposit insurance fund, which protects customer holdings up to $250,000 per account in the event of a failure, saw its balance increase in the fourth quarter to $9.2 billion (unaudited) from $7.8 billion in the third quarter, the eighth consecutive quarterly increase. Problem Institutions Failed Institutions -------------------- ------------------- Year Number Assets (Mil) Number Assets (Mil) ---- ------ ------------ ------ ------------ 2011 813 $319,432 92 $34,923 2010 884 $390,017 157 $92,085 2009 702 $402,800 140 $169,700 2008 252 $159,405 25 $371,945 2007 76 $22,189 3 $2,615 2006 50 $8,265 0 $0 2005 52 $6,607 0 $0 2004 80 $28,250 4 $170 Federal regulators assign a composite rating to each financial institution, based upon an evaluation of financial and operational criteria. The rating is based on a scale of 1 to 5 in ascending order of supervisory concern. "Problem" institutions are those institutions with financial, operational, or managerial weaknesses that threaten their continued financial viability. Depending upon the degree of risk and supervisory concern, they are rated either a "4" or "5." The number and assets of "problem" institutions are based on FDIC composite ratings. Prior to March 31, 2008, for institutions whose primary federal regulator was the OTS, the OTS composite rating was used. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Sept. 19-20, 2012 AMERICAN BANKRUPTCY INSTITUTE 38th Annual Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganizations New York University School of Law, New York, N.Y. Contact: 1-703-739-0800 ; http://www.abiworld.org/ Oct. 4, 2012 AMERICAN BANKRUPTCY INSTITUTE Nuts & Bolts: Bankruptcy Fundamentals for Young and New Practitioners Charles Evans Whittaker Courthouse, Kansas City, Mo. Contact: 1-703-739-0800 ; http://www.abiworld.org/ Oct. 5, 2012 AMERICAN BANKRUPTCY INSTITUTE 32nd Annual Midwestern Bankruptcy Institute & Consumer Forum Kansas City Marriott Downtown, Kansas City, Mo. Contact: 1-703-739-0800 ; http://www.abiworld.org/ Oct. 5, 2012 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy 2012: Views from the Bench Georgetown University Law Center, Washington, D.C. Contact: 1-703-739-0800 ; http://www.abiworld.org/ Oct. 8, 2012 AMERICAN BANKRUPTCY INSTITUTE 5th Annual Chicago Consumer Bankruptcy Conference University of Chicago Gleacher Center, Chicago, Ill. Contact: 1-703-739-0800 ; http://www.abiworld.org/ Oct. 18, 2012 AMERICAN BANKRUPTCY INSTITUTE International Insolvency & Restructuring Symposium Parco dei Principi Grand Hotel & Spa, Rome, Italy Contact: 1-703-739-0800 ; http://www.abiworld.org/ Oct. 26, 2012 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program San Diego Marriott Marquis and Marina, San Diego, Calif. Contact: 1-703-739-0800 ; http://www.abiworld.org/ Nov. 1-2, 2012 AMERICAN BANKRUPTCY INSTITUTE Corporate Restructuring Competition Wharton University of Pennsylvania, Philadelphia, Pa. Contact: 1-703-739-0800 ; http://www.abiworld.org/ Nov. 1-3, 2012 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Westin Copley Place, Boston, Mass. Contact: http://www.turnaround.org/ Nov. 7, 2012 AMERICAN BANKRUPTCY INSTITUTE U.S./Mexico Restructuring Symposium The Four Seasons, Mexico City, D.F. Contact: 1-703-739-0800 ; http://www.abiworld.org/ Nov. 12, 2012 AMERICAN BANKRUPTCY INSTITUTE Detroit Consumer Bankruptcy Conference MGM Grand, Detroit, Mich. Contact: 1-703-739-0800 ; http://www.abiworld.org/ Nov. 26, 2012 BEARD GROUP, INC. 19th Annual Distressed Investing Conference The Helmsley Park Lane Hotel, New York, N.Y. Contact: 240-629-3300 or http://bankrupt.com/ Nov. 29-30, 2012 MID-SOUTH COMMERCIAL LAW INSTITUTE 33rd Annual Bankruptcy & Commercial Law Seminar Nashville Marriott at Vanderbilt, Nashville, Tenn. Contact: 1-703-739-0800 ; http://www.abiworld.org/ Nov. 29 - Dec. 1, 2012 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference JW Marriott Starr Pass Resort & Spa, Tucson, Ariz. Contact: 1-703-739-0800 ; http://www.abiworld.org/ Dec. 4-8, 2012 AMERICAN BANKRUPTCY INSTITUTE ABI/SJUSL Mediation Training Symposium St. John's University, Queens, N.Y. Contact: 1-703-739-0800 ; http://www.abiworld.org/ Jan. 24-25, 2013 AMERICAN BANKRUPTCY INSTITUTE Rocky Mountain Bankruptcy Conference Four Seasons Hotel Denver, Denver, Colo. Contact: 1-703-739-0800 ; http://www.abiworld.org/ Feb. 7-9, 2013 AMERICAN BANKRUPTCY INSTITUTE Caribbean Involvency Symposium Eden Roc Renaissance, Miami Beach, Fla. Contact: 1-703-739-0800 ; http://www.abiworld.org/ Feb. 17-19, 2013 AMERICAN BANKRUPTCY INSTITUTE Advanced Consumer Bankruptcy Practice Institute Charles Evans Whittaker Courthouse, Kansas City, Mo. Contact: 1-703-739-0800 ; http://www.abiworld.org/ Feb. 20-22, 2013 AMERICAN BANKRUPTCY INSTITUTE VALCON Four Seasons Las Vegas, Las Vegas, Nev. Contact: 1-703-739-0800 ; http://www.abiworld.org/ Apr. 10-12, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference JW Marriott Chicago, Chicago, Ill. Contact: http://www.turnaround.org/ Apr. 18-21, 2013 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, National Harbor, Md. Contact: 1-703-739-0800 ; http://www.abiworld.org/ June 13-16, 2013 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, Mich. Contact: 1-703-739-0800 ; http://www.abiworld.org/ July 11-13, 2013 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Hyatt Regency Newport, Newport, R.I. Contact: 1-703-739-0800 ; http://www.abiworld.org/ July 18-21, 2013 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton Amelia Island, Amelia Island, Fla. Contact: 1-703-739-0800 ; http://www.abiworld.org/ Aug. 8-10, 2013 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hotel Hershey, Hershey, Pa. Contact: 1-703-739-0800 ; http://www.abiworld.org/ Aug. 22-24, 2013 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference Hyatt Regency Lake Tahoe, Incline Village, Nev. Contact: 1-703-739-0800 ; http://www.abiworld.org/ Oct. 3-5, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Wardman Park, Washington, D.C. Contact: http://www.turnaround.org/ Nov. 1, 2013 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program Atlanta Marriott Marquis, Atlanta, Ga. Contact: 1-703-739-0800 ; http://www.abiworld.org/ Dec. 2, 2013 BEARD GROUP, INC. 19th Annual Distressed Investing Conference The Helmsley Park Lane Hotel, New York, N.Y. Contact: 240-629-3300 or http://bankrupt.com/ Dec. 5-7, 2013 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Terranea Resort, Rancho Palos Verdes, Calif. Contact: 1-703-739-0800 ; http://www.abiworld.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, 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 ***