/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/121123.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, November 23, 2012, Vol. 16, No. 326 Headlines 44 CP I: Parkway Bank Can Proceed With Zoning Hearing 4KIDS ENTERTAINMENT: Reports $11.9-Mil. Net Income in 3rd Quarter 501 GRANT STREET: Sheriff Sale for Union Trust Building in January ADJ INC: Case Summary & 9 Unsecured Creditors ADVANSOURCE BIOMATERIALS: Incurs $324,000 Net Loss in Sept. 30 Qtr AFFIRMATIVE INSURANCE: Moody's Lowers IFS Rating to 'Caa1' ALLY FINANCIAL: Moody's Reviews B1 Sr. Unsec. Rating for Upgrade AMERICAN LARDER: Salt Restaurant Files for Chapter 11 Bankruptcy AMPAL-AMERICAN ISRAEL: Incurs $3.3-Mil. Net Loss in 3rd Quarter ANV SECURITY: Incurs $298,161 Net Loss in Third Quarter AOXING PHARMACEUTICAL: Incurs $449,000 Net Loss in Sept. 30 Qtr. APPLIED ENERGETICS: Incurs $366,067 Net Loss in Third Quarter ATLANTIC COAST: Incurs $1.7-Mil. Net Loss in 3rd Quarter BALKANI REALTY: Voluntary Chapter 11 Case Summary BERNARD L. MADOFF: Revives $30-Bil. Claims vs. JPM and HSBC BEST BUY: Fitch Lowers Rating on IDR to 'BB-'; Outlook Negative BEST BUY: S&P Cuts Corp. Credit Rating to 'BB'; Outlook Negative BLACK ELK: S&P Puts 'CCC+' CCR on Watch on Oil Platform Accident BLUE RIDGE: Case Summary & 20 Largest Unsecured Creditors BLUE SPRINGS: Plan Filing Exclusivity Extended to Feb. 14 BOBIER TOOL: Case Summary & 20 Largest Unsecured Creditors BRADEN RIVER: Case Summary & 11 Unsecured Creditors BRIER CREEK: Wants Exclusive Filing Period Extended to Jan. 21 BROWNSTONE LOFTS: Wants Court to Dismiss Case CENTRAL ENERGY: Incurs $369,000 Net Loss in Third Quarter CEREPLAST INC: Incurs $10-Mil. Net Loss in Third Quarter CHINA 3C GROUP: Incurs $4.2-Mil. Net Loss in Third Quarter CHINA CEETOP.COM: Incurs $151,278 Net Loss in Third Quarter CHINA ENERGY: Reports $900,600 Net Income in Third Quarter CHINA FRUITS: Reports $49,340 Net Income in Third Quarter CHINA GINSENG: Incurs $1.4-Mil. Net Loss in Q1 Ended Sept. 30 CHINA GREEN ENERGY: Incurs $184,700 Net Loss in Third Quarter CHINA SHOUGUAN: Reports $312,060 Net Income in Third Quarter CHINA TELETECH: Reports $112,000 Net Income in Third Quarter CHINA MARKETING: Incurs $602,000 Net Loss in Third Quarter CHINESEINVESTORS.COM: Incurs $284,000 Net Loss in Sept. 30 Quarter COLLEGE BOOK: Files Schedules of Assets and Liabilities COMMUNITY COUNTRY: Day School Files for Bankruptcy CONSUMER CAPITAL: Incurs $411,000 Net Loss in Third Quarter CORNETT HOSPITALITY: Case Summary & 20 Largest Unsecured Creditors CORROZI-FOUNTAINVIEW: Fails to File Plan; Court Dismisses Case CROSS BORDER: Incurs $606,000 Net Loss in Third Quarter CYBRDI INC: Incurs $134,800 Net Loss in Third Quarter CYPRESS OF TAMPA: Case Summary & 4 Largest Unsecured Creditors DELTA OIL: Incurs $129,600 Net Loss in Third Quarter DEWEY & LEBOEUF: Collects $4.9-Mil. in Fees During October DEWEY & LEBOEUF: Has Access to Cash Collateral Until Dec. 2 DEWEY & LEBOEUF: Can Employ E&Y as Tax Services Provider DEWEY & LEBOEUF: Hearing on Motion to Disband FPC Today EMERALD PROPERTIES: Case Summary & 10 Unsecured Creditors ENVISION SOLAR: Incurs $600,600 Net Loss in Third Quarter FIRST ACCEPTANCE: A.M. Best Affirms 'B' Financial Strength Rating FIRST NATIONAL: Incurs $6.5-Mil. Net Loss in Third Quarter FITZLORD INC: Case Summary & 20 Largest Unsecured Creditors FLURIDA GROUP: Reports $36,600 Net Income in Third Quarter GENERAL MOTORS: Moody's Affirms 'Ba3' Ratings; Outlook Positive GENIUS BRANDS: Incurs $720,400 Net Loss in Third Quarter GEOPETRO RESOURCES: Has Accumulated Deficit of $49.1MM at Sept. 30 GLOBAL CASINOS: Incurs $128,576 Net Loss in Sept. 30 Quarter GMX RESOURCES: S&P Raises CCR To 'CCC'; Outlook Developing GRYPHON GOLD: Incurs $1.1-Mil. Net Loss in Sept. 30 Quarter HAWAII OUTDOOR: Case Summary & 20 Largest Unsecured Creditors HAWKER BEECHRAFT: Judge Rejects Bid for Speedy Inventory Sale HOSTESS BRANDS: Adviser Says Customers Interested in Buying Brands HOSTESS BRANDS: Begins Firings After Wind Down Approved HOTEL INDIGO: Ownership Group Emerges From Chapter 11 Bankruptcy HYPERTENSION DIAGNOSTICS: Posts $729,800 Net Loss in Sept. 30 Qtr. IBIO INC: Incurs $2.1-Mil. Net Loss in Sept. 30 Quarter IN HOOT: Voluntary Chapter 11 Case Summary INDEPENDENCE TAX IV: Reports $607,000 Net Income in Sept. 30 Qtr. INFRAX SYSTEMS: Incurs $594,000 Net Loss in Sept. 30 Quarter INKSURE TECHNOLOGIES: Incurs $59,000 Net Loss in Third Quarter INTERNATIONAL HOME: U.S. Trustee Appoints Marcos Colon as Examiner INVENT VENTURES: Reports $416K Net Loss in Third Quarter IVEDA SOLUTIONS: Incurs $834,100 Net Loss in Third Quarter JEFFERSON 28K: Case Summary & 2 Largest Unsecured Creditors KANSAS CITY SOUTHERN: Moody's Hikes Sr. Unsec. Rating From (P)Ba2 KAR AUCTION: Moody's Says Proposed Amendment Credit Negative KWF THREE: Chapter 11 Case Summary & 4 Unsecured Creditors L. K. FAMILY: Voluntary Chapter 11 Case Summary LAS VEGAS RAILWAY: Incurs $870,020 Net Loss in Sept. 30 Quarter LBI MEDIA HOLDINGS: Incurs $13.9-Mil. Net Loss in Third Quarter LENDINGCLUB CORPORATION: Incurs $882,000 Net Loss in Sept. 30 Qtr. LEWISTOWN HOSPITAL: Moody's Cuts Long-Term Bond Rating to 'Ba1' LIGHTSQUARED INC: FCC Seeks Comments on Proposal Band Spectrum LIGHTSQUARED INC: EY LLP May Provide Additional Tax Services LIGHTSQUARED INC: Negotiates Extension of Lease Decision Period LIGHTSQUARED INC: LP Lenders Files Redacted Version of Complaint LYFE COMMUNICATIONS: Incurs $322,500 Net Loss in Third Quarter METROGAS SA: Had ARS82.6-Mil. Net Loss in First 9 Months of 2012 MOUNT VERNON: Voluntary Chapter 11 Case Summary NEW BEGINNING: Case Summary & 7 Unsecured Creditors OAKHURST NATIONAL: Case Summary & Unsecured Creditor ODYSSEY DIVERSIFIED: Files Schedules of Assets and Liabilities OPTIMUMBANK HOLDINGS: Incurs $1-Mil. Net Loss in Third Quarter ORBITAL SCIENCES: Refinancing Plan No Impact on Moody's 'Ba1' CFR OLD SECOND BANCORP: Reports $120,000 Net Income in Third Quarter ORLANDO, FL: Fitch Affirms Low-B Rating on TDT Revenue Bonds PACIFICHEALTH LABORATORIES: Incurs $345,400 Net Loss in 3rd Qtr. PATRIOT COAL: Claims Recovery Group Buys Claim PATRIOT COAL: Sierra Liquidity Fund Buys Claims PATRIOT COAL: Court Extends Exclusive Right to File Plan to May 5 PATRIOT COAL: XL May Pay Defense Costs of Whiting and Schroeder PB REDELL: Case Summary & 20 Largest Unsecured Creditors PEREGRINE DEVELOPMENT: U.S. Trustee Wants Chapter 7 Liquidation PHYSICAL PROPERTY: Incurs HK$101,000 Net Loss in Third Quarter PMI GROUP: S&P Withdraws 'D' Counterparty Credit Rating POTOMAC SUPPLY: $10MM AIP Sale Okayed; Unsecureds May Recoup 10% PROBE MANUFACTURING: Incurs $71,848 Net Loss in Third Quarter PROVEST REALTY: Voluntary Chapter 11 Case Summary RADIOSHACK CORP: S&P Lowers CCR to 'CCC+' on Weak Performance REPUBLIC MORTGAGE: S&P Withdraws 'R' Counterparty Credit Rating RG STEEL: Court Approves Settlement Agreements With Teamsters RG STEEL: Court Approves Retention Plan for Key Employees RG STEEL: Kinder and Pinney Dock Withdraw Motion for Stay Relief RG STEEL: USW Objects to Retention Plan for 21 Key Employees RICEBRAN TECHNOLOGIES: Incurs $580,000 Net Loss in Third Quarter RICHFIELD OIL: Incurs $1.1-Mil. Net Loss in Third Quarter ROCKDALE RESOURCES: Incurs $523,500 Net Loss in Third Quarter SAFEGUARD SECURITY: Case Summary & 16 Unsecured Creditors SAFENET INC: S&P Affirms 'B' Corp. Credit Rating; Outlook Positive SAN BERNARDINO: Agrees to Mediation With Firefighters Union SMILE BRANDS: S&P Lowers CCR to 'B-' on Negative Cash Flow SRY INC: Case Summary & 20 Largest Unsecured Creditors STILLWATER ASSET: Wants Dismissal of Involuntary Ch 11 Case STONER AND COMPANY: US Trustee Wins Dismissal of Chapter 11 Case STORY BUILDING: Case Dismissal Hearing Continued to Dec. 12 SUPERCONDUCTOR TECHNOLOGIES: Incurs $2.3MM Net Loss in 3rd Quarter TARGET ACQUISITIONS I: Incurs $373,000 Net Loss in Third Quarter TEXAS INDUSTRIES: S&P Revises Outlook on 'B-' CCR to Stable THE HALLWOOD GROUP: Incurs $1.1-Mil. Net Loss in Third Quarter TRAINOR GLASS: Taps Cole Martin to Render Auditing Services TURBOSONIC TECHNOLOGIES: Had $116K Net Loss in Fiscal 1st Quarter ULURU INC: Incurs $851,700 Net Loss in Third Quarter VECTOR GROUP: Moody's Affirms 'B2' CFR/PDR; Outlook Negative VERMILLION INC: Incurs $2.0-Mil. Net Loss in Third Quarter VILLAGIO PARTNERS: Court OKs Jimbo Homeyer as Real Estate Agent VILLAGIO PARTNERS: Marcel, Compass Can Hire Realty Partners VILLAGIO PARTNERS: Compass Care Taps Colliers Appelt as Broker VOICESERVE INC: June 30 Form 10-Q Restated to Correct Errors VOICESERVE INC: Incurs $1.1-Mil. Net Loss in Q2 Ended Sept. 30 WOONSOCKET, RI: Fitch Affirms 'B' Rating on $118-Mil. GO Bonds ZHONE TECHNOLOGIES: Incurs $4.2-Mil. Net Loss in Third Quarter ZOOM TELEPHONICS: Incurs $155,000 Net Loss in Third Quarter * BOOK REVIEW: Ralph H. Kilmann's Beyond the Quick Fix ********* 44 CP I: Parkway Bank Can Proceed With Zoning Hearing ----------------------------------------------------- The U.S. Bankruptcy Court for the District of Arizona entered an order granting Parkway Bank & Trust relief from the automatic stay pursuant to 11 U.S.C. Sec. 362(d)(2) in the Chapter 11 cases of 44 CP I Loan LLC and 44 CP II Loan LLC. Christopher R. Kaup, the attorney for Parkway Bank & Trust, sought and obtained a waiver of the automatic 14-day stay for the limited extent of permitting the zoning hearing to go forward. Parkway Bank has a pending motion to dismiss the Chapter 11 case. 44 CP I Loan LLC and 44 CP II Loan LLC filed bare-bones Chapter 11 petitions (Bankr. D. Ariz. Case Nos. 12-15286 and 12-15287) in Phoenix on July 9, 2012. The Debtors each estimated assets and debts of $10 million to $50 million. Judge Eileen W. Hollowell oversees the case. Mark Winkleman, as chief operating officer, signed the Chapter 11 petition. The Debtors are represented by Cathy L. Reece, Esq., at Fennemore Craig, P.C. 4KIDS ENTERTAINMENT: Reports $11.9-Mil. Net Income in 3rd Quarter ----------------------------------------------------------------- 4Kids Entertainment, Inc., filed its quarterly report on Form 10- Q, reporting net income of $11.9 million for the 2012 third quarter, compared to a net loss of $5.3 million in 2011. Revenue for the 2012 third quarter was $263,000, compared to $1.7 million in 2011. The net income for the 2012 nine month period was $9.7 million, compared to a net loss of $13.5 million in 2011. Revenue for the 2012 nine month period was $3.0 million, compared to $6.2 million in 2011. Income from continuing operations was $20.4 million for the nine months ended Sept. 30, 2012, compared to a loss of $2.1 million in 2011. During the nine months ended Sept. 30, 2012, the Company recognized a gain on litigation in the amount of $8.0 million pursuant to the Yu-Gi-Oh! Settlement as well as a gain of $16.7 million in conjunction with the sale of certain of the Company's assets pursuant to the Asset Purchase Agreement entered into on June 24, 2012, among, 4Kids, Saban Bidder, and Konami Bidder. The Company's balance sheet at Sept. 30, 2012, showed $15.8 million in total assets, $12.1 million in total liabilities, and stockholders' equity of $3.7 million. A copy of the Form 10-Q is available at http://is.gd/gVGOSD About 4Kids Entertainment New York-based 4Kids Entertainment, Inc., dba 4Kids, is an entertainment and media company specializing in the youth oriented market, with operations in these business segments: (i) licensing, (ii) advertising and media broadcast, and (iii) television and film production/distribution. The parent entity, 4Kids Entertainment, was organized as a New York corporation in 1970. 4Kids filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code to protect its most valuable asset -- its rights under an exclusive license relating to the popular Yu-Gi-Oh! series of animated television programs -- from efforts by the licensor, a consortium of Japanese companies, to terminate the license and force 4Kids out of business. 4Kids and affiliates filed Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 11-11607) on April 6, 2011. Kaye Scholer LLP is the Debtors' restructuring counsel. Epiq Bankruptcy Solutions, LLC, is the Debtors' claims and notice agent. BDO Capital Advisors, LLC, is the financial advisor and investment banker. EisnerAmper LLP fka Eisner LLP serves as auditor and tax advisor. 4Kids Entertainment disclosed $78,397,971 in assets and $86,515,395 in liabilities as of the Chapter 11 filing. Hahn & Hessen LLP serves as counsel to the Official Committee of Unsecured Creditors. Epiq Bankruptcy Solutions LLC serves as its information agent for the Committee. The Consortium consists of TV Tokyo Corporation, which owns and operates a television station in Japan; ASATSU-DK Inc., a Japanese advertising company; and Nihon Ad Systems, ADK's wholly owned subsidiary. The Consortium is represented by Kyle C. Bisceglie, Esq., Michael S. Fox, Esq., Ellen V. Holloman, Esq., and Mason Barney, Esq., at Olshan Grundman Frome Rosenzweig & Wolosky LLP, in New York. In January 2012, the bankruptcy judge ruled in favor of 4Kids, deciding that the Yu-Gi-Oh! property license agreement between the Debtor and the licensor was not effectively terminated prior to the bankruptcy filing. Following the ruling, 4Kids entered into a settlement where it would receive $8 million to end the dispute over its valuable Yu-Gi-Oh! Property. On Oct. 5, 2012, the Company filed a disclosure statement with respect to Debtors' proposed joint plan of reorganization and (ii) the Debtors' joint plan of reorganization and a motion establishing deadlines and procedures with respect to the solicitation of votes on the Plan. On Oct. 31, 2012, the Bankruptcy Court approved the Procedures Motion and the Disclosure Statement and authorized the Debtors to solicit votes on the Plan. The Debtors formally commenced solicitation in respect of the Plan in early November 2012. 501 GRANT STREET: Sheriff Sale for Union Trust Building in January ------------------------------------------------------------------ Mark Belko at Pittsburgh Post-Gazette reports the Union Trust Building, built nearly a century ago by industrialist Henry Clay Frick, is scheduled for a sheriff sale Jan. 7, 2012, after U.S. Bankruptcy Judge Judith K. Fitzgerald dismissed a Chapter 11 bankruptcy petition by its owner. The report notes Judge Fitzgerald dismissed the 501 Grant Street petition on the Union Trust Building without prejudice, meaning it can be re-filed with the consent of all owners. According to the report, Judge Fitzgerald's decision cleared the way for SA Challenger Inc., which was assigned the building's mortgage by U.S. Bank, to foreclose on the property. The building owner, 501 Grant Street Partners, sought bankruptcy court protection to avoid a sheriff sale in August. The report relates SA Challenger initially filed for foreclosure after Allegheny County Common Pleas Judge Christine Ward ruled last spring that the owner had defaulted on loan payments. At the time, she calculated the amount owed at $41.1 million. In its latest filing, SA Challenger is seeking to collect $41.4 million. The report notes earlier this month, at the lender's request, Judge Ward appointed the real estate firm CBRE to serve as receiver for the building, overseeing its operation and management until the sheriff sale takes place. According to the report, Judge Ward ruled that 501 Grant Street Partners could not pay to maintain the property because it no longer had access to building rents, its only income source. Even when it did so, she added, it was unable to manage and service its debt. 501 Grant Street Partners, LLC, owner of the Union Trust Building, filed a Chapter 11 bankruptcy petition (Bankr. W.D. Pa. Case No. 12-23890) on Aug. 3, 2012, listing under $50,000 in assets and debts. Roger M. Bould, Esq., at Keevican Weiss Bauerle & Hirsch, LLC, serves as the Debtor's counsel. ADJ INC: Case Summary & 9 Unsecured Creditors --------------------------------------------- Debtor: ADJ, Inc. a New Mexico Corporation dba Baymont Inn & Suites 1608 E. Santa Fe Ave. Grants, NM 87020 Bankruptcy Case No.: 12-14264 Chapter 11 Petition Date: November 20, 2012 Court: United States Bankruptcy Court New Mexico (Albuquerque) Judge: Robert H. Jacobvitz Debtor's Counsel: R Trey Arvizu, III, Esq. ARVIZULAW.COM, LTD. P.O. Box 1479 Las Cruces, NM 88004-1479 Tel: (575) 527-8600 Fax: (575) 527-1199 E-mail: trey@arvizulaw.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 nine largest unsecured creditors is available for free at http://bankrupt.com/misc/nmb12-14264.pdf The petition was signed by Harpreet Singh, president. ADVANSOURCE BIOMATERIALS: Incurs $324,000 Net Loss in Sept. 30 Qtr ------------------------------------------------------------------ AdvanSource Biomaterials Corporation filed its quarterly report on Form 10-Q, reporting a net loss of $324,000 on $451,00 of revenues for the three months ended Sept. 30, 2012, compared with net income of $38,000 on $848,000 of revenues for the three months ended Sept. 30, 2011. For the six months ended Sept. 30, 2012, the Company had a net loss of $717,000 on $916,000 of revenues, compared with a net loss of $524,000 on $1.2 million of revenues for the six months ended Sept. 30, 2011. The Company's balance sheet at Sept. 30, 2012, showed $3.3 million in total assets, $2.4 million in total liabilities, and stockholders' equity of $905,000. A copy of the Form 10-Q is available at http://is.gd/xfv9Sn Wilmington, Mass.-based AdvanSource Biomaterials Corporation develops advanced polymer materials which provide critical characteristics in the design and development of medical devices. The Company's biomaterials are used in devices that are designed for treating a broad range of anatomical sites and disease states. AFFIRMATIVE INSURANCE: Moody's Lowers IFS Rating to 'Caa1' ---------------------------------------------------------- Moody's Investors Service has lowered the insurance financial strength ratings (IFS) of Affirmative Insurance Company (AIC) and Insura Property and Casualty Insurance Company (Insura), both subsidiaries of Affirmative Insurance Holdings, Inc. (Affirmative), to Caa1 from B3. In the same rating action, Moody's also confirmed the corporate family rating of Affirmative at Ca and the senior secured credit rating of its bank credit facility at Ca. The rating actions conclude a ratings review initiated on August 22, 2012, and reflect Affirmative's continued weak operating profitability and deteriorating cash flow position, despite the resolution of a deficiency with a loss reserve requirement under the Illinois Insurance Code. The outlook for the ratings remains negative. Moody's will also withdraw its rating on Insura as the company was merged into AIC on November 19, 2012. Ratings Rationale According to Moody's, the downgrade of the IFS ratings reflect the continued poor profitability of the company's regulated insurance operations. Moody's notes that AIC reported a decline in surplus of 21% (to $54.7 million) for the first nine months of 2012, following a 19% decline in 2011. AIC also posted negative statutory operating cash flows of $49.5 million for the first nine months of 2012, following negative operating cash flows of $84 million in 2011, while net written premium volume fell by 3.5% during the first nine months of 2012. Affirmative Insurance Company (AIC), the lead insurance company of the group, was deficient under the Illinois Insurance Code by $18.9 million (at 12/31/11) in the requirement to hold a qualifying amount of investments relative to loss and loss adjustment expense reserves. As of September 30, 2012, the company was in compliance, following several management actions, which included the consolidation of certain operating subsidiaries into AIC, the reallocation of certain qualifying investments, and additional borrowings from its lenders. The outlook for the ratings remains negative, reflecting continued heightened operational risks in its insurance business and ongoing potential to breach loan covenants in the bank credit facility. Despite now being in compliance with the Illinois Insurance Code, the company's financial condition remains very weak, given its negative unassigned surplus position and inability to dividend funds to the parent without regulatory approval. Overall premium revenue continues to decline, albeit at a slower pace, however, written premiums increased for Q3 2012. Given its deteriorating financial fundamentals, the company exercised the deferral feature of its trust preferred securities in February 2012 in order to preserve cash. During Q3 2012, the company violated the leverage ratio covenant under its bank credit facility. The company has received a waiver of the violation from its lenders and amended its existing loan agreement. The majority of debt service is supported by unregulated cash flows derived from its insurance services companies, agent's commissions and premium finance fees, revenue sources that depend to a meaningful extent on the premium revenues of the insurance operations. A further deterioration in the health of the insurance subsidiaries could adversely impact the magnitude of Affirmative's unregulated cash flows to the holding company. The following rating was downgraded, with a negative outlook: Affirmative Insurance Company -- insurance financial strength to Caa1 from B3; The following rating was downgraded, with a negative outlook and will be withdrawn: Insura Property & Casualty Company -- insurance financial strength to Caa1 from B3. The following rating was confirmed, with a negative outlook: Affirmative Insurance Holdings, Inc. -- senior secured bank credit facility at Ca; corporate family rating at Ca. The principal methodology used in this rating was Moody's Global Rating Methodology for Property and Casualty Insurers published in May 2010. Affirmative, based in Addison, TX is a producer and provider of non-standard personal automobile insurance to consumers in highly targeted geographic markets. The company offers products in 8 states including Louisiana, Texas, Alabama and Illinois. For the first nine months of 2012, Affirmative reported revenues of $154.3 million and a net loss of $43.6 million. As of September 30, 2012, Affirmative's shareholders' deficit was $125 million. ALLY FINANCIAL: Moody's Reviews B1 Sr. Unsec. Rating for Upgrade ---------------------------------------------------------------- Moody's Investors Service placed the long-term ratings of Ally Financial Inc. (B1 senior unsecured) and its supported subsidiaries on review for possible upgrade, while affirming the Not Prime commercial paper and other short-term ratings assigned to these entities. Ratings Rationale The review of Ally's long-term ratings is based on expected improvements in the firm's liquidity, capital position and operating efficiency after it divests non-core operations, makes further progress lowering funding costs, and reduces exposures to Residential Capital LLC (ResCap), Ally's mortgage finance subsidiary now in bankruptcy. Ally is reducing its operating footprint with the sale of its international businesses and certain mortgage assets, which will lead to a leaner enterprise focused on the US auto finance market where it is strongly positioned. On Nov. 21, Ally announced that General Motors Financial Company, a subsidiary of General Motors Corporation, will acquire Ally's Latin American and European operations as well as its share in a joint venture in China for $4.2 billion. Ally previously announced sales of its Canadian auto finance operations for $4.1 billion and Mexican insurance subsidiary for $865 million. Non-core international and mortgage operations were about 18% of Ally's consolidated assets of $182.5 billion at the end of the third quarter of 2012. Ally will use most proceeds from the sales to accelerate paying back $17.2 billion of capital the US government injected into Ally during the credit crisis. The US Treasury owns 74% of Ally's shares and $5.7 billion of mandatorily convertible preferred stock, which has a 9% dividend. Timing of the sale of US Treasury's shares in Ally is undetermined and will likely occur in stages, given the size of the stake. Independent of this, Ally's own efforts should simplify and reduce its cost of capital and reduce its reliance on market funding. "The reduction in Ally's risk weighted assets resulting from the sales should also strengthen Ally's measures of capital adequacy," said Moody's senior analyst Mark Wasden. Ally's Tier 1 common ratio, which measured 7.33% at September 30, 2012, should increase materially once the sales are consummated. Ally's efforts to distance itself from ResCap's contingent obligations is also progressing. This week, the US Bankruptcy Court approved the sale of ResCap's mortgage origination and servicing platforms and whole loan portfolios, further moving the company toward resolving creditor claims before the court. As part of ResCap's bankruptcy plan, Ally pledged $750 million of cash in exchange for a shield against future creditor claims. Moody's believes that Ally has sufficient capital to absorb additional costs that could reasonably arise during the ongoing bankruptcy process. During the ratings review, Moody's will weigh the anticipated benefits of Ally's transactions and further ResCap bankruptcy developments against the associated execution risks. Moody's will also consider the sustainability of Ally's positioning in the US auto lending market given the competitive landscape. Moody's is concerned that the strength of Ally's business proposition, which relates in part to its significant penetration of inventory floorplan financing for GM and Chrysler dealers, could be vulnerable to competitive incursion by lenders with lower cost funding sources. The further evolution of Ally Bank as a sustainably low-cost deposit funding platform is therefore also a key rating consideration. Moody's will also examine the forward strength of Ally's liquidity and capital positions, as well as the credit quality and profitability implications of trends in the company's business mix toward higher volumes of used auto lending and auto leasing. Ally Financial Inc. is a provider of automotive financial services with $182 billion in total assets at September 30, 2012. Ally Bank, the company's direct banking subsidiary, offers a variety of savings and checking account products. The methodology used in this rating was Finance Company Global Rating Methodology published in March 2012. On review for possible upgrade: Ally Financial Inc.: Issuer rating, placed on review for possible upgrade, currently B1 Senior unsecured, placed on review for possible upgrade, currently B1 Senior unsecured Medium-Term Note program, placed on review for possible upgrade, currently (P)B1 Senior unsecured shelf, placed on review for possible upgrade, currently (P)B1 Subordinate debt, placed on review for possible upgrade, currently B2 Preferred stock, placed on review for possible upgrade, currently a range of Caa1 to B3 Ally Credit Canada Limited: Senior unsecured Medium-Term Note program, placed on review for possible upgrade, currently (P)B1 GMAC Bank GmbH: Senior unsecured Medium-Term Note program, placed on review for possible upgrade, currently (P)B1 GMAC Capital Trust I: Preferred Stock, placed on review for possible upgrade, currently B3 GMAC International Finance B.V.: Senior Unsecured, placed on review for possible upgrade, currently B1 Senior unsecured Medium-Term Note program, placed on review for possible upgrade, currently a range of (P)NP to (P)B1 Assignments: Ally Financial Inc.: Corporate Family Rating, assigned B1, placed on review for possible upgrade AMERICAN LARDER: Salt Restaurant Files for Chapter 11 Bankruptcy ---------------------------------------------------------------- American Larder, which operates a restaurant called Salt, filed on Nov. 19, 2012, for Chapter 11 protection in the U.S. Bankruptcy Court for the Eastern District of Missouri, citing assets of less than $50,000 and liabilities of between $100,000 and $500,000. American Larder owes $76,500 to Merchant Advanced Funding LP; $75,436, Internal Revenue Service; $41,000, Rewards Network Establishment Services; $35,929, Missouri Department of Revenue Bankruptcy Unit; and $21,145, Ta Daa LLC, among others. According to the report, in August, the restaurant's landlord, Ta Daa LLC, sued to evict Salt, citing American Larder's failure to pay $51,025 in rent and late fees as grounds for terminating the lease. Salt had subsequently paid up, but Ta Daa proceeded with the suit. The report notes a hearing on the case was scheduled for Nov. 20, 2012, but has been postponed. Danielle A. Suberi, Esq., at Desai Eggman Mason LLC, represents American Larder. AMPAL-AMERICAN ISRAEL: Incurs $3.3-Mil. Net Loss in 3rd Quarter --------------------------------------------------------------- Ampal-American Israel Corporation filed its quarterly report on Form 10-Q, reporting a net loss of US$3.3 million for the 2012 third quarter, compared to a net loss of US$20.4 million in 2011. Revenue for the 2012 third quarter was US$107.9 million, compared to US$140.5 million in 2011. The decrease in net loss for the three months ended Sept. 30, 2012, resulted mainly from impairment of the investment in East Mediterranean Gas Co. S.A.E., an Egyptian joint stock company ("EMG") in the amount of US$33.6 million offset by translation gain of US$19.9 million in the corresponding period in 2011, as compared to translation income of US$5.8 million in the three months ended Sept. 30, 2012. The net loss for the 2012 nine month period was US$285.5 million, compared to a net loss of US$53.9 million in 2011. Revenue for the 2012 nine month period was US$328.4 million, compared to US$342.8 million in 2011. The net loss for the nine months ended Sept. 30, 2012, is primarily attributable to the impairment of the investment in EMG in the amount of US$260.4 million, as compared to a US$50.5 million loss in the corresponding period in 2011. The Company's balance sheet at Sept. 30, 2012, showed US$511.4 million in total assets, US$747.0 million in total liabilities, US$605,000 in redeemable noncontrolling interest, and a stockholders' deficit of US$236.2 million. A copy of the Form 10-Q is available at http://is.gd/D5RqA8 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, 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, serve 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. ANV SECURITY: Incurs $298,161 Net Loss in Third Quarter ------------------------------------------------------- ANV Security Group, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $298,161 on $26,039 of revenues for the three months ended Sept. 30, 2012, compared with a net loss of $119,674 on $nil revenues for the same period last year. The Company disposed its manufacturing business to develop its services business, as a result, the continuing revenue is only $26,039 for the three months ended Sept. 30, 2012. Net loss from continuing operations was $298,994 for the three months ended Sept. 30, 2012, compared to $nil for the same period last year. Income (loss) from discontinued operations was $833 for three months ended Sept. 30, 2012, compared to ($119,674) for the same period in 2011. In the second quarter of 2012, the Company disposed certain subsidiaries and recorded $5.85 million of loss on disposals. For the nine months ended Sept. 30, 2012, the Company had a net loss of $7.26 million on $nil revenues, compared with a net loss of $816,569 on $nil revenues for the corresponding period of 2011. Net loss from continuing operations was $938,028 for the nine months ended Sept. 30, 2012, compared to $nil for the same period last year. Loss from discontinued operations was $6.32 million for the nine months ended Sept. 30, 2012, compared to $816,569 for the same period in 2011. The Company's balance sheet at Sept. 30, 2012, showed $3.10 million in total assets, $51,630 in total liabilities, and stockholders' equity of $3.05 million. "The Company has incurred $14 million losses since inception. Further, as of Sept. 30, 2012, the cash resources of the Company were insufficient to meet its current business plan. These and other factors raise substantial doubt about the Company's ability to continue as a going concern." A copy of the Form 10-Q is available at http://is.gd/XD98Nh Shenzhen, China-based ANV Security Group, Inc., specializes in network video surveillance and video alarm service, and conducts new products research & development, software solution and technologies on its current platforms. The Company plans to become a fully integrated developer, designer, manufacturer, marketer, installer and servicer of web-based security systems for residential, commercial and government customers operating in the People's Republic of China. AOXING PHARMACEUTICAL: Incurs $449,000 Net Loss in Sept. 30 Qtr. ---------------------------------------------------------------- Aoxing Pharmaceutical Company, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $448,516 on $2.6 million of sales for the three months ended Sept. 30, 2012, compared with a net loss of $955,163 on $1.5 million of sales for prior fiscal period. The Company's balance sheet at Sept. 30, 2012, showed $47.4 million in total assets, $26.5 million in total liabilities, and stockholders' equity of $20.9 million. "We have incurred recurring operating losses and had an accumulated deficit of $39.3 million as of Sept. 30, 2012. We had negative working capital of $2.1 million as of as of Sept. 30, 2012. Our history of operating losses and lack of binding financing commitments raise substantial doubt as to our ability to continue as a going concern." A copy of the Form 10-Q is available at http://is.gd/CrQBSO Jersey City, N.J.-based Aoxing Pharmaceutical Company, Inc., is a Florida incorporated specialty pharmaceutical company with its main operations in China, specializing in research, development, manufacturing and distribution of a variety of narcotic, pain- management, and addiction treatment pharmaceutical products. The Company operates its business through its subsidiary, Hebei Aoxing. The Company's product line is comprised of prescription and over-the-counter pharmaceutical products. The Company's pharmaceutical products have been approved by the Chinese State Food and Drug Administration, or SFDA, based on demonstrated safety and efficacy. The Company sells its products primarily to hospitals, clinics, pharmacies and retail in most of the provinces of China, including rural areas and major cities. * * * As reported in the TCR on Oct. 22, 2012, BDO China Dahua CPA Co., Ltd, in Shenzhen, China, expressed substantial doubt about Aoxing's ability to continue as a going concern. The independent auditors noted that the Company continues to incur losses from operations, has negative cash flow from operations and a working capital deficit. APPLIED ENERGETICS: Incurs $366,067 Net Loss in Third Quarter ------------------------------------------------------------- Applied Energetics, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $366,067 on $311,992 of revenue for the three months ended Sept. 30, 2012, compared with a net loss of $1.8 million on $611,206 of revenue for the same period last year. For the nine months ended Sept. 30, 2012, the Company had a net loss of $3.0 million on $1.2 million of revenue, compared with a net loss of $4.7 million on $4.5 million of revenue for the same period of 2011. The Company's balance sheet at Sept. 30, 2012, showed $3.4 million in total assets, $233,642 in total liabilities, and stockholders' equity of $3.2 million. BDO USA, LLP, in Phoenix, Arizona, expressed substantial doubt about Applied Energetics, Inc.'s ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has suffered recurring losses from operations, has negative cash flow from operations and may incur additional losses due to the reduction in Government contract activity. A copy of the Form 10-Q is available at http://is.gd/t13NyN Tucson, Arizona-based Applied Energetics, Inc., designs, develops and manufactures solid state Ultra Short Pulse ("USP") lasers for commercial applications and applied energy systems for military applications. ATLANTIC COAST: Incurs $1.7-Mil. Net Loss in 3rd Quarter -------------------------------------------------------- Atlantic Coast Financial Corporation filed its quarterly report on Form 10-Q, reporting a net loss of $1.7 million on $4.7 million of net interest income for the three months ended Sept. 30, 2012, compared with a net loss of $1.4 million on $5.5 million of net interest income for the same period last year. The Company's higher net loss for the third quarter of 2012 reflected a decrease in noninterest income of $1.9 million primarily related to lower gains on the sale of securities available-for-sale and a decrease in net interest income of $796,000 due to lower average balances of interest-earning assets as well as lower average yields, partially offset by a decrease in provision for loan losses of $890,000 and lower noninterest expense of $1.5 million, primarily in compensation and benefits. For the nine months ended Sept. 30, 2012, the Company had a net loss of $6.4 million on $14.8 million of net interest income, compared with a net loss of $6.3 million on $16.2 million of net interest income for the same period of 2011. The Company's balance sheet at Sept. 30, 2012, showed $784.8 million in total assets, $741.7 million in total liabilities, and stockholders' equity of $43.1 million. Consent Order With OCC On Aug. 10, 2012, the Company's Board of Directors of the Bank agreed to a Consent order (the Agreement) with its primary regulator, the OCC. Among other things the Agreement provides that by Dec. 31, 2012, the Bank must achieve and maintain total risk based capital of 13.00% of risk weighted assets and Tier 1 capital of 9.00% of adjusted total assets. As a result of entering into the Agreement to achieve and maintain specific capital levels, the Bank's capital classification under the Prompt Corrective Action (PCA) rules has been lowered to adequately capitalized, notwithstanding actual capital levels that otherwise would be deemed well capitalized under such rules. The Bank has satisfied all requirements under the Agreement to date. The Bank applied for and received OCC approval for an extension to Dec. 8, 2012, to file its Strategic Plan and Capital Plan. A copy of the Consent Order is available at: http://is.gd/WgxCS1 A copy of the Form 10-Q is available at http://is.gd/jD1t9p Jacksonville, Florida-based Atlantic Coast Financial Corporation is the holding company for Atlantic Coast Bank, a federally chartered and insured stock savings bank. It is a community- oriented financial institution serving northeastern Florida and southeastern Georgia markets through 12 locations, with a focus on the Jacksonville metropolitan area. BALKANI REALTY: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Balkani Realty, Inc. 2408 Hoffman Street Bronx, NY 10458 Bankruptcy Case No.: 12-14658 Chapter 11 Petition Date: November 20, 2012 Court: United States Bankruptcy Court Southern District of New York (Manhattan) Judge: Allan L. Gropper Debtor's Counsel: David Carlebach, Esq. LAW OFFICES OF DAVID CARLEBACH, ESQ. 40 Exchange Place, Suite 1306 New York, NY 10005 Tel: (212) 785-3041 Fax: (646) 355-1916 E-mail: david@carlebachlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. The petition was signed by Antonio Raimondo, president. BERNARD L. MADOFF: Revives $30-Bil. Claims vs. JPM and HSBC ----------------------------------------------------------- Linda Sandler and Bob Van Voris at Bloomberg News report that the Bernard Madoff firm's liquidator will try to recoup $30 billion for the con man's customers in court by reviving damage claims against banks including JPMorgan Chase & Co. and HSBC Holdings Plc. According to the report, Madoff trustee Irving Picard appealed rulings barring him from demanding damages from banks that allegedly ignored Madoff's fraud for the sake of fees. Federal district judges Colleen McMahon and Jed Rakoff, both in Manhattan, said Mr. Picard can't accuse the banks of fraud because he's the trustee for a fraudulent enterprise. A panel of the U.S. Court of Appeals in New York is hearing arguments Nov. 21 on what Mr. Picard's powers are as a bankrupt firm's trustee. The report notes that if Mr. Picard loses the appeals, Ponzi customers will have a smaller pot from which to recover their remaining losses, and some investors who bought discounted claims on the con man's estate may lose the bets they made. Mr. Picard so far has distributed $2.9 billion out of $9.2 billion he has raised to plug estimated customer losses of about $17.5 billion. Mr. Picard "is challenging a well-established doctrine that has been applied in a number of cases," said Peter Henning, a former Securities and Exchange Commission lawyer who teaches at Wayne State University in Detroit. "Courts have been consistent in using the in pari delicto principle to prevent lawsuits between wrongdoers, even when there is a trustee who had nothing to do with the fraud," Mr. Henning wrote in an e-mail. "The decisions by Judges McMahon and Rakoff were fairly typical applications of the doctrine, so I expect Mr. Picard will have a tough time asking for an exception to it, despite the huge losses suffered by investors." The banks fighting the appeal include Switzerland's UBS AG and Italy's UniCredit SpA. The biggest U.S. bank, JPMorgan, was hit with the largest demand from Mr. Picard, for $19 billion. It has said in court filings that it was "preposterous" to accuse an institution of propping up a doomed Ponzi scheme, and the fees were small. In court Nov. 21, a lawyer for Mr. Picard told Chief Judge Dennis Jacobs that, contrary to the district judges' rulings, the right of a bankrupt brokerage's trustee to sue to recover money for customers is recognized in investor protection law and court decisions. The main case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-ap-1789, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The appeal is In re: Bernard L. Madoff, 11-05175, U.S. Court of Appeals, Second Circuit (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. BEST BUY: Fitch Lowers Rating on IDR to 'BB-'; Outlook Negative ---------------------------------------------------------------- Fitch Ratings has downgraded its Issuer Default Rating (IDR) on Best Buy Co., Inc. (Best Buy) to 'BB-' from 'BB+'. The Rating Outlook is Negative. As of Nov. 3, 2012, Best Buy had $2.0 billion of debt outstanding. Fitch believes that Best Buy faces headwinds around market share that are having an adverse impact on comparable store sales, profitability, and the company's credit profile. The Negative Outlook reflects (i) the potential for an accelerating shift in consumer electronics sales to the online channel and (ii) Fitch's skepticism that the strategic plan laid out by new management, which shed some light on cost cutting programs and initiatives to reinvigorate sales, will achieve the targeted improvements and curb market share losses and profitability declines. The ratings continue to reflect Best Buy's strong liquidity position and free cash flow (FCF) generation. While Best Buy has dominant market shares in many of its categories, Fitch believes that it will be difficult and expensive for the company to retain its current market share as price conscious consumers gravitate toward the lowest prices within the online and brick and mortar channels. Although Best Buy has implemented a company-wide price matching policy for the holidays, Fitch expects it will put a burden on gross margins near term without a meaningful uplift in overall sales as it will remain challenging for Best Buy to change its price perception among consumers. Best Buy's financial performance reflects the pressure on its business, as its decline in comp store sales have accelerated to an estimated -4.2% for the first nine months of 2012 (based on reported quarterly comps), after declining 2.1% in 2011; comps have not been materially positive on an annual basis since calendar 2007. This figure incorporates mid-teens growth in online revenues, which accounts for approximately 10% of total revenues, implying further erosion in the productivity of Best Buy's retail stores. Operating EBITDA margins were down by 125 basis points for the LTM period ended Nov. 3, versus the comparable year ago period. Given Fitch's expectation that comp store sales will remain negative in the low-single digit range over the next 24 months (with possible quarter to quarter fluctuations based on new product flow), margins are likely to compress further given pressure on gross margin and deleveraging of fixed costs. Therefore EBITDA is expected to decline to approximately $2.4-$2.5 billion in 2012, down 30% relative to 2011, and could decline to the $1.5-$1.6 billion range in 2013-2014. Financial leverage (adjusted debt/EBITDAR) was 2.9 times (x) at the end of the third quarter, increasing from 2.6 at the end of 2011, and Fitch expects it could move up to the 4.0x range in 2013-2014. Best Buy's liquidity remains strong with year-end cash balances expected to be in the range of $1.5-$1.6 billion versus $1.4 billion in 2011, as free cash flow is still expected to be in the $850 million to $1 billion range in 2012. In addition, the company has $2.5 billion in undrawn revolving credit facilities. Going forward, Fitch expects FCF to be in the range of $300 to $400 million annually; EBITDA would have to fall to an estimated $1 billion range for Best Buy to become FCF neutral assuming no material swings in working capital. Best Buy has suspended share buybacks. Upcoming debt maturities include $500 million of unsecured notes in 2013, which Fitch expects the company could refinance or pay down with cash on hand. While an LBO of the company by Best Buys's founder, Richard Schulze, and a consortium of private equity firms remains an overhang, Fitch believes significant challenges stand in the way of consummating such a deal given the headwinds in the business. Please see the special report 'Best Buy LBO - Significant Hurdles Remain' published Nov. 8, 2012 for more detailed analysis and perspectives. What would trigger a Rating Action: A downgrade could be caused by the following factors, individually or collectively: -- Sales declines are worse than expected in the mid-single digit range versus Fitch's low single digit range projections. -- Gross margin declines are similar to third quarter levels of 150 bps without any significant offset from cost savings, thereby putting further pressure on EBITDA. -- Adjusted leverage is expected to track above 4x going forward. In order to revise Best Buy's Outlook to Stable, Fitch would need to see stabilization in comparable store sales trends and operating margins that are sustainable. Fitch has removed from Rating Watch Negative and downgraded Best Buy's ratings as follows: -- Long-term IDR to 'BB-' from 'BB+'; -- Bank credit facility to 'BB-' from 'BB+'; -- Senior unsecured to 'BB-' from 'BB+'. The Rating Outlook is Negative. BEST BUY: S&P Cuts Corp. Credit Rating to 'BB'; Outlook Negative ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Richfield, Minn.-based Best Buy Inc. to 'BB' from 'BB+.' The ratings are removed from CreditWatch, where they were originally placed with negative implications on April 4, 2012. The outlook is negative. "The recovery rating on the senior unsecured debt remains '3', indicating our expectations for meaningful (50% to 70%) recovery in the event of a payment default," S&P said. "The downgrade of Best Buy reflects our view that it will be very difficult for the company to improve its gross margin in the fourth quarter of the year given the highly promotional nature of year-end holiday retailing in the wireless and consumer electronic categories," said Standard & Poor's credit analyst Jayne Ross. "It is our belief that all segments of the company's business will remain under margin pressure for 2012 and into 2013. In addition, we believe that the new management team still needs to fully formulate its strategy for improving the continued decline in same-store sales and margins. Given the highly seasonal nature of the company's operations, skewed heavily to the fourth quarter, we may not begin to see any tangible results until the second half of fiscal 2013 or beyond." "The ratings on Best Buy Co. reflect Standard & Poor's assessment that the company's business risk profile is 'weak' and its financial risk profile is 'significant,'" S&P said. "Our negative rating outlook reflects our expectation that Best Buy's operating trends will remain at their new lower level over the next year. We believe that the same-store sales trend and revenue growth will be flat to negative (in the low single digits) for the remainder of 2012 and into fiscal 2013, given the weak industry dynamics in consumer electronics and the company's recent performance. Also, we are estimating that margins will continue to be under significant pressure," S&P said. "We would consider a downgrade if gross margin contracts by more than 100 bps and revenues decline in mid- to high-single-digits, resulting in debt leverage trending to about 3.5x or more. In addition, we could lower the rating if the company's cash flow generation continues to decline resulting in liquidity concerns or we believe that the new management team's strategy for the company does not begin to improve its operating performance. Also, we could lower the rating multi-notches should the company receive and accept a leveraged buyout offer," S&P said. "Although unlikely in the near term, we would consider a stable outlook if business conditions improve, such that Best Buy consistently posts positive same-store sales and revenue growth and credit metrics strengthen. We estimate that if gross margins improved by more than 150 bps and revenues rose in the low- to mid-single digits, credit metrics would strengthen, with debt leverage below 2x," S&P said. BLACK ELK: S&P Puts 'CCC+' CCR on Watch on Oil Platform Accident ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including its 'CCC+' long-term corporate credit ratings, on Houston-based Black Elk Offshore Operations LLC (Black Elk) on CreditWatch with negative implications. "The CreditWatch follows an accident on one of Black Elk's oil production platforms in shallow Gulf of Mexico water that resulted in an explosion and fire," said Standard & Poor's credit analyst Ben Tsocanos. "The accident injured several workers and caused one confirmed death. The financial effect of the accident on the company is not yet clear. While we do not expect it to materially affect oil and gas production or cash flow, Black Elk has very limited liquidity and we believe little capacity to absorb unexpected expenses or incurred liabilities. We expect to resolve the CreditWatch when we have more information about the potential costs and the company's ability to weather them." The ratings on Black Elk reflect S&P's 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. The company is geographically concentrated in the Gulf of Mexico region, and operates in a highly cyclical, capital-intensive, and competitive industry. "The CreditWatch 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, which could result from costs related to remediation or penalties related to the platform accident. 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. BLUE RIDGE: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Blue Ridge Ventures LLC dba Blue Ridge Inn dba Quality Inn 1908 Robindale Road Richmond, VA 23235 Bankruptcy Case No.: 12-35142 Chapter 11 Petition Date: November 20, 2012 Court: United States Bankruptcy Court Western District of Kentucky (Louisville) Debtor's Counsel: Neil Charles Bordy, Esq. SEILLER WATERMAN LLC 2200 Meidinger Tower 462 S 4th Street Louisville, KY 40202 Tel: 584-7400 E-mail: bordy@derbycitylaw.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/kywb12-35142.pdf The petition was signed by Lalitha Vani Mandalika, member. BLUE SPRINGS: Plan Filing Exclusivity Extended to Feb. 14 --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has extended, at the behest of Blue Springs Ford Sales, Inc., the exclusive periods to file and solicit acceptances of a Chapter 11 plan until Feb. 14, 2013, and April 15, 2013, respectively. As reported by the Troubled Company Reporter on Nov. 5, 2012, the Debtor, in its request to extend the plan filing period beyond Nov. 16, 2012, said that it needs to accommodate the review and, if necessary, the resolution of claims filed in order that a plan of reorganization may take all timely and proper claims into consideration. Blue Springs Ford Blue Springs Ford Sales, Inc. -- http://www.bluespringsford.com/ -- is a Ford dealer, serving Blue Springs in Missouri. A jury verdict assessing actual damages of $171,500 and punitive damages in the amount of $1.75 million (54 times the actual damages) prompted Blue Springs Ford to seek Chapter 11 protection. The judgment was on account of a suit filed by a customer in Circuit Court of Jackson County, Missouri, under a variety of legal claims, including, but not limited to, the company's alleged failure to adequately disclose a full detailed vehicle history report in connection with a sale of a used Ford. Blue Springs Ford filed a Chapter 11 petition (Bankr. D. Del. Case No. 12-10982) on March 21, 2012, listing $10 million to $50 million in assets and debts. Christopher A. Ward, Esq., at Polsinelli Shughart PC, serves as the Debtor's counsel. Donlin Recano & Company Inc. serves as the Debtor's claims agent. Delaware Bankruptcy Judge Mary F. Walrath in a March 28 order transferred the case's venue following an oral motion by the judgment, creditors Kimberly and Michael von David, at a March 23 hearing. The case was transferred to the U.S. Bankruptcy Court Western District of Missouri Court (Case No. 12-41176) and assigned to the Hon. Jerry W. Venters. BOBIER TOOL: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Bobier Tool Supply, Inc. aka Precision Metrology Inspection aka World Wide Measurement G-4163 Corunna Road Flint, MI 48532 Bankruptcy Case No.: 12-34560 Chapter 11 Petition Date: November 20, 2012 Court: United States Bankruptcy Court Eastern District of Michigan (Flint) Judge: Daniel S. Opperman Debtor's Counsel: Dennis M. Haley, Esq. WINEGARDEN, HALEY ET. AL. P.L.C G-9460 S. Saginaw Street, Suite A Grand Blanc, MI 48439 Tel: (810) 579-3600 E-mail: ecf@winegarden-law.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/mieb12-34560.pdf The petition was signed by Devere Bobier, vice president. BRADEN RIVER: Case Summary & 11 Unsecured Creditors --------------------------------------------------- Debtor: Braden River Dental, Inc. 3720 E. 53rd Avenue Bradenton, FL 34203 Bankruptcy Case No.: 12-17657 Chapter 11 Petition Date: November 21, 2012 Court: U.S. Bankruptcy Court Middle District of Florida (Tampa) Debtor's Counsel: Christopher C. Todd, Esq. MCINTYRE, PANZARELLA, THANASIDES, ET AL 6943 East Fowler Avenue Temple Terrace, FL 33617 Tel: (813) 899-6059 Fax: (813) 899-6069 E-mail: chris@mcintyrefirm.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 11 unsecured creditors is available for free at http://bankrupt.com/misc/flmb12-17657.pdf The petition was signed by Tiffany D. Boyd, president. BRIER CREEK: Wants Exclusive Filing Period Extended to Jan. 21 -------------------------------------------------------------- Brier Creek Corporate Center Associates Limited, et al., ask the U.S. Bankruptcy Court for the Eastern District of North Carolina to extend the exclusive period to file a disclosure statement and proposed plan of reorganization to Jan. 21, 2013, and the Debtors' exclusive period to confirm a plan of reorganization to March 22, 2013. The Debtors are the owners of real property located in Wake County, North Carolina, and Mecklenburg County, North Carolina. In most instances, the real property owned by the Debtors consists of land upon which is constructed commercial or industrial buildings consisting of office, service and retail space. On June 4, 2012, the Debtors filed a motion for valuation of the collateral of Bank of America, N.A., pursuant to which the Debtors requested that the Court determine the fair market value of the Properties. In the Valuation Motion, the Debtors provided that they intended to file a proposed plan of reorganization in which each Debtor will retain its Property and provide BOA with deferred cash payments totaling the allowed amount of BOA's secured claim. The parties participated in hearings in July and August. As of the date of the filing of the exclusivity extension motion, the Court has not entered a final order on the motion. After the final order is entered on the motion, the Debtors will need additional time to finalize a plan of reorganization and the disclosure statement, including any necessary plan projections. Given the complexity of these consolidated cases and the uncertainty as to when a final court order will be entered on the Valuation Motion, the Debtors may not be able to finalize a plan and disclosure statement by the current deadline. The Court has set the hearing on the exclusive period extension for Nov. 29, 2012, at 2:00 p.m. About Brier Creek Corporate Brier Creek Corporate Center Associates Limited, Whitehall Corporate Center #4, LLC, and seven other related entities affiliates filed for Chapter 11 protection (Bankr. E.D.N.C. Lead Case No. 12-01855) on March 9, 2012. The Debtors own real property located in Wake County, North Carolina and Mecklenburg County, North Carolina. In most instances, the real property owned by the Debtors consists of land upon which is constructed commercial or industrial buildings consisting of office, service or retail space. The affiliates that also sought bankruptcy protection are: Brier Creek Office #4, LLC; Brier Creek Office #6, LLC; Service Retail at Brier Creek, LLC; Service Retail at Whitehall II L.P.; Shopton Ridge 30-C, LLC; Whitehall Corporate Center #4, LLC; Whitehall Corporate Center #5, LLC; and Whitehall Corporate Center #6, LLC. Brier Creek is a 106-acre development that is to have 2.8 million square feet of commercial space. Whitehall has 146 acres and will have 4 million square feet on completion. Brier Creek Corporate scheduled assets of $19,713,147 and liabilities of $18,086,183. Judge Stephani W. Humrickhouse oversees the case. Northen Blue, LLP, serves as counsel to the Debtors. C. Richard Rayburn, Jr. and the firm Rayburn Cooper & Durham, P.A., serve as special counsel. Grant Thornton LLP is the accountant. Bidencope & Associates was hired as appraiser. The petitions were signed by Terry Bradshaw, vice president. BROWNSTONE LOFTS: Wants Court to Dismiss Case --------------------------------------------- Brownstone Lofts, LLC, asks the U.S. Bankruptcy Court for the Northern District of California to dismiss its Chapter 11 bankruptcy case. The Debtor said that its motion is made on the grounds that given the nature of its assets -- a pending state court litigation matter and another anticipated litigation matter -- the Debtor believes that a confirmable plan is unlikely at this time and that dismissal, as opposed to conversion, is in the best interest of the Debtor's creditors. As the Debtor anticipates that its future activities in the coming months will consist almost entirely, if not exclusively, of assisting litigation counsel in prosecuting the two litigation matters to a successful conclusion, there is no real advantage to creditors to having the Debtor remain in the bankruptcy court. "On the contrary, by staying in bankruptcy, the Debtor will continue to incur trustee fees, legal fees, costs and other expenses that might otherwise be used to help support the litigations for the ultimate benefit of the Debtor's creditors," the Debtor stated. As reported by the Troubled Company Reporter on July 30, 2012, August B. Landis, the Acting U.S. Trustee for the Northern District of California asked that the Court convert the Debtor's case to one under Chapter 7 of the Bankruptcy Code, or in the alternative, dismiss the case, saying: -- relief from stay was granted to the creditor in January 2012 with respect to Debtor's sole real property and the Debtor appears to have abandoned the case; -- the Debtor has been in chapter 11 for several months without filing any monthly operating reports; and -- the Debtor has not paid any quarterly fees due the U.S. Trustee and owes a minimum of $975 through the first quarter of 2012. The hearing on the case dismissal and conversion motions is set for Nov. 30, 2012, at 10:00 a.m. About Brownstone Lofts LLC San Mateo, California-based Brownstone Lofts LLC filed for Chapter 11 bankruptcy (Bankr. N.D. Calif. Case No. 11-33495) on Sept. 26, 2011. Judge Dennis Montali presides over the case. Coleman Frost LLP serves as the Debtor's general bankruptcy counsel. The Debtor disclosed $29,040,050 in assets and $14,189,156 in liabilities. In its amended schedules, the Debtor listed $9,040,179 in assets and $12,469,016 in liabilities. The petition was signed by Monica Hujazi, managing member. CENTRAL ENERGY: Incurs $369,000 Net Loss in Third Quarter --------------------------------------------------------- Central Energy Partners LP filed its quarterly report on Form 10-Q, reporting a net loss of $369,000 on $1.47 million of revenues for the three months ended Sept. 30, 2012, compared with a net loss of $246,000 on $1.81 million of revenues for the comparable period last year. For the nine months ended Sept. 30, 2012, the Partnership had a net loss of $1.09 million on $4.08 million of revenues, compared with a net loss of $1.08 million on $5.30 million of revenues for the same period of 2011. The Partnership's balance sheet at Sept. 30, 2012, showed $8.27 million in total assets, $8.44 million in total liabilities, and a partners' deficit of $170,000. "Central had a loss from operations for the year ended Dec. 31, 2011, and the nine months ended Sept. 30, 2012, and has a deficit in working capital of $5,252,000 at Sept. 30, 2012. Pursuant to the October 4 Demand Notice, RZB has declared the RZB Note immediately due and payable and demands immediate payment in full. RZB is also contemplating the initiation of foreclosure proceedings in respect of the property owned by Regional and demanding immediate payment of all rents due upon the property. Currently, the amounts owing under the RZB Note total approximately $1,970,000. Regional's unpaid income taxes for the 2011 Tax Year totaled approximately $189,000 at Sept. 30, 2012. The RZB Note is collateralized by all Regional assets and a pledge of the common stock of Regional to RZB by the Partnership. In addition, the Partnership is liable for the federal and state late filing penalties related to the Partnership's failure to deliver timely Schedules K-1 for the 2008 Tax Year and the 2009 Tax Year to its Unitholders of up to $3,464,000. Central is also responsible for contingencies associated with the TransMontaigne dispute." A copy of the Form 10-Q is available at http://is.gd/vGwg7o Dallas, Tex.-based Central Energy Partners LP is a publicly-traded Delaware limited partnership. It currently provides liquid bulk storage, trans-loading and transportation services for hazardous chemicals and petroleum products through its wholly-owned subsidiary, Regional Enterprises, Inc. * * * As reported in the TCR on April 5, 2012, Burton McCumber & Cortez, L.L.P., in Brownsville, Texas, expressed substantial doubt about Central Energy's ability to continue as a going concern, following the Partnership's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has insufficient cash flow to pay its current debt obligations and contingencies as they become due. CEREPLAST INC: Incurs $10-Mil. Net Loss in Third Quarter -------------------------------------------------------- Cereplast, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $10.0 million on $477,000 of net sales for the three months ended Sept. 30, 2012, compared with a net loss of $3.6 million on $5.4 million of net sales for the corresponding period last year. According to the regulatory filing, the decrease in sales was due to transitioning significant resources and efforts toward recovery of past due accounts receivables from customers and minimizing any additional exposure to the Company's accounts receivable credit risk. The Company's current period sales were primarily prepaid shipments of sample materials and nominal shipments to established existing customers with low risk credit limits. For the nine months ended Sept. 30, 2012, the Company had a net loss of $16.3 million on $770,000 of net sales, compared with a net loss of $7.8 million on $20.2 million of net sales for the same period of 2011. The Company's balance sheet at Sept. 30, 2012, showed $25.4 million in total assets, $22.1 million in total liabilities, and stockholders' equity of $3.3 million. Bankruptcy Warning "We have incurred a net loss of $16.3 million for the nine months ended Sept. 30, 2012, and $14.0 million for the year ended Dec. 31, 2011, and have an accumulated deficit of $73.2 million as of Sept. 30, 2012. Based on our operating plan, our existing working capital will not be sufficient to meet the cash requirements to fund our planned operating expenses, capital expenditures and working capital requirements through Dec. 31, 2012, without additional sources of cash." "Our plan to address the shortfall of working capital is to generate additional financing through a combination of sale of our equity securities, additional funding from our new short-term convertible debt financings, incremental product sales into new markets with advance payment terms and collection of outstanding past due receivables. We are confident that we will be able to deliver on our plans, however, there are no assurances that we will be able to obtain any sources of financing on acceptable terms, or at all." "If we cannot obtain sufficient additional financing in the short- term, we may be forced to curtail or cease operations or file for bankruptcy." A copy of the Form 10-Q is available at http://is.gd/CVcsHh El Segundo, Calif.-based Cereplast, Inc., has developed and is commercializing proprietary bio-based resins through two complementary product families: (1) Cereplast Compostables(R) resins, which are compostable and bio-based, ecologically sound substitutes for traditional petroleum-based non-compostable plastics, and (2) Cereplast Sustainables(TM) resins, which replace up to 90% of the petroleum-based content of traditional plastics with materials from renewable resources. CHINA 3C GROUP: Incurs $4.2-Mil. Net Loss in Third Quarter ---------------------------------------------------------- China 3C Group filed its quarterly report on Form 10-Q, reporting a net loss of $4.2 million on $5.6 million of sales for the three months ended Sept. 30, 2012, compared with a net loss of $18.5 million on $8.6 million of sales for the same period last year. For the nine months ended Sept. 30, 2012, the Company had a net loss of $12.3 million on $15.9 million of sales, compared with a net loss of $28.7 million on $30.6 million of sales for the same period of 2011. The Company's balance sheet at Sept. 30, 2012, showed $8.1 million in total assets, $4.8 million in total liabilities, and stockholders' equity of $3.3 million. "The Company realized net losses of $52,844,000 and $24,927,000 for the years ended Dec. 31, 2011m and 2010, respectively, as well as $12,337,000 through the first nine months of 2012, accumulating a deficit of $39,968,000 as of Sept. 30, 2012." A copy of the Form 10-Q is available at http://is.gd/oGzQfA About China 3C Group Located in HangZhou City, Zhejiang Province, China, China 3C Group was incorporated on Aug. 20, 1998, under the laws of the State of Nevada. China 3C focuses on distributing mobile phones through Wang Da Electronics Company Limited and Zhejiang Yong Xin Digital Technology Company Limited. * * * As reported in the TCR on April 20, 2012, Goldman Kurland and Mohidin LLP, in Encino, California, expressed substantial doubt about China 3C Group's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has incurred significant losses from operations for the past three years. "In addition, the Company's cash position substantially deteriorated from 2010." CHINA CEETOP.COM: Incurs $151,278 Net Loss in Third Quarter ----------------------------------------------------------- China Ceetop.com, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $151,278 on $1.2 million of sales for the three months ended Sept. 30, 2012, compared with a net loss of $468,306 on $3.2 million of sales for the same period last year. For the nine months ended Sept. 30, 2012, the Company had a net loss of $663,757 on $3.9 million of sales, compared with a net loss of $1.2 million on $10.4 million of sales for the same period of 2011. The Company's balance sheet at Sept. 30, 2012, showed $1.7 million in total assets, $1.2 million in total current liabilities, and stockholders' equity of $505,545. "As shown in the accompanying Consolidated Financial Statements, the Company incurred net losses of $663,757 and $151,278 for the nine and three months ended Sept. 30, 2012. respectively, and has accumulated deficit of $4,989,405 at Sept. 30, 2012. As reported in the TCR on April 23, 2012, Clement C. W. Chan & Co., in Hong Kong, expressed substantial doubt about China Ceetop.com's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company incurred a net loss of $1,654,520 for the year ended Dec. 31, 2011, and has an accumulated deficit of $4,325,648 at Dec. 31, 2011. A copy of the Form 10-Q is available at http://is.gd/WhS1z9 About China Ceetop.com Shenzhen, China-based China Ceetop.com, Inc., an Oregon-registered corporation, is a leading Business-to-Consumer ("B2C") e-commerce company. The Company owns and operates the online platform http://www.ceetop.com/ The Company mainly focuses on selling computers/ Communications/ Consumer ("3C") products online and providing a trading information platform for both buyers and sellers as software as a service ("SaaS"). The Company carries a wide range of products in assorted categories, including mainstream digital products, home appliances, kitchen appliances, personal care, and lifestyle products, etc. under well-known international and Chinese brands. CHINA ENERGY: Reports $900,600 Net Income in Third Quarter ---------------------------------------------------------- China Energy Recovery, Inc., filed its quarterly report on Form 10-Q, reporting net income of $900,619 on $20.9 million of revenues for the three months ended Sept. 30, 2012, compared with net income of $2.3 million on $29.4 million of revenues for the same period last year. For the nine months ended Sept. 30, 2012, the Company reported net income of $2.6 million on $76.5 million of revenues, compared with net income of $2.7 million on $55.0 million of revenues for the same period of 2011. The Company's balance sheet at Sept. 30, 2012, showed $90.0 million in total assets, $79.8 million in total liabilities, and stockholders' equity of $10.2 million. "The accompanying financial statements have been prepared assuming the Group will continue as a going concern. However, as of Sept. 30, 2012, the Group reported a negative working capital balance of $31.3 million and had negative operating cash flows of $352,824 for the nine months ended Sept. 30, 2012. The Group expects such negative working capital to continue into the foreseeable future and will need to obtain new sales orders and additional financing to fund its daily operations. These factors raise substantial doubt about the Group's ability to continue as a going concern. A copy of the Form 10-Q is available at http://is.gd/GrlYQP Shanghai, China-based China Energy Recovery, Inc., through its subsidiaries and affiliates, is in the business of designing, fabricating, implementing and servicing industrial energy recovery systems. The Company's energy recovery systems capture industrial waste energy for reuse in industrial processes or to produce electricity and thermal power, thereby allowing industrial manufacturers to reduce their energy costs, shrink their emissions and generate sellable emissions credits. All of the manufacturing takes place at the Company's manufacturing facility in Yangzhou, China. The Company transports the manufactured systems in parts via truck, train or ship to the customers' facilities where the systems are assembled and installed. The Company has primarily sold energy recovery systems to chemical manufacturing plants to reduce their energy costs by increasing the efficiency of their manufacturing equipment. The Company mainly sells its energy recovery systems and services directly to customers. CHINA FRUITS: Reports $49,340 Net Income in Third Quarter --------------------------------------------------------- China Fruits Corp. filed its quarterly report on Form 10-Q, reporting net income of $49,340 on $555,014 of sales for the three months ended Sept. 30, 2012, compared with a net loss of $199,925 on $426,266 of sales for the same period last year. For the nine months ended Sept. 30, 2012, the Company reported a net loss of $199,307 on $2.2 million of sales, compared with a net loss of $428,700 on $1.6 million of sales for the same period of 2011. The decrease in net loss was due to the increase in revenues. In addition, the net income during the three months ended Sept. 30, 2012, was also due to the grants received from the local government in amount of $316,370, which was to encourage the Company's efforts on modern agricultural development. Without the government grant, the Company suffered loss of $231,191 from operations. The Company's balance sheet at Sept. 30, 2012, showed $5.8 million in total assets, $3.7 million in total liabilities, and stockholders' equity of $2.1 million. "As of Sept. 30, 2012, the Company had an accumulated deficit of $2,172,778. Management has taken certain action and continues to implement changes designed to improve the Company's financial results and operating cash flows. The actions involve certain cost-saving initiatives and growing strategies, including (a) reductions in headcount and corporate overhead expenses; and (b) expansion into new market. Management believes that these actions will enable the Company to improve future profitability and cash flow in its continuing operations through Dec. 31, 2012. As a result, the financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of the Company's ability to continue as a going concern." A copy of the Form 10-Q is available at http://is.gd/m1O6TF Located in Nan Feng County, Jiang Xi Province, China, China Fruits Corp. is principally engaged in manufacturing, trading and distributing fresh tangerine and other fresh fruits in the PRC. * * * As reported in the TCR on April 5, 2012, Lake & Associates CPA's LLC, in Schaumburg, Ill., expressed substantial doubt about China Fruits' ability to continue as a going concern. The independent auditors noted that the Company has suffered accumulated deficit and negative cash flow from operations. CHINA GINSENG: Incurs $1.4-Mil. Net Loss in Q1 Ended Sept. 30 ------------------------------------------------------------- China Ginseng Holdings, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $1.4 million on $503,772 of revenue for the three months ended Sept. 30, 2012, compared with a net loss of $412,259 on $892,405 of revenue for the prior fiscal period. The Company's balance sheet at Sept. 30, 2012, showed $7.3 million in total assets, $6.2 million in total liabilities, and stockholders' equity of $1.1 million. The Company had an accumulated deficit of $7,154,611 as of Sept. 30, 2012. A copy of the Form 10-Q is available at http://is.gd/OiroI4 About China Ginseng Holdings China Ginseng Holdings, Inc., headquartered in Changchun City, China, was incorporated on June 24, 2004, in the State of Nevada. Since its inception in 2004, the Company has been engaged in the business of farming, processing, distribution and marketing of fresh ginseng, dry ginseng, ginseng seeds, and seedlings. Starting August 2010, it has gradually shifted the focus of its business from direct sales of ginseng to canned ginseng juice production and wine production. * * * As reported in the TCR on Oct. 9, 2012, Meyler & Company, LLC, in Middletown, N.J., expressed substantial doubt about China Ginseng's ability to continue as a going concern. The independent auditors noted that the Company had an accumulated deficit of $5.8 million at June 30, 2012, had a negative working capital of $547,480, and there are existing uncertain conditions the Company faces relative to its ability to obtain working capital and operate successfully. CHINA GREEN ENERGY: Incurs $184,700 Net Loss in Third Quarter ------------------------------------------------------------- China Green Energy Industries, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $184,695 on $7.4 million of revenues for the three months ended June 30, 2012, compared with a net loss of $874,430 on $7.1 million of revenues for the same period last year. For the nine months ended Sept. 30, 2012, the Company had net income of $965,650 on $27.1 million of revenues, compared with a net loss of $1.0 million on $18.3 million of revenues for the same period of 2011. The Company's balance sheet at Sept. 30, 2012, showed $58.5 million in total assets, $53.8 million in total current liabilities, and stockholders' equity of $4.7 million. The Company said in the regulatory filing: "The Company has a negative cash flow from operations of $700,938 for the period ended Sept. 30, 2012. To date, we have financed our operations primarily through cash flows from operations, augmented by short- term bank loans and equity contributions by stockholders. We believe that cash on hand and cash flow from operations will meet a portion of our present cash needs and that we will require additional cash resources, including equity investment, to meet expected capital expenditures and working capital requirements for the next 12 months." A copy of the Form 10-Q is available at http://is.gd/9FGpqN Located in Changzhou City, Jiangsu Province, China, China Green Energy Industries, Inc., manufactures and distributes clean technology-based consumer products, including light electric vehicles, or LEVs, and cryogen-free refrigerators. The Company also manufactures and distributes network and High-Definition Multimedia Interface, or HDMI, cables. * * * As reported in the TCR on April 23, PKF, in San Diego, Calif., expressed substantial doubt about China Green Energy's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has experienced negative cash flows from operations and is dependent upon future financing in order to meet its planned operating activities. CHINA SHOUGUAN: Reports $312,060 Net Income in Third Quarter ------------------------------------------------------------ China Shouguan Mining Corporation filed its quarterly report on Form 10-Q, reporting net income of $312,060 on $2.2 million of revenues, compared with a net loss of $1.5 million on $1.1 million of revenues for the same period last year. For the nine months ended Sept. 30, 2012, the Company reported a net loss of $1.3 million on $3.3 million of revenues, compared with a net loss of $1.9 million on $3.6 million of revenues for the same period of 2011. The Company's balance sheet at Sept. 30, 2012, showed $15.4 million in total assets, $9.6 million in total liabilities, and stockholders' equity of $5.8 million. As of Sept. 30, 2012, the Company has available cash of $642,589 and a working deficit of $4.4 million, compared with cash of $339,870 and a working capital deficit of $7.5 million at Dec. 31, 2011. A copy of the Form 10-Q is available at http://is.gd/cIiL2H Located in Shenzhen, PRC, China Shouguan Mining Corporation was incorporated in the State of Nevada on May 4, 2010. The Company, through its subsidiaries and variable interest entities, is principally engaged in the project management of gold mining operations in China. In May 2009, the Company commenced its first project, the Cunli Ji Mine which is located in Shandong Province, the People Republic of China. HKCMCPA Company Limited, in Hong Kong, said China Shouguan has incurred substantial losses and working capital deficit for the year ended Dec. 31, 2011, all of which raise substantial doubt about its ability to continue as a going concern. CHINA TELETECH: Reports $112,000 Net Income in Third Quarter ------------------------------------------------------------ China Teletech Holding, Inc., filed its quarterly report on Form 10-Q, reporting net income of $112,491 on $8.6 million of sales for the three months ended Sept. 30, 2012, compared with a net loss of $27,367 on $3.1 million of sales for the comparable period a year earlier. For the nine months ended Sept. 30, 2012, the Company had net income of $2.7 million on $19.6 million of sales, compared with net income of $132,002 on $15.8 million of sales for the same period of 2011. General and administrative expenses were $892,465 during the nine months ended Sept. 30, 2012, as compared to $271,729 during the same period in 2011, representing an increase of $620,736, or 228%. The increase in G&A expenses was mainly due to the special equity compensation ($455,133) to mainly business partners for business development, the increase in several types of professional fees and the net increase in such expenses from the newly acquired companies less the exclusion of the expenses from Guangzhou Global Telecommunication Company Limited (GGT) which was disposed on June 30, 2012. In the nine months of 2012, there were a gain on forgiveness of long term debt of $1,566,323 and a gain from disposal of GGT of $1,371,596. The Company's balance sheet at Sept. 30, 2012, showed $4.3 million in total assets, $2.4 million in total liabilities, and stockholders' equity of $1.9 million. "As of Sept. 30, 2012, the Company has an accumulated loss of $3,876,558 due to the fact that the Company incurred losses over the past several years." A copy of the Form 10-Q is available at http://is.gd/Z72obK About China Teletech Tallahassee, Fla.-based China Teletech Holding, Inc., is a national distributor of prepaid calling cards and integrated mobile phone handsets and a provider of mobile handset value-added services. The Company is an independent qualified corporation that serves as one of the principal distributors of China Telecom, China Unicom, and China Mobile products in Guangzhou City. On June 30, 2012, the Company strategically sold its wholly-owned subsidiary, Guangzhou Global Telecommunication Company Limited ("GGT"), to a third party. GGT was engaged in the trading and distribution of cellular phones and accessories, prepaid calling cards, and rechargeable store-value cards. * * * Samuel H. Wong & Co., LLP, in San Mateo, Calif., expressed substantial doubt about Guangzhou Global's ability to continue as a going concern, following the Company's results for the year ended Dec. 31, 2011. The independent auditors noted that the Company has incurred substantial losses, and has difficulty to pay the PRC government Value Added Tax and past due Debenture Holders Settlement. CHINA MARKETING: Incurs $602,000 Net Loss in Third Quarter ---------------------------------------------------------- China Marketing Media Holdings, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $602,379 on $2.0 million of revenue for the three months ended Sept. 30, 2012, compared with a net loss of $123,999 on $2.8 million of revenue for the same period last year. "The decrease in revenues for the three months ended Sept. 30, 2012, was mainly due to a decrease in Advertising Space Sales of $307,776 or 23.7% and Consulting Services of $430,132 or 41.2%. The management believes that the Advertising Space Sales will continue to suffer from continuously low market demand." For the nine months ended Sept. 30, 2012, the Company had a net loss of $871,846 on $7.0 million of revenue, compared with net income of $47,202 on $9.3 million of revenue for the same period of 2011. "The decrease of $919,048 or 1,947.1% resulted from a significant decrease in revenue and increase in cost of goods sold in the 1st and 3rd quarter of 2012." The Company's balance sheet at Sept. 30, 2012, showed $17.8 million in total assets, $3.7 million in total liabilities, and stockholders' equity of $14.1 million. "As of Sept. 30, 2012, the Company has suffered from working capital deficit of $903,190. For the nine months ended Sept. 30, 2012, the Company has incurred a net loss of $871,846. The Company plans to obtain the additional capital injection from its shareholders or external financing. However, there can be no assurance that the Company will be able to obtain sufficient funds to meet its obligations on a timely basis." "These factors raise substantial doubt about the Company?s ability to continue as a going concern." A copy of the Form 10-Q is available at http://is.gd/pzXTFv Located in Beijing, China, China Marketing Media Holdings, Inc., was originally organized under the laws of the State of Texas on Oct. 29, 1999, under the name Brazos Strategies, Inc. It changed its name to Infolife, Inc., on July 16, 2003, and finally to China Marketing Media Holdings, Inc., on Feb. 7, 2006. China Marketing is a holding company and has no operations other than administrative matters and the ownership of its direct and indirect operating subsidiaries. Through its indirect Chinese subsidiaries, it is engaged in the business of selling magazines and advertising space in its magazines and providing sales and marketing consulting services. All of the Company's operations, assets, personnel, officers and directors are located in China. Currently, it publishes China Marketing magazine in China. * * * As reported in the TCR on April 23, 2012, Van Wagoner & Bradshaw, PLLC, in Salt Lake City, Utah, expressed substantial doubt about China Marketing's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has cash flow constraints and has suffered a large loss from operations. CHINESEINVESTORS.COM: Incurs $284,000 Net Loss in Sept. 30 Quarter ------------------------------------------------------------------ Chineseinvestors.com, Inc., filed its quarterly report on Form 10- Q, reporting a net loss of $284,192 on $425,676 of total revenue for the three months ended Aug. 31, 2012, compared with a net loss of $256,295 on $217,591 of total revenue for the prior fiscal period. The Company's balance sheet at Aug. 31, 2012, showed $1.0 million in total assets, $378,267 in total liabilities, and stockholders' equity of $659,937. The Company had an accumulated deficit of $9.4 million at Aug. 31, 2012, compared to an accumulated deficit of $9.1 million at May 31, 2012. A copy of the Form 10-Q is available at http://is.gd/96goHT Aurora, Colo.-based Chineseinvestors.com, Inc. (OTC BB: CIIX) was incorporated on June 15, 1999, in the State of California. The Company is a provider of Chinese language web-based real-time financial information. The Company's operations had been located in California until September 2002 at which time the operations were relocated to Shanghai, in the People's Republic of China (PRC). * * * As reported in the TCR on Sept 4, 2012, B.F. Borgers CPA PC, in Denver, in their audit report on Chineseinvestors.com, Inc.'s financial statements for the years ended May 31, 2012, and 2011, said that the Company's significant operating losses raise substantial doubt about the Company's ability to continue as a going concern. COLLEGE BOOK: Files Schedules of Assets and Liabilities ------------------------------------------------------- College Book Rental Company, LLC, filed with the Bankruptcy Court for the Middle District of Tennessee its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property None B. Personal Property $17,913,543 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $23,141,957 E. Creditors Holding Unsecured Priority Claims $5,833 F. Creditors Holding Unsecured Non-priority Claims $2,174,652 ----------- ----------- TOTAL $17,913,543 $25,322,442 Four creditors filed an involuntary Chapter 11 bankruptcy petition against Murray, Kentucky-based College Book Rental Company, LLC (Bankr. M.D. Ky. Case No. 12-09130) in Nashville on Oct. 4, 2012. Bankruptcy Judge Marian F. Harrison oversees the case. The petitioning creditors are represented by Joseph A. Kelly, Esq., at Frost Brown Todd LLC. The petitioning creditors are David Griffin, allegedly owed $15 million for money loaned; Commonwealth Economics, allegedly owed $15,000 for unpaid services provided; John Wittman, allegedly owed $158 for unpaid services provided; and CTI Communications, allegedly owed $21,793 for unpaid services provided. COMMUNITY COUNTRY: Day School Files for Bankruptcy -------------------------------------------------- Sean McCracken at Erie Times-News reports that Community Country Day School officials have filed for Chapter 11 bankruptcy protection, citing hundreds of thousands of dollars in debt and unpaid taxes that accumulated as the school lost donations and grant funding. According to the report, Aaron Collins, executive director of the school, said it began falling behind on its bills three to four years ago at the lowest point of the recession. "When the economy took a big dip, we lost a lot of our donor funding," the report quotes Mr. Collins as saying. "At that time a lot of organizations were shutting down. We kept the doors open but took a major hit." The report, citing court documents, says the school owes the Internal Revenue Service about $175,000 in back taxes. Mr. Collins said those back taxes are largely from 2011 or earlier. The school also owes roughly $600,000 to Northwest Savings Bank, including for the mortgage on the school's main campus at 5800 Old Zuck Road in Millcreek Township. Mr. Collins said the school was $54,000 behind on mortgage payments, the report notes. The report relates the school owes money to at least 17 other creditors, according to court filings, including $60,679 in Pennsylvania unemployment compensation, $41,455 to Awareness Ministries, $30,000 to Community of Caring, about $28,000 to the Pennsylvania Department of Revenue and $27,623 to the Pennsylvania Department of Education. The report relates Mr. Collins said the unemployment compensation costs are a result of recent staff cuts made at the school in light of decreased funding. He said the school owes money to the Department of Education because administrators overestimated enrollment and the school is required to return a portion of its state funding. The report notes Mr. Collins said the school has made several cost-cutting moves. They include eliminating staff positions, cutting pay for those who stayed and scaling back multiple programs, he said, although he did not specify how many jobs were cut or which programs were eliminated or cut. The report also relates Mr. Collins said the school has been able to continue paying its 25 remaining employees, who were informed two weeks ago of the plans to file for bankruptcy. The report adds Chief U.S. Bankruptcy Judge Thomas Agresti has issued an order allowing the school to pay $37,822.83 in wages. Community Country Day is a private, K-12 school founded in 1968 that currently has about 140 students. CONSUMER CAPITAL: Incurs $411,000 Net Loss in Third Quarter ----------------------------------------------------------- Consumer Capital Group, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $411,082 on $2.2 million of revenues for the three months ended Sept. 30, 2012, compared with a net loss of $174,354 on $2.3 million of revenues for the same period of 2011. For the nine months ended Sept. 30, 2012, the Company had a net loss of $929,651 on $5.1 million of revenues, compared with a net loss of $1.6 million on $5.6 million of revenues for the nine months ended Sept. 30, 2011. The Company's balance sheet at Sept. 30, 2012, showed $2.2 million in total assets, $2.3 million in total liabilities, and a stockholders' deficit of $93,607. The Company incurred a net comprehensive loss of $941,421 for the nine months ended Sept. 30, 2012, and had an accumulated deficit of approximately $3.0 million as of Sept. 30, 2012. A copy of the Form 10-Q is available at http://is.gd/8WHUNC New York based Consumer Capital Group, Inc., is primarily engaged in three different businesses: e-commerce services, meat distribution, and debit card business. The Company operates an online retail platform at www.ccmus.com in China through Arki (Beijing) E-Commerce Technology Corp., its wholly owned PRC subsidiary. The Company also has an online retail platform at www.ccgusa.us in the United States. Its meat distribution business is operated through Beijing Beitun Trading Co., Ltd., in which the Company owns a 51% equity interest. The debit card business is operated through America Arki Fuxin Network Management Co. Ltd., the Company's wholly owned PRC subsidiary. * * * Anton & Chia, LLP, in Newport Beach, California, expressed substantial doubt about Consumer Capital's ability to continue as a going concern in their report on the Company's financial statements for the year ended Dec. 31, 2011. The independent auditors noted that the Company has a loss from operations of $2,106,457 for the year ended Dec. 31, 2011. and an accumulated deficit of $2,081,716 at Dec. 31, 2011. Further, the independent auditors said that the Company has negative cash flows from operations due to significantly lower sales demand of its online products and high operating costs. CORNETT HOSPITALITY: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Cornett Hospitality, LLC dba Happy Owl of Wilkins, LLC dba Hooters of Monroeville Happy Owl of Roanoke, LLC dba Hooters of Roanoke Topeka's of Parham, LLC dba Topeka's of Parham Happy Owl of Chesterfield, LLC dba Hooters of Midlothian Topeka's of Chesterfield, LLC dba Topeka's Swift Creek Max & Erma's of Glenside, LLC dba Max & Erma's Glenside & Broad Topeka's of Charlottesville, LLC dba Topeka's of Charlottesville Happy Owl of Beckley, LLC dba Hooters of Beckley, WV Happy Owl of Wyomissing, LLC dba Hooters of Wyomissing Happy Owl of Harrisburg, LLC dba Hooters of Mechanicsburg Happy Owl of Chester, LLC dba Hooters of Chester Happy Owl of York, LLC dba Hooters of York, PA Happy Owl of Richmond, LLC dba Hooters of Richmond Max & Erma's of Short Pump, LLC dba Max & Erma's John Rolfe Commons P.O. Box 6887 Richmond, VA 23230-2917 Bankruptcy Case No.: 12-36693 Chapter 11 Petition Date: November 21, 2012 Court: U.S. Bankruptcy Court Eastern District of Virginia (Richmond) Judge: Douglas O. Tice, Jr. Debtor's Counsel: Bruce E. Arkema, Esq. DURRETTECRUMP PLC 1111 East Main Street, 16th Floor Richmond, VA 23219 Tel: (804) 775-6900 Fax: (804) 775-6911 E-mail: barkema@durrettecrump.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 with the petition is available for free at: http://bankrupt.com/misc/vaeb12-36693.pdf The petition was signed by J. Phillip Cornett, director. CORROZI-FOUNTAINVIEW: Fails to File Plan; Court Dismisses Case -------------------------------------------------------------- The Hon. Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware has dismissed the Chapter 11 bankruptcy case of Corrozi-Fountainview, LLC, after the Debtor failed to file a plan of liquidation or reorganization or accompanying disclosure statement. Roberta A. DeAngelis, U.S. Trustee for Region 3, sought the dismissal of the Chapter 11 case or conversion to Chapter 7. As reported by the Troubled Company Reporter on July 26, 2012, the U.S. Trustee noted that since the case was commenced on March 31, 2010, no plan or disclosure statement has ever been filed. Based on the Monthly Operating Reports on file, the Debtor owes $6,503 in unpaid quarterly fees, not including any fees that may be assessable for the second calendar quarter of 2012. David L. Buchbinder, Esq., representing the U.S. Trustee, related that this is one of five related cases. The other four cases have all been either dismissed or converted to cases under Chapter 7 of the Bankruptcy Code. In the related converted case of Doveview, LLC, the Chapter 7 trustee recently initiated an Adversary Complaint against the present Debtor. According to Mr. Buchbinder, the Debtors' primary asset is an unfinished condominium and townhouse project known as Village of Fountainview on Fountainview Drive in Newark, Delaware. The condominium project has been substantially completed but few units have sold. Relief from the automatic stay was granted in favor of Artisan Bank earlier in the case with respect to the townhouse portion of the project. In August 2012, the Court ordered the Debtor to file a proposed plan of liquidation or reorganization and corresponding disclosure statement by Oct. 31, 2012. About Corrozi-Fountainview Wilmington, Delaware-based Corrozi-Fountainview, LLC, a single asset real estate, filed for Chapter 11 protection (Bankr. D. Del. Case No. 10-11090) on March 31, 2010. Cross & Simon LLC represents the Debtor as its as counsel. In its schedules, the Debtor disclosed total assets of $15,962,545 and total liabilities of $15,279,958 as of the Chapter 11 filing. CROSS BORDER: Incurs $606,000 Net Loss in Third Quarter ------------------------------------------------------- Cross Border Resources, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $605,973 on $2.8 million of total revenues for the three months ended Sept. 30, 2012, compared with a net loss of $249,555 on $1.9 million of total revenues for the same period last year. For the nine months ended Sept. 30, 2012, the Company had net income of $596,929 on on $10.6 million of total revenues, compared with a net loss of $471,068 on $5.0 million of total revenues for the same period of 2011. Gain (loss) from operations totaled $637,219 and ($799,856) during the nine months ended Sept. 30, 2012, and 2011, respectively. Operating expenses [YTD 2012 - $9,927,875; YTD 2011 - $5,797,069] increased due to an increase in production taxes and depletion directly resulting from an increase in production from the 2011 period to the 2012 period. In addition, the Company recognized impairment on its Wolfberry assets of $1,775,796 during the nine months ended Sept. 30, 2012. Further, the Company recognized a gain of the sale of oil and gas properties of $599,100 in the 2011 period compared to a loss of $47,607 in the 2012 period. During YTD 2012, the Company recognized a gain of $514,901 [$452,678 during YTD 2011] which includes $108,416 of realized hedge settlements received for the difference between the hedged price and the market price, as well as a $406,485 mark to market gain on the remaining term of the Company's crude oil fixed price swap. The Company's balance sheet at Sept. 30, 2012, showed $36.1 million in total assets, $17.6 million in total liabilities, and stockholders' equity of $18.5 million. Going Concern Uncertainty According to the regulatory filing, at Sept. 30, 2012, the Company had a working capital deficit of $3.4 million and outstanding debt (consisting of a line of credit, creditors payable, change in control payments, and notes payable) of $12.2 million. Because of the working capital deficit, the Company was not in compliance with the covenants of its line of credit with Texas Capital Bank ("TCB"). Of the outstanding debt, $367,309 was due Sept. 30, 2012, under an unsecured promissory note payable to Green Shoe Investments, Ltd and $396,969 is due Sept. 30, 2012, under an unsecured promissory note payable to Little Bay Consulting, SA. The Company currently does not have sufficient funds to repay these obligations. The Company is exploring available financing options, including the sale of debt, equity, or assets. If the Company is unable to finance its operations on acceptable terms or at all, its business, financial condition and results of operations may be materially and adversely affected. "As a result of the working capital deficiency, there is substantial doubt regarding the Company's ability to continue as a going concern." A copy of the Form 10-Q is available at http://is.gd/56B4Gc About Cross Border Resources Dallas, Tex.-based Cross Border Resources, Inc., is an oil and gas exploration company resulting from the business combination of Doral Energy Corp. and Pure Gas Partners II, L.P. ("Pure L.P."), effective Jan. 3, 2011. The Company owns over 865,893 gross (approximately 293,843 net) mineral and lease acres in New Mexico and Texas. Approximately 25,000 of these net acres exist within the Permian Basin. CYBRDI INC: Incurs $134,800 Net Loss in Third Quarter ----------------------------------------------------- Cybrdi, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $134,843 on $129,032 of revenues for the three months ended Sept. 30, 2012, compared with a net loss of $255,705 on $146,709 of revenues for the same period last year. For the nine months ended Sept. 30, 2012, the Company had a net loss of $495,915 on $483,549 of revenues, compared with a net loss of $582,400 on $383,939 of revenues for the corresponding period in 2011. The Company's balance sheet at Sept. 30, 2012, showed $10.4 million in total assets, $5.8 million in total liabilities, and equity of $4.6 million. "The Company had an accumulated deficit of $2,854,278 and $2,447,643 as of Sept. 30, 2012, and Dec. 31, 2011, including net losses of $495,915 and $582,400 for the nine months ended Sept. 30, 2012, and 2011, respectively. In addition, current liabilities exceeded current assets by $3,315,503 and $2,931,175 as of Sept. 30, 2012, and Dec. 31, 2011, respectively. These matters raise substantial doubt about the Company?s ability to continue as a going concern." A copy of the Form 10-Q is available at http://is.gd/8CAsOd Cybrdi, Inc., located in Xi'an, Shaanxi, People's Republic of China, is a holding company incorporated with 80% equity in Chaoying Biotech, which is engaged in biotechnology manufacturing, and research and development. Through Chaoying Biotech, Cybrdi also controls SD Chaoying, a cultural and entertainment company, which is also developing a casino. * * * As reported in the TCR on April 23, 2012, KCCW Accountancy Corp., in Diamond Bar, California, expressed substantial doubt about Cybrdi's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has incurred recurring losses, accumulated deficit, and working capital deficit at Dec. 31, 2011, and 2010. CYPRESS OF TAMPA: Case Summary & 4 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: The Cypress of Tampa LLC 12570 Telecom Drive Tampa, FL 33637 Bankruptcy Case No.: 12-17518 Chapter 11 Petition Date: November 20, 2012 Court: U.S. Bankruptcy Court Middle District of Florida (Tampa) Debtor's Counsel: Suzy Tate, Esq. JENNIS & BOWEN, PL 400 North Ashley Drive, Suite 2540 Tampa, FL 33602 Tel: (813) 229-1700 Fax: (813) 229-1707 E-mail: ecf@jennisbowen.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Liabilities: $10,000,001 to $50,000,000 The petition was signed by Gordon Comer, manager. Affiliate that filed separate Chapter 11 petition: Entity Case No. Petition Date ------ -------- ------------- The Cypress of Tampa II LLC 12-17520 11/20/2012 Assets: $1,000,001 to $10,000,000 Debts: $1,000,001 to $10,000,000 A copy of Cypress of Tampa's List of Its Four Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Macfarlane Ferguson Services $67,145 One Tampa City Center 201 N. Franklin Street, Suite 2000 Tampa, FL 33602 Adams & Reese LLP Services $16,659 101 E. Kennedy Boulevard, Suite 4000 Tampa, FL 33602 MRK Construction, Inc. Services $14,169 26650 Wesley Chapel Boulevard Lutz, FL 33559 Redstone Commercial Services $10,053 DELTA OIL: Incurs $129,600 Net Loss in Third Quarter ---------------------------------------------------- Delta Oil & Gas, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of US$129,630 on US$127,517 of revenue for the three months ended Sept. 30, 2012, compared with net income of $791 on US$219,471 of revenue for the same period last year. For the nine months ended Sept. 30, 2012, the Company had a net loss of US$419,551 on US$375,292 of revenue, compared with net income of US$20,703 on US$1.0 million of revenue for the corresponding period in 2011. The Company's balance sheet at Sept. 30, 2012, showed US$1.8 million in total assets, US$97,276 in total liabilities, and stockholders' equity of US$1.7 million. The Company has incurred a net loss of $5.9 million since inception. A copy of the Form 10-Q is available at http://is.gd/w7UK8W About Delta Oil & Gas Vancouver, Canada-based Delta Oil & Gas, Inc., is an independent natural and oil company engaged in the exploration, development and acquisition of gas and oil properties properties in the United States and Canada. * * * As reported in the TCR on April 5, 2012, Mark Bailey & Company, Ltd., in Reno, Nevada, expressed substantial doubt about Delta Oil's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has incurred recurring losses from operations. DEWEY & LEBOEUF: Collects $4.9-Mil. in Fees During October ---------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports Dewey & LeBoeuf LLP collected $4.9 million in fees during October, down from $11.5 million in collections from former clients in September. Dewey still has $218.7 million in receivables on the books, including $173.6 million more than 90 days old. According to the report, the firm ran up $4 million of expenses in October. Since the liquidation began in May, Dewey has collected $68.4 million and spent $22.1 million on the liquidation, according to the operating report filed in bankruptcy court. The report relates that as a result of a so-called cash sweep paying down secured debt by $2.7 million in October, cash declined by $1.6 million to end the month at $24.2 million. The secured debt paydown was $6.1 million in September. About Dewey & LeBoeuf 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 LLP operated as a prestigious, New York City- based, law firm that traced its roots to the 2007 merger of Dewey Ballantine LLP -- originally founded in 1909 as Root, Clark & Bird -- and LeBoeuf, Lamb, Green & MacCrae LLP -- originally founded in 1929. In recent years, more than 1,400 lawyers worked at the firm in numerous domestic and foreign offices. At its peak, Dewey employed about 2,000 people with 1,300 lawyers in 25 offices across the globe. When it filed for bankruptcy, only 150 employees were left to complete the wind-down of the business. Dewey's offices in Hong Kong and Beijing are being wound down. The partners of the separate partnership in England are in process of winding down the business in London and Paris, and administration proceedings in England were commenced May 28. All lawyers in the Madrid and Brussels offices have departed. Nearly all of the lawyers and staff of the Frankfurt office have departed, and the remaining personnel are preparing for the closure. The firm's office in Sao Paulo, Brazil, is being prepared for closure and the liquidation of the firm's local affiliate. The partners of the firm in the Johannesburg office, South Africa, are planning to wind down the practice. The firm's ownership interest in its practice in Warsaw, Poland, was sold to the firm of Greenberg Traurig PA on May 11 for $6 million. The Pension benefit Guaranty Corp. took $2 million of the proceeds as part of a settlement. Judge Martin Glenn oversees the case. Albert Togut, Esq., at Togut, Segal & Segal LLP, represents the Debtor. Epiq Bankruptcy Solutions LLC serves as claims and notice agent. The petition was signed by Jonathan A. Mitchell, chief restructuring officer. JPMorgan Chase Bank, N.A., as Revolver Agent on behalf of the lenders under the Revolver Agreement, hired Kramer Levin Naftalis & Frankel LLP. JPMorgan, as Collateral Agent for the Revolver Lenders and the Noteholders, hired FTI Consulting and Gulf Atlantic Capital, as financial advisors. The Noteholders hired Bingham McCutchen LLP as counsel. The U.S. Trustee formed two committees -- one to represent unsecured creditors and the second to represent former Dewey partners. The creditors committee hired Brown Rudnick LLP led by Edward S. Weisfelner, Esq., as counsel. The Former Partners hired Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt & Winters, LLP, as counsel. DEWEY & LEBOEUF: Has Access to Cash Collateral Until Dec. 2 ----------------------------------------------------------- In a fifth supplemental order dated Nov. 16, 2012, the U.S. Bankruptcy Court for the Southern District of New York further extended and modified the final order, dated June 13, 2012, authorizing Dewey & LeBoeuf LLP to use cash collateral of the collateral agent, revolving lenders and noteholders, through the date which is earlier to occur of (a) 11:59 p.m. on the fifth day following the "termination declaration date", or (b) 11:59 p.m. on Dec. 2, 2012. With respect to the Debtor's pending application for an order directing the U.S. Trustee to disband the Official Committee of Former Partners, in the event the Court enters an order directing the U.S. Trustee to disband and dissolve the FPC, any professional fees in the Budget for the FPC will cease to accrue as of the date of entry of such order. A copy of the final cash collateral order is available at http://bankrupt.com/misc/dewey.doc91.pdf About Dewey & LeBoeuf 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 LLP operated as a prestigious, New York City- based, law firm that traced its roots to the 2007 merger of Dewey Ballantine LLP -- originally founded in 1909 as Root, Clark & Bird -- and LeBoeuf, Lamb, Green & MacCrae LLP -- originally founded in 1929. In recent years, more than 1,400 lawyers worked at the firm in numerous domestic and foreign offices. At its peak, Dewey employed about 2,000 people with 1,300 lawyers in 25 offices across the globe. When it filed for bankruptcy, only 150 employees were left to complete the wind-down of the business. Dewey's offices in Hong Kong and Beijing are being wound down. The partners of the separate partnership in England are in process of winding down the business in London and Paris, and administration proceedings in England were commenced May 28. All lawyers in the Madrid and Brussels offices have departed. Nearly all of the lawyers and staff of the Frankfurt office have departed, and the remaining personnel are preparing for the closure. The firm's office in Sao Paulo, Brazil, is being prepared for closure and the liquidation of the firm's local affiliate. The partners of the firm in the Johannesburg office, South Africa, are planning to wind down the practice. The firm's ownership interest in its practice in Warsaw, Poland, was sold to the firm of Greenberg Traurig PA on May 11 for $6 million. The Pension benefit Guaranty Corp. took $2 million of the proceeds as part of a settlement. Judge Martin Glenn oversees the case. Albert Togut, Esq., at Togut, Segal & Segal LLP, represents the Debtor. Epiq Bankruptcy Solutions LLC serves as claims and notice agent. The petition was signed by Jonathan A. Mitchell, chief restructuring officer. JPMorgan Chase Bank, N.A., as Revolver Agent on behalf of the lenders under the Revolver Agreement, hired Kramer Levin Naftalis & Frankel LLP. JPMorgan, as Collateral Agent for the Revolver Lenders and the Noteholders, hired FTI Consulting and Gulf Atlantic Capital, as financial advisors. The Noteholders hired Bingham McCutchen LLP as counsel. The U.S. Trustee formed two committees -- one to represent unsecured creditors and the second to represent former Dewey partners. The creditors committee hired Brown Rudnick LLP led by Edward S. Weisfelner, Esq., as counsel. The Former Partners hired Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt & Winters, LLP, as counsel. DEWEY & LEBOEUF: Can Employ E&Y as Tax Services Provider -------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Dewey & LeBoeuf LLP asks to employ Ernst & Young LLP to provide tax compliance services, nunc pro tunc to Oct. 1, 2012. All payments to EY LLP will be subject to and consistent with the Debtor's post-petition use of cash collateral and any budget attendant with that use of cash collateral. As reported in the TCR on Oct. 18, 2012, the tax compliance services to be provided by E&Y are: A. fixed fee services: -- preparation of the U.S. federal income tax return, Form 1065, for the Debtor for the year ended Dec. 31, 2011; -- preparation of the state and local income and franchise tax returns and K-1 equivalents where applicable for those jurisdictions listed in the statement of work ("SOW") for tax compliance services; and -- preparation of the statements listed on Attachment B to the Tax Compliance SOW. B. hourly services: -- assistance with gathering and reconciling the necessary information for the preparation of the returns, including revising tax work-papers and returns due to updated information; -- assistance with research, documentation, correspondence, and responses to various Federal and State notices; -- reviewing client prepared depreciation schedules, making adjustments, if necessary; -- assistance with gathering data for the completion of Schedule M-3, including information related to foreign subsidiaries, permanent and temporary differences, detail of book income, and related analysis; -- preparation of Form 5471; -- preparation of additional state income tax filings during the current year; -- re-work of client provided state apportionment data; -- assistance with updating financial information received from the client impacting tax return; -- assistance with adjustments and discussions regarding PBC allocations of book income, if necessary; -- preparation of forms and disclosures not included in the 2010 tax returns; -- computation and analysis of applicable penalty and interest using tax interest software; -- assistance with changes in the Debtor's tax depreciation schedules to take advantage of Section 179/bonus deprecation rules, if necessary; -- assistance with fixed asset reconciliation and analysis and assistance provided for in the computation of state tax depreciation when the Debtor's system did not compute state adjustments for bonus deprecation; -- conversion of the PDF format trial balances into excel and bridging the related information into the tax return, if needed; -- research and analysis of the proper tax treatment for transactions during 2011, if needed; -- changes to the Debtor's 2011 tax returns stemming form adjustments to fixed asset depreciation, partner allocations, and certain income and expense items proposed by the Debtor after the returns have been finalized; and -- assistance provided following a technical termination resulting in the preparation of two returns instead of one for the partnership. EY LLP will charge the Debtor a fixed fee of $180,000 for all Fixed Fee Services Provided. EY LLP will also charge the Debtor for Hourly Services based on its agreed hourly rates for all Hourly Services provided, according to the following rate schedule: Partner $620 - $730 Executive Director $520 - $660 Senior Manager $500 - $590 Manager $420 - $520 Senior $250 - $390 Staff $120 - $210 EY LLP's total compensation for the tax compliance services will not exceed $250,000 for all fixed fee services and hourly services. About Dewey & LeBoeuf 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 LLP operated as a prestigious, New York City- based, law firm that traced its roots to the 2007 merger of Dewey Ballantine LLP -- originally founded in 1909 as Root, Clark & Bird -- and LeBoeuf, Lamb, Green & MacCrae LLP -- originally founded in 1929. In recent years, more than 1,400 lawyers worked at the firm in numerous domestic and foreign offices. At its peak, Dewey employed about 2,000 people with 1,300 lawyers in 25 offices across the globe. When it filed for bankruptcy, only 150 employees were left to complete the wind-down of the business. Dewey's offices in Hong Kong and Beijing are being wound down. The partners of the separate partnership in England are in process of winding down the business in London and Paris, and administration proceedings in England were commenced May 28. All lawyers in the Madrid and Brussels offices have departed. Nearly all of the lawyers and staff of the Frankfurt office have departed, and the remaining personnel are preparing for the closure. The firm's office in Sao Paulo, Brazil, is being prepared for closure and the liquidation of the firm's local affiliate. The partners of the firm in the Johannesburg office, South Africa, are planning to wind down the practice. The firm's ownership interest in its practice in Warsaw, Poland, was sold to the firm of Greenberg Traurig PA on May 11 for $6 million. The Pension benefit Guaranty Corp. took $2 million of the proceeds as part of a settlement. Judge Martin Glenn oversees the case. Albert Togut, Esq., at Togut, Segal & Segal LLP, represents the Debtor. Epiq Bankruptcy Solutions LLC serves as claims and notice agent. The petition was signed by Jonathan A. Mitchell, chief restructuring officer. JPMorgan Chase Bank, N.A., as Revolver Agent on behalf of the lenders under the Revolver Agreement, hired Kramer Levin Naftalis & Frankel LLP. JPMorgan, as Collateral Agent for the Revolver Lenders and the Noteholders, hired FTI Consulting and Gulf Atlantic Capital, as financial advisors. The Noteholders hired Bingham McCutchen LLP as counsel. The U.S. Trustee formed two committees -- one to represent unsecured creditors and the second to represent former Dewey partners. The creditors committee hired Brown Rudnick LLP led by Edward S. Weisfelner, Esq., as counsel. The Former Partners hired Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt & Winters, LLP, as counsel. DEWEY & LEBOEUF: Hearing on Motion to Disband FPC Today ------------------------------------------------------- A hearing will be held before the Honorable Martin Glenn, United States Bankruptcy Judge, on Nov. 21, 2012, at 10:00 a.m., to consider Dewey & LeBoeuf LLP's application for an order directing the United States Trustee to disband the Official Committee of Former Partners. As reported in the TCR on Oct. 15, 2012, the Debtors told the Court, among others, that the FPC has consistently taken positions that are detrimental to the orderly administration of this case and contrary to the efforts of the Debtor's bona fide stakeholders and has not provided any tangible benefit to its constituents, or more importantly, the estate. About Dewey & LeBoeuf 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 LLP operated as a prestigious, New York City- based, law firm that traced its roots to the 2007 merger of Dewey Ballantine LLP -- originally founded in 1909 as Root, Clark & Bird -- and LeBoeuf, Lamb, Green & MacCrae LLP -- originally founded in 1929. In recent years, more than 1,400 lawyers worked at the firm in numerous domestic and foreign offices. 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. EMERALD PROPERTIES: Case Summary & 10 Unsecured Creditors --------------------------------------------------------- Debtor: Emerald Properties, LLC 8660 Crestgate Circle Orlando, FL 32819 Bankruptcy Case No.: 12-15646 Chapter 11 Petition Date: November 19, 2012 Court: U.S. Bankruptcy Court Middle District of Florida (Orlando) Judge: Arthur B. Briskman Debtor's Counsel: Aldo G Bartolone, Jr., Esq. KELLEY KRONENBERG, P.A. 20 North Orange Avenue, Suite 1207 Orlando, FL 32801 Tel: (407) 648-9450 E-mail: abartolone@kelleykronenberg.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 unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/flmb12-15646.pdf The petition was signed by Adrian McCloskey, managing member. ENVISION SOLAR: Incurs $600,600 Net Loss in Third Quarter --------------------------------------------------------- Envision Solar International, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $606,606 on $197,319 of revenues for the the three months ended Sept. 30, 2012, compared with a net loss of $1.2 million on $499,314 of revenues for the same period a year ago. For the nine months ended Sept. 30, 2012, the Company had a net loss of $1.8 million on $617,827 of revenues, compared with a net loss of $2.1 million on $1.1 million of revenues for the same period in 2011. The Company's balance sheet at Sept. 30, 2012, showed $1.1 million in total assets, $2.7 million in total current liabilities, and a stockholders' deficit of $1.6 million. According to the regulatory filing, for the nine months ended Sept. 30, 2012, the Company had net losses of $1.8 million. Additionally, at Sept. 30, 2012, the Company had a working capital deficit of $1.7 million, an accumulated deficit of $24.2 million and a stockholders' deficit of $1.6 million. "These factors raise substantial doubt about the Company's ability to continue as a going concern." As reported in the TCR on April 9, 2012, Salberg & Company P.A., in Boca Raton, Fla., expressed substantial doubt about Envision Solar's ability to continue as a going concern. The independent auditors noted that the Company reported a net loss of $2,547,493 and $2,360,851 in 2011 and 2010, respectively, and used cash for operating activities of $1,970,831 and $1,112,794 in 2011 and 2010, respectively. "At Dec. 31, 2011, the Company had a working capital deficiency, stockholders' deficit and accumulated deficit of $2,657,976, $2,482,203 and $22,340,460, respectively." A copy of the Form 10-Q is available at http://is.gd/0FCKu9 San Diego, Calif.-based Envision Solar International, Inc., is a developer of solar products and proprietary technology solutions. The Company focuses on creating high quality products which transform both surface and top deck parking lots of commercial, institutional, governmental and other customers into shaded renewable generation plants. FIRST ACCEPTANCE: A.M. Best Affirms 'B' Financial Strength Rating ----------------------------------------------------------------- A.M. Best Co. has revised the outlook to stable from positive and affirmed the financial strength rating (FSR) of B (Fair) and issuer credit ratings (ICR) of "bb+" of the pooled subsidiary members (First Acceptance) of First Acceptance Corporation (Delaware) [NYSE: FAC]. Concurrently, A.M. Best has revised the outlook to stable from positive and affirmed the ICR of "b" of First Acceptance Corporation. (See below for a detailed listing of the companies.) The ratings of First Acceptance are based upon unfavorable operating performance in recent years; concentration of risk in private passenger non-standard auto lines; and challenging economic conditions compounded by a below average interest rate environment. These negative factors are offset in part by strong risk-adjusted capitalization and sound balance sheet liquidity along with action being taken to improve earnings. Losses in recent years have been negatively impacted by increased claims severity, storm losses and higher expenses, as well as declining revenue from premium writings, investment income and other income items. Premium volume and additional fees charged to policyholders were down due to scaling back production and the weakened economy. Investment income was lower from reductions in invested assets and low interest rates. Capitalization remains more than supportive of the ratings but has weakened in recent years. First Acceptance Corporation contributed nearly $13.1 million of additional capital to the insurance operations in September 2012. This was to partially offset a reduction in surplus primarily due to operating losses in 2011 and 2012 as well as a dividend paid in 2011 to buy back shares. In addition, management has taken a number of actions to improve earnings, primarily by raising rates, closing under- performing retail stores and improving claims handling and underwriting. However, capitalization may continue to weaken as management executes an aggressive growth plan over the next couple of years. The ratings may be further stabilized by a return to a profitable operating trend that leads to capital appreciation; however, the ratings may be downgraded by further weakening in risk-adjusted capitalization. The rating of First Acceptance Corporation is based on the consolidated financial strength of the insurance subsidiaries; its acceptable level of financial leverage from debt; its ability to fund the debt without having to take extraordinary dividends out of the insurance companies; and the subordination of the holding company's creditors to the insurance companies' policyholders. The FSR of B (Fair) and ICR of "bb+" have been affirmed for the following pooled subsidiaries of First Acceptance Corporation: - First Acceptance Insurance Company, Inc. - First Acceptance Insurance Company of Georgia, Inc. - First Acceptance Insurance Company of Tennessee, Inc. FIRST NATIONAL: Incurs $6.5-Mil. Net Loss in Third Quarter ---------------------------------------------------------- First National Community Bancorp, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $6.5 million on $6.8 million of net interest income before provision (credit) for loan and lease losses for the three months ended Sept. 30, 2012, compared with a net loss of $434,000 on $7.4 million of net interest income before provision (credit) for loan and lease losses for the same period last year. For the nine months ended Sept. 30, 2012, the Company had a net loss of $8.7 million on $21.0 million of net interest income before provision (credit) for loan and lease losses, compared with a net loss of $771,000 on $22.2 million of net interest income before provision (credit) for loan and lease losses for the same period of 2011. The $6.1 million increase in net loss for the three months ended Sept. 30 2012, as compared to the three months ended September 30, 2011, was largely due to a $4.3 million increase in the provision for loan and lease losses, which resulted primarily from a charge- off of one large commercial credit totaling $3.1 million. Also affecting the higher net loss were a $680 thousand decrease in non-interest income, a $1.5 million decrease in interest income partially offset by a $853 thousand reduction in interest expense, and a $508 thousand increase in non-interest expense. For the nine months ended Sept. 30, 2012, the $7.9 million increase in net loss resulted from a $5.1 million decrease in interest income partially offset by a $3.9 million reduction in interest expense, and a $1.3 million increase in the provision for loan losses. The Company's balance sheet at Sept. 30, 2012, showed $1.014 billion in total assets, $974.8 million in total liabilities, and shareholders' equity of $39.3 million. Consent Order First National Community Bank is under a Consent Order from the Office of the Comptroller of the Currency dated Sept. 1, 2010. The Company is also subject to a written Agreement with the Federal Reserve Bank of Philadelphia dated Nov. 24, 2010. In accordance with the Order, the Bank is required to achieve and thereafter maintain a total risk-based capital equal to at least 13% of risk-weighted assets and a Tier 1 capital equal to at least 9% of adjusted total assets. At Sept. 30, 2012, and Dec. 31, 2011, the Bank did not meet these requirements. At Nov. 14, 2012, the Company and the Bank are restricted from paying any dividends without regulatory approval. A copy of the Form 10-Q for the third quarter ended Sept. 30, 2012, is available at http://is.gd/E9OxJc Headquartered in Dunmore, Pa., First National Community Bancorp, Inc., is a Pennsylvania corporation, incorporated in 1997 and is registered as a bank holding company under the Bank Holding Company Act ("BHCA") of 1956, as amended. The Company became an active bank holding company on July 1, 1998, when it acquired ownership of First National Community Bank (the "Bank"). The Bank is a wholly-owned subsidiary of the Company. The Company's primary activity consists of owning and operating the Bank, which provides customary retail and commercial banking services to individuals and businesses. The Bank provides practically all of the Company's earnings as a result of its banking services. FITZLORD INC: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: FitzLORD, Inc. dba Vulcan Steel 650 East 27th Street Jacksonville, FL 32206 Bankruptcy Case No.: 12-07494 Chapter 11 Petition Date: November 19, 2012 Court: U.S. Bankruptcy Court Middle District of Florida (Jacksonville) Judge: Paul M. Glenn Debtor's Counsel: Jason A. Burgess, Esq. THE LAW OFFICES OF JASON A. BURGESS, LLC 118 West Adams Street, Suite 900 Jacksonville, FL 32202 Tel: (904) 354-5065 E-mail: jason@jasonaburgess.com Scheduled Assets: $1,983,739 Scheduled Liabilities: $2,154,942 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/flmb12-07494.pdf The petition was signed by Thomas E. Fitzpatrick, chief executive officer. FLURIDA GROUP: Reports $36,600 Net Income in Third Quarter ---------------------------------------------------------- Flurida Group, Inc., filed its quarterly report on Form 10-Q, reporting net income of $36,633 on $4.0 million of revenues for the three months ended Sept. 30, 2012, compared with net income of $127,379 on $4.2 million of revenues for the comparable period last year. For the nine months ended Sept. 30, 2012, the Company reported net income of $86,757 on $11.6 million of revenues, compared with net income of $195,741 on $11.2 million of revenues for the same period of 2011. The Company's balance sheet at Sept. 30, 2012, showed $5.0 million in total assets, $3.3 million in total current liabilities, and stockholders' equity of $1.7 million. According to the regulatory filing, because of the concentration of the customer and supplier base and Company's heavily reliance on the Electrolux and its subsidiaries, the Company may face difficulty as going concern. "However, the going concern may be mitigated due to the close relationship between the Company and its suppliers, Zhong Nan Fu Rui and Chuzhou Fuda Mechanical & Electronics Co., Ltd, which are 100% owned by the [Company's] founder, Jianfeng Ding. Zhong Nan Fu Rui and Chuzhou Fuda Mechanical & Electronics Co., Ltd.'s current customers can be served by the Company for the same quality of products and services. Besides, as of Sept. 30, 2012, the cash and cash equivalent balance was $1,503,137, the management believes that the revenues will be generated and its cash flows will be maintained to cover its operational costs and the risk of going concern in long term is significantly low." A copy of the Form 10-Q is available at http://is.gd/ccx0kf About Flurida Group Chicago-based Flurida Group, Inc.'s business is the sale of appliance parts in Asia, Europe, Australia, North and South America. The main products that the Company sells to these markets are icemakers, motors, ice water dispensing system, and appliance assemblies. These parts are manufactured in China by Zhong Nan Fu Rui Mechanical Electronics Manufacturing Co., Ltd. * * * As reported in the TCR on March 30, 2012, Enterprise CPAs, Ltd., in Chicago, says that the Company's operating history and its customer concentration may raise doubt about its ability to continue as a going concern. GENERAL MOTORS: Moody's Affirms 'Ba3' Ratings; Outlook Positive --------------------------------------------------------------- Moody's Investors Service affirmed the ratings of General Motors Financial Company, Inc. (GMF, corporate family rating and senior unsecured debt at Ba3) and changed the outlook to positive from stable. The rating action follows GMF's announcement that it plans to acquire the international auto finance operations of Ally Financial Inc. The purchase price is $4.2 billion, including a premium of approximately $550 million to the book value of the international operations. The acquisition is expected to close in mid- 2013, subject to regulatory approvals. GMF's ratings currently incorporate one notch of lift from ownership and support by parent General Motors Company (GM). Ratings Rationale The change in outlook reflects the credit benefits of the acquisition, including stronger asset quality and increased ties to GM. Following the acquisition GMF will have stronger asset quality and reduced volatility of assets and cash flows due to a much higher percentage of prime assets. Also, though GMF's leverage will rise, the financing structure of the acquisition - including a $2 billion equity contribution to GMF by GM - will be less aggressive than originally indicated (GM had noted in its 8-K filing of August 2012 that the acquisition, if consummated, could result in a more than doubling of GMF's leverage). These benefits mitigate the significant execution and integration-related challenges associated with the acquisition - Ally International is a large and geographically sprawling business with operations in Europe, Mexico, Latin America and China via a 40% joint venture. GM will likely allocate management resources to the integration project, further mitigating this risk. Another supportive factor is the fact that the international operations' leadership team will remain in place. The positive outlook also reflects the increased level of integration of GMF with GM, and the increased strategic importance of GMF to GM, post-acquisition. Following the acquisition GMF will be able to support GM customers and dealers in markets comprising about 80 percent of GM's global sales; thus GMF will have evolved into largely a GM captive operation. Over time Moody's will consider how the closer integration of GMF and GM could more tightly align the two credits. GMF provides auto finance solutions through auto dealers across the United States and Canada. GMF has approximately 3,700 employees, 809,000 customers and $16.3 billion in aassets as of September 30, 2012. The company is headquartered in Fort Worth, Texas. The principal methodologies used in this rating was Finance Company Global Rating Methodology published in March 2012 and The Rating Relationship Between Industrial Companies And Their Captive Finance Subsidiaries, published in May 2012. GENIUS BRANDS: Incurs $720,400 Net Loss in Third Quarter -------------------------------------------------------- Genius Brands International, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $720,427 on $1.6 million of revenues for the three months ended Sept. 30, 2012, compared with a net loss of $313,216 on $1.7 million of revenues for the same period of 2011. For the nine months ended Sept. 30, 2012, the Company had a net loss of $1.9 million on $4.3 million of revenues, compared with a net loss of $1.3 million on $3.8 million of revenues for the corresponding period of 2011. "Historically, the Company has incurred net losses. As of Sept. 30, 2012, the Company had a consolidated accumulated deficit of $10,045,390 and total stockholders' deficit of $154,682. At Sept. 30, 2012, the Company had consolidated current assets of $1,808,799, including cash of $149,513, and consolidated current liabilities of $1,724,272, resulting in a working capital of $84,527. For the nine month period ending Sept. 30, 2012, the Company reported a consolidated net loss of $1,910,341, including stock option expense of $192,049 which has no cash expenditure requirement. The Company had net cash used by operating activities of $1,218,910." 'Management believes that its increasing revenue each year over the prior year and cash generated by operations, together with funds available from short-term related party advances and funding from the debentures issued June 27, 2012, will be sufficient to fund planned operations for the next twelve months. However, there can be no assurance that operations and operating cash flows will continue at the current levels or improve in the near future. If the Company is unable to obtain profitable operations and positive operating cash flows sufficient to meet scheduled debt obligations, it may need to seek additional funding or be forced to scale back its development plans or to significantly reduce or terminate operations. A copy of the Form 10-Q is available at http://is.gd/s7Q7As San Diego, Calif.-based Genius Brands International, Inc., f/k/a Pacific Entertainment Corporation, provides music-based products which the Company believes are entertaining, educational and beneficial to the well-being of infants and young children under its brands, including Baby Genius. GEOPETRO RESOURCES: Has Accumulated Deficit of $49.1MM at Sept. 30 ------------------------------------------------------------------ GeoPetro Resources Company filed its quarterly report on Form 10-Q, reporting a net loss of $1.3 million on $nil revenue for the three months ended Sept. 30, 2012, compared with net income of $1.9 million on $nil revenue for the corresponding period a year earlier. For the nine months ended Sept. 30, 2012, the Company had a net loss of $3.4 million on $351,082 of revenues, compared with a net loss of $574,071 on $607,939 of revenues for the same period of 2011. Results for the three and nine months ended Sept. 30, 2011, included a gain on sale of equipment of $4.0 million. The Company's balance sheet at Sept. 30, 2012, showed $23.8 million in total assets, $5.8 million in total liabilities, and shareholders' equity of $18.0 million. According to the regulatory filing, as of Sept. 30, 2012, the Company had a working capital deficit of $2.8 million, and for the nine months ended Sept. 30, 2012, the Company's cash used in operating activities amounted to $1.7 million. "If capital is available, we estimate that our investment needs during the remainder of fiscal year 2012 and 2013 will amount to $10,676,000 related to our natural gas properties within the Madisonville field, our California properties and our Canadian properties. Our results of operations have resulted in an accumulated deficit of $49,072,092 from inception through the nine months ended Sept. 30, 2012." "Our current cash and cash equivalents and anticipated cash flow from operations will not be sufficient to meet our working capital, and capital expenditure requirements for the foreseeable future. Additional financing is required to carry out our business plan." A copy of the Form 10-Q is available at http://is.gd/nCu6pE San Francisco, Calif.-based GeoPetro Resources Company is an oil and gas company in the business of exploring and developing oil and natural gas reserves on a worldwide basis. Since inception, the Company has conducted leasehold acquisition, exploration and drilling activities on its North American and international prospects. These projects currently encompass approximately 9,030 gross (9,030 net) acres, consisting of mineral leases and exploration permits that give the Company the right to explore for, develop and produce oil and natural gas. Most of these properties are in the exploration, appraisal or development drilling phase and have not begun to produce revenue from the sale of oil and natural gas. Excluding minor interest and dividend income, the Company's only significant cash inflows until 2003 were the recovery of capital invested in projects through sale or other divestiture of interests in oil and gas prospects to industry partners. Since 2003, substantially all of the Company's revenue has been generated from natural gas sales derived from the Magness #1, the Fannin #1, and the Mitchell #1 wells in the Madisonville Field in East Texas under spot gas purchase contracts at market prices. Natural gas sales from the Madisonville Field are expected to account for all of our revenues for 2012. GLOBAL CASINOS: Incurs $128,576 Net Loss in Sept. 30 Quarter ------------------------------------------------------------ Global Casinos, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $128,576 on $1.31 million of net revenues for the three months ended Sept. 30, 2012, compared with a net loss of $74,431 on $1.32 million of net revenues for the prior fiscal period. The Company's balance sheet at Sept. 30, 2012, showed $3.8 million in total assets, $2.2 million in total liabilities, and stockholders' equity of $1.6 million. As reported in the TCR on Oct. 16, 2012, Schumacher & Associates, Inc., in their report on the Company's financial statements for the year ended June 30, 2012, expressed substantial doubt about Global Casinos' ability to continue as a going concern. The independent auditors noted that the Company has suffered significant losses, and has working capital and stockholders' deficits. A copy of the Form 10-Q is available at http://is.gd/fr96Z3 Boulder, Colo.-based Global Casinos, Inc., and its wholly owned subsidiaries operate in the domestic gaming industry. As of Sept. 30, 2012, the Company's operating subsidiaries were Casinos USA, Inc., which owns and operates the Bull Durham Saloon and Casino, located in the limited stakes gaming district of Black Hawk, Colorado, and Doc Holliday Casino II, LLC, which operates the Doc Holliday Casino, located in the limited stakes gaming district of Central City, Colorado. Effective June 1, 2012, the Company entered into a definitive Split-Off Agreement with Gemini Gaming LLC to sell all of its gaming properties, interests and operations (the "Split-Off"). Gemini is controlled by Clifford Neuman, the Company's President and Director, Pete Bloomquist, a Director, and Doug James, the General Manager of the Company's two casinos: Bull Durham Casino and Doc Holliday Casino. Also effective June 1, 2012, the Company entered into a definitive Stock Purchase Agreement, to acquire 100% of the issued and outstanding equity securities of Georgia Healthcare REIT, Inc., which was formed and organized to acquire real estate interests focused in the healthcare industry. Consummation of the Stock Purchase is subject to numerous conditions, including the approval of the Georgia REIT shareholder, the approval of a Change of Ownership of the two casino licenses by the Colorado Division of Gaming, the concurrent closing of the Split-Off Agreement, a definitive Information Statement under Sections 14(c) and 14(f) of the Exchange Act is filed with the SEC and mailed to the Company's shareholders, and other conditions customary in transactions of this nature. GMX RESOURCES: S&P Raises CCR To 'CCC'; Outlook Developing ---------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Oklahoma City-based GMX Resources Inc. to 'CCC' from 'SD' (selective default). The outlook is developing. "At the same time, we lowered the issue-level rating on GMX's $288.6 million senior secured notes due 2017 to 'CCC-' from 'CCC+' and removed the rating from CreditWatch negative. We revised the recovery rating on the notes to '5', indicating our expectation of modest recovery (10% to 30%), in the event of a payment default, from '4'," S&P said. "The rating on GMX Resources Inc. reflects our assessment of the company's 'weak' liquidity, 'vulnerable' business risk, and 'highly leveraged' financial risk," said Standard & Poor's credit analyst Paul Harvey. "The 'CCC' corporate credit rating assumes the successful sale of an additional $30 million of senior secured notes due 2017 and subsequent repayment of its $27.1 million convertible notes due 2013, which we expect should be completed in fourth quarter 2012. The rating also reflects our expectation of ongoing tight liquidity given the company's aggressive capital spending and limited production levels. Finally, despite recent drilling results, we view the development of the company's Bakken and Niobrara assets as having a high level of execution risk for GMX given its limited experience in the plays." "The developing outlook reflects the potential for either an upgrade or downgrade over the next six to 12 months, depending on the success, or lack thereof, from the development of GMX's Bakken and Niobrara assets," S&P said. "We could lower ratings if GMX is unable to establish a consistent record of strong growth from its Bakken assets. If the Bakken assets fail to meet expectations, we expect GMX to face significant difficulty obtaining additional capital to support its operations. As a result, liquidity would quickly contract and potentially force GMX to pursue distressed transactions to support operations," S&P said. "On the other hand, we could raise ratings if GMX can successfully execute its operating strategy. If GMX can grow production and reserves on a consistent basis, it should significantly improve the company's ability to access further capital to fund operations. As a result, we could raise ratings if we have reasonable confidence of sufficient access to liquidity over a 12- month, or greater, period," S&P said. GRYPHON GOLD: Incurs $1.1-Mil. Net Loss in Sept. 30 Quarter ----------------------------------------------------------- Gryphon Gold Corporation filed its quarterly report on Form 10-Q, reporting a net loss of $1.1 million on $3.5 million of revenue for the three months ended Sept. 30, 2012, compared with net loss of $804,461 on $nil revenue for the three months ended Sept. 30, 2011. For the six months ended Sept. 30, 2012, the Company had a net loss of $1.4 million on $9.4 million of revenue, compared with a net loss of $1.4 million on $nil revenue for the six months ended Sept. 30, 2011. The Company's balance sheet at Sept. 30, 2012, showed $39.5 million in total assets, $29.5 million in total liabilities, and stockholders' equity of $10.0 million. "The Company has an accumulated deficit of $44,515,900 as of Sept. 30, 2012, compared to $43,072,173 as of March 31, 2012, and has cash on hand of $4,534,941 as of Sept. 30, 2012. In addition, the Company had $21,224,392 in notes payable and long-term debt as of Sept. 30, 2012. These conditions raise substantial doubt about the Company's ability to continue as a going concern." DeCoria, Maichel & Teague P.S., in Spokane, Washington, expressed substantial doubt about Gryphon's ability to continue as a going concern, following the Company's results for the fiscal year ended March 31, 2012. The independent auditors noted that the Company has suffered recurring operating losses and has an accumulated deficit of $43.1 million. A copy of the Form 10-Q is available at http://is.gd/fhg3ur Gryphon Gold Corporation, headquartered in Carson City, Nevada, is an exploration, development and operating company focused on precious metals and is currently producing precious metals at its Borealis property, located in Nevada's Walker Lane Gold Belt. The plan for the Borealis property is to advance production of the oxide heap leachable gold and silver. The Borealis property consists of unpatented mining claims of approximately 20 acres each, totaling about 15,020 acres, which had successful historic production. HAWAII OUTDOOR: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Hawaii Outdoor Tours, Incorporated P.O. Box 1417 Hilo, HI 96721 Bankruptcy Case No.: 12-02279 Chapter 11 Petition Date: November 20, 2012 Court: U.S. Bankruptcy Court District of Hawaii (Honolulu) Judge: Robert J. Faris About the Debtor: The Debtor is the operator of the Niloa Volcanoes Resort in Hilo, Hawaii. Niloa Volcanoes is a 382-room hotel with a nine-hole golf course. The hotel has 52 employees. Occupancy at the hotel was below 45% in 2012, and is expected to rise to 53% in 2013. Debtor's Counsel: James A. Wagner, Esq. WAGNER CHOI & VERBRUGGE 745 Fort Street, Suite 1900 Honolulu, HI 96813 Tel: (808) 533-1877 Fax: (808) 566-6900 E-mail: jwagner@hibklaw.com - and ? Neil J. Verbrugge, Esq. WAGNER CHOI & VERBRUGGE 745 Fort Street, Suite 1900 Honolulu, HI 96813 Tel: (808) 533-1877 Fax: (808) 566-6900 E-mail: nverbrugge@hibklaw.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Liabilities: $10,000,001 to $50,000,000 The petition was signed by Kenneth Fujiyama, CEO. Debtor's List of Its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ HELCO -- $169,291 P.O. Box 909 Honolulu, HI 96808 EZ Computing -- $32,656 16-572 Ohe Street Keaau, HI 96749 Ms. Martin RB Thornton, trustee -- $32,252 Eleanor Rose Benda Trust Carrollton, TX 75006 Wastewater Division -- $32,246 Department of Water Supply -- $25,691 Hawaiian Telcom -- $20,267 Hirayama Bros. Electric Inc. -- $20,000 Thyssenkrupp Elevator Corp. -- $12,844 Ashford & Wriston -- $9,806 Rainbow Isle Refrigeration -- $6,239 Oceanic Time Warner Cable -- $5,368 Hawaii Employer's Mutual Insurance -- $3,677 Co. HMSA -- $2,934 Land & Natural Resources -- $2,465 Pacific Guardian Life -- $1,762 Bankcard Center -- $1,560 3T Poly LLC -- $905 Solid Waste Division ? COH -- $848 ABC Corp., Hilo -- $829 Paradise Beverages -- $731 HAWKER BEECHRAFT: Judge Rejects Bid for Speedy Inventory Sale ------------------------------------------------------------- Molly McMillin at The Wichita Eagle reports a bankruptcy judge rejected Hawker Beechcraft's request for permission to expedite the sale of its remaining inventory of discontinued Hawker 4000 business jets for a substantial discount after a group of Hawker 4000 owners protested. According to the report, Hawker Beechcraft is seeking to sell its remaining Hawker 4000 inventory without warranty or support commitments. Hawker 4000 owners, worried about discontinuance of warranties and other agreements, hired attorneys to protect their interests. According to the report, Hawker Beechcraft said it wanted to accelerate the sales before competitors can introduce new aircraft into the market that could further decrease the value of the Hawker 4000 aircraft. An ad hoc committee of Hawker 4000 customers, in a court filing, argued that rather than hastening the process, sales of the assets should proceed in a measured, responsible process to maximize the value of the aircraft. The report adds Hawker Beechcraft has 20 Hawker 4000 in its inventory, with a retail value of $20 million each. The inventory includes 13 new Hawker 4000s, three in production and four used planes. The report notes a hearing on the Hawker 4000 motion is set for Nov. 29, 2012, in bankruptcy court. The report notes Hawker Beechcraft said late last month that it was discontinuing warranties on the Hawker 4000 and Premier 1 and 1A business jet lines, as well as its extended service contracts on the two planes. About Hawker Beechcraft Hawker Beechcraft Acquisition Company, LLC, headquartered in Wichita, Kansas, manufactures business jets, turboprops and piston aircraft for corporations, governments and individuals worldwide. Hawker Beechcraft reported a net loss of $631.90 million on $2.43 billion of sales in 2011, compared with a net loss of $304.30 million on $2.80 billion of sales in 2010. Hawker Beechcraft Inc. and 17 affiliates filed for Chapter 11 reorganization (Bankr. S.D.N.Y. Lead Case No. 12-11873) on May 3, 2012, having already negotiated a plan that eliminates $2.5 billion in debt and $125 million of annual cash interest expense. The plan will give 81.9% of the new stock to holders of $1.83 billion of secured debt, while 18.9% of the new shares are for unsecured creditors. The proposal has support from 68% of secured creditors and holders of 72.5% of the senior unsecured notes. Hawker is 49%-owned by affiliates of Goldman Sachs Group Inc. and 49%-owned by Onex Corp. The Company's balance sheet at Dec. 31, 2011, showed $2.77 billion in total assets, $3.73 billion in total liabilities and a $956.90 million total deficit. Other claims include pensions underfunded by $493 million. Hawker's legal representative is Kirkland & Ellis LLP, its financial advisor is Perella Weinberg Partners LP and its restructuring advisor is Alvarez & Marsal. Epiq Bankruptcy Solutions LLC is the claims and notice agent. Sidley Austin LLP serves as legal counsel and Houlihan Lokey Howard & Zukin Capital Inc. serves as financial advisor to the DIP Agent and the Prepetition Agent. Wachtell, Lipton, Rosen & Katz represents an ad hoc committee of senior secured prepetition lenders holding 70% of the loans. Milbank, Tweed, Hadley & McCloy LLP represents an ad hoc committee of holders of the 8.500% Senior Fixed Rate Notes due 2015 and 8.875%/9.625% Senior PIK Election Notes due 2015 issued by Hawker Beechcraft Acquisition Company LLC and Hawker Beechcraft Notes Company. The members of the Ad Hoc Committee -- GSO Capital Partners, L.P. and Tennenbaum Capital Partners, LLC -- hold claims or manage accounts that hold claims against the Debtors' estates arising from the purchase of the Senior Notes. Deutsche Bank National Trust Company, the indenture trustee for senior fixed rate notes and the senior PIK-election notes, is represented by Foley & Lardner LLP. An Official Committee of Unsecured Creditors appointed in the case has selected Daniel H. Golden, Esq., and the law firm of Akin Gump Strauss Hauer & Feld LLP as legal counsel. The Committee's financial advisor is FTI Consulting, Inc. On June 30, 2012, Hawker filed its Plan, which proposed to eliminate $2.5 billion in debt and $125 million of annual cash interest expense. The plan would give 81.9% of the new stock to holders of $1.83 billion of secured debt, while 18.9% of the new shares are for unsecured creditors. The proposal has support from 68% of secured creditors and holders of 72.5% of the senior unsecured notes. In July 2012, Hawker disclosed it was in exclusive talks with China's Superior Aviation Beijing Co. for the purchase of Hawker's corporate jet and propeller plane operations out of bankruptcy for $1.79 billion. In October 2012, Hawker unveiled that those talks have collapsed amid concerns a deal with Superior wouldn't pass muster with a U.S. government panel and other cross-cultural complications. Sources told The Wall Street Journal that Superior encountered difficulties separating Hawker's defense business from those units in a way that would make both sides comfortable the deal would get U.S. government clearance. The sources told WJS the defense operations were integrated in various ways with Hawker's civilian businesses, especially the propeller plane unit, in ways that proved difficult to untangle. Thereafter, Hawker said it intends to emerge from bankruptcy as an independent company. On Oct. 29, 2012, Hawker filed a modified reorganization plan and disclosure materials. Hawker said the plan was supported by the official creditors' committee and by a "substantial majority" of holders of the senior credit and a majority of holders of senior notes. Hawker said it will either sell or close the jet-manufacturing business. The revised plan still offers 81.9% of the new stock in return for $921 million of the $1.83 billion owing on the senior credit. Unsecured creditors are to receive the remaining 18.9% of the new stock. Holders of the senior credit will receive 86% of the new stock. The senior credit holders are projected to have a 43.1% recovery from the plan. General unsecured creditors' recovery is a projected 5.7% to 6.3%. The recovery by holders of $510 million in senior notes is predicted to be 9.2% to 10%. HOSTESS BRANDS: Adviser Says Customers Interested in Buying Brands ------------------------------------------------------------------ Dawn McCarty and Phil Milford at Bloomberg News report a financial adviser said in court Nov. 21 that Hostess Brands Inc. customers are interested in buying the company's brands and the baker of Twinkies and Wonder bread may generate about $1 billion from asset sales. The company has been "undervalued" for years and there is "very intense" competition for its brands, Joshua Scherer of Perella Weinberg Partners LP said Nov. 21 at a hearing in U.S. Bankruptcy Court in White Plains, New York. Hostess isn't administratively insolvent, he said. According to the report, Mr. Joshua Scherer told Judge Drain the sales of Hostess assets may generate about $1 billion. There is "very intense" competition for the brands, Mr. Scherer said in court. A sale would be a "once in a lifetime opportunity for our competitors to get iconic brands," he said. The judge approved going-out-of-business sales at Hostess' retail outlets and the return of excess ingredients and packaging. 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. DHostess Brands disclosed assets of $982 million and liabilities of $1.43 billion as of the Chapter 11 filing. 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). In the new Chapter 11 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. The official committee of unsecured creditors 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. Hostess Brands in mid-November opted to pursue the orderly wind down of its business and sale of its assets after the Bakery, Confectionery, Tobacco and Grain Millers Union (BCTGM) commenced a nationwide strike. The Debtor failed to reach an agreement with BCTGM on contract changes. Hostess Brands said it intends to retain approximately 3,200 employees to assist with the initial phase of the wind down. Employee headcount is expected to decrease by 94% within the first 16 weeks of the wind down. The entire process is expected to be completed in one year. HOSTESS BRANDS: Begins Firings After Wind Down Approved ------------------------------------------------------- Dawn McCarty and Phil Milford at Bloomberg News report Hostess Brands Inc. began firing employees after winning interim court approval to shut down and start selling assets that a financial adviser said may bring in $1 billion. According to the report, U.S. Bankruptcy Judge Robert Drain on Nov. 21 approved Hostess's request to close at a hearing in White Plains, New York. Chief Executive Officer Gregory Rayburn said 15,000 workers would be fired the same day so they could start receiving unemployment benefits. Hostess said Nov. 16 that it needed to liquidate because a weeklong strike by its bakers' union crippled operations. The report relates that final approval of the wind-down plan will be considered Nov. 29, and Hostess will seek court approval later for sales of major assets, such as its brands. Most of the wind-down will take place in the first three months, said Heather Lennox, Esq., a lawyer for Hostess with Jones Day. Quick asset sales may preserve some jobs, Joshua Scherer of Perella Weinberg Partners LP said. Mr. Scherer said a prospective buyer visited a Drake's cake factory Nov. 20 and asked whether its acquirer "could rehire employees who worked here." The report relates Mr. Rayburn asked Judge Drain to shield company officials from lawsuits over the firings. Hostess has been spending about $1 million a day for payroll since halting operations last week, down from $2 million a day, Mr. Rayburn said. Hostess said about 3,200 employees will stay on temporarily to clean plants and mothball equipment. Mr. Drain approved a plan to retain the employees, as well as a request to use cash collateral and an amended financing agreement for the company. According to the report, Judge Drain rejected a request by U.S. Trustee Tracy Hope Davis to convert the Hostess case to a Chapter 7 liquidation from Chapter 11, which would have handed control over the asset sales to a trustee. Conversion "would be a disaster," Judge Drain said. Charles Carroll, an adviser to Hostess with FTI Consulting Inc., argued that a trustee would "take time to get up to speed" while the assets' values declined. 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. DHostess Brands disclosed assets of $982 million and liabilities of $1.43 billion as of the Chapter 11 filing. 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). In the new Chapter 11 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. The official committee of unsecured creditors 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. Hostess Brands in mid-November opted to pursue the orderly wind down of its business and sale of its assets after the Bakery, Confectionery, Tobacco and Grain Millers Union (BCTGM) commenced a nationwide strike. The Debtor failed to reach an agreement with BCTGM on contract changes. Hostess Brands said it intends to retain approximately 3,200 employees to assist with the initial phase of the wind down. Employee headcount is expected to decrease by 94% within the first 16 weeks of the wind down. The entire process is expected to be completed in one year. HOTEL INDIGO: Ownership Group Emerges From Chapter 11 Bankruptcy ---------------------------------------------------------------- Patrick Danner at San Antonio Express News reports the partnership that owns the landmark Hotel Indigo at the Alamo and three other San Antonio hotel ownership groups has emerged from bankruptcy with the businesses intact. According to the report, Chief U.S. Bankruptcy Judge Ronald B. King confirmed the Chapter 11 reorganization plans for the four related groups after they were able to restructure loans on each of the properties. "They're delighted to be exiting bankruptcy," Rakhee V. Patel, a Dallas attorney representing the ownership groups, said after a bankruptcy court hearing. The report notes the partnership that owns the 91-room Hotel Indigo at 105 N. Alamo St., cater-cornered to Alamo Plaza, had assets of at least $10.8 million and liabilities of about $15.8 million. The hotels owned by the other groups are: -- The 93-room La Quinta Inn & Suites at 5622 Utex Blvd. -- The 79-room Comfort Inn & Suites at 4038 Interstate 10 East. -- The 75-room Motel 6 at 748 Wells Blvd. The report notes the hotel partnership, 1909 Ltd., received $500,000 from a legal settlement related to damage claims. The report adds First National Bank, which holds a nearly $10.9 million secured claim related to the Hotel Indigo, agreed to modify the loan terms. The loan matures in 10 years. HYPERTENSION DIAGNOSTICS: Posts $729,800 Net Loss in Sept. 30 Qtr. ------------------------------------------------------------------ Hypertension Diagnostics, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $729,837 on $34,622 of revenues for the three months ended Sept. 30, 2012, compared with a net loss of $1.0 million on $1,200 of revenues for the prior fiscal period. The Company's balance sheet at Sept. 30, 2012, showed $1.1 million in total assets, $2.0 million in total liabilities, and a stockholders' deficit of $909,741. "For the quarter ended Sept. 30, 2012, we incurred losses from continuing operations of $447,957. At Sept. 30, 2012, we had an accumulated deficit of $30,011,138 and negative working capital of $227,525. Our ability to continue as a going concern is dependent on our ability to raise the required additional capital or debt financing to meet short-term needs to relocate our plastics processing facility to a new site and then restart the facility which would include hiring production works. The Company is currently seeking to raise an additional $750,000 through an issuance of 14.5% Series II Subordinated Notes in order to meet the cash flow needs to restart our plastics business. As of this filing, we have raised $210,000 related to these notes. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our current shareholders could be reduced, and such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to adequately restart our plastics business, which could significantly and materially restrict our operations." A copy of the Form 10-Q is available at http://is.gd/ON5RX6 Minnetonka, Minnesota-based Hypertension Diagnostics, Inc., was previously engaged in the design, development, manufacture and marketing of proprietary devices. In August 2011, the Company sold its medical device inventory, subleased its office and manufacturing facility, and entered into a limited license agreement with a company controlled by Jay Cohn, a founder and at that time, a director of the Company. In September 2011, the Company formed HDI Plastics Inc. ("HDIP"), a wholly owned- subsidiary, leased a facility for warehouse and processing of recycled plastic, purchased selected manufacturing assets and began engaging in the business of plastics reprocessing in Austin, Tex. On March 29, 2012, the Company ceased operations at the Austin facility and it is currently seeking to relocate the processing facility to a new location. The Company currently has a plan to resume production around Feb. 1, 2013, assuming adequate capital is obtained to do so. * * * As reported in the TCR on Oct. 2, 2012, Moquist Thorvilson Kaufmann & Pieper LLC, in Edina, Minnesota, expressed substantial doubt about Hypertension's ability to continue as a going concern. The independent auditors noted that the Company had net losses for the years ended June 30, 2012, and 2011, and has a stockholders' deficit at June 30, 2012. IBIO INC: Incurs $2.1-Mil. Net Loss in Sept. 30 Quarter ------------------------------------------------------- iBio, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $2.1 million on $390,186 of revenues for the three months ended Sept. 30, 2012, compared with net income of $383,143 on $320,348 of revenues for the prior fiscal period. The Company is required to account for the August 2008 Warrants as derivative liabilities. The derivative liabilities are revalued at the end of each reporting period. The periodic change in value of the derivative liabilities is recorded as either non-cash derivative income or as non-cash derivative expense. The Company recorded non-cash derivative expense and non-cash income of approximately $240,883 and $2.7 million for the three months ended Sept. 30, 2012, and 2011, respectively. The Company's balance sheet at Sept. 30, 2012, showed $8.0 million in total assets, $3.4 million in total liabilities, and stockholder's equity of $4.6 million. As of Sept. 30, 2012, the Company's accumulated deficit was approximately $33,389,000 and it had cash used in operating activities of approximately $1,290,000 and $1,228,000 for the three months ended Sept. 30, 2012, and 2011, respectively. A copy of the Form 10-Q is available at http://is.gd/sDSnHs Based in Newark, Del., iBio, Inc., is a biotechnology company focused on commercializing its proprietary technologies, the iBioLaunch(TM) platform for vaccines and therapeutic proteins, as well as the iBioModulator(TM) platform for vaccine enhancement. * * * As reported in the TCR on Oct. 16, 2012, CohnReznick LLP, in Eatontown, N.J., expressed substantial doubt about iBio's ability to continue as a going concern. The independent auditors noted that the Company has incurred net losses and negative cash flows from operating activities for the years ended June 30, 2012, and 2011 and has an accumulated deficit as of June 30, 2012. IN HOOT: Voluntary Chapter 11 Case Summary ------------------------------------------ Debtor: In Hoot, LLC aka Hooters 1306 S. 119th Street Omaha, NE 68144 Bankruptcy Case No.: 12-82639 Chapter 11 Petition Date: November 20, 2012 Court: United States Bankruptcy Court District of Nebraska (Omaha Office) Debtor's Counsel: Anna M. Bednar, Esq. Robert F. Craig, Esq. CRAIG/BEDNAR LAW 14301 FNB Parkway Omaha, NE 68154 Tel: (402) 408-6000 Fax: (402) 408-6001 E-mail: anna@craiglawpc.com robert@craiglawpc.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. The petition was signed by Darren L. Taylor, managing member. INDEPENDENCE TAX IV: Reports $607,000 Net Income in Sept. 30 Qtr. ----------------------------------------------------------------- Independence Tax Credit Plus L.P. IV filed its quarterly report on Form 10-Q, reporting net income of $606,951 on $1.2 million of total revenues for the three months ended Sept. 30, 2012, compared with a net loss of $302,719 on $1.1 million of total revenues for the three months ended Sept. 30, 2011. For the six months ended Sept. 30, 2012, the Partnership had net income of $2.6 million on $2.3 million of total revenues, compared with a net loss of $626,871 on $2.2 million of total revenues for the six months ended Sept. 30, 2011. The Partnership's balance sheet at Sept. 30, 2012, showed $16.7 million in total assets, $32.0 million in total liabilities, and a partners' deficit of $15.3 million. "At Sept. 30, 2012, the Partnership's liabilities exceeded assets by $15,335,042 and for the six months ended Sept. 30, 2012, had net income of $2,565,568, including gain on sale of properties of $2,917,069. These factors raise substantial doubt about the Partnership's ability to continue as a going concern. A copy of the Form 10-Q is available at http://is.gd/zFfcq8 Independence Tax Credit Plus L.P. IV is a limited partnership which was formed under the laws of the State of Delaware on Feb. 22, 1995. The general partner of the Partnership is Related Independence L.L.C., a Delaware limited liability company (the "General Partner"), which is managed by an affiliate of Centerline Holding Company, the ultimate parent of the manager of the general partner of the General Partner. The Partnership's initial business was to invest in other partnerships owning leveraged apartment complexes that are eligible for the low-income housing tax credit enacted in the Tax Reform Act of 1986, some of which may also be eligible for the historic rehabilitation tax credit. The Partnership is currently in the process of developing a plan to dispose of all of its investments. It is anticipated that this process will continue to take a number of years. INFRAX SYSTEMS: Incurs $594,000 Net Loss in Sept. 30 Quarter ------------------------------------------------------------ Infrax Systems, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $594,369 on $54,068 of revenues for the three months ended Sept. 30, 2012, compared with a net loss of $1.3 million on $204,975 of revenues for the prior fiscal period. The Company's balance sheet at Sept. 30, 2012, showed $5.1 million in total assets, $2.9 million in total liabilities, and stockholders' equity of $2.2 million. "As of Sept. 30, 2012, the Company has a working capital deficit and has incurred a loss from operations and recurring losses since its inception resulting in a significant accumulated deficit. As of Sept. 30, 2012, the Company had negative working capital of approximately $2.0 million and approximately $0 in cash with which to satisfy any future cash requirements. These conditions raise substantial doubt about the Company's ability to continue as a going concern." A copy of the Form 10-Q is available at http://is.gd/fpw9Ga St. Petersburg, Fla.-based Infrax Systems, Inc., since its inception, the Company had been dedicated to selling and/or licensing a fiber optic management software system under the name OptiCon Network Manager, originally developed, and acquired from Corning Cable System, Inc. through a related company, FutureTech Capital, LLC. INKSURE TECHNOLOGIES: Incurs $59,000 Net Loss in Third Quarter -------------------------------------------------------------- InkSure Technologies Inc. filed its quarterly report on Form 10-Q, reporting a net loss of $59,000 on $516,000 of revenues for the three months ended Sept. 30, 2012, compared with net income of $108,000 on $1.0 million of revenues for the corresponding period last year. For the nine months ended Sept. 30, 2012, the Company had a net loss of $949,000 on $915,000 of revenues, compared with a net loss of $12,000 on $2.8 million of revenues for the same period of 2011. The Company's balance sheet at Sept. 30, 2012, showed $1.6 million in total assets, $704,000 in total liabilities, and stockholders' equity of $854,000. "The Company has sustained significant operating losses in recent periods, which has resulted in a significant reduction in its cash reserves. As reflected in the accompanying financial statements the Company's operations for the nine months ended Sept. 30, 2012, resulted in a net loss of $949,000 and negative cash flows from operation activities of $1,134,000. The Company believes that it will continue to experience losses and increased negative working capital and negative cash flows in the near future and will not be able to return to positive cash flow without obtaining additional financing in the near term. The Company may experience difficulties accessing the equity and debt markets and raising such capital, and there can be no assurance that the Company will be able to raise such additional capital on favorable terms or at all. If additional funds are raised through the issuance of equity securities, the Company's existing stockholders will experience significant further dilution. As a result of the foregoing factors, there is substantial doubt about the Company's ability to continue as a going concern. I A copy of the Form 10-Q is available at http://is.gd/bLMT4M New York, N.Y.-based InkSure Technologies Inc. specializes in comprehensive security solutions, designed to protect branded products and documents from counterfeiting, fraud, and diversion. INTERNATIONAL HOME: U.S. Trustee Appoints Marcos Colon as Examiner ------------------------------------------------------------------ Donald F. Walton, the U.S. Trustee for Region 21 has informed the Hon. Enrique S. Lamoutte Inclan of the U.S. Bankruptcy Court for the District of Puerto Rico of its appointment of Marcos L. Colon Cuebas, CPA, as examiner for International Home Products, Inc., and Health Distillers International, Inc. The U.S. Trustee and the Examiner have agreed to this timetable for the work to be performed: a. Dec. 7, 2012 -- Work-plan and budget due, after examination of documents at the Debtors' facilities; b. Jan. 18, 2013 -- Preliminary report due; and c. Feb. 19, 2012 -- Final report due. The Examiner will be compensated at these hourly rates: Partners $150 Manager $100 Seniors $75 Staff $65 To the best of the U.S. Trustee's knowledge, the Examiner is a "disinterested person' as that term is defined in Section 101(14) of the Bankruptcy Code. The Examiner can be reached at: Marcos L. Colon Cuebas, CPA Colon Cuebas & Laguna, PSC 1519 Ponce de Leon Avenue, Suite 601, Stop 23 San Juan, Puerto Rico 00910 Tel. (787)724-3400 Telecopier: (787)724-3300 E-mail: mcolon@ccl-cpafirm.com As reported by the Troubled Company Reporter on Oct. 2, 2012, secured creditor First Bank Puerto Rico asked the Court to appoint an examiner in the Chapter 11 cases of the Debtors, saying that the examiner will conduct an investigation of the Debtors' management of assets and their financial affairs because, among other things, the Debtors have not completed an audit of their financial statements for the years 2010 and 2011. Creditor Marian Ellen Foti joined in the motion of First Bank to appoint an examiner. On Oct. 4, 2012, the Court stated that since the debts in the case exceed $5 million, the appointment of an examiner is mandatory. On Oct. 9, 2012, the Debtors requested reconsideration to the court order due to the fact that the Debtors have contested in their objection to the appointment of the examiner and the supplement thereto that the fixed, liquidated and unsecured debts excluding debts for goods, services, or taxes, or debts to insiders, do not reach the $5 million limit imposed by the Bankruptcy Code. The Debtors reinstated in the supplement that First Bank's claim in full has been disputed and is contingent to the results of an adversary proceeding and a pending appeal. Without First Bank's claim, the requirement of the $5 million fixed, liquidated, unsecured debts, excluding debts for goods, services, taxes or debts to insiders, is not complied. On Oct. 22, 2012, the Court denied the Debtors' motion for reconsideration on the court order authorizing the appointment of an examiner. The Court said that the record shows that the Debtors have more than $5 million in unsecured debts. Proof of claim 9-1, as amended, filed by Firstbank shows a total amount claimed of $36,865,623 and the value of collateral of $27 million. Thus the difference exceeds $5 million. According to the Court, the claim has not been objected to. The issue regarding Firstbank's claim is whether it is secured or not. The Court found that it was at a hearing held on May 3, 2012, and in the order entered on May 15, 2012. The order was entered in relation to the Debtors' request for use of cash collateral and not as a result of an objection to claim. The order was appealed to the U.S. District Court. "If the Debtors prevail in their appeal, the amount of unsecured debt will increase," the Court stated. A review of the minutes of the hearing held on July 24, 2012, shows the Debtors accepted amounts of $40 million; and in the joint motion filed on June 22, 2012, the unsecured debt admitted exceeds $5 million. About International Home Products International Home Products, Inc., is engaged in the sale, financing of "Lifetime" cookware and other kitchenware as well as sale of account receivables in the secondary market. It is the exclusive distributor of "Lifetime" products in Puerto Rico for over 40 years. The Company filed for Chapter 11 bankruptcy protection (Bankr. D.P.R. Case No. 12-02997) on April 19, 2012. Carmen D. Conde Torres, Esq., in San Juan, P.R., serves as the Debtor's counsel. Wigberto Lugo Mendel, CPA, serves as its accountants. The Debtor disclosed $66,155,798 and $43,350,031 in liabilities as of the Chapter 11 filing. Secured lender First-Bank Puerto Rico is represented by Manuel Fernandez-Bared, Esq., and Jane Patricia Van Kirk, Esq., at Toro, Colon, Mullet, Rivera & Sifre, P.S.C. INVENT VENTURES: Reports $416K Net Loss in Third Quarter -------------------------------------------------------- Invent Ventures, Inc., formerly known as Los Angeles Syndicate of Technology, Inc., filed its quarterly report on Form 10-Q, reporting a net decrease in net assets from operations of $415,857 on $31,150 of revenues for the three months ended Sept. 30, 2012, compared with a net decrease in net assets from operations of $68,815 on $25,000 of revenues for the same period a year ago. Net loss from operations was $220,070 and $14,792 during the nine months ended Sept. 30, 2012, and 2011, respectively. Net realized and unrealized losses were $195,787 and $54,023 for the three months ended Sept. 30, 2012, and 2011, respectively. For the nine months ended Sept. 30, 2012, the Company had a net decrease in net assets from operations of $1.8 million on $74,137 of revenues, compared with a net increase in net assets from operations of $5.3 million on $82,500 of revenues for the corresponding period in 2011. Net loss from operations was $582,911 and $115,923 during the nine months ended Sept. 30, 2012, and 2011, respectively. Net realized and unrealized losses were $1.2 million for the nine months ended Sept. 30, 2012, compared with net realized and unrealized gains of $2.8 million for the nine months ended Sept. 30, 2011. Unrealized appreciation income tax adjustment were $0 and $2.6 million for the nine months ended Sept. 30, 2012, and 2011, respectively. The Company's balance sheet at Sept. 30, 2012, showed $11.1 million in total assets, $560,749 in total liabilities, and net assets of $10.5 million. Paritz & Company, P.A., in Hackensack, N.J., in their audit report on Los Angeles Syndicate of Technology, Inc.'s financial statements for 2011 and 2010, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company will need to raise capital through sales of Company stock to provide sufficient cash flow to fund the Company's operations. A copy of the Form 10-Q is available at http://is.gd/SDpegB NVENT Ventures, Inc., is a technology incubator located in Santa Monica, California that builds web and mobile technology companies. The Company develops businesses in digital media, consumer Internet, and social networking, and it owns six companies at different stages of development. INVENT operates as an internally-managed, non-diversified, closed- end investment company that has elected to be treated as a business development company ("BDC") under the Investment Company Act of 1940. From incorporation through Dec. 31, 2010, the Company was taxed as a corporation under Subchapter C of the Internal Revenue Code of 1986. Effective Jan. 1, 2011, the Company has elected to be treated for tax purposes as a regulated investment company, or RIC, under the Internal Revenue Code of 1986. IVEDA SOLUTIONS: Incurs $834,100 Net Loss in Third Quarter ---------------------------------------------------------- Iveda Solutions, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $834,104 on $381,173 of revenue for the three months ended Sept. 30, 2012, compared with a net loss of $662,654 on $589,307 of revenue for the same period last year. For the nine months ended Sept. 30, 2012, the Company had a net loss of $2.5 million on $2.2 million of revenue, compared with a net loss of $2.3 million on $1.4 million of revenue for the same period of 2011. The Company's balance sheet at Sept. 30, 2012, showed $3.8 million in total assets, $1.8 million in total liabilities, and stockholders' equity of $2.0 million. "Since inception, the Company has generated an accumulated deficit from operations of approximately $13.6 million at Sept. 30, 2012, and has used approximately $2.3 million in cash from operations through the current nine months ended Sept. 30, 2012. As a result, a risk exists regarding our ability to continue as a going concern." A copy of the Form 10-Q is available at http://is.gd/nNFgRC Based in Mesa, Ariz., Iveda Solutions, Inc., delivers enterprise- class centralized video hosting and real-time video surveillance through cloud computing. The Company installs video surveillance equipment, primarily for security purposes, and provides video hosting, archiving, and real-time remote surveillance services with a proprietary reporting system, DSR(TM) (Daily Surveillance Report), to a variety of businesses and organizations. * * * As reported in the TCR on April 9, 2012, Albert Wong & Co., in Hong Kong, expressed substantial doubt about Iveda Solutions' ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has suffered recurring losses from operations and has a significant accumulated deficit. "In addition, the Company continues to experience negative cash flows from operations." JEFFERSON 28K: Case Summary & 2 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Jefferson 28K G3 Murrieta LLC aka Jefferson 28K G3 Murrieta LLC 29995 Technology Drive, Suite 304 Murrieta, CA 92563 Bankruptcy Case No.: 12-35793 Chapter 11 Petition Date: November 19, 2012 Court: U.S. Bankruptcy Court Central District of California (Riverside) Judge: Scott C. Clarkson Debtor's Counsel: Bill J. Parks, Esq. LAW OFFICES OF BILL PARKS 316 S. Melrose Drive Vista, CA 92081 Tel: (760) 806-9293 E-mail: attparks@aol.com Scheduled Assets: $1,400,000 Scheduled Liabilities: $1,161,700 A copy of the Company's list of its two unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/cacb12-35793.pdf The petition was signed by Edward A. Shepherd, manager. KANSAS CITY SOUTHERN: Moody's Hikes Sr. Unsec. Rating From (P)Ba2 ----------------------------------------------------------------- Moody's Investors Service has upgraded the ratings of Kansas City Southern ("KCS") and The Kansas City Southern Railway Company ("KCSR"), senior unsecured shelf rating to (P)Baa3 from (P)Ba2. Moody's has also upgraded the ratings of Kansas City Southern de Mexico S.A. de C.V. ("KCSM", a wholly-owned subsidiary of KCS), Corporate Family Rating to Ba1 from Ba2. At the same time, Moody's has assigned a Baa3 rating to KCSR's amended bank credit facility. The ratings for KCS, KCSR and KCSM have stable outlooks. Ratings Rationale The ratings upgrade for KCS and its subsidiaries reflect the strengthening credit profiles of both companies evidenced by continuing improvements in the leverage, profitability, and liquidity at these railroads, and Moody's expectations that these companies will be able to sustain strong credit metrics over the near term. The operating ratio (essentially one minus operating margin) at KCS' US operations, which is predominantly represented by the company's US railroad subsidiary KCSR, is expected to remain in the low-70% range over the near term. This ratio compares well to other larger Class I railroads that are rated Baa3 and higher. It should also result in strong operating cash flow that will enable KCS to maintain an aggressive and strategically important network investment program. Although this investment program is expected to result in negative free cash flow during the intermediate term, it should support meaningful improvement in service levels and greater pricing power over the long term. While the company has grown its revenue by over 10% annually since 2009, KCS has been able to reduce debt at its US operations, and credit metrics have improved accordingly. Leverage (Debt to EBITDA) at the company's US operations is estimated at less than 2.5 times as of September 2012, and EBIT to Interest at over 8 times. These measures map well against other Baa3 rated companies. Operating cash flows have been robust, with Retained Cash Flow to Debt of over 40%. Despite the negative free cash flow resulting from its large investment program (in excess of 30% of revenue) debt levels and leverage at the US operations have remained relatively modest as a result of dividend distributions upstreamed from KCSM. Although operating results are also strong at KCS' Mexican railroad, KCSM, the overall debt levels at this subsidiary remain somewhat elevated, resulting in ratings at KCSM that lag that of KCSR. Whereas debt at US operations now represents less than 100% of revenue in the US, which is roughly in-line with the Class I railroad average, KCSM's $1.4 billion of total debt represents over 140% of revenue. KCSM's key credit metrics for the last twelve months (LTM) through September 2012 include Debt to EBITDA of 2.7 times and EBIT to Interest of 3.5 times. These levels are appropriate for the Ba1 rating, but lag those of the US operations. Moreover, with higher debt levels relative to its size, Moody's believes that KCSM does not enjoy the same downside protection as will the US operations in the event of a recession. KCSM's ratings also take into account recent distributions that it has made to its shareholder, KCS, and some potential that distributions in the future could keep KCSM's debt at higher levels than those of US operations. KCSR's amended senior bank credit facilities are rated Baa3. Although this facility is currently secured by substantially all assets of the company's US operations, the terms of the amended facility prescribe a fall-away provision relating to certain rating changes, whereby the collateral is released from security pledges and the facilities effectively become senior unsecured obligations of the company. As these provisions will become effective shortly, Moody's has assigned the ratings of these facilities at the same level as KCSR's senior unsecured ratings. The stable ratings outlook for KCS and its subsidiaries reflect Moody's expectations that the company's operations will be able to maintain solid operating margins while experiencing slow revenue growth over the near term. Operating cash flow is expected to be strong at both railroads over the next few years, sufficient to support substantial levels of investments in their networks, although Moody's also expects that KCS will continue to use a moderate amount of cash distributed from KCSM, partially to cover a portion of US operations' investments. The ratings could be raised if KCSR or KCSM can further reduce leverage, while at the same time grow the railroads' revenue base and improve margins. At KCSR, the company would need to demonstrate sustained operating ratios at US operations of below 70% through the business cycle, while maintaining leverage below 2.0 times Debt to EBITDA while substantially growing its revenue base. The ability to consistently generate positive free cash flow while maintaining capital spending of at least 17% of revenue will also be important for a ratings upgrade at KCS and KCSR. Similarly, the ratings of KCSM could be raised if the company could consistently grow its revenue base and maintain operating ratios in the mid-60% range, while reducing leverage to below 2.5 times and achieve EBIT to Interest in excess of 5 times. Ratings could be lowered if operating conditions were to unexpectedly deteriorate, with operating ratios increasing substantially from current levels and negative free cash flow ensuing despite reductions in capital spending in such a downturn. Ratings could also be lowered if the company undertakes an aggressive shareholder return policy, possibly using cash flow or additional debt to fund such a program. Additionally, KCSM's ratings could be revised lower if they were to face any risk of termination of its concession with the Government of Mexico. Issuer: Kansas City Southern, Inc Upgrades: Multiple Seniority Shelf, Upgraded to (P)Ba1 from (P)Ba2 Withdrawals: Probability of Default Rating, Withdrawn, previously rated Ba1 Speculative Grade Liquidity Rating, Withdrawn, previously rated SGL-2 Corporate Family Rating, Withdrawn, previously rated Ba1 Multiple Seniority Shelf, Withdrawn, previously rated LGD5, 89% Issuer: Kansas City Southern de Mexico, S.A. de C.V. , Upgrades: Corporate Family Rating, Upgraded to Ba1 from Ba2 Senior Unsecured Regular Bond/Debenture, Upgraded to Ba1 from Ba2 Senior Secured Bank Credit Facility, Upgraded to Baa3 from Ba1 Issuer: Kansas City Southern Railway Company (The) , Upgrades: Senior Unsecured Shelf, Upgraded to (P)Baa3 from (P)Ba2 Assignments: Senior Unsecured Bank Credit Facility, Assigned Baa3 Withdrawals: Senior Unsecured Shelf, Withdrawn, previously rated LGD5, 89% Issuer: Southern Capital Corporation , Upgrades: Senior Secured Equipment Trust, Upgraded to Baa1, Baa1 from Baa2, Baa2 The principal methodology used in rating Kansas City Southern and rated subsidiaries was the Global Freight Railroad Industry Methodology, published March 2009. Other methodologies used include Loss Given Default for Speculative Grade Issuers in the US, Canada, and EMEA, published June 2009. Kansas City Southern operates a Class I railway in the central U.S. (The Kansas City Southern Railway Company) and, through its wholly-owned subsidiary Kansas City Southern de Mexico, S.A. de C.V., owns the concession to operate Mexico's northeastern railroad. Kansas City Southern operates a Class I railway in the central U.S. (The Kansas City Southern Railway Company) and, through its wholly-owned subsidiary Kansas City Southern de Mexico, S.A. de C.V., owns the concession to operate Mexico's northeastern railroad. KAR AUCTION: Moody's Says Proposed Amendment Credit Negative ------------------------------------------------------------ Moody's Investors Service said KAR Auction Services, Inc.'s amendment request to lenders, while credit negative, does not impact the B1 Corporate Family Rating, SGL-2 liquidity rating or stable outlook. Headquartered in Carmel, Indiana, KAR is a leading provider of vehicle auction services in North America. The company provides whole car auction services (dba ADESA), salvage auction services (dba Insurance Auto Auctions, or IAAI), and floorplan financing (dba Automotive Finance Corporation, or AFC). In the twelve months ended September 30, 2012, KAR reported revenues of about $1.9 billion. KWF THREE: Chapter 11 Case Summary & 4 Unsecured Creditors ---------------------------------------------------------- Debtor: KWF Three, LLC 2070 S. Orange Blossom Trail Apopka, FL 32703 Bankruptcy Case No.: 12-15668 Chapter 11 Petition Date: November 19, 2012 Court: U.S. Bankruptcy Court Middle District of Florida (Orlando) Judge: Karen S. Jennemann Debtor's Counsel: David R. McFarlin, Esq. WOLFF, HILL, MCFARLIN & HERRON, P.A 1851 West Colonial Drive Orlando, FL 32804 Tel: (407) 648-0058 Fax: (407) 648-0681 E-mail: dmcfarlin@whmh.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 Affiliates that filed separate Chapter 11 petitions: Entity Case No. Petition Date ------ -------- ------------- GW Partners Ltd. 1 12-02045 02/20/12 GW Partners Ltd. 2 12-02046 02/20/12 GW Partners Ltd. 3 12-02047 02/20/12 KWF Four, LLC 12-15669 11/19/12 Assets: $1,000,001 to $10,000,000 Debts: $1,000,001 to $10,000,000 MDC 2, LLC 12-09323 07/10/12 MDC 4, LLC 12-09389 07/11/12 MDC 5, LLC 12-04678 04/09/12 MDC 9, LLC 12-02048 02/20/12 The petitions were signed by Kenneth L. Wood, manager. A copy of the copy of KWF Three's list of its four unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/flmb12-15668.pdf A copy of KWF Four's list of its three unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/flmb12-15669.pdf L. K. FAMILY: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: L. K. Family Trust dtd 1/1/98 P.O. Box 93580 Lakeland, FL 33804 Bankruptcy Case No.: 12-17449 Chapter 11 Petition Date: November 19, 2012 Court: U.S. Bankruptcy Court Middle District of Florida (Tampa) Judge: Catherine Peek McEwen 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 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Leonard J. Kronen, manager. Affiliate that filed separate Chapter 11 petition: Entity Case No. Petition Date ------ -------- ------------- Southern Land Development Holdings, LLC. 10-15565 06/29/10 LAS VEGAS RAILWAY: Incurs $870,020 Net Loss in Sept. 30 Quarter --------------------------------------------------------------- Las Vegas Railway Express, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $870,020 on $102 of revenues for the three months ended Sept. 30, 2012, compared with a net loss of $341,995 on $nil revenue for the three months ended Sept. 30, 2011. Net loss from discontinued operations was $3,914 for the three months ending Sept. 30, 2012, compared to income of $419 for the three months ending Sept. 30, 2011. For the six months ended Sept. 30, 2012, the Company incurred a net loss of $960,530 on $102 of revenues, compared with a net loss of $749,096 on $nil revenue for the six months ended Sept. 30, 2011. Net income from discontinued operations was $480,507 for the six months ending Sept. 30, 2012, compared to $419 for the six months ending Sept. 30, 2011. For the quarter and six months ended Sept. 30, 2012, there were no revenues associated with the railcar operations. The Company's balance sheet at Sept. 30, 2012, showed $2.1 million in total assets, $362,135 in total liabilities, and stockholders' equity of $1.7 million. The Company said in the regulatory filing: "As shown in the accompanying financial statements, the Company has net loss from continuing operations of $1,441,037 for the six months ended Sept. 30, 2012 and an accumulative deficit of $12,584,143 through Sept. 30, 2012. Although a substantial portion of the Company's cumulative net loss is attributable to discontinued operations, management believes that it will need additional equity or debt financing to implement the business plan. These matters raise substantial doubt about the Company's ability to continue as a going concern." A copy of the Form 10-Q is available at http://is.gd/GXYjHW About Las Vegas Railway Las Vegas, Nev.-based Las Vegas Railway Express, Inc., is a Delaware corporation whose business plan is to establish a rail passenger train service between Las Vegas and Los Angeles using existing railroad lines currently utilized by two Class I railroads, Burlington Northern and Union Pacific. The development concept is to provide a Las Vegas style experience on the train (which the Company plans to call the "X" Train), which would traverse the planned route in approximately 5 hours. Prior to Jan. 21, 2010, the Company had been actively engaged in acquiring underperforming mortgage loan portfolios and generating revenues from re-performing, sale of loans and fee revenue. As of Jan. 21, 2010, the Company changed its primary business and abandoned the prior business. Accordingly, the assets and liabilities and results of operation related to this business have been classified as discontinued operations in the financial statements for all periods presented. * * * Hamilton, PC's report on Las Vegas Railway's financial statements for the fiscal year ended March 31, 2012, contained an explanatory paragraph stating that the Company's recurring losses from operations raises substantial doubt about its ability to continue as a going concern. LBI MEDIA HOLDINGS: Incurs $13.9-Mil. Net Loss in Third Quarter --------------------------------------------------------------- LBI Media Holdings, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $13.9 million on $32.1 million of net revenues for the three months ended Sept. 30, 2012, compared with a net loss of $6.7 million on $30.5 million of net revenues for the same period last year. For the nine months ended Sept. 30, 2012, the Company had a net loss of $31.3 million on $91.7 million of net revenues, compared with a net loss of $19.7 million on $87.4 million of net revenues for the same period of 2011. The Company's balance sheet at Sept. 30, 2012, showed $311.6 million in total assets, $561.0 million in total liabilities, and a stockholders' deficit of $249.4 million. According to the regulatory filing, as a result of uncertainties related to future sources and sufficiency of liquidity required by the Company to satisfy its outstanding debt and debt service obligations, there is substantial doubt about the Company's ability to continue as a going concern. "In an attempt to reduce their outstanding debt and debt service obligations, LBI Media and LBI Media Holdings have commenced private exchange offers to exchange new notes to be issued by LBI Media and LBI Media Holdings for any and all of LBI Media's 2007 Senior Subordinated Notes and LBI Media Holdings' Senior Discount Notes. Concurrently with the Exchange Offers, LBI Media began soliciting consents for amendments to its 2011 Revolver from lenders under the 2011 Revolver and for amendments to the indenture governing its 2011 Senior Secured Notes from holders of its 2011 Senior Secured Notes. The Exchange Offers are conditioned on, among other things, obtaining the requisite consents to the proposed amendments to the Senior Secured Revolver and the indenture governing the 2011 Senior Secured Notes. The Company can provide no assurances that the Exchange Offers will be consummated or that the terms of the Exchange Offers will not change. If the Exchange Offers are not consummated, the Company will need to pursue one or more alternative strategies, such as refinancing or restructuring its indebtedness, selling additional debt or equity securities or selling assets, in order to pay the amounts due under LBI Media Holdings' Senior Discount Notes when they mature in October 2013 and to meet its ongoing obligations. If LBI Media Holdings and its subsidiaries are unable to secure alternative sources of liquidity in sufficient amounts, LBI Media Holdings and its subsidiaries may not be able to satisfy their obligations when they become due which would have a material adverse effect on LBI Media Holdings' and its subsidiaries' overall business and financial condition. Because LBI Media has also pledged substantially all of its assets to its existing lenders and holders of LBI Media's 2011 Senior Secured Notes, the Company may not be able to refinance its existing debt or issue additional debt or equity securities on favorable terms, if at all, and if the Company must sell its assets, it may negatively affect its ability to generate net revenues." A copy of the Form 10-Q is available at http://is.gd/NEtwby Headquartered in Burbank, Calif., LBI Media Holdings, Inc., and its wholly owned subsidiaries own and operate television stations located in California, Texas, Arizona, Utah, New York, Colorado, Illinois, and Florida and radio stations in California and Texas. The Company operates its New York television station and three of its radio stations in its California and Texas markets under time brokerage agreements. The Company also owns television production facilities that are used to produce programming for Company-owned and affiliated television stations. The Company sells commercial airtime on its radio and television stations to local, regional and national advertisers. LENDINGCLUB CORPORATION: Incurs $882,000 Net Loss in Sept. 30 Qtr. ------------------------------------------------------------------ LendingClub Corporation filed its quarterly report on Form 10-Q, reporting a net loss of $881,587 on $9.9 million of total net revenue for the three months ended Sept. 30, 2012, compared with a net loss of $3.3 million on $3.4 million of total net revenue for the three months ended Sept. 30, 2011. For the six months ended Sept. 30, 2012, the Company had a net loss of $3.4 million on $16.6 million of total net revenue, compared with a net loss of $6.5 million on $6.2 million of total net revenue for the six months ended Sept. 30, 2011. The Company's balance sheet at Sept. 30, 2012, showed $669.3 million in total assets, $617.8 million in total liabilities, $102.5 million of preferred stock, and a stockholders' deficit of $51.0 million. The Company said in the regulatory filing: "We have incurred operating losses since our inception. For the three months ended Sept. 30, 2012, and 2011, we incurred net losses of $881,587 and $3,346,357, respectively, and for the six months ended Sept. 30, 2012. and 2011, we incurred net losses of $3,407,395 and $6,453,035, respectively. Additionally, we have an accumulated deficit of $56,806,095 since inception and a stockholders' deficit of $50,975,398 as of Sept. 30, 2012." A copy of the Form 10-Q is available at http://is.gd/RZVLp0 Based in San Francisco, LendingClub Corporation is an online financial platform that enables qualified borrower members to obtain unsecured consumer loans (which the Company refers to as "Member Loans"). The Company was incorporated in Delaware in October 2006, and in May 2007, began operations as an application on Facebook.com. The Company expanded its operations in August 2007 with the launch of its public website, www.lendingclub.com. Investors have the opportunity to purchase Member Payment Dependent Notes issued by the Company, with each series of Notes corresponding to an individual Member Loan facilitated through the Company's platform. The Notes are unsecured, are dependent for payment on the related Member Loan and offer interest rates and credit characteristics that the Company believes the investors find attractive. LEWISTOWN HOSPITAL: Moody's Cuts Long-Term Bond Rating to 'Ba1' --------------------------------------------------------------- Moody's Investors Service has downgraded to Ba1 from Baa3 the long-term bond rating assigned to Lewistown Hospital's (PA) $20.6 million of outstanding bonds issued by the Mifflin County Hospital Authority, PA. The outlook remains negative. Ratings Rationale The rating downgrade to Ba1 and the continued negative rating outlook is based on operating losses, large volume declines, and flat revenues in fiscal year (FY) 2012; trends which continue unabated through first quarter of FY 2013. The challenges are partially offset by Lewistown Hospital's leading (though declining) market position, adequate unrestricted cash position and maintenance of adequate debt coverage measures. However, failure to improve performance and weakening of debt service coverage measures could further pressure the rating. Challenges * At least six years of volume declines with 26% inpatient admission declines over FYs 2007 through 2012; future projected decline in FY13. * Erratic operating performance with -1.8% operating margin and 4.7% operating cash flow through unaudited FYE 2012. Since FY 2008, operating margin has averaged -1.4% and operating cash flow averaging 5.8%. Through first quarter FY 2013, Lewistown had an operating margin of -3.7% and operating cash flow margin of 2.9%. * Growing percentage of Medicaid at 14.3% in FY 2012 and 14.0% in FY 2011 along with challenging demographics, including anemic population growth in Mifflin County, education levels and wealth indicators lower than state and national levels. * Small size hospital with less than 5,000 admissions and less than $113 million revenue base with high dependency on a small physician staff. * Increasingly competitive environment outside of the primary service area with local competitor Mount Nittany completing construction of a new wing in State College, PA and other tertiary and quaternary providers in Harrisburg and Hershey. * Large unfunded pension obligation, with lowering of discount rate in FY 2012 contributing to accrued pension cost growing to $33.6 million from $19.0 million in FY 2011; employer contribution expected to grow by $780,000 to $4.8 million in FY 2013; pension liability exceeds bonded debt Strengths * Sole community provider status for acute care services in a two county primary service area of Mifflin and Juniata county. * 100% all fixed rate debt structure with no exposure to derivatives. * Balance sheet and liquidity measures above Ba1 medians with 124 days cash on hand at unaudited FYE 2012 (down from 153 days cash on hand in FY 2011 and 140 days in FY 2010) and 126% cash to debt at unaudited FYE 2012 (down from 166% in FY 2011). Outlook The negative outlook reflects LHF's weakened fundamentals demonstrated by continued volume losses, inconsistent operating performance and market share decline. Inability to increase volumes and significantly improve financial performance could result in further downward rating action. What Could Make The Rating Go UP Longer-term possibility of upgrade reliant on an ability to rebuild volumes, retain and improve market share, sustain profitable operations and fortify cash. What Could Make The Rating Go DOWN Continued volume decline, further operating losses, deterioration of balance sheet measures, or increase in debt without commensurate operational improvement. The principal methodology used in this rating was Not-For-Profit Healthcare Rating Methodology published in March 2012. LIGHTSQUARED INC: FCC Seeks Comments on Proposal Band Spectrum -------------------------------------------------------------- Phil Goldstein at FierceWireless reports that the Federal Communications Commission is seeking comment on LightSquared's latest proposal to salvage its MSS L-band spectrum holdings and deploy an LTE network. According to the report, LightSquared wants to share spectrum that is currently set aside for weather balloons used by the federal government. In exchange, LightSquared said it would permanently relinquish its 10 MHz of spectrum that is directly adjacent to the frequencies used by global position system receivers. The report notes, in a public notice, the FCC said petitions to deny LightSquared's proposal are due Dec. 17, oppositions are due Jan. 4 and reply comments are due Jan. 11. According to the report, the FCC's move is just the latest step in a long-running saga that has left LightSquared in bankruptcy protection fighting for its survival. The report relates, earlier this fall LightSquared filed a new spectrum proposal that, if approved, would let it use some of its existing spectrum holdings along with the weather balloon spectrum. Under the proposal LightSquared would combine the 5 MHz it uses for satellite service at 1670-1675 MHz with frequencies in the 1675-1680 MHz band, currently used by National Oceanographic and Atmospheric Administration weather balloons. The company would share the NOAA spectrum rather than gain exclusive rights to it. The new proposal comes as Globalstar, a small satellite firm, is asking the FCC to allow it to use its MSS spectrum for mobile broadband. Globalstar is licensed to provide mobile satellite service in the Big LEO band at 1610-1618.725 MHz (the "Lower Big LEO band" for uplink operations) and 2483.5-2500 MHz (the "Upper Big LEO band" for downlink operations). The company plans to partner with unnamed "terrestrial partners," or wireless carriers, to launch LTE service on its spectrum, the report adds. 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. LIGHTSQUARED INC: EY LLP May Provide Additional Tax Services ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York authorized Lightsquared Inc., et al., to modify the scope of its employment and retention of Ernst & Young LLP in the Chapter 11 cases, nunc pro tunc to Oct. 9, 2012, to include additional services. See http://bankrupt.com/misc/lightsquared.doc408.pdf The Debtors previously obtained approval to hire E&Y LLP to provide services pursuant to a certain master services agreement, and incorporated statements of work for tax compliance services for LightSquared Inc. and subsidiaries, tax compliance services for LightSquared LP and certain affiliates, restructuring advisory services, routine on-call tax services. About LightSquared LightSquared Inc. and 19 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on May 14, 2012, as the Company seeks to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network. LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements. LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties, prompting the bankruptcy filing. As of the Petition Date, the Debtors employed roughly 168 people in the United States and Canada. As of Feb. 29, 2012, the Debtors had $4.48 billion in assets (book value) and $2.29 billion in liabilities. LightSquared also sought ancillary relief in Canada on behalf of all of the Debtors, pursuant to the Companies' Creditors Arrangement Act (Canada) R.S.C. 1985, c. C-36 as amended, in the Ontario Superior Court of Justice (Commercial List) in Toronto, Ontario, Canada. The purpose of the ancillary proceedings is to request the Canadian Court to recognize the Chapter 11 cases as a "foreign main proceeding" under the applicable provisions of the CCAA to, among other things, protect the Debtors' assets and operations in Canada. The Debtors named affiliate LightSquared LP to act as the "foreign representative" on behalf of the Debtors' estates. Judge Shelley C. Chapman presides over the Chapter 11 case. Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to the Debtors. Kurtzman Carson Consultants LLC serves as claims and notice agent. Counsel to UBS AG as agent under the October 2010 facility is Melissa S. Alwang, Esq., at Latham & Watkins LLP. The ad hoc secured group of lenders under the Debtors' October 2010 facility was formed in April 2012 to negotiate an out-of- court restructuring. The members are Appaloosa Management L.P.; Capital Research and Management Company; Fortress Investment Group; Knighthead Capital Management LLC; and Redwood Capital Management. Counsel to the ad hoc secured group is Thomas E. Lauria, Esq., at White & Case LLP. Philip Falcone's Harbinger Capital Partners indirectly owns 96% of LightSquared's outstanding common stock. Harbinger and certain of its managed and affiliated funds and wholly owned subsidiaries, including HGW US Holding Company, L.P., Blue Line DZM Corp., and Harbinger Capital Partners SP, Inc., are represented in the case by Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP. The Office of the U.S. Trustee has not appointed a statutory committee of unsecured creditors. LIGHTSQUARED INC: Negotiates Extension of Lease Decision Period --------------------------------------------------------------- LightSquared Inc., et al., ask the U.S. Bankruptcy Court for the Southern District of New York to further extend the time within which it may assume or reject certain of its unexpired leases of nonresidential real property to A hearing on the motion will be held on Nov. 28, 2012, at 10:00 a.m. Objections, if any, to the motion must be filed no later than Nov. 21, 2012, at 4:00 p.m. The leases subject to the extension relate to nonresidential real property currently used by LightSquared for: (a) inventory fulfillment and warehousing, (b) satellite carrier monitoring stations, and (c) satellite network gateways. The Debtors tell the Court that each of the counterparties to the subject leases have consented in writing to, extensions to the 365(d)(4) deadline to and including June 10, 2013 (Exhibit A) or through the date upon which a plan of reorganization under Chapter 11 of the Bankruptcy Code is confirmed in the Chapter 11 cases (Exhibit B). A list of the leases is available at http://bankrupt.com/misc/lightsquared.doc413.pdf 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. LIGHTSQUARED INC: LP Lenders Files Redacted Version of Complaint ---------------------------------------------------------------- The Ad Hoc Secured Group of LightSquared LP filed a reply Wednesday in support of its motion to grant it leave, standing and authority to commence, prosecute and/or settle certain claims of the estates of LightSquared Inc., et al., and in response to the (i) objection of U.S. Bank National Association and Mast Capital Management, LLC, to the motion [Docket No. 377], (ii) supplemental objection of U.S. Bank National Association to the motion [Docket No. 378]; (iii) Statement of LightSquared, Inc., et al., regarding the motion [Docket No. 379]; and (iv) objection of Harbinger Capital Partners LLC to the motion. The holders of $1.08 billion in secured debt in LightSquared LP said LightSquared Inc. received a faulty $263.8 million loan last year. The LP Lenders claim that the July 2011 loan should be recharacterized as an equity investment by Harbinger, which contributed $183.8 million of the total. Affiliates committed fraudulent transfers when they guaranteed the loan without receiving anything of value in return, the Ad Hoc Secured Group contended. The LP Lenders argued: I. The objections do not refute the existence of colorable estate claims. II. The objections do not refute that pursuing these claims would be valuable to the estates. A copy of the LP Lenders' Reply and Revised Complaint is available at http://bankrupt.com/misc/lightsquared.doc416.pdf 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. LYFE COMMUNICATIONS: Incurs $322,500 Net Loss in Third Quarter -------------------------------------------------------------- LYFE Communications, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $322,534 for the 2012 third quarter, compared to a net loss of $1.0 million for the same period in 2011. Revenue for the 2012 third quarter was $133,107 compared to $215,052 for the same period in 2011. The net loss for the 2012 nine month period was $1.1 million, compared to a net loss of $3.6 million for the same period in 2011. Revenue for the 2012 nine month period was $458,654, compared to $426,311 for the same period in 2011. "Selling, General and Administrative costs decreased by $602,911 and $2,362,575 for the three and nine months ended Sept,. 30, 2012, and 2011, respectively. This decrease is due to a reduction in employee head count, as well as a decrease in operating costs related to a decline in the customer base. Due to a lack of liquidity and funding resources, the Company has reduced all non- essential costs." The Company's balance sheet at Sept. 30, 2012, showed $1.2 million in total assets, $3.3 million in total liabilities, and a stockholders' deficit of $2.1 million. "The Company has an accumulated deficit through Sept. 30, 2012, of $15,151,677, and has had negative cash flows from operating activities. These factors raise substantial doubt about the Company?s ability to continue as a going concern." A copy of the Form 10-Q is available at http://is.gd/gSeXC1 About LYFE Communications South Jordan, Utah-based LYFE Communications, Inc.'s business is to develop, deploy, and operate next generation media and communications network based services to single-family, multi- family, high-rise resort and hospitality properties. * * * Mantyla McReynolds, LLC, in Salt Lake City, Utah, expressed substantial doubt about LYFE's ability to continue as a going concern, following the Company's results for the year ended Dec. 31, 2011. The independent auditors noted that the Company has incurred significant losses and negative cash flows from operations since inception, has not established operations with consistent revenue streams, and has a working capital deficit. METROGAS SA: Had ARS82.6-Mil. Net Loss in First 9 Months of 2012 ---------------------------------------------------------------- MetroGAS S.A. reported a net loss of ARS82.6 million on ARS945.4 million of sales for the nine months ended Sept. 30, 2012, compared with a net loss of ARS12.5 million on ARS906.2 million of sales for the same period of 2011. The Company's balance sheet at Sept. 30, 2012, showed total assets of ARS2.604 billion, total liabilities of ARS1.933 billion, minority interest of ARS1.0 million, and shareholders' equity of ARS670.1 million. Limited Review Report Dated Nov. 7, 2012 In their limited review report to the shareholders, President and directors of the Company, dated Nov. 7, 2012, Price Waterhouse & Co., S.R.L., cited, among other things, that the changes in the economic conditions in Argentina and the changes to the License under which the Company operates made by the Argentine National Government, mainly related to the suspension of the original regime for tariff adjustments, have affected the Company's economic and financial equation. Management is in the process of renegotiating certain terms of the License with the Argentine National Government to counteract the negative impact caused by the above mentioned circumstances. The adverse financial conditions that MetroGAS faces as a result of the situation mentioned above led to MetroGAS' Board of Directors to approve the Company's filing of a petition for voluntary reorganization (concurso preventivo) in an Argentine court on June 17, 2010, which was decreed by such court hearing the case on July 15, 2010. This circumstance generated an event of default under the Negotiable Obligation Issue Program of the Company which resulted in the automatic acceleration of the outstanding financial debt obligations. Nevertheless, upon the reorganization filing, an automatic stay was put into place on the payment of principal and interest on its outstanding debt obligations. A copy of the Company's unaudited consolidated interim financial statements for the nine months ended Sept. 30, 2012, is available at http://is.gd/Rf5NL2 About MetroGas Buenos Aires, Argentina-based MetroGAS S.A., a gas distribution company, was incorporated on Nov. 24, 1992, and began operations on Dec. 29, 1992, when the privatization of Gas del Estado S.E. ("GdE") (an Argentine Government-owned enterprise) was completed. Through Executive Decree No. 2,459/92 dated Dec. 21, 1992, the Argentine Government granted MetroGAS an exclusive license to provide the public service of natural gas distribution in the area of the Federal Capital and southern and eastern Greater Buenos Aires, by operating the assets allocated to the Company by GdE for a 35 year period from the Takeover Date (Dec. 28, 1992). This period can be extended for an additional 10 year period under certain conditions. MetroGAS' controlling shareholder is Gas Argentino S.A. ("Gas Argentino") who holds 70% of the Common Stock of the Company. The 20%, which was originally owned by the National Government, was offered in public offering and the remaining 10% is under the Employee Stock Ownership Plan ("Programa de Propiedad Participada" or "PPP"). Going Concern Doubt Price Waterhouse & Co. S.R.L., in Buenos Aires, Argentina, expressed substantial doubt about MetroGas S.A.'s ability to continue as a going concern, following the Company's 2011 results. The independent auditors noted of the uncertainties related to the suspension of the original regime for tariff adjustments and the Company's petition for voluntary reorganization in an Argentine Court on June 17, 2010. MOUNT VERNON: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Mount Vernon Missionary Baptist Church 310 Ottilia Street Daly City, CA 94014 Bankruptcy Case No.: 12-33282 Chapter 11 Petition Date: November 19, 2012 Court: U.S. Bankruptcy Court Northern District of California (San Francisco) Judge: Dennis Montali Debtor's Counsel: Richard A. LaCava, Esq. LAW OFFICES OF RICHARD A. LACAVA 3814 24th Street, #202 San Francisco, CA 94114 Tel: (415) 282-8960 E-mail: lacava@pacbell.net 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 Alfredo Lewis, pastor. NEW BEGINNING: Case Summary & 7 Unsecured Creditors --------------------------------------------------- Debtor: New Beginning Missionary Baptist Church, Inc. 2125 NW 155 St. Miami Gardens, FL 33054 Bankruptcy Case No.: 12-37848 Chapter 11 Petition Date: November 20, 2012 Court: United States Bankruptcy Court Southern District of Florida (Miami) Judge: Laurel M. Isicoff Debtor's Counsel: Peter D. Spindel, Esq. P.O. Box 166245 Miami, FL 33116 Tel: (786) 517-4229 Fax: (305) 279-2127 E-mail: peterspindel@gmail.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 seven unsecured creditors is available for free at http://bankrupt.com/misc/flsb12-37848.pdf The petition was signed by Eric Readon, president. OAKHURST NATIONAL: Case Summary & Unsecured Creditor ---------------------------------------------------- Debtor: Oakhurst National Plaza, LLC 493 Robertson Boulevard Beverly Hills, CA 90211 Tel: (310) 275-2211 Bankruptcy Case No.: 12-48532 Chapter 11 Petition Date: November 19, 2012 Court: U.S. Bankruptcy Court Central District of California (Los Angeles) Judge: Julia W. Brand Debtor's Counsel: James B. Smith, Esq. LAW OFFICES OF JAMES B. SMITH 15303 Ventura Boulevard, Suite 900 Los Angeles, CA 91403 Tel: (323) 924-8480 Fax: (323) 924-8481 E-mail: jim@jamesbsmithlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Marvin Markowitz, manager. The Company's list of its largest unsecured creditors filed with the petition contains only one entry: Entity Nature of Claim Claim Amount ------ --------------- ------------ 3328 Oakhurst, LLC Judgment $1,200,000 c/o EGERMAN & BROWN, LLP 9401 Wilshire Boulevard, #500 Beverly Hills ODYSSEY DIVERSIFIED: Files Schedules of Assets and Liabilities -------------------------------------------------------------- Odyssey Diversified IX, LLC, filed with the Bankruptcy Court for the Middle District of Florida its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $0 B. Personal Property $291,524 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $21,515,420 E. Creditors Holding Unsecured Priority Claims $0 F. Creditors Holding Unsecured Non-priority Claims $9,896,330 ----------- ----------- TOTAL $291,524 $31,411,750 Odyssey Diversified VI, LLC, Odyssey Diversified VII, LLC, and Odyssey Diversified IX, LLC, sought Chapter 11 protection (Bankr. M.D. Fla. Case Nos. 12-12323 to 12-12325) on Aug. 10, 2012, in Tampa, Florida. Edward J. Peterson. Esq., at Tampa, Florida, serves as counsel to the Debtors. OPTIMUMBANK HOLDINGS: Incurs $1-Mil. Net Loss in Third Quarter -------------------------------------------------------------- OptimumBank Holdings, Inc., filed its quarterly report on Form 10- Q, reporting a net loss of $1.0 million for the 2012 third quarter, compared to a net loss of $563,000 for the same period in 2011. Net interest income before provision (credit) for loan losses for the 2012 third quarter was $661,000, compared to $686,000 for the same period in 2011. The net loss for the 2012 nine month period was $2.4 million, compared to a net loss of $3.7 million for the same period in 2011. Net interest income before provision (credit) for loan losses for the 2012 nine month period was $1.9 million, compared to $2.4 million for the same period in 2011. The Company's balance sheet at Sept. 30, 2012, showed $150.0 million in total assets, $141.1 million in total liabilities, and stockholders' equity of $8.9 million. Regulatory Capital According to the regulatory filing, at Sept. 30, 2012, the Bank met or exceeded all of its regulatory capital requirements. "As a result of the Consent Order the Bank is categorized as "adequately capitalized" until the Consent Order is lifted, even though the ratios would otherwise place it in the 'well capitalized' category." At Sept. 30, 2012, the Bank had a tier 1 risk-based capital ratio of 12.64%, a total risk-based capital ratio of 13.90% and a leverage ratio of 9.21%. A copy of the Form 10-Q is available at http://is.gd/o3akQK OptimumBank Holdings, Inc., headquartered in Fort Lauderdale, Fla., is a one-bank holding company and owns 100% of OptimumBank, a state (Florida)-chartered commercial bank. ORBITAL SCIENCES: Refinancing Plan No Impact on Moody's 'Ba1' CFR ----------------------------------------------------------------- Moody's Investors Service said that Orbital Sciences Corporation's (Ba1 Corporate Family Rating) announced plan to tender for and redeem its $143.75 million 2.4375% Convertible Senior Subordinated Notes due 2027 using funds from a $150 million five-year first lien term loan to be arranged under an existing bank debt facility could adversely affect the existing Baa3 (LGD-2, 24%) bank facility rating. The transaction, which is subject to certain thresholds, would address refinancing risk associated with the company's existing convertible notes which could be put back to the company by investors in January of 2014. Orbital Sciences Corporation, headquartered in Dulles, Virginia, manufactures small/medium space and missile systems for commercial, civil government and military customers. Revenues over the twelve months ended September 30, 2012 were $1.4 billion. OLD SECOND BANCORP: Reports $120,000 Net Income in Third Quarter ---------------------------------------------------------------- Old Second Bancorp, Inc., filed its quarterly quarterly report on Form 10-Q, reporting net income of $120,000 on $14.6 million of net interest and dividend income for the three months ended Sept. 30, 2012, compared with a net loss of $1.4 million on $15.9 million of net interest and dividend income for the same period last year. For the nine months ended Sept. 30, 2012, the Company had a net loss of $1.6 million on $45.4 million of net interest and dividend income, compared with a net loss of $3.5 million on $48.9 million of net interest and dividend income for the same period in 2011. The Company's balance sheet at Sept. 30, 2012, showed $1.903 billion in total assets, $1.832 billion in total liabilities, and stockholders' equity of $70.7 million. The Bank exceeded The Bank exceeded the general minimum regulatory requirements to be considered "well capitalized" and is in full compliance with heightened capital ratios that it agreed to maintain with the OCC contained within the Consent Order. However, as a result of continuing to be under the Consent Order, the Bank is formally considered "adequately capitalized". A copy of the Form 10-Q is available at http://is.gd/JkcWuM Old Second Bancorp, Inc., is a financial services company with its main headquarters located in Aurora, Illinois. The Company is the holding company of Old Second National Bank, a national banking organization headquartered in Aurora, Illinois and provides commercial and retail banking services, as well as a full complement of trust and wealth management services. The Company has offices located in Cook, Kane, Kendall, DeKalb, DuPage, LaSalle and Will counties in Illinois. ORLANDO, FL: Fitch Affirms Low-B Rating on TDT Revenue Bonds ------------------------------------------------------------ Fitch Ratings has affirmed the following bonds for the city of Orlando: -- $185.0 million senior lien tourist development tax (TDT) revenue bonds (sixth cent contract payments) series 2008A at 'BB+'; -- $33.4 million second lien subordinate TDT revenue bonds (sixth cent contract payments) series 2008B at 'B'. The Rating Outlook is Stable. SECURITY The 2008A and 2008B revenue bonds are limited obligations of the city secured by the discrete trust estate, including pledged funds, for each respective series of bonds. The majority of pledged funds consist of 50% of a one cent tax levied county-wide on hotel stays. The hotel tax is collected by the county and remitted to the city according to an interlocal agreement. Pledged revenues also include a fixed installment payment payable from the remaining half of the one cent tax, and equal to $2.8 million available through 2018. Pledged funds are allocated to each trust estate of the three series of bonds (Fitch does not rate the series 2008C bonds) according to a flow of funds with revenues distributed to each trust estate according to the seniority of the series. Additional security is provided by a dedicated liquidity reserve and debt service reserve fund for each series with each established at 50% of respective maximum annual debt service (MADS) for a total combined reserve for each series of 100% of MADS. KEY RATING DRIVERS RECOVERING BUT VOLATILE REVENUE STREAM: TDT collections continue to experience consistent year over year monthly revenue growth, benefitting from a recovery of the tourism industry as well as a one-time settlement from a lawsuit. With 15% declines in fiscals 2001-2002 and 2009, the TDT remains economically sensitive and volatile revenue. THIN DEBT SERVICE COVERAGE DESPITE TDT GROWTH Debt service coverage for the senior series 2008A bonds and combined senior bonds and subordinate series 2008B bonds has improved but remains thin, even with recent TDT growth. Modest revenue growth for the series A bonds and much more rapid growth for the series B bonds are required to ensure payment of both series of bonds without a draw upon reserves. SERIES 2008B BONDS FAIL UNDER STRESS SCENARIOS: Under certain Fitch designed stress scenarios, liquidity reserves and ultimately DSRA holdings will be insufficient to pay series 2008B debt service requirements in full. Series 2008A bonds hold up satisfactorily for the current rating to stress scenarios. RESERVE CUSHION: Each series of bonds was issued with a liquidity reserve equal to 1/2 maximum annual debt services (MADS) and a debt service reserve account (DSRA) equal to 1/2 MADS, with the intention that the cushion could provide sufficient cash flow to compensate against periods of weak revenue performance. A one- time cash infusion from unused construction proceeds has fully replenished the liquidity reserve for the series 2008B bonds, and the liquidity reserve for the series 2008A bonds remains fully funded. There has never been a draw on either DSRA. BONDHOLDERS PROTECTED UPON CROSS DEFAULT: A default for any of the series results in a cross default under the indenture. The ensuing flow of funds is structured to honor the lien status. NO ADDITIONAL DEBT: Additional debt is prohibited under the indentures, excluding refundings. PREMIER TOURIST DESTINATION: The city is home to Disney World, a world-class tourist attraction. The strength of the amusement park and other area attractions has enabled the leisure industry to rebound relatively quickly from downturns. WHAT COULD TRIGGER A RATING ACTION SUSTAINED TDT GROWTH: Sustained and robust growth in TDT revenues could lead to positive rating action. DECLINE IN TDT REVENUE: Conversely, a reversal of recent positive trends could lead to coverage at levels inconsistent with even the current low ratings. CREDIT PROFILE Pledged TDT revenues continue to expand as monthly collections have consistently increased on a year over year basis, with two exceptions, since February 2010. The first exception was a negligible 0.4% drop in December 2011collections. The second exception was a 35% month over month decrease in September 2012, attributable to a sizable litigation settlement between the county and Expedia.com. Adjusting for the settlement payments, September 2012 TDT revenues expanded by a healthy 5.1% over prior year revenues. For the entire fiscal 2012, TDT revenues gained 4.2% net of the Expedia settlement and have grown a substantial 19% since fiscal 2009. The ongoing recovery has been boosted by a combination of pent-up theme park demand according to officials, an improving economy, an influx of foreign visitors and a Harry Potter attraction at the Universal Theme Park which opened in 2010. Both Disney World and Universal are in the process of making sizable investments in their Orlando theme parks. Disney is expanding Fantasyland while Universal is in the process of developing a 1,800 room hotel on- site. New features at existing theme parks, such as the planned Antarctica ride at SeaWorld, are expected to further boost visitors. TDT revenues experienced robust growth, increasing at an average annual rate of 12.7% from 1979 to 2000. During the past decade, however, the TDT suffered its first-time annual drop falling 3.1% in fiscal 2001. The TDT fell an additional 12.6% in fiscal 2002 and 15.4% in fiscal 2009. The recent volatility of the revenue stream underscores the economically sensitive nature of the TDT and its dependence upon the local tourist sector. Some revenue stability is provided by an annual installment payment equal to $2.8 million to be received monthly through Nov. 15, 2018. In bond year 2011 - 2012, the installment payments equalled 16% of pledged revenues. THIN COVERAGE RATIOS, CUSHIONS FROM RESERVES Despite the recovery in TDT collections, coverage of series 2008A and 2008B debt service remains thin. The bonds were structured with the larger principal and interest payments payable on Nov. 1 as revenue collections have historically been more robust during the summer months. The flow of funds is unusual as the first interest payment in each bond year is paid across all series while for the second principal and interest payment, senior debt service is paid prior to the second and third liens. As a consequence, debt service requirements are substantially higher for November payment dates. Both on a historical and projected basis, coverage has been narrower for the November dates, and Fitch rates to these lower ratios. TDT revenues collected from March through August of 2012 provided a slim 1.25x debt service coverage for the series 2008A November, 2012 payment. Payment of all series 2008A bonds without a draw on the reserve funds requires modest TDT growth over the life of the issue. Under the Fitch base case scenario of 2.3% annual growth, equal to the average annual growth since fiscal 2000, TDT revenues would provide debt service coverage of at least 1.2x. Fitch stress scenarios that mirror the severe historical revenue declines of the past decade, followed by a conservative recovery and then baseline growth, demonstrate that reserves would be required to augment pledged revenues. For combined series 2008A and subordinate series 2008B debt service, TDT revenues failed to provide sum-sufficient coverage for the November 2010 payment, with actual coverage at 0.97x. TDT revenue growth over the past two years resulted in a still slim 1.13x coverage in November 2012. Under the Fitch base case scenario, TDT coverage would range from 1.0x - 1.2x through November 2020. Fitch stress scenarios described above as well as a no growth scenario would result in a default of the series B bonds. The liquidity reserves for each series were established to compensate for expected fluctuations in TDT collections. Use of the liquidity reserve does not constitute a material event, and use of the DSRA does not constitute a default. The series 2008A liquidity reserve has been fully funded since the middle of 2009 when it was replenished subsequent to a draw to compensate for lower than anticipated capitalized interest earnings. The series 2008B liquidity reserve was replenished in July 2011 with the payment of $392,000 of unused construction. THE DSRA has never been utilized for either series of bonds. ADEQUATE BONDHOLDER PROJECTIONS Legal provisions include a cross-default provision, which stipulates that the default of one series of bonds under the indenture is an event of default under all indentures. Upon default, the flow of funds directs payment of principal and interest to the holders of the series 2008A bonds and subsequently to the owners of the 2008B bonds, prior to any payments to third lien bondholders. It is likely that a cross-default will occur during the life of the bonds, given that the series 2008C defaults in the Fitch base case scenario and in all of the stress tests. Average annual revenue growth of 11.1% is required to generate sufficient income to avoid default on the series 2008C through 2020. Fitch considers this to be optimistic, given the recent trend of TDT volatility. Additional debt is prohibited under the indenture, except for refundings. Additional bonds for refunding purposes may be issued if, during any consecutive 12 of the previous 25 months, contract revenues equaled at least 1.33x MADS on all existing and proposed debt and 1.10x MADS on all senior and second-lien bonds. The calculation excludes installment payment revenues. CENTRAL FLORIDA ECONOMIC STRENGTHS The local economy is experiencing a sustained recovery as evidenced by solid job growth and falling unemployment rates. Employment levels within the Orlando metropolitan statistical area (MSA) increased by 1.7% in 2011 after three consecutive years of job losses. MSA employment for August 2012 shows a year over year increase of 3.7% or approximately 37,000 jobs. Consequently, unemployment rates have dipped from over 10% during 2011 to 8.7% as of this past August, below the state rate of 9.0% but above the national unemployment rate of 8.2%. The leisure and hospitality sector is a major component of the local economy, comprising about 21% of total employment. Disney is the dominant player, employing about 58,000 or over 10% and 5% of county and MSA employment, respectively. Universal reports 13,000 employees while SeaWorld of Orlando's workforce totals approximately 7,000. Beside growing TDT collections, consistent expansion in leisure and hospitality employment and generally higher occupancy and hotel room rates reflect the growing strength of this sector. Economic diversification continues to take hold, most notably within the education and health services sectors. A growing biotechnology and life sciences cluster is anchored by The University of Central Florida's (UCF) Health Sciences Campus, which is home to its College of Medicine and the Burnett College of Biomedical Sciences, in addition to M.D. Anderson Cancer Center and Sanford-Burnham Medical Research Institute. In addition, Nemours Children's Hospital recently opened and completion of a new Veteran's Administration hospital is projected for mid to late 2013. Arduin, Laffer & Moore Econometrics estimated the creation of 30,000 jobs and $7.6 billion in economic impact over 10 years as a result of the UCF activity and related life sciences development. PACIFICHEALTH LABORATORIES: Incurs $345,400 Net Loss in 3rd Qtr. ---------------------------------------------------------------- PacificHealth Laboratories, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $345,439 on $1.7 million of revenues for the three months ended Sept. 30, 2012, compared with a net loss of $116,675 on $2.0 million of revenues for the same period last year. For the nine months ended Sept. 30, 2012, the Company reported a net loss of $454,965 on $5.7 million of revenues, compared with net income of $2,324 on $5.9 million of revenues for the same period of 2011. According to the regulatory filing, the higher net loss in the three months ended Sept. 30, 2012, as compared to the same period in 2011 and the net loss in the nine months ended Sept. 30, 2012, as compared to net income for the same period in 2011 is due primarily to lower revenues and lower gross margins. The Company's balance sheet at Sept. 30, 2012, showed $2.0 million in total assets, $1.2 million in total current liabilities, and stockholders' equity of $827,127. "The Company has incurred declining revenues, significant operating losses, and has an accumulated deficit of $20,589,738 as of Sept. 30, 2012. These factors raise substantial doubt about the Company?s ability to continue as a going concern." A copy of the Form 10-Q is available at http://is.gd/edzjoL Matawan, N.J.-based PacificHealth Laboratories, Inc., develops patented protein-based nutritional products that activate biochemical pathways to enhance muscle endurance and additionally the specific peptides involved in appetite regulation. PATRIOT COAL: Claims Recovery Group Buys Claim ---------------------------------------------- A notice of transfer of claim was made Tuesday in the Chapter 11 cases of Patriot Coal Corporation, et al., to wit: Debtor Eastern Associated Coal, LLC Transferee Claims Recovery Group LLC Transferor Veres Quality Water Inc. Scheduled Amount of Claim $53,826.25 Claim # 125?344 Date Claim Filed 08/24/2012;10/27/2012 Transfer Date 11/13/2012 Docket Entry 1605 (11/20/12) 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: Sierra Liquidity Fund Buys Claims ----------------------------------------------- These additional notices of transfers of claims were made Wednesday and Thursday in the Chapter 11 cases of Patriot Coal Corporation, et al., to wit: A. Debtor Kanawha Eagle Coal, LLC Transferee Sierra Liquidity Fund, LLC Transferor Grace Equipment Company Amount of claim transferred $1,994.80 (Partial) Claim # Not Disclosed Transfer Date Oct. 10, 2012 Docket Entry 1564 (11/14/12) B. Apogee Coal Company, LLC Transferee Sierra Liquidity Fund, LLC Transferor White Armature Works, Inc. Amount of Claim $3,332.72 Claim # Not Disclosed Transfer Date Oct. 12, 2012 Docket Entry 1577 (11/158/12) C. Debtor Eastern Associated Coal, LLC Transferee Sierra Liquidity Fund, LLC Transferor White Armature Works, Inc. Amount of Claim $3,370.72 Claim # Not Disclosed Transfer Date Oct. 21, 2012 Docket Entry 1578 (11/15/12) 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: Court Extends Exclusive Right to File Plan to May 5 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York extended Patriot Coal Corporation, et al.'s exclusive periods to file a plan of reorganization and to solicit acceptances of a plan through May 5, 2013, and July 4, 2013, respectively. As reported in the TCR on Oct. 23, 2012, the Debtors asked the Bankruptcy Court to extend the Debtors' exclusive periods within which to file and solicit acceptances of a plan or reorganization by 180 days, from Nov. 6, 2012, and Jan. 5, 2013, respectively, to May 5, 2013, and July 4, 2013, respectively, citing, among others, the existence of certain unresolved contingencies, the resolution of which will affect the Debtors' ability to propose a confirmable plan of 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. PATRIOT COAL: XL May Pay Defense Costs of Whiting and Schroeder --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has granted a limited modification of the stay, to the extent that it applies, to allow the payment of defense costs and advance of legal fees to Richard M. Whiting and Mark N. Schroeder and any other Patriot officers and directors subsequently named defendants in relation to securities class action lawsuits filed against Mr. Whiting and Mr. Schroeder captioned Ernesto Espinoza v. Richard M. Whiting and Mark N. Schroeder, 4:12 CV 01711 (E.D. Mo.) and Furman Jerry Rogers III v. Richard M. Whiting and Mark N. Schroeder, 4:12 CV 01815 (E.D. Mo.) and any other related securities lawsuits, pursuant to the terms of Insurance Policy No. ELU123382-11 provided by XL Specialty Insurance Company. As reported in the TCR on Oct. 23, 2012, XL issued to Patriot on Oct. 31, 2011, Management Liability and Company Reimbursement Insurance Policy No. ELU123382-11 for the period Oct. 31, 2011, to Oct. 31, 2012. Subject to all of its terms and conditions, the XL Policy potentially affords coverage up to a maximum aggregate limit of liability of $15,000,000, including Defense Expenses. The XL Policy contains three Insuring Agreements. First, under Insuring Agreement A, coverage is provided to Insured Persons for Loss resulting from a Claim if such Loss is not indemnified by Patriot. Insuring Agreement B provides coverage to Patriot to the extent it indemnifies the Insured Persons for covered Loss in connection with Claims made against Insured Persons. Insuring Agreement C provides coverage to Patriot for Company Loss resulting from any Securities Claim made against Patriot. 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. PB REDELL: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Debtor: PB Redell, Inc., a California corporation dba Pacific Beach Bar and Grill PB Bar and Grill Club Tremors 860 Garnet Avenue San Diego, CA 92109 Bankruptcy Case No.: 12-15328 Chapter 11 Petition Date: November 19, 2012 Court: U.S. Bankruptcy Court Southern District of California (San Diego) Judge: Margaret M. Mann Debtor's Counsel: John L. Smaha, Esq. SMAHA LAW GROUP, APC 7860 Mission Center Court, Suite 100 San Diego, CA 92108 Tel: (619) 688-1557 Fax: (619) 688-1558 E-mail: jsmaha@smaha.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 with the petition is available for free at: http://bankrupt.com/misc/casb12-15328.pdf The petition was signed by Marianne R. Carson, president. PEREGRINE DEVELOPMENT: U.S. Trustee Wants Chapter 7 Liquidation --------------------------------------------------------------- William T. Neary, the U.S. Trustee for Region 6, has asked the U.S. Bankruptcy Court for the Eastern District of Texas to convert the Chapter 11 bankruptcy case of Peregrine Development, LLC, to Chapter 7 liquidation. The U.S. Trustee claimed that the Debtor is not engaged in business, and its primary asset is a parcel of real estate in Lewisville, Texas. The Debtor's real estate was valued on its schedules at $12,249,590. The property was purchased by Arthur James II from J. Grady Brown in 2006 through an owner financing arrangement. The property was then conveyed to the Debtor. Mr. Brown assigned his note to Buckaroo Partners, L.P. Prior to the commencement of this case, Buckaroo converted its lien position in the Debtor into a 50% ownership of the Debtor. Buckaroo filed a plan of reorganization and disclosure statement on behalf of the Debtor on May 11, 2012. On May 25, 2012, a Chapter 11 plan and disclosure statement were filed by Arthur P. James III and Tom James, the brother and son of one of the Debtor's co-managers. Also pending before the court is a motion to convert filed by Arthur P. James III and Tom James. The U.S. Trustee stated that the Debtor's Chapter 11 case has been characterized by significant recent litigiousness. The Debtor and Buckaroo have represented to the U.S. Trustee that the Debtor has experienced delay and impasse due to its management structure. The relative rights of co-managers Buckaroo and Arthur James II to govern the affairs of the Debtor are controlled by a company agreement executed on April 29, 201l. The U.S. Trustee said that he is informed that under the company agreement, all significant decisions require the consent of both co-managers. According to Buckaroo, this has led to an inability of the Debtor to negotiate effectively with its creditor body, and to determine a path for emergence from Chapter 11. Because of this situation, the U.S. Trustee filed his motion to appoint a Chapter 11 trustee, and the Debtor and other parties filed their motion to retain a Chief Restructuring Officer. At the July 25, 2012 hearing, the court approved the Debtor's retention of Daniel Sherman as Chief Restructuring Officer for the Debtor. "The retention of a CRO to act as a 'tiebreaker' between the Debtor's co-managers has apparently not had the desired effect posited by the Debtor and other interested parties. The U.S. Trustee is not aware of any tie on the supposed emergency matters testified about at the July 25, 2012 hearings that Mr. Sherman has actually broken. As of the date of the filing of this motion, the U.S. Trustee is informed that the plan proponents do not have an agreement for a consensual plan. The U.S. has also been informed that the Debtor has been offered a letter of intent for a sale of the primary asset of the estate by counsel for Arthur James III, but that the Debtor has not acted on this offer. It is unclear why Mr. Sherman, as tiebreaker, has not been involved in the process of addressing the proposed sales transaction," the U.S. Trustee stated. According to the U.S. Trustee, the impasse in the Debtor's governance caused by its management structure has not been successfully addressed by the CRO. As pointed out by the U.S. Trustee in his motion for the appointment of a Chapter 11 trustee and in his objection to the application to retain Mr. Sherman as CRO, Mr. Sherman lacks any real authority to manage the affairs of the Debtor, or to make the necessary decisions to allow the Debtor to emerge from Chapter 11. "This case has been pending well over one year. The Debtor does not have a complex financial or business structure, rather it has a unworkable management system that is preventing reorganization. As a result, there has been unreasonable delay in the progress of this case," the U.S. Trustee said. About Peregrine Development Peregrine Development, LLC, in Lewisville, Texas, owns undeveloped real property in Denton County, Texas where retail and commercial development continues to occur. The Company filed for Chapter 11 bankruptcy protection (Bankr. E.D. Tex. Case No. 11-41449) on May 3, 2011, represented by Michael R. Rochelle, Esq., and Eric M Van Horn, Esq., at Rochelle McCullough L.L.P. In its petition, the Debtor estimated $10 million to $50 million in assets and $1 million to $10 million in debts. The petition was signed by Arthur James, II, manager. PHYSICAL PROPERTY: Incurs HK$101,000 Net Loss in Third Quarter -------------------------------------------------------------- Physical Property Holdings Inc., filed its quarterly report on Form 10-Q, reporting a net loss of HK$101,000 on HK$248,000 of revenues for the three months ended Sept. 30, 2012, compared with a net loss of HK$110,000 on HK$203,000 of revenues for the same period last year. For the nine months ended June 30, 2012, the Company had a net loss of HK$373,000 on HK$624,000 of revenue, compared with a net loss of HK$381,000 on HK$604,000 of revenue for the same period in 2011. The Company's balance sheet at Sept. 30, 2012, showed HK$10.1 million in total assets, HK$11.5 million in total current liabilities, and a stockholders' deficit of HK$1.4 million. "The Company had negative working capital of HK$11,419,000 as of Sept. 30, 2012, and incurred losses of HK$373,000 and HK$381,000 for the nine months ended Sept. 30, 2012, and 2011, respectively. These conditions raised substantial doubt about the Company?s ability to continue as a going concern." A copy of the Form 10-Q is available at http://is.gd/PsLAKu Located in Hong Kong, Physical Property Holdings Inc., through its wholly-owned subsidiary, Good Partner Limited, owns five residential apartments located in Hong Kong. The Company was incorporated in the State of Delaware. * * * As reported in the TCR on March 30, 2012, Mazars CPA Limited, in Hongkong, noted that Physical Property had a negative working capital as of Dec. 31, 2011, and incurred loss for the year then ended, which raised substantial doubt about its ability to continue as a going concern. PMI GROUP: S&P Withdraws 'D' Counterparty Credit Rating ------------------------------------------------------- Standard & Poor's Ratings Services has withdrawn its 'D' and 'R' counterparty credit and issue ratings on PMI Group Inc. and PMI Mortgage Insurance Co. "The 'D' ratings on PMI Group Inc. and 'R' ratings on PMI Mortgage Insurance reflect its voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code, following the Arizona Department of Insurance seizing PMI's primary operating subsidiaries on Oct. 20, 2011. We withdrew the ratings because the company is in liquidation, and not expected to emerge from bankruptcy in the near term," S&P said. POTOMAC SUPPLY: $10MM AIP Sale Okayed; Unsecureds May Recoup 10% ---------------------------------------------------------------- Northern Neck News reports that Bankruptcy Judge Douglas O. Tice, with the U.S. Bankruptcy Court for the Eastern District of Virginia has approved the sale of Potomac Supply to American Industrial Partners last week for $10 million in a deal expected to be finalized in December. AIP plans to continue operations at the company that was once a major employer in Westmoreland County. According to the report, the sale, which is less than what the company owes creditors including Regions Bank, would bring the major issues of a lengthy case to a close. The report notes, in September, they sought to auction assets valued at about $17 million, but the auction was cancelled because early bids were too low. The company remained on the market as its attorneys worked aggressively to find a buyer and initiated discussions with several potential purchasers. They believed they had a deal with Chesapeake Bay Enterprise Inc., who paid Potomac a $500,000 deposit. Chesapeake was set to pay about $20.3 million but that deal fell through when its lender backed out, according to the report. The report relates Chief Executive Officer William Carden Jr., whose family founded Potomac Supply in 1948, said a priority has been to keep the 100 or so workers the company has been able to retain employed. The company laid off about 100 workers earlier this year. The AIP sale should forestall further lay-offs. The report notes attorneys say the sale also satisfies Regions Bank, who agreed to receive less than the $17.3 million they were owed so that unsecured creditors could receive partial compensation, about 10 cents on the dollar. The report adds a representative for a committee of creditors has admitted to Judge Tice that the AIP offer was the only practicable offer made. Potomac Supply, Regions bank and the creditors' committee believe Chesapeake forfeited the deposit and that it can be used to compensate creditors, the report notes. About Potomac Supply Kinsale, Virginia-based building-supply manufacturer Potomac Supply Corporation filed for Chapter 11 bankruptcy (Bankr. E.D. Va. Case No. 12-30347) on Jan. 20, 2012, estimating assets and debts of $10 million to $50 million. Potomac in mid-January announced it was suspending manufacturing operations in Kinsale after its lender refused to provide financing without additional investment. Judge Douglas O. Tice, Jr., presides over the case. Patrick J. Potter, Esq., at Pillsbury Winthrop Shaw Pittman LLP, in Washington, D.C., serves as the Debtor's bankruptcy counsel. LeClairRyan P.C. is representing the Official Committee of Unsecured Creditors. PROBE MANUFACTURING: Incurs $71,848 Net Loss in Third Quarter ------------------------------------------------------------- Probe Manufacturing, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $71,848 on $1.1 million of sales for the three months ended Sept. 30, 2012, compared with net income of $39,638 on $1.2 million of sales for the same period last year. For the nine months ended Sept. 30, 2012, the Company had net income of $12,322 on $4.0 million of sales, compared with net income of $96,577 on $3.3 million of sales for the same period of 2011. For the three and nine months ended Sept. 30, 2012, the Company's operating income was $(36,578) and $144,962 compared to $92,820 and $193,611 for the same period in 2011. The Company's balance sheet at Sept. 30, 2012, showed $1.9 million in total assets, $1.5 million in total current liabilities, and stockholders' equity of $363,669. The Company said, "Although for the nine months ended Sept. 30, 2012, we had a net profit of $12,322, a working capital surplus of $185,767 and a shareholder surplus of $363,669; we had an accumulated deficit of $(226,160), our ability to operate as a going concern is still dependent upon our ability (1) to obtain sufficient debt and/or equity capital and/or (2) generate positive cash flow from operations and maintain profitability." A copy of the Form 10-Q is available at http://is.gd/9RCimg Irvine, California-based Probe Manufacturing, Inc., provides global design and manufacturing services to original electronic equipment manufacturers from its 23,000 sq.-ft. facility in Irvine, California and strategic locations worldwide. Revenue is generated from sales of the Company's services primarily to customers in the medical device, aerospace, automotive, industrial and instrumentation product manufacturers. * * * As reported in the TCR on April 16, 2012, W. T. Uniack & Co. CPA's P.C., in Woodstock, Georgia, said that the the financial statements have been prepared assuming that the Company will continue as a going concern. "As discussed in the footnotes, the Company has current assets of $1,460,906 and current liabilities of $1,260,952. Sales have increased from $2,799,935 in 2010 to $4,549,798 for the comparable period in 2011. In addition, the Company has an accumulated deficit of ($238,483) and is dependent on at least maintaining current revenue levels. Those conditions raise substantial doubt about the Company's ability to continue as a going concern." PROVEST REALTY: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Provest Realty Services, Inc. 150 N. Michigan Avenue, 28th Floor Chicago, IL 60601 Bankruptcy Case No.: 12-45789 Chapter 11 Petition Date: November 19, 2012 Court: U.S. Bankruptcy Court Northern District of Illinois (Chicago) Judge: Jacqueline P. Cox Debtor's Counsel: Adam S. Tracy, Esq. THE TRACY FIRM, LTD. 800 W. Fifth Avenue, Suite 201A Naperville, IL 60563 Tel: (888) 611-7716 Fax: (630) 689-9471 E-mail: at@tracyfirm.com Estimated Assets: $0 to $50,000 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 James Reed, president. RADIOSHACK CORP: S&P Lowers CCR to 'CCC+' on Weak Performance ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Fort Worth, Texas-based RadioShack Corp. to 'CCC+' from 'B-'. The outlook is negative. "The recovery rating on the senior unsecured debt remains '4', indicating our expectations for average (30% to 50%) recovery in the event of a payment default," S&P said. "The downgrade of RadioShack reflects our view that it will be very difficult for the company to improve its gross margin in the fourth quarter of this year, given the highly promotional nature of year-end holiday retailing in the wireless and consumer electronic categories," said Standard & Poor's credit analyst Jayne Ross. "It is our belief that all segments of the company's business will remain under margin pressure for 2012 and into 2013." The ratings on RadioShack reflect Standard & Poor's assessment that the company's financial risk profile is "highly leveraged." "This reflects, in our view, weaker credit metrics with debt leverage in the 12x area and modest cash flow generation, but "adequate" liquidity in the near term. We characterize the company's business risk profile as 'vulnerable,' because of the short product cycles, the secular change in the products offered, the fiercely competitive nature of the retail consumer mobility industry and its much lower margins, and the company's vulnerability to weak consumer spending because of limited discretionary income," S&P said. "Our negative outlook on RadioShack reflects our expectation that the company's operating trends will remain at their new lower level. We expect flat to modest sales growth in the signature segment as well as mixed sales performance in the company's other segments for the remainder of 2012, given weak industry dynamics. We are not estimating any meaningful improvement in margins or credit metrics in the near term," S&P said. "We would consider a downgrade if the company's liquidity position were to deteriorate such that the company no longer maintains sizeable cash balances and availability begins to decline under its revolving credit facility," S&P said. "Although unlikely, we could consider a stable outlook if we begin to see stabilization in sales results in the company's signature segment, solid results in RadioShack's mobility platform, and stable credit metrics. For this to occur, we would have to see gross margin improvement of at least 100 basis points or more and revenue growth in the low- to mid-single digits or more, or some combination of higher gross margin and sales growth. We would also consider an upgrade if the company reduced its debt such that total debt to EBITDA remained at less than 9x, other credit metrics improved, and operating performance stabilized," S&P said. REPUBLIC MORTGAGE: S&P Withdraws 'R' Counterparty Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'R' counterparty credit and issue ratings on Republic Mortgage Insurance Co. "The 'R' ratings on Republic Mortgage Insurance Co. reflect its placement under supervision by the North Carolina Department of Insurance. We withdrew the ratings because we do not expect the company to emerge from regulatory supervision in the near term," S&P said. RG STEEL: Court Approves Settlement Agreements With Teamsters ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized and approved the Section 1113/1114 Settlement and Modified Labor Agreement between RG Steel, LLC, and the International Brotherhood of Teamsters, Truck Drivers Local No. 541. As reported in the TCR on Nov. 6,, 2012, the Union represents approximately 18 individuals formerly employed by Wheeling Corrugating Company, a division of debtor RG Steel Wheeling, LLC, pursuant to that certain collective bargaining agreement effective May 1, 2010, between the Company and the Union. CBA With Truck Drivers The Union and the Debtors have agreed that, pursuant to the Settlement, the CBA will be terminated, upon Court approval of the Settlement, as of Aug. 31, 2012. The Settlement will apply to all retirees, surviving spouses and dependents eligible to receive benefits under the CBA or any retiree benefit program under the CBA. To secure the prompt termination of the CBA, the Debtors have agreed to deposit $32,000 into an escrow account to be used by the Debtors to satisfy Union members' miscellaneous claims as directed by the Teamsters, the majority of which are either postpetition administrative claims, or entitled to priority as claims for outstanding contributions to employee benefit plans under Section 507(a)(5) of the Bankruptcy Code. The Bankruptcy Court also approved the Section 1113/1114 Settlement and Modified Labor Agreement between RG Steel, LLC, and the International Brotherhood of Teamsters, General Drivers Local No. 89. Teamsters represents 25 individuals formerly employed by Wheeling Corrugating Company, a division of RG Steel Wheeling pursuant to that certain collective bargaining agreement effective Aug. 19, 2010, between the Company and the Union. CBA With General Drivers The Union and the Debtors have agreed that, pursuant to the Settlement Agreement, the CBA will be terminated, upon Court approval of the Settlement Agreement, as of Aug. 31, 2012. The Settlement Agreement will apply to all retirees, surviving spouses and dependents eligible to receive benefits under the CBA or any retiree benefit program under the CBA. To secure the prompt termination of the CBA, the Debtors have agreed to deposit $68,000 into an escrow account to be used by the Debtors to satisfy Union members' miscellaneous claims as directed by the Teamsters, the majority of which are either postpetition administrative claims, or entitled to priority as claims for outstanding contributions to employee benefit plans under Section 507(a)(5) of the Bankruptcy Code. About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as its financial advisor. The Debtor has sold off the principal plants. The sale of the Wheeling Corrugating division to Nucor Corp. brought in $7 million. That plant in Sparrows Point, Maryland, fetched the highest price, $72.5 million. RG STEEL: Court Approves Retention Plan for Key Employees --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved a retention plan for 21 non-insider Key Employees of WP Steel Venture LLC, et al. Compensation that the Debtors have determined, in their sole discretion, to award to the Key Employees pursuant to the KERP will be treated in the Debtors' Chapter 11 cases as allowed administrative expenses in accordance with Section 503 of the Bankruptcy Code. As reported in the TCR on Oct. 30, 2012, following the sale of the Debtors' primary steelmaking facilities and assets, the Debtors' focus has shifted on the wind-down of their estates, including liquidating their remaining inventory, collecting accounts receivable, analyzing and pursuing preference/avoidance actions and other litigation claims, and conducting the claims reconciliation process. In order to maximize the recoveries for the Debtors' remaining secured and unsecured creditors, the Debtors relate that it is crucial that personnel necessary to achieve these objectives must be retained. The KERP would provide for each Key Employee who remains employed by the Debtors through Dec. 31, 2012 to receive, in addition to such employee's current base salary, a monthly stipend of $2,000 to purchase health insurance, as well as a lump sum retention payment equal to three months of the employee's base salary. During the period from Aug. 31, 2012, through the end of the Key Employee's employment or service pursuant to the KERP, the Company will not provide employee benefits under any medical, insurance or similar welfare plan, nor will the Key Employee be eligible to participate in any 401(k) or similar retirement savings plan. About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as its financial advisor. The Debtor has sold off the principal plants. The sale of the Wheeling Corrugating division to Nucor Corp. brought in $7 million. That plant in Sparrows Point, Maryland, fetched the highest price, $72.5 million. RG STEEL: Kinder and Pinney Dock Withdraw Motion for Stay Relief ---------------------------------------------------------------- Kinder Morgan Bulk Terminals, Inc., and Pinney Dock & Transport LLC have withdrawn their motion in RG Steel Inc.'s case for relief from stay to remove equipment and to terminate contract. The notice of withdrawal of motion for relief from stay gave no further details. Pinney Dock and debtor RG Steel are parties to an Iron Ore Agreement dated as of Feb. 1, 2008, pursuant to which Pinney Dock agreed to provide certain services including unloading, loading and storage of Debtor RG Steel's iron ore at the Pinney Dock facility located in Ashtabula, Ohio. Pinney Dock told the Court that despite its full and timely performance of the terms of the Ore Agreement, Debtor RG Steel has defaulted by failing to make payments when due. Further, Pinney Dock related that Debtor RG Steel cannot provide Pinney Dock with adequate protection of its interest in the Ore Agreement and lacks the "financial wherewithal" to ensure that it receives payment under the Ore Agreement. Kinder Morgan and Debtor RG Sparrow were parties to a number of short term purchase orders whereby Kinder Morgan agreed to provide equipment, storage and related services of certain commodities. Kinder Morgan told the Court that the orders have all expired by their terms. Kinder Morgan had rented numerous pieces of equipment at Debtor RG Sparrow's request and for Debtor RG Sparrow's benefit. In addition, Kinder Morgan owns certain equipment which is located on Debtor's premises, including, but not limited to a Gottwald crane. About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as its financial advisor. The Debtor has sold off the principal plants. The sale of the Wheeling Corrugating division to Nucor Corp. brought in $7 million. That plant in Sparrows Point, Maryland, fetched the highest price, $72.5 million. RG STEEL: USW Objects to Retention Plan for 21 Key Employees ------------------------------------------------------------ The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO objects to WP Steel Venture LLC, et al.'s Motion For Order Approving Key Employee Retention Plan ("KERP") for 21 remaining non-insider key employees of the Debtors, citing that there is no basis for approval of the motion. The USW is the exclusive bargaining representative of more than 3,500 former employees of Debtor RG Steel, LLC. The USW is also the authorized representative for purposes of Section 1114 of the Code, of the retirees, surviving spouses, and dependents who received retiree benefits pursuant to the collective bargaining agreements between RG Steel and the USW. The USW and RG Steel were parties to a Basic Labor Agreement ("BLA") covering workers at all of the Debtors' steelmaking operations, as well as other related operations, and then became parties to a Modified Labor Agreement ("MLA") approved by the Bankruptcy Court. Among other things, the MLA terminated effective Aug. 31, 2012, the Debtors' obligation to provide programs of medical benefits to its bargaining unit employees and retirees. The USW argued: 1. There is no basis under any possible standard of review, including business judgment or "justification by the facts and circumstances of the case," 11 U.S.C. Section 503(c)(3), for the Court to conclude that any payments, let alone these payments worth many multiples of remaining salary, are required to induce these employees to remain. 2. The payments appear to be gifts, not retention payments, as, by the time of the hearing, nearly three-fourths of the alleged covered period will have passed. 3. There simply is no legal or factual basis for approval of the KERP motion, which proposes to give a substantial gratuity to 21 employees for six additional weeks of work while thousands of former employees face financial ruin resulting from lost employment and unpaid medical claims. As reported in the TCR on Oct. 30, 2012, the Debtors told the Court that following the sale of their primary steelmaking facilities and assets, their focus have shifted on the wind-down of their estates, including liquidating their remaining inventory, collecting accounts receivable, analyzing and pursuing preference/avoidance actions and other litigation claims, and conducting the claims reconciliation process. In order to maximize the recoveries for the Debtors' remaining secured and unsecured creditors, the Debtors related that it is crucial that personnel necessary to achieve these objectives must be retained. The KERP would provide for each Key Employee who remains employed by the Debtors through Dec. 31, 2012, to receive, in addition to the employee's current base salary, a monthly stipend of $2,000 to purchase health insurance, as well as a lump sum retention payment equal to three months of the employee's base salary. During the period from Aug. 31, 2012, through the end of the Key Employee's employment or service pursuant to the KERP, the Company will not provide employee benefits under any medical, insurance or similar welfare plan, nor will the Key Employee be eligible to participate in any 401(k) or similar retirement savings plan. About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as its financial advisor. The Debtor has sold off the principal plants. The sale of the Wheeling Corrugating division to Nucor Corp. brought in $7 million. That plant in Sparrows Point, Maryland, fetched the highest price, $72.5 million. RICEBRAN TECHNOLOGIES: Incurs $580,000 Net Loss in Third Quarter ---------------------------------------------------------------- RiceBran Technologies, formerly known as NutraCea, filed its quarterly report on Form 10-Q, reporting a net loss of $580,000 on $9.3 million of revenues for the three months ended Sept. 30, 2012, compared with a net loss of $1.8 million on $9.4 million of revenues for the same period last year. Loss from operations was $1.4 million for the three months ended Sept. 30, 2012, compared to $2.4 million for the three months ended Sept. 30, 2011. For the nine months ended Sept. 30, 2012, the Company had a net loss of $10.6 million on $28.8 million of revenues, compared with a net loss of $5.9 million of $28.6 million of revenues for the same period of 2011. The nine months ended Sept. 30, 2012, includes $2.2 million financing expense and the $4.9 million loss on extinguishment recognized in connection with the 2012 issuances of the subordinated convertible notes, senior convertible debenture and related warrants and a $3.2 million increase in income from change in fair value of derivative liabilities. The Company's balance sheet at Sept. 30, 2012, showed $48.8 million in total assets, $36.2 million in total liabilities, $8.3 million of redeemable noncontrolling interest in Nutra SA, and stockholders' equity of $4.3 million. The Company had an accumulated deficit of $204.3 million at Sept. 30, 2012. A copy of the Form 10-Q is available at http://is.gd/sU3Vgt About RiceBran Technologies Scottsdale, Ariz.-based RiceBran Technologies, formerly known as NutraCea, is a human food ingredient and animal nutrition company focused on the procurement, bio-refining and marketing of numerous products derived from rice bran. On Oct. 3, 2012, the Company changed its name from NutraCea to RiceBran Technologies. Nutracea filed for Chapter 11 bankruptcy protection (Bankr. D. Ariz. Case No. 09-28817) on Nov. 10, 2009. NutraCea emerged from Chapter 11 bankruptcy protection effective Nov. 30, 2010. * * * As reported in the TCR on April 5, 2012, BDO USA, LLP, in Phoenix, Arizona, expressed substantial doubt about NutraCea's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has suffered recurring losses from operations resulting in an accumulated deficit of $194.9 million. "Although the Company emerged from bankruptcy in November 2010, there continues to be substantial doubt about its ability to continue as a going concern." RICHFIELD OIL: Incurs $1.1-Mil. Net Loss in Third Quarter --------------------------------------------------------- Richfield Oil & Gas Company filed its quarterly report on Form 10-Q, reporting a net loss of $1.1 million on $217,852 of revenues for the three months ended Sept. 30, 2012, compared with a net loss of $5.2 million on $185,910 of revenues for the same period last year. For the nine months ended Sept. 30, 2012, the Company had a net loss of $4.0 million on $666,750 of revenues, compared with a net loss of $8.4 million on $585,970 of revenues for the same period in 2011. The Company's balance sheet at Sept. 30, 2012, showed $15.4 million in total assets, $6.7 million in total liabilities, and stockholders' equity of $8.7 million. The Company has an accumulated deficit of $26.6 million as of Sept. 30, 2012. The accumulated deficit was $22.6 million as of Dec. 31, 2011. Mantyla McReynolds LLC, in Salt Lake City, Utah, expressed substantial doubt about Richfield Oil's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has incurred substantial losses from operations causing negative working capital and negative operating cash flows. A copy of the Form 10-Q is available at http://is.gd/OJxbGv Salt Lake City-based Richfield Oil & Gas Company is an oil and gas exploration and production company with ten projects in Utah, Kansas, Oklahoma and Wyoming. The Company is currently producing oil from four projects in Kansas. The Company is currently completing one well in Juab County, Utah which the Company refers to as the "Liberty #1 Well," and is in the completion stage of development. ROCKDALE RESOURCES: Incurs $523,500 Net Loss in Third Quarter ------------------------------------------------------------- Rockdale Resources Corporation filed its quarterly report on Form 10-Q, reporting a net loss of $523,569 on $39,452 of revenues for the three months ended Sept. 30, 2012, compared with a net loss of $9,154 on $nil revenue for the same period last year. For the nine months ended Sept. 30, 2012, the Company had a net loss of $1.14 million on $39,452 of revenues, compared with a net loss of $21,920 on $nil revenue for the same period of 2011. Since the Company did not become active until April 2012, a comparison of its operating results for the three and nine months ended Sept. 30, 2012, with the comparable periods in 2011 would not be meaningful. The Company's balance sheet at Sept. 30, 2012, showed $3.20 million in total assets, $28,529 in total liabilities, and stockholders' equity of $3.17 million. "The Company has suffered recurring losses from operations. These conditions raise substantial doubt about the Company?s ability to continue as a going concern. The Company may raise additional capital through the sale of its equity securities, through offerings of debt securities, or through borrowings from financial institutions. Management believes that actions presently being taken to obtain additional funding provide the opportunity for the Company to continue as a going concern." A copy of the Form 10-Q is available at http://is.gd/9boV54 Austin, Tex.-based Rockdale Resources Corporation (formerly Art Design, Inc.) was incorporated in the State of Colorado on Jan. 16, 2002. In April 2012 the Company discontinued its prior operations and became involved in the exploration and development of oil and gas. On May 4, 2012, the Company amended its articles of incorporation to change its name to Rockdale Resources Corporation. SAFEGUARD SECURITY: Case Summary & 16 Unsecured Creditors --------------------------------------------------------- Debtor: Safeguard Security Holdings, Inc. 4801 Spring Valley Road, #125 Dallas, TX 75244 Bankruptcy Case No.: 12-22912 Chapter 11 Petition Date: November 21, 2012 Court: U.S. Bankruptcy Court District of Nevada (Las Vegas) Debtor's Counsel: H. Stan Johnson, Esq. COHEN-JOHNSON, LLC 255 E. WARM SPRINGS ROAD, SUITE 100 LAS VEGAS, NV 89119 Tel: (702) 823-3500 Fax: (702) 823-3400 E-mail: sjohnson@cohenjohnson.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 16 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/nvb12-22912.pdf The petition was signed by R. Michael Lagow, president. SAFENET INC: S&P Affirms 'B' Corp. Credit Rating; Outlook Positive ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Belcamp, Md.-based SafeNet Inc. to positive from stable. "At the same time, we affirmed our 'B' corporate credit rating on the company. We also raised our issue rating on the company's existing first-lien term loan to 'BB-' from 'B+' and revised our recovery rating on the debt to '1' from '2', indicating our expectation for very high (90% to 100%) recovery of principal in the event of payment default. In addition, we are raising our rating on the company's existing second-lien term loan to 'B' from 'B-'. We revised our recovery rating on the debt to '3' from '5', indicating our expectation for meaningful (50% to 70%) recovery of principal in the event of payment default," S&P said. "The outlook revision reflects our expectation of an improved financial risk profile following the sale of the GS business," said Standard & Poor's credit analyst Katarzyna Nolan. The company plans to use the sale proceeds to repay approximately 80% of its outstanding first-lien debt, for taxes, fees, and expenses, and to add $5 million of cash to the balance sheet. The rating on SafeNet reflects its "weak" business risk profile, which encompasses the company's modest scale, as well as vulnerability to competition from large vendors with stronger financial profiles and its "aggressive" financial risk profile. These factors are partly offset by a diverse customer base and growing addressable markets. "The positive outlook reflects our expectation of an improved financial risk profile and more sustainable revenue growth following the proposed sale. We could raise the rating if the company can maintain leverage at or below the mid-4x area. We could revise the outlook to stable if investments in R&D and sales don't translate into sustained revenue and EBITDA growth in the near term, or if leverage were to exceed 5x on a sustained basis," S&P said. SAN BERNARDINO: Agrees to Mediation With Firefighters Union ----------------------------------------------------------- Steven Church at Bloomberg News reports that San Bernardino, the bankrupt California city, and its firefighters union agreed to seek court-supervised mediation of their labor contract disputes, the city said in court papers. According to the report, the two sides will ask U.S. Bankruptcy Judge Scott Clarkson to oversee talks aimed at resolving their disagreements, which were not specified in the court filing in Riverside, California. About San Bernardino San Bernardino, California, filed an emergency petition for municipal bankruptcy under Chapter 9 of the U.S. Bankruptcy Code (Bankr. C.D. Calif. Case No. 12-28006) on Aug. 1, 2012. San Bernardino, a city of about 210,000 residents roughly 65 miles (104 km) east of Los Angeles, estimated assets and debts of more than $1 billion in the bare-bones bankruptcy petition. The city council voted on July 10, 2012, to file for bankruptcy. The move lets San Bernardino bypass state-required mediation with creditors and proceed directly to U.S. Bankruptcy Court. The city is represented that Paul R. Glassman, Esq., at Stradling Yocca Carlson & Rauth. San Bernardino joins two other California cities in bankruptcy: Stockton, an agricultural center of 292,000 east of San Francisco, and Mammoth Lakes, a mountain resort town of 8,200 south of Yosemite National Park. SMILE BRANDS: S&P Lowers CCR to 'B-' on Negative Cash Flow ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Irvine, Calif.-based Smile Brands Group Inc. to 'B-' from 'B'. "At the same time, we revised the outlook on the rating to negative," S&P said. "In addition, we lowered our rating on Smile Brands' senior secured debt to 'B-', in conjunction with the downgrade, from 'B'. Our recovery rating on this debt remains unchanged at '3', indicating our expectation for meaningful (50% to 70%) recovery of principal in the event of payment default," S&P said. "The rating on dental practice management (DPM) services provider Smile Brands Group Inc. continues to reflect its "vulnerable" business risk profile (according to Standard & Poor's Ratings Services' criteria), characterized by its narrow scope of operations in intensely competitive markets with low barriers to entry. Smile Brands had negative free operating cash flow (FOCF) after elevated capital spending for the past four quarters and we expect this to continue in the fourth quarter of 2012," S&P said. "Our downgrade is based on the expectation that early in 2013, Smile Brands will stem the trend of negative FOCF by reducing spending for new dental offices or taking other actions, such as paying interest on its holding company debt in kind, rather than in cash," said Standard & Poor's credit analyst Gail Hessol. "We also expect adjusted debt to EBITDA will rise to about 8x by the end of 2012, significantly higher than our prior expectations, but still consistent with a 'highly leveraged' financial risk profile. As of Sept. 30, 2012, debt to EBITDA was 7.7x, adjusted to capitalize operating leases and including holding company debt. We have lowered our expectations for Smile Brands' revenue growth, EBITDA generation, and cash flow over the next one to two years," S&P said. "We expect revenues will grow at a mid-single-digit annual rate, somewhat faster than the total U.S. dental services industry over the next few years, primarily fueled by Smile Brands' geographic expansion and a slowly strengthening economic climate. Our prior growth expectations were mid- to high-single-digit annual growth. Although Smile Brands' revenue growth slowed in the second and third quarter of 2012, revenues increased 4.2% for the 12 months ended Sept. 30, 2012. We believe an unsuccessful marketing strategy, which was subsequently abandoned, contributed to the growth slowdown. Still, we believe underlying industry fundamentals remain sound and relatively resistant to downturns. During the 2008 to 2010 recession, when revenue for the total U.S. industry was nearly flat (according to data from the Centers for Medicare and Medicaid Services), Smile Brands grew modestly, supporting our expectation for continued, albeit modest, growth," S&P said. SRY INC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------ Debtor: SRY, Inc. dba Blue Light Market 8844 Mack Ave Detroit, MI 48214 Bankruptcy Case No.: 12-65484 Chapter 11 Petition Date: November 20, 2012 Court: United States Bankruptcy Court Eastern District of Michigan (Detroit) Judge: Walter Shapero Debtor's Counsel: Edward J. Gudeman, Esq. GUDEMAN & ASSOCIATES, PC 26862 Woodward Ave., Suite 103 Royal Oak, MI 48067 Tel: (248) 546-2800 E-mail: ejgudeman@gudemanlaw.com Scheduled Assets: $101,000 Scheduled Liabilities: $1,192,364 A copy of the Company's list of its 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/mieb12-65484.pdf The petition was signed by Muna K. Shammas, president. STILLWATER ASSET: Wants Dismissal of Involuntary Ch 11 Case ----------------------------------------------------------- Stillwater Asset Backed Offshore Fund Ltd. has asked the U.S. Bankruptcy Court for the Southern District of New York to dismiss its involuntary Chapter 11 case. The Alleged Debtor also wants the Court to (i) impose sanctions against Eden Rock Finance Master Limited, f/k/a Fortis Prime Fund Solutions Custodial Services (Ire) Ltd. re KBC ac G1 (ERFF), Eden Rock Unleveraged Finance Master Limited f/k/a Fortis (Isle of Man) Nominees Limited, ARP Structural Alpha Fund, f/k/a Fortis (Isle of Man) Nominees Limited a/c 80 000 323, ARP Private Finance Fund, f/k/a Fortis (Isle of Man) Nominees Limited a/c 80 000 357; and (ii) direct the Petitioning Creditors to post a bond to indemnify the Alleged Debtor for damages. The Alleged Debtor claimed that the Petitioning Creditors commenced this case, in bad faith, in order to upset a heavily- negotiated, mediator proposed settlement which would have consensually resolved three class action lawsuits, provided for the return of assets to the control of investors and provided for the appointment of a new professional manager (whose selection was approved by a committee of investors and as part of the settlement would be approved by all investors and the District Court) to oversee entities formed to administer and distribute proceeds from the liquidation of those assets. "The motion was literally filed the day before a long-scheduled mediation session in which it was anticipated that such a settlement would be agreed to by multiple parties including counsel for several class actions brought on behalf of all investors," the Alleged Debtor stated. Petitioning Creditor Eden Rock and its counsel were invited to the mediation and were informed, in advance, of the proposed agenda to attempt to reach a global resolution of all claims, including their own claim. The Alleged Debtor said, "Rather than participate in the mediation in good faith, Eden Rock (along with ARP) instead filed both the Involuntary Petition and a motion to appoint a Chapter 11 trustee, solely to gain leverage in the mediation and in non-bankruptcy litigation,1 all at the expense of other investors and creditors. In so doing, the Petitioning Creditors ignored the fact that their alleged 'claims' have been heavily contested in connection with motion practice before the Supreme Court of the State of New York and are thus subject to bona fide dispute as to both liability and amount. " The Alleged Debtor stated that the Petitioning Creditors' bad faith is manifested by: (1) their filing of the Involuntary Petition in order to gain an advantage over hundreds of other investors and creditors by thwarting the mediation settlement process; (2) their failure to disclose to the Court that Eden Rock had previously sought, and been denied, the appointment of a receiver over the same assets; (3) their failure to disclose to the Court that the Involuntary Petition and Trustee Motion were filed one day before the long-scheduled mediation session at which it was anticipated that a global settlement would be achieved; (4) their failure to disclose to the Court that Eden Rock had been participating in the mediation sessions that had led up to the anticipated settlement; and (5) their filing of the Involuntary Petition notwithstanding their knowledge of the existence of a bona fide dispute with respect to both liability and amount of their alleged claims. "By filing the involuntary petition on the eve of a settlement of the Class Actions, the Petitioning Creditors essentially transformed the litigation into a two-party dispute between them, on the one hand, and the Funds and Class Action plaintiffs, on the other," the Alleged Debtor said. About Stillwater Asset Investment funds allegedly owed roughly $35.8 million, filed an involuntary Chapter 11 petition against Brooklyn-based Stillwater Asset Backed Offshore Fund Ltd. (Bankr. S.D.N.Y. Case No. 12-14140) on Oct. 3, 2012. Bankruptcy Judge Allan L. Gropper oversees the case. The petitioning creditors are represented by: Douglas E. Spelfogel, Esq. Richard Bernard, Esq. Mark Wolfson, Esq. Katherine R. Catanese, Esq. FOLEY & LARDNER LLP 90 Park Avenue New York, NY 10016-1314 Telephone: 212-682-7474 Facsimile: 212-687-2329 E-mail: dspelfogel@foley.com rbernard@foley.com mwolfson@foley.com kcatanese@foley.com An affiliated entity, Gerova Financial Group, Ltd., a Bermuda- based financial-services company, is the subject of Chapter 15 bankruptcy proceedings (Bankr. S.D.N.Y. Case No. 12-13641) commenced on Aug. 24, 2012. Liquidators of Gerova -- Michael Morrison and Charles Thresh, both of KPMG Advisory Limited, and John McKenna of Finance and Risk Service Ltd, Bermuda -- filed the Chapter 15 petition, estimating up to $100 million in assets and as much as $500 million in liabilities. A Chapter 15 petition was also filed for Gerova Holdings Ltd. (Case No. 12-13642), which is estimated to have under $100,000 in assets and liabilities. Hamilton-based Gerova Financial, formerly known as Asia Special Situations Acquisition Corp., was primarily involved, from 2010 on, in the business of investing in and managing certain types of illiquid financial assets. Gerova planned to then use such assets as regulatory capital for insurance companies, though this strategy was not fully implemented. After lengthy proceedings and over the objections of Gerova's then-current management, on July 20, 2012, the Bermuda Court entered an order appointing Morrison, et al., as joint provisional liquidators of GFG. Morrison, et al., were also appointed provisional liquidators of GHL on Aug. 20. Judge Gropper also oversees the Gerova Chapter 15 case. Peter A. Ivanick, Esq., and lawyers at Hogan Lovells US LLP represent the Liquidators as counsel. STONER AND COMPANY: US Trustee Wins Dismissal of Chapter 11 Case ---------------------------------------------------------------- The United States Trustee sought and obtained an order from the Bankruptcy Court dismissing the Chapter 11 case of Stoner and Company. In seeking the dismissal, the U.S. Trustee said the Debtor has disregarded its obligation to timely file monthly operating reports since the inception of the case. The U.S. Trustee also pointed out to the substantial or continuing loss to or diminution of the estate and the absence of a reasonable likelihood of rehabilitation. Stoner and Company, based in Fort Collins, Colorado, filed for Chapter 11 bankruptcy (Bankr. D. Colo. Case No. 12-10429) on Jan. 11, 2012. Judge Elizabeth E. Brown presides over the case. Daniel W. Alexander, Esq., serves as the Debtor's counsel. In its petition, the Debtor estimated $10 million to $50 million in assets and $100,001 to $500,000 in debts. The petition was signed by Jay D. Stoner, president. STORY BUILDING: Case Dismissal Hearing Continued to Dec. 12 ----------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California has continued until Dec. 12, 2012, at 10:30 a.m., the hearing to consider the request of Wells Fargo Bank, N.A. for dismissal of the Chapter 11 case of Story Building LLC. Story Building LLC is a real estate management company based in Irvine, California. The Company owns and operates a 13-story historical building located in Downtown, Los Angeles, known as the Walter P. Story Building, located at 610 S. Broadway. The building is primarily utilized as a jewelry plaza. Story Building LLC filed for Chapter 11 bankruptcy protection (Bankr. C.D. Calif. Case No. 10-16614) on May 17, 2010. Sandford Frey, Esq., who has an office in Los Angeles, California, represents the Debtor in its restructuring effort. The Debtor disclosed $19,421,024 in assets and $16,500,721 in liabilities as of the Chapter 11 filing. There was no official committee of unsecured creditors appointed in the Debtor's case. The Debtor has filed a plan providing for distributions to be funded primarily from operations of the Story Building property, and the new value contribution. The Debtor's interest holder has agreed to provide $160,000. SUPERCONDUCTOR TECHNOLOGIES: Incurs $2.3MM Net Loss in 3rd Quarter ------------------------------------------------------------------ Superconductor Technologies Inc. filed its quarterly report on Form 10-Q, reporting a net loss of $2.3 million on $1.3 million of revenues for the three months ended Sept. 29, 2012, compared with a net loss of $3.3 million on $479,000 of revenues for the same period last year. For the nine months ended Sept. 29, 2012, the Company had a net loss of $8.7 million on $2.3 million of revenues, compared with a net loss of $10.3 million on $3.2 million of revenues for the same period of 2011. The Company's balance sheet at Sept. 29, 2012, showed $11.7 million in total assets, $1.9 million in total liabilities, and stockholders' equity of $9.8 million. As reported in the TCR on April 10, 2012, Marcum LLP, in Los Angeles, California, expressed substantial doubt about Superconductor Technologies' ability to continue as a going concern. The independent auditors noted that the Company incurred significant net losses since its inception and has an accumulated deficit of $251,016,000 and expects to incur substantial additional losses and costs. A copy of the Form 10-Q is available at http://is.gd/YlUkv1 Santa Barbara, California-based Superconductor Technologies Inc. develops and commercializes high temperature superconductor ("HTS") materials and related technologies. TARGET ACQUISITIONS I: Incurs $373,000 Net Loss in Third Quarter ---------------------------------------------------------------- Target Acquisitions I, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $372,597 on $0 sales for the three months ended Sept. 30, 2012, compared with net income of $933,541 on $4.3 million of net sales for the same period last year. The decrease in income was mainly due to the absence of sales and higher operating expenses during the third quarter of 2012. For the nine months ended Sept. 30, 2012, the Company had a net loss of $1.2 million on $0 sales, compared with net income of $2.1 million on $8.7 million of net sales for the same period of 2011. The Company's balance sheet at Sept. 30, 2012, showed $11.2 million in total assets, $2.5 million in total current liabilities, and stockholder's equity of $8.7 million. The Company said in the filing: "We incurred a net loss of $1.21million and $0.4 million for the nine and three months ended Sept. 30, 2012. We also had negative cash flows from operating activities of $455,015 during the nine months ended Sept. 30, 2012, and had a working capital deficit of $1.6 million as of Sept. 30, 2012. In addition we have refused to sell our iron ore concentrate to our sole customer because of the low price offered for our product. The price of iron ore concentrate is still in decline. These conditions raise a substantial doubt as to whether we can continue as a going concern." "We are in the process of upgrading our equipment. Once the upgrading project is completed, we will be able to resume production. Also, the shareholders of the Company have indicated that they will continue to fund the Company, though there is no written agreement in place and the Company currently owes $1.089 million to shareholders." A copy of the Form 10-Q is available at http://is.gd/i9seZs Based in Zhangjiakou, Hebei Province, China, Target Acquisitions I, Inc., is engaged in iron ore mining, processing and the production of iron ore concentrate in the People's Republic of China through its variable interest entity, China Jinxin. Currently, the Company's only product is iron ore concentrate. TEXAS INDUSTRIES: S&P Revises Outlook on 'B-' CCR to Stable ----------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Dallas- based Texas Industries Inc. to stable from negative. "At the same time we affirmed our ratings on company, including our 'B-' corporate credit rating," S&P said. "We affirmed our 'B-' rating on Texas Industries' $650 million senior notes due 2020. The '4' recovery rating indicates our expectation for average (30% to 50%) recovery in the event of default," S&P said. "The outlook revision and rating affirmation acknowledge Texas Industries' return to profitability in recent quarters, albeit at still weak levels, and our expectation that positive trends will continue over the next several quarters," said Standard & Poor's credit analyst James Fielding. "The outlook revision further reflects our view that the company will burn through less cash than we previously anticipated because of lower future capital expenditures and better working capital management and that its liquidity position will remain adequate over the next 12 to 24 months." "The rating on Texas Industries reflects our view of the cement, ready-mix concrete, and aggregates company's 'highly leveraged' financial risk profile and 'weak' business risk profile. Our highly leveraged financial risk assessment acknowledges risks associated with the company's large debt balance and its weak EBITDA, which is just beginning to recover from deep cyclical lows. Our weak business risk assessment reflects improving, but still low demand for the geographically concentrated company's commodity products." "The stable rating outlook reflects our baseline assumption that construction activity in Texas Industries' core markets will continue to improve modestly over the next year and that EBITDA will strengthen to fully cover $60 million to $65 million of annual interest expense by its fiscal year 2014," S&P said. "We are unlikely to upgrade our rating under our baseline scenario for the next 12 months, given our view that leverage is likely to remain elevated over that span, at 10x EBITDA or above. However, we would raise our ratings if operating conditions improved markedly such that EBITDA surpassed $140 million and leveraged dropped below 5x," S&P said. "We would lower our rating if Texas construction markets dipped into a second recession causing us to expect the company to incur EBITDA/interest coverage shortfalls in fiscal 2014. In this downside scenario Texas Industries could burn through its cash and draw down its revolving borrowing capacity below $75 million, which would cause us to view the company's liquidity to be less than adequate," S&P said. THE HALLWOOD GROUP: Incurs $1.1-Mil. Net Loss in Third Quarter -------------------------------------------------------------- The Hallwood Group Incorporated filed its quarterly report on Form 10-Q, reporting a net loss of $1.1 million for the three months ended Sept. 30, 2012, compared with net income of $350,000 for the same period last year. Textile products sales of $27.1 million decreased by $10.5 million, or 27.9%, in the 2012 third quarter, compared to $37.6 million in 2011. For the nine months ended Sept. 30, 2012, the Company had a net loss of $11.8 million on $100.2 million of revenues, compared with a net loss of $4.2 million on $101.1 million of revenues for the same period of 2011. The Company's balance sheet at Sept. 30, 2012, showed $81.6 million in total assets, $34.3 million in total liabilities, and stockholders' equity of $47.3 million. Impact of Litigation on the Company's Liquidity According to the regulatory filing, the Company and its subsidiaries are and have been involved in a number of litigation matters, and have spent significant amounts in professional fees in connection with the defense of its pending and resolved legal matters. On April 24, 2012, the United States District Court in the Adversary Proceeding (styled as Ray Balestri, Trustee of the Hallwood Energy I Creditors' Trust, as successor in interest to Hallwood Energy, L.P., Plaintiffs and FEI Shale L.P. and Hall Phoenix/Inwood Ltd., Plaintiffs in Intervention vs. The Hallwood Group Incorporated, Defendant; Adversary No. 09-03082-SGJ) issued a Judgment awarding damages against the Company totaling approximately $18,700,000 plus prejudgment and postjudgment interest and court costs and plaintiff's attorneys' fees as may be requested and awarded pursuant to a subsequent motion. The Company satisfied the Judgment, including prejudgment and postjudgment interest, in two payments; $3,774,000 on May 4, 2012, and $17,947,000 on May 9, 2012. At Sept. 30, 2012, the litigation reserve for the Hallwood Energy Matters is $2,079,000. The parties settled the amount of court costs for approximately $101,000, which was paid in August 2012. While the Company will be required to pay some additional amount of money to the plaintiffs as compensation for their attorney fees related to the breach of contract claim they prosecuted against the Company, the amounts and timing of that payment are currently unresolved and will be determined by the court. The plaintiffs have alleged that they are entitled to approximately $4,000,000 for attorney fees while the Company contends that they should only recover a small fraction of that amount. In addition, the Company is in the process of appealing to the Fifth Circuit Court of Appeals the portions of the Judgment awarding a combined $17,947,000 on the plaintiffs' tort claims. On Sept. 13, 2012, the Company filed its appellate brief in the Fifth Circuit. On Nov. 15, 2012, FEI, the only appellee, will file its response, and the Company will then file a reply brief, completing the briefing process. It is difficult to determine or even approximate when the Fifth Circuit will rule on the Company's appeal, but it will likely be several months, if not longer. In May 2012, in addition to its then current available cash, to obtain additional funds to satisfy the Judgment, the Company received an $8,000,000 dividend from Brookwood and the $10,000,000 HFL Loan. The outstanding balance on the HFL Loan was $9,000,000 at Sept. 30, 2012, after a principal repayment of $1,000,000 in May 2012. The HFL Loan is secured by a pledge of all of the stock of Brookwood, pursuant to the terms of the Intercreditor Agreement, and by the Company's interest in the anticipated refunds of federal income taxes, which are in excess of $5,000,000, that the Company expects to receive in 2012 and 2013. In August 2012, Brookwood's New Revolving Credit Facility was amended to, among other things, clarify the provisions to which cash dividends or advances to the Company may be made provided no event of default has occurred or would result from any such payment. Brookwood may pay to the Company (a) periodic payments for tax sharing obligations, (b) discretionary dividends in an aggregate amount not to exceed 50% of Borrowers' net income for the fiscal year with respect to which such dividends are made, and (c) other dividends or distributions in an aggregate amount not to exceed $15,000,000 (of which, as of Nov. 13, 2012, $8,000,000 was previously disbursed in May 2012). Any such payments or advances would also be contingent upon the approval of Brookwood's board of directors and Brookwood's ability to meet the requirements of the Delaware corporate laws for the payment of dividends and compliance with other applicable laws and requirements. "The aforementioned circumstances raise substantial doubt about the Company's ability to continue as a going concern." A copy of the Form 10-Q is available at http://is.gd/dS2OPy About The Hallwood Group Dallas, Texas-based The Hallwood Group Incorporated (NYSE MKT: HWG) operates as a holding company. The Company operates its principal business in the textile products industry through its wholly owned subsidiary, Brookwood Companies Incorporated. Brookwood is an integrated textile firm that develops and produces innovative fabrics and related products through specialized finishing, treating and coating processes. Prior to October 2009, the Company held an investment in Hallwood Energy, L.P. Hallwood Energy was a privately held independent oil and gas limited partnership and operated as an upstream energy company engaged in the acquisition, development, exploration, production, and sale of hydrocarbons, with a primary focus on natural gas assets. The Company accounted for the investment in Hallwood Energy using the equity method of accounting. Hallwood Energy filed for bankruptcy on March 1, 2009 (Bankr. N.D. Texas Case No. 09-31253). In connection with the confirmation of Hallwood Energy's bankruptcy in October 2009, the Company's ownership interest in Hallwood Energy was extinguished and the Company no longer accounts for the investment in Hallwood Energy using the equity method of accounting. * * * As reported in the TCR on April 10, 2012, Deloitte & Touche LLP, in Dallas, expressed substantial doubt about The Hallwood Group's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the award proposed by the U.S. Bankruptcy Court for the Northern District of Texas against the Company and the uncertainty related to the ongoing litigation raises substantial doubt about its ability to continue as a going concern. TRAINOR GLASS: Taps Cole Martin to Render Auditing Services ----------------------------------------------------------- Trainor Glass Company seeks authorization from the U.S. Bankruptcy Court for the Northern District of Illinois to employ Cole, Martin & Co., Ltd., to render certain auditing services related to the Debtor's 401(k) and profit sharing plan, nunc pro tunc Aug. 27, 2012. To prepare and file an IRS Form 5500 for the year ended Dec. 31, 2011, and for the year ended March 31, 2012, on Aug. 27, 2012, Thomas Trainor, as trustee of the Trainor 401(k)/Profit Sharing Plan, entered into agreements with Cole Martin for certain audit services relating to the Trainor 401(k)/Profit Sharing Plan for the year ended Dec. 31, 2011, and for the year ended March 31, 2012. Cole Martin has rendered the audit services required for the year ended Dec. 31, 2011. Cole Martin's fee for the services is $5,900. Cole Martin has not yet rendered the audit services for the year ended March 31, 2012. Cole Martin intends to charge for these services on an hourly basis. Cole Martin has advised the Debtor, however, that its fees will not exceed $4,950. Cole Martin has advised the Debtor that the hourly rates applicable to the principal persons who have and will render services are: William A. Martin, Partner $185 Donna Achs, Senior Auditor $125 The Debtor requests authorization to pay $5,900 to Cole Martin at this time for Cole Martin's services in connection with the audit of the plan year ended Dec. 31, 2011. The Debtor also requests authorization to pay Cole Martin, without further court order, for Cole Martin's services in connection with the audit of the plan year ended March 31, 2012, upon completion of services and receipt of an invoice from Cole Martin. All of these audit fees are included in the Debtor's most recent budget which was approved by First Midwest Bank and the Committee. William A. Martin, a partner of Cole Martin, attests to the Court that the firm is a "disinterested person' as that term is defined in Section 101(14) of the Bankruptcy Code. About Trainor Glass Trainor Glass Company, doing business as Trainor Modular Walls, Trainor Solar, and Trainor Florida, filed for Chapter 11 bankruptcy (Bankr. N.D. Ill. Case No. 12-09458) on March 9, 2012. Trainor was founded in 1953 by Robert J. Trainor Sr. to pursue a residential glass business in Chicago, Illinois. Trainor's business model was focused on quality fabrication, design, engineering, and installation of glass products and framing systems in virtually every architectural application, including (a) new construction, (b) green-building solutions, (c) building rehabilitation, (d) storefronts and entrances, (e) tenant interiors, and (f) custom-specialty work. The Hon. Carol A. Doyle oversees the Chapter 11 case. David A. Golin, Esq., Michael L. Gesas, Esq., and Kevin H. Morse, Esq., at Arnstein & Lehr LLP, serve as the Debtor's counsel. High Ridge Partners, Inc., serves as its financial consultant. The Debtor scheduled $14,276,745 in assets and $64,840,672 in liabilities. A three-member official committee of unsecured creditors has been appointed in the case. The committee retained Sugar Felsenthal Grais & Hammer LLP as counsel. TURBOSONIC TECHNOLOGIES: Had $116K Net Loss in Fiscal 1st Quarter ----------------------------------------------------------------- TurboSonic Technologies, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of US$116,465 on US$4.4 million of revenues for the three months ended Sept. 30, 2012, compared with a net loss of US$436,594 on US$5.9 million of revenues for the prior fiscal period. The Company's balance sheet at Sept. 30, 2012, showed US$5.3 million in total assets, US$3.3 million in total liabilities, and stockholders' equity of US$2.0 million. According to the regulatory filing, the Company continues to face market uncertainties due to a slow economic recovery and delays in the passage and implementation of regulations in the United States. "As a result of these uncertainties, we have incurred significant losses during the three months ended Sept. 30, 2012, and the three fiscal years ended June 30, 2012, which losses have reduced our cash and stockholders' equity. These conditions raise substantial doubt about our ability to continue as a going concern." A copy of the Form 10-Q is available at http://is.gd/oJlijs About TurboSonic Technologies Waterloo, Ontario-based TurboSonic Technologies, Inc., directly and through subsidiaries, designs and markets integrated air pollution control and liquid atomization technology, including industrial gas cooling/conditioning systems, to ameliorate or abate industrial environmental problems. * * * As reported in the TCR on Oct. 22, 2012, Deloitte & Touche LLP, in Kitchener, Canada, said TurboSonic's recurring losses from operations and accumulated deficit raise substantial doubt about its ability to continue as a going concern. ULURU INC: Incurs $851,700 Net Loss in Third Quarter ---------------------------------------------------- ULURU Inc. filed its quarterly report on Form 10-Q, reporting a net loss of $851,725 on $88,922 of revenues for the three months ended Sept. 30, 2012, compared with a net loss of $1.0 million on $73,652 of revenues for the same period last year. For the nine months ended Sept. 30, 2012, the Company had a net loss of $2.6 million on $205,138 of revenues, compared with a net loss of $3.2 million on $229,009 of revenues for the same period of 2011. The Company's balance sheet at Sept. 30, 2012, showed $7.8 million in total assets, $5.3 million in total liabilities, and stockholders' equity of $2.5 million. Lane Gorman Trubitt, PLLC, in Dallas, Texas, expressed substantial doubt about ULURU's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has suffered recurring losses from operations, negative cash flows from operating activities and is dependent upon raising additional funds from strategic transactions, sales of equity, and/or issuance of debt. "The Company's ability to consummate such transactions is uncertain." A copy of the Form 10-Q is available at http://is.gd/owb8x0 Addison, Texas-based ULURU Inc. is a diversified specialty pharmaceutical company committed to developing and commercializing a broad range of innovative wound care and muco-adhesive film products based on its patented Nanoflex(R) and OraDisc(TM) drug delivery technologies, with the goal of improving outcomes for patients, health care professionals, and health care payers. VECTOR GROUP: Moody's Affirms 'B2' CFR/PDR; Outlook Negative ------------------------------------------------------------ Moody's Investors Service affirmed the B2 Corporate Family Rating and Probability of Default rating of Vector Group Ltd. and revised the outlook to negative from stable. The change to a negative outlook reflects Moody's expectation that leverage will remain above 5.0 times over the next 12 to 18 months due to its recent issuance of $230 million in unrated subordinated convertible notes. Moody's also upgraded the rating of the company's $415 million in senior secured notes to Ba3 from B1 due to the higher proportion of unguaranteed, unsecured convertible debt in the company's capital structure. The following ratings of Vector have been affirmed: - Corporate Family Rating of B2; - Probability of Default Rating of B2; - Speculative Grade Liquidity Rating of SGL-2 The following ratings of Vector have been upgraded: - $415 million senior secured notes due 2015 at Ba3 (LGD2, 27%) from B1 (LGD3, 33%) The rating outlook is negative. Ratings Rationale Vector's negative outlook reflects its high proforma leverage and Moody's expectation that limited deleveraging will occur over the next 12 to 18 months. Although a portion of the proceeds of the company's recent convertible debt offering could be used to address upcoming maturities; no specific refinancing has been announced. Vector has further indicated that proceeds from the offering could support its existing tobacco business and to invest in real estate through its wholly-owned subsidiary, New Valley LLC. As a result, Moody's expects the company's financial risk profile will remain weak at a time when operating risks associated with its tobacco business are already elevated. Sales of the company's largest cigarette brand, Pyramid, are declining due to lower product volumes and weak pricing flexibility as competitive offerings from from the three major tobacco manufacturers have gained share. Despite growing competition, Vector's significant cash holdings ($217 million at September 30th plus proceeds from convertible offering) and highly profitable tobacco operations support its good liquidity profile. Despite the strong liquidity and cash flow, Vector maintains a dividend payout that is significantly in excess of its cash flow from operations and is reliant on its ability to monetize its real estate investments in order to support its financial policies. Absent a sizable asset disposition, Moody's expects free cash flow to remain negative over the next 12 to 18 months. The upgrade of the senior secured notes reflects increase in the loss cushion provided by the higher proportion of junior debt in Vector's capital structure following its $230 million unrated subordinated convertible notes offering. Vector's B2 Corporate Family Rating is constrained by its relatively small scale, high leverage, negative free cash flow after dividend payments as well as the ongoing threat of adverse tobacco litigation. The company's ratings also reflect its limited pricing flexibility in the highly regulated, competitive, secularly declining domestic cigarette business. Vector's ratings are supported by its sustainable Master Settlement Agreement ("MSA") cost advantage and strong profitability metrics. Vector's real estate investments are conservatively managed and provide an additional, albeit potentially volatile, source of earnings diversification and cash flow with controllable capital requirements. Any unexpected material increase in litigation risk could result in a ratings downgrade. In this regard, Moody's considers the impact on the company's debt service capabilities. Vector's ratings could also be downgraded if pricing flexibility trends, anti-tobacco legislation and growth prospects for the discount cigarette industry are adversely impacted. A significant sustained decline in credit metrics including EBITA margins below 20% or debt-to-EBITDA above 5.0 times could also result in a downgrade. To upgrade Vector's ratings, litigation risk would need to further diminish and the company's profitability and credit metrics would need to improve with no adverse impact on volume growth and/or market share. An upgrade would require EBITA margins to be sustained above 30% and debt-to-EBITDA to remain below 4.0 times. The principal methodology used in rating Vector Group Ltd. was the Global Tobacco Rating Methodology published in November 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Vector Group Ltd. is a holding company with subsidiaries engaged in domestic cigarettes manufacturing, real estate development and brokerage. Vector's revenues during the twelve months ended September 30, 2012 were approximately $580 million (net of excise taxes of $520 million). VERMILLION INC: Incurs $2.0-Mil. Net Loss in Third Quarter ---------------------------------------------------------- Vermillion, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $2.0 million on $319,000 of revenues for the three months ended Sept. 30, 2012, compared with a net loss of $4.7 million on $320,000 of revenues for the same period last year. For the nine months ended Sept. 30, 2012, the Company had a net loss of $5.8 million on $952,000 of revenues, compared with a net loss of $14.7 million on $1.1 million of revenues for the corresponding period in 2011. The Company recognized a gain on sale of instrument business of $50,000 and $1,830,000 during the three and nine months ended Sept. 30, 2012, respectively. On Feb. 9, 2012, the Company entered into a Settlement Agreement with Oppenheimer & Co., Inc., related to losses on the Company's short and long-term investments in previous years. Under the terms of the Settlement Agreement, the total settlement before legal fees and costs was $1,000,000; $535,000 was paid in March 2012 ($379,000 net received by the Company) and $465,000 ($331,000 net received by the Company) was paid in August 2012. The Company recorded the net amounts when realized as a component of non-operating income. The Company's balance sheet at 30, 2012, showed $16.9 million in total assets, $11.5 million in total liabilities, and stockholders' equity of $5.4 million. The Company said in the regulatory filing, "We expect cash for OVA1 from Quest Diagnostics to be our only material, recurring source of cash in 2012. In order to continue our operations as currently planned through 2013 and beyond, we will need to raise additional capital. Given the above conditions, there is substantial doubt about the Company's ability to continue as a going concern." As reported in the TCR on April 2, 2012, PricewaterhouseCoopers LLP, in Austin, Texas, expressed substantial doubt about Vermillion's ability to continue as a going concern. The independent auditors noted that the Company has incurred recurring losses and negative cash flows from operations and has debt outstanding [under the secured line of credit from Quest Diagnostics] due and payable in October 2012. "On Oct. 12, 2012, we paid Quest Diagnostics approximately $5,894,000 of principal and $7,000 of accrued interest which we believe represents payment in full of all outstanding principal and interest under the secured line of credit. We continue to show the amount of the liability as $7,000,000 as of Sept. 30, 2012, given that Quest Diagnostics has not affirmatively acknowledged that the $1,000,000 milestone was met." A copy of the Form 10-Q is available at http://is.gd/1BCL7P Austin, Texas-based Vermillion, Inc. (NASDAQ: VRML) -- http://www.vermillion.com/-- is dedicated to the discovery, development and commercialization of novel high-value diagnostic tests that help physicians diagnose, treat and improve outcomes for patients. Vermillion, along with its prestigious scientific collaborators, has diagnostic programs in oncology, vascular medicine and women's health. The Company's lead product, OVA1, was cleared by the FDA on Sept. 11, 2009, and is currently being offered through Quest Diagnostics. OVA1 addresses a clear, unmet clinical need, namely the pre-surgical identification of women who are at high risk of having a malignant ovarian tumor. VILLAGIO PARTNERS: Court OKs Jimbo Homeyer as Real Estate Agent --------------------------------------------------------------- The Hon. Marvin Isgur of the U.S. Bankruptcy Court for the Southern District of Texas has granted Villagio Partners Ltd permission to employ Jimbo Homeyer at Keller Williams as its real estate agent to assist in the marketing, negotiation and leasing of commercial real property located at 22756, 22758, 22760, 22762 and 22764 Westheimer Parkway, Katy, Texas 77450. The Debtor attested to the Court that the Agent has no connections with Marcel or Compass's creditors, any other party in interest, their respective attorneys and accountants, the U.S. Trustee, or any person employed in the Office of the U.S. Trustee. The Debtor also sought permission to assume a Commercial Real Estate Listing Agreement Right to Lease in connection with the Property. About Villagio Partners et al. Villagio Partners Ltd., along with six affiliates, filed separate Chapter 11 petitions (Bankr. S.D. Tex. Case Nos. 12-35928, 12-35930 to 12-35932, 12-35934, 12-35936 and 12-35937) in Houston on Aug. 6, 2012. The Debtors are engaged primarily in the business of owning and operating commercial retail shopping centers and offices. The Debtors' commercial real properties are located in and around the Houston Metropolitan area, including Katy, Humble and The Woodlands. The petitions were signed by Vernon M. Veldekens, CEO for The Marcel Group. The Marcel Group -- http://www.themarcelgroup.com/-- is an integrated commercial real estate firm specializing in development, construction, design, engineering, master planning, leasing and property management. Village Partners, a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101(51B), estimated assets and debts of at least $10 million. It says that a real property in Katy, Texas, is worth $24.6 million. The affiliated debtors are Compass Care Holdings Ltd., Cinco Office VWM, Greens Imperial Center, Inc., Marcel Construction & Maintenance, Ltd., Tidwell Properties, Inc., and Research-New Trails Partners, Ltd. Bankruptcy Judge Marvin Isgur presides over the cases. Simon Richard Mayer, Esq., and Wayne Kitchens, Esq., at Hughes Watters Askanase, LLP, in Houston, represent the Debtors as counsel. VILLAGIO PARTNERS: Marcel, Compass Can Hire Realty Partners ----------------------------------------------------------- The Hon. Marvin Isgur of the U.S. Bankruptcy Court for the Southern District of Texas has granted Debtors Marcel Construction and Maintenance, Ltd., and Compass Care Holdings, Ltd., permission to employ Janet Maass with Century 21 Realty Partners as real estate agent to act as its real estate agent and assist in the marketing, negotiation and leasing of commercial real properties. As reported by the Troubled Company Reporter on Nov. 12, 2012, Marcel and Compass attested to the Court that the Agent has no connections with Marcel or Compass's creditors, any other party in interest, their respective attorneys and accountants, the United States Trustee, or any person employed in the Office of the United States Trustee. The Debtor also sought entry of an order approving the assumption of: (i) the Commercial Real Estate Listing Agreement Right to Lease at Marcel's commercial real property located at 19784 and 19786 Highway 105 West, Montgomery, Texas 77356; and (ii) the Commercial Real Estate Listing Agreement Right to Lease at Compass' commercial real property located at 18315, 18321 and 18323 W. Lake Houston Parkway, Humble, Texas 77346. About Villagio Partners et al. Villagio Partners Ltd., along with six affiliates, filed separate Chapter 11 petitions (Bankr. S.D. Tex. Case Nos. 12-35928, 12-35930 to 12-35932, 12-35934, 12-35936 and 12-35937) in Houston on Aug. 6, 2012. The Debtors are engaged primarily in the business of owning and operating commercial retail shopping centers and offices. The Debtors' commercial real properties are located in and around the Houston Metropolitan area, including Katy, Humble and The Woodlands. The petitions were signed by Vernon M. Veldekens, CEO for The Marcel Group. The Marcel Group -- http://www.themarcelgroup.com/-- is an integrated commercial real estate firm specializing in development, construction, design, engineering, master planning, leasing and property management. Village Partners, a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101(51B), estimated assets and debts of at least $10 million. It says that a real property in Katy, Texas, is worth $24.6 million. The affiliated debtors are Compass Care Holdings Ltd., Cinco Office VWM, Greens Imperial Center, Inc., Marcel Construction & Maintenance, Ltd., Tidwell Properties, Inc., and Research-New Trails Partners, Ltd. Bankruptcy Judge Marvin Isgur presides over the cases. Simon Richard Mayer, Esq., and Wayne Kitchens, Esq., at Hughes Watters Askanase, LLP, in Houston, represent the Debtors as counsel. VILLAGIO PARTNERS: Compass Care Taps Colliers Appelt as Broker -------------------------------------------------------------- Compass Care Holdings, Ltd., asks for authorization from the Hon. Marvin Isgur of the U.S. Bankruptcy Court for the Southern District of Texas to employ Colliers Appelt Womack, Inc., dba Colliers International as real estate broker and to assist in the marketing, negotiation and sale of certain real property. Compass Care owns improved and unimproved real property located at 18315, 18321 and 18323 W. Lake Houston Parkway, Humble, Texas 77346. Compass Care wishes to employ the Broker as real estate agent for the marketing, negotiation and sale of an unimproved portion of the Property on substantially the same terms of the Listing Agreement, a copy of which is available for free at: http://is.gd/da05C1 Under the Listing Agreement, Compass grants the Broker the exclusive right to sell the Property for a period commencing on Jan. 20, 2012, and ending on Dec. 31, 2012, at a price of $3.3 million, or at any other price acceptable to Compass. Compass will pay the Broker sales commission that will be 6% of the gross sales price. A 5% fee will be paid on any joint venture arrangement. The fee will be predicted on the gross equity raised, excluding the land contributed to the project at cost of $6.00/S.F. The leasing commission will be payable on execution of a lease by Compass and a tenant, in accordance with these rates: (i) in the event that Compass' agent is the only agent involved in the transaction, the leasing commission will be 4% of the total base rental for the first 120 months in which rent is to be paid, plus 2% of the total base rental for the remainder of the term; (ii) in the event there are additional agents other than Compass' agent involved in the transaction, the leasing commission will be 6% of the total base rental for the first 120 months of the term, plus 4% of the total base rental for the remainder of the term. About Villagio Partners et al. Villagio Partners Ltd., along with six affiliates, filed separate Chapter 11 petitions (Bankr. S.D. Tex. Case Nos. 12-35928, 12-35930 to 12-35932, 12-35934, 12-35936 and 12-35937) in Houston on Aug. 6, 2012. The Debtors are engaged primarily in the business of owning and operating commercial retail shopping centers and offices. The Debtors' commercial real properties are located in and around the Houston Metropolitan area, including Katy, Humble and The Woodlands. The petitions were signed by Vernon M. Veldekens, CEO for The Marcel Group. The Marcel Group -- http://www.themarcelgroup.com/-- is an integrated commercial real estate firm specializing in development, construction, design, engineering, master planning, leasing and property management. Village Partners, a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101(51B), estimated assets and debts of at least $10 million. It says that a real property in Katy, Texas, is worth $24.6 million. The affiliated debtors are Compass Care Holdings Ltd., Cinco Office VWM, Greens Imperial Center, Inc., Marcel Construction & Maintenance, Ltd., Tidwell Properties, Inc., and Research-New Trails Partners, Ltd. Bankruptcy Judge Marvin Isgur presides over the cases. Simon Richard Mayer, Esq., and Wayne Kitchens, Esq., at Hughes Watters Askanase, LLP, in Houston, represent the Debtors as counsel. VOICESERVE INC: June 30 Form 10-Q Restated to Correct Errors ------------------------------------------------------------ VoiceServe, Inc., filed on Nov. 14, 2012, Amendment No. 1 on Form 10-Q/A for the quarterly period ended June 30, 2012, to correct an error in the accounting for common shares issued for services during April 2012. The Company incorrectly applied a 50% discount to the market price of the Company's common stock when determining the fair value of the common shares. In addition, the Company discovered an aggregate of 1,800,000 common shares granted for services during April 2012 that were not accounted for. This resulted in an adjustment to the previously reported amounts in the consolidated financial statements as of June 30, 2012, and for the three months then ended as restated in this Form 10-Q/A. Based on the restated statement of operations for the three months ended June 30, 2012, the Company incurred a net loss of US$818,285 on US$1.4 million of revenues, compared with a net loss of US$1.6 million on US$1.2 million of revenues for the prior fiscal period. The Company's balance sheet at June 30, 2012, showed US$2.3 million in total assets, US$1.2 million in total current liabilities, and stockholders' equity of US$1.1 million. As of June 30, 2012, the Company had an accumulated deficit of US$6.9 million. A copy of the Form 10-Q/A is available at http://is.gd/rQ753T About VoiceServe Inc. Headquartered in Middlesex, England, VoiceServe, Inc., has had no operations; VoiceServe is a holding company for its wholly owned subsidiaries VoiceServe Limited, a corporation incorporated in the United Kingdom, and VoipSwitch Inc., a corporation incorporated in the Republic of Seychelles. In 2010, Voiceserve formed two additional subsidiaries: VoipSwitch Inc., a Delaware corporation, and VoipSwitch AG, a Swiss corporation. VoipSwitch Inc. was formed to provide a future North American presence and has had no significant operations to date. VoipSwitch AG was formed to coordinate sales and billing activities from Switzerland and commenced operations in the three months ended Dec. 31, 2010. Limited is engaged in the telephone communications business from its London, United Kingdom office. Limited offers its software to large enterprises and carriers. The software allows communication through the Company's exchange via the internet. Since January 15, 2008, Limited has also licensed VoipSwitch software systems. * * * As reported in the TCR on July 19, 2012, Michael T. Studer CPA P.C., in Freeport, New York, expressed substantial doubt about VoiceServe's ability to continue as a going concern, following the Company's results for the year ended March 31, 2012. Mr. Studer noted that as of March 31, 2012, the Company had negative working capital of US$200,167. Further, since inception, the Company has incurred losses of US$5,653,427. VOICESERVE INC: Incurs $1.1-Mil. Net Loss in Q2 Ended Sept. 30 -------------------------------------------------------------- VoiceServe, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of US$1.1 million on US$1.2 million of revenues for the three months ended Sept. 30, 2012, compared with a net loss of US$36,167 on US$1.0 million of revenues for the same period of the prior fiscal year. For the six months ended Sept. 30, 2012, the Company incurred a net loss of US$2.0 million on US$2.6 million of revenues, compared with a net loss of US$1.6 million on US$2.2 million of revenues for the six months ended Sept. 30, 2011. The Company's balance sheet at Sept. 30, 2012, showed US$2.3 million in total assets, US$2.2 million in total current liabilities, and stockholders' equity of US$105,409. The Company has a working capital deficit of US$1.7 million and a accumulated deficit of US$8.0 million as of Sept. 30, 2012. A copy of the Form 10-Q is available at http://is.gd/0Knfws About VoiceServe Inc. Headquartered in Middlesex, England, VoiceServe, Inc., has had no operations; VoiceServe is a holding company for its wholly owned subsidiaries VoiceServe Limited, a corporation incorporated in the United Kingdom, and VoipSwitch Inc., a corporation incorporated in the Republic of Seychelles. In 2010, Voiceserve formed two additional subsidiaries: VoipSwitch Inc., a Delaware corporation, and VoipSwitch AG, a Swiss corporation. VoipSwitch Inc. was formed to provide a future North American presence and has had no significant operations to date. VoipSwitch AG was formed to coordinate sales and billing activities from Switzerland and commenced operations in the three months ended Dec. 31, 2010. Limited is engaged in the telephone communications business from its London, United Kingdom office. Limited offers its software to large enterprises and carriers. The software allows communication through the Company's exchange via the internet. Since January 15, 2008, Limited has also licensed VoipSwitch software systems. * * * As reported in the TCR on July 19, 2012, Michael T. Studer CPA P.C., in Freeport, New York, expressed substantial doubt about VoiceServe's ability to continue as a going concern, following the Company's results for the year ended March 31, 2012. Mr. Studer noted that as of March 31, 2012, the Company had negative working capital of US$200,167. Further, since inception, the Company has incurred losses of US$5,653,427. WOONSOCKET, RI: Fitch Affirms 'B' Rating on $118-Mil. GO Bonds -------------------------------------------------------------- Fitch Ratings has taken the following action on City of Woonsocket RI's (the city) outstanding general obligation (GO) bonds: -- Approximately $118 million GO bonds affirmed at 'B' The Rating Outlook remains Negative. Security The bonds are general obligations of the city and are backed by its full faith and credit and unlimited taxing power. Key Rating Drivers CONTINUED SCHOOL FUND DEFICIT OPERATIONS, LIQUIDITY CONCERNS: The city remains financially stressed due to ongoing school fund deficit operations and liquidity issues. For the near-term, liquidity issues have been addressed through an advance of state aid that was scheduled for the final three months of fiscal year 2013, necessitating action to address cash needs in those months. NEGATIVE OUTLOOK: The Negative Outlook reflects the likelihood of continued long-term fiscal pressure as the city attempts to bring its finances back into balance. INTERNAL CONTROL DEFICIENCIES: Deficiencies in internal fiscal controls of the school department, an autonomous division of the city, led to a sizable fiscal year 2011 school fund deficit, contrary to prior reported estimates of a positive ending balance. Similarly, the significant projected deficit for fiscal 2012 surfaced precipitously and well into the fiscal year. LIMITED REVENUE GENERATING FLEXIBILITY: Revenue generation is reliant primarily on property taxes, currently at a high rate. The city council continues to show willingness to tax at the maximum level and attempted to implement a fiscal 2012 supplemental tax levy increase, which was not approved by the state legislature. WEAK EMPLOYMENT AND DEMOGRAPHICS: City demographics are weak with high unemployment levels, low income levels, and declining population. HIGH DEBT RATIOS AND UNDER-FUNDED PENSIONS: Debt levels are above average and the city administered pension plan is funded at a low 57%, as of July 2012. Combined fiscal year annual pension, OPEB, and debt service costs are high at about 26% of general fund and school fund expenditures. WHAT COULD TRIGGER A RATING ACTION LIQUIDITY CONCERNS: Inability to adequately address cash flow issues could further weaken the city's credit quality. INADEQUATE RESPONSE TO DEFICIT: Failure to address accumulated and ongoing operating deficits adequately and in a timely manner may lead to a rating downgrade. CONTINUED INTERNAL CONTROL PROBLEMS: Continued lack of solid school department fiscal controls and lack of meaningful change in financial management could also have a negative impact on the rating. CREDIT PROFILE: STATE AID ADVANCE ADDRESSES NEAR-TERM SCHOOL LIQUIDITY CONCERNS Through May of fiscal year 2012, school cash flow needs were met by prioritizing payments, reliance on expedited state aid payments, and city general fund assistance. Over $6 million in vendor invoices remained outstanding and the city was on track to run out of cash resources by early June. Although the city council had approved a supplemental tax levy to address school cash flow needs, it did not receive the state legislative approval necessary for its implementation. At the end of May, the city council voted to request state Budget Commission oversight of city and school department finances. The state approved the request, and the Budget Commission used its authority to advance $12 million in state aid to the city, originally scheduled for April through June of fiscal year 2013. Establishment of Budget Commission oversight is a positive development that may provide the city with greater and more effective fiscal solutions. Earlier this month, voters approved a ballot measure that aligns school department operations closer to those of the city. The measure gives the mayor authority to appoint school committee members, with the consent of the city council, rather than having them elected. It also grants the city authority over school purchasing for supplies, materials and services. The state aid advance addressed the city's immediate cash flow needs, including the backlog of outstanding vendor payments. However, it left the city with the need to adjust its finances to allow for the fiscal year end's lack of state aid. City cash flows currently indicate deficits starting in March 2013 that grow to $6.6 million by fiscal year-end. To address cash flow issues, the city is considering imposing a supplemental tax levy and issuing tax anticipation notes backed by these proceeds. Fitch views this strategy with concern given the state legislature's decision not to approve a supplemental levy in 2012. However, management has indicated that the smaller increase considered this year, (about 6% vs. 13% last year) and the city's pursuit of union concessions in addition to the tax increase, may improve the chances of the tax proposal being approved by the state legislature. ONGOING SIGNIFICANT CUMULATIVE BUDGET DEFICIT Current estimates indicate a fiscal year 2012 cumulative school fund budget deficit of about $10 million, with the total cumulative deficit (offset by a fiscal year 2012 positive general fund balance) of about $8 million. The deficit could grow by at least another $5 million in fiscal year 2013, absent cost containment and/or revenue generating measures. To address the deficit, the city is looking to cut expenditures, including lowering health and pension costs and is currently involved in negotiations with labor unions. Estimated multi-year health care savings total about $3.2 million, with $1.5 million estimated for fiscal year 2013. The city is also seeking cost reductions through consolidation of departmental operations. In addition, the city is considering a supplemental tax levy that would generate $2 to $3 million. The city is hoping that measures in fiscal year 2013 will avoid the increase to the cumulative deficit, although the existing deficit will be addressed over the next three to five years. FINANCIAL OPERATIONS PLAGUED BY SCHOOL FUND DEFICITS Following significant cuts in state aid and a weak economy, Woonsocket has been hurt over the last three years by overspending by school department officials. It appeared that the city was on track towards financial stability when it issued $11.5 million in deficit financing bonds in March of 2011. The city was projecting a small surplus in its general fund and school officials were projecting balanced operations for fiscal year 2011. While the general fund ended fiscal year 2011 positively with an unrestricted fund balance (the sum of the unassigned, assigned, and committed fund balances under GASB 54) of $2.4 million or about 3.1% of general fund spending, the unrestricted school fund balance was a negative $3 million (4.6% of school fund spending. The deficit was related largely to personnel spending without corresponding resources to cover the expenditures, according to city management. In December 2011, city officials reported that revenues were not going to be sufficient to meet the school fund's fiscal 2012 budget. An accurate estimate was not available at the time due to poor internal reporting practices. City and school officials worked to compile accurate current year cash flow and expenditure information for the school fund and in March 2012 presented budget figures indicating an estimated $7.3 million school fund deficit for the fiscal year 2012. LONGER-TERM FINANCIAL CHALLENGES The city faces a significant structural budget imbalance and will face significant challenges in bringing its spending in line with revenues. Fitch remains concerned about the ability of the city and school department to implement changes that will meaningfully improve financial stability given that prior efforts have not always yielded intended results. However, Budget Commission oversight and recent closer integration of city and school operations are positive developments that may lead to more effective fiscal management. The city's revenue raising flexibility is limited due to statewide annual limits on property tax levies. The city was able to exceed the statewide property tax levy cap limit in fiscal year 2011 with approval by 4/5ths of city council to make up for cuts in state aid revenues. To offset declines in city revenues in recent years, the city has been cutting expenses in all areas, including reduced payroll costs through attrition, furlough days, reduced salaries, and unpaid vacation days. In addition, the city has worked its unions to reduce labor costs. WEAK SOCIOECONOMIC INDICATORS Woonsocket, located 15 miles outside of Providence, has a 2011 population of 41,188 and a tax base of about $1.8 billion. The city benefits from the presence of CVS Caremark Corporation, which maintains its headquarters in the city and is the city's largest employer with about 5,780 workers. Median household income of $38,625 and per capita money income of $20,242 are below average at 70% and 71% of state averages, respectively. The city's unemployment rate continues to be elevated at 12.2% for August 2012, as compared to 10.6% for the state and 8.2% for the nation. Between 2000 and 2011, the city's population declined by about 5%, while the state's increased by less than 1% and the nation's grew by about 11%. HIGH DEBT RATIOS AND UNDER-FUNDED PENSIONS Overall debt levels are high at $3,265 per capita and 7.6% of market value. These levels are net of state debt service reimbursements on the city's public school revenue bonds issued by the Rhode Island Health and Education Building Corporation and include the city's 2002 GO pension bonds. The city administered pension plan is funded at a low 57%, assuming a 7.5% rate of return, with an unfunded liability of $43 million at July 1, 2012. This represents a decline from the 2011 funded level of about 61%. The 2012 funded ratio declines even further to 54% using a Fitch-adjusted 7% rate of return. The city has been funding only a fraction of the actuarially required contribution (ARC) for the city administered pension plan. Funding in fiscal 2013 was a weak 28% of the ARC but an improvement over the less than 1% funded in fiscal year 2011. The city's and school department's OPEB liabilities as of July 1, 2011 were equal to a high $127 million and $47 million, respectively; both amounts include assumptions of a 4% investment rate of return. Total pension, OPEB, and debt service payments as a percentage of fiscal 2011 spending were high at about 42% of general fund spending or about 26% of general and school fund spending. ZHONE TECHNOLOGIES: Incurs $4.2-Mil. Net Loss in Third Quarter -------------------------------------------------------------- Zhone Technologies, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $4.2 million on $29.2 million of net revenue for the three months ended Sept. 30, 2012, compared with a net loss of $2.7 million on $30.2 million of net revenue for the same period last year. For the nine months ended Sept. 30, 2012, the Company had a net loss of $9.7 million on $87.1 million of net revenue, compared with a net loss of $7.1 million on $91.1 million of net revenue for the same period of 2011. The Company's balance sheet at Sept. 30, 2012, showed $65.2 million in total assets, $34.0 million in total liabilities, and stockholders' equity of $31.2 million. "The Company has continued to incur losses in 2011 and the nine months ended Sept. 30, 2012." "Since inception, we have incurred significant operating losses and had an accumulated deficit of $1,037.6 million as of June 30, 2012, and we expect that our operating losses may continue. If we are unable to access or raise the capital needed to meet liquidity needs and finance capital expenditures and working capital, or if the economic, market and geopolitical conditions in the United States and the rest of the world do not continue to improve or deteriorate, we may experience material adverse impacts on our business, operating results and financial condition." A copy of the Form 10-Q is available at http://is.gd/Jk089D Zhone Technologies, Inc., designs, develops and manufactures communications network equipment for telecommunications, wireless and cable operators worldwide. The Company's products allow network service providers to deliver video and interactive entertainment services in addition to their existing voice and data service offerings. The Company was incorporated under the laws of the state of Delaware in June 1999. The Company began operations in September 1999 and is headquartered in Oakland, California. ZOOM TELEPHONICS: Incurs $155,000 Net Loss in Third Quarter ----------------------------------------------------------- Zoom Telephonics, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $154,569 on $3.4 million of sales for the three months ended Sept. 30, 2012, compared with a net loss of $264,758 on $3.0 million of sales for the comparable period last year. For the nine months ended Sept. 30, 2012, the Company had a net loss of $479,697 on $11.2 million of sales, compared with a net loss of $875,429 on $9.0 million of sales for the same period of 2011. The Company's balance sheet at Sept. 30, 2012, showed $5.5 million in total assets, $2.3 million in total current liabilities, and stockholders' equity of $3.2 million. According to the regulatory filing, the Company has had recurring net losses and continues to experience negative cash flows from operations. "To conserve cash and manage liquidity, the Company has implemented cost cutting initiatives. However, management believes that the Company may not have sufficient resources to fund its normal operations over the next 12 months unless gross profit improves significantly, the Company increases its line of credit, or the Company raises capital." As reported in the TCR on April 9, 2012, Marcum LLP, in Boston, Massachusetts, expressed substantial doubt about Zoom Telephonics' ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has had recurring net losses and continues to experience negative cash flows from operations. A copy of the Form 10-Q is available at http://is.gd/T24di9 Located in Boston, Massachusetts, Zoom Telephonics, Inc., designs, produces, markets, and supports modems and other communication products under the Zoom, Hayes(R), and Global Village(R) brands. * BOOK REVIEW: Ralph H. Kilmann's Beyond the Quick Fix ------------------------------------------------------ Author: Ralph H. Kilmann Publisher: Beard Books Hardcover: 320 pages Listprice: $34.95 Review by Henry Berry Every few years, a new approach is offered for unleashing the full potential of organized efforts. These are the quick fixes to which the title of this book refers. The jargon of the quick fix is familiar to any businessperson: decentralization, human resources, restructuring, mission statement, corporate strategy, corporate culture, and so on. These terms are all limited in scope or objective, and some are even irrelevant or misconceived with regard to the overall well-being and purpose of a corporation. With his extensive experience as a corporate consultant, author of numerous articles, and professor in business studies, Kilmann recognizes that each new idea for optimum performance and results is germane to some area of a corporation. However, he also recognizes that each new idea inevitably falls short in bringing positive change -- that is, a change that is spread throughout the corporation and is lasting. At best, when a corporation relies on an alluring, and sometimes little more than fashionable, idea, it is a wasteful distraction. At worst, it can skew a corporate organization and its operations, thereby allowing the corporation's true problems or weaknesses to grow until they become ruinous. As the author puts it, "Essentially, it is not the single approach of culture, strategy, or restructuring that is inherently ineffective. Rather, each is ineffective only if it is applied by itself -- as a "quick fix"." Kilmann tells corporate leaders how to break the cycle of embracing a quick fix, discarding it after it proves ineffective, and then turning to a newer and ostensibly better quick fix that soon proves to be equally ineffective. For a corporation to break this self-defeating cycle, the author offers a five-track program. The five tracks, or elements, of this program are corporate culture, management skills, team-building, strategy- structure, and reward system. These elements are interrelated. The virtue of Kilmann's multidimensional five-track program is that it addresses a corporation in its entirety, not simply parts of it. Kilmann's five tracks offer structural and operational aspects of a corporation that executives and managers will find familiar in their day-to-day leadership and strategic thinking. Thus, the author does not introduce any unfamiliar or radical perspectives or ideas, but rather advises readers on how to get all parts of a corporation involved in productive change by integrating the five tracks into "a carefully designed sequence of action: one by one, each track sets the stage for the next track." Kilmann does more, though, than bring all significant features of a modern corporation together in a five-track program and demonstrate the interrelation of its elements. His singularly pertinent and useful contribution is providing a sequence of steps to be implemented with respect to each track so that a corporation progresses toward its goals in an integrated way. Beyond the Quick Fix is a manual for implementing and evaluating the progress of a five-track program for corporate success. The book should be read by any corporate leader desiring to bring change to his or her organization. Ralph H. Kilmann has been connected with the University of Pittsburgh for 30 years. For a time, he was its George H. Love Professor of Organization and Management at its Katz Graduate School of Business. Additionally, he is president of a firm specializing in quantum transformations. ********* 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, Carmel Paderog, Meriam Fernandez, 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 ***