/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/130128.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, January 28, 2013, Vol. 17, No. 27 Headlines 22ND CENTURY: Sabby Healthcare Discloses 9.9% Equity Stake 250 AZ: Case Summary & 20 Largest Unsecured Creditors ABB/CON-CISE: Moody's Affirms 'B2' CFR; Rates Facilities 'B2' ACCREDITED HOME: REIT Shareholders OK Liquidation Plan AHERN RENTALS: District Court Won't Restore Plan Exclusivity AIRTRONIC USA: Global Digital Gets Bridge Loan for Planned Merger AIRVANA NETWORK: S&P Withdraws 'CCC-' Corporate Credit Rating AMERICAN AIRLINES: To Sell $750MM of EETCs at Low Rates AMERICAN AIRLINES: Court OKs Aircraft Purchase Agreements AMERICAN AIRLINES: Trans World Pilots Appeal Contract Approval AMERICAN AIRLINES: Agrees with U.S. Bank on Suit Consolidation AMERICAN INT'L GROUP: Asks Ex-CEO to Inform Ct. If He Will Appeal AMERICAN REALTY: Hearing on Plan Exclusivity on Feb. 13 AMERICAN SUZUKI: Can Increase DIP Financing to $100 Million AMERICAN SUZUKI: Files Schedules of Assets and Liabilities APPLIED MINERALS: Receives $5.5 Million from Securities Sale ARCAPITA BANK: Wants 7th Extension of Exclusivity Until Feb. 28 ARCAPITA BANK: Tide Reiterates Request to Lift Stay ARCHDIOCESE OF MILWAUKEE: To Release Priest's Info to Police ARCHDIOCESE OF MILWAUKEE: No Statute of Limitations, Says Claimant ARCHDIOCESE OF MILWAUKEE: Church Bleeding Cash ATARI INC: Gets New DIP Lender as Judge Blasts Prior Deal ATP OIL: Sale Procedures' Approval Sought AVCORP INDUSTRIES: Ceases Bombardier Litigation in Quebec Court AVCORP INDUSTRIES: Ceases Litigation with Bombardier in Quebec BAKERS FOOTWEAR: Robert J. Blackwell Named Chapter 7 Trustee BAKERS FOOTWEAR: Great American Group to Handle Liquidation BEALL CORP: Wabash National Agrees to Acquire Certain Assets BEALL CORP: Wash. Revenue Dept. Loses Case Dismissal Bid BIG PAPA'S: Case Summary & 20 Largest Unsecured Creditors BIOLITEC INC: Case Summary & 20 Largest Unsecured Creditors BIOPURE CORP: Massachusetts Agency Loses 1st Cir. BAP Appeal BLUEGREEN CORP: Signs Marketing Alliance With Choice Hotels BROOKE CORP: Kansas Court Rules in Unicredit v. Eastman CAPE FEAR BANK: FDIC Fails to Dismiss Trust's Counterclaims CCC ATLANTIC: Wants Court's Nod to Pay Critical Vendors CE GENERATION: S&P Lowers Rating on Senior Secured Notes to 'BB' CENTENNIAL BANK: Western Alliance Signs Deal to Buy Bank CHARLIE MCGLAMRY: Exclusive Plan Filing Period Extended to March 5 CHINA ORGANIC: Files Amended Annual Report for 2010 CIRCLE ENTERTAINMENT: "Huff" Lawsuit Settlement Becomes Final COEUR D'ALENE: Moody's Assigns 'B2' CFR; Rates $200MM Notes 'B3' COEUR D'ALENE: S&P Assigns 'BB-' ICR to Proposed $200MM Notes CREDITRON FINANCIAL: Tues. Hearing on Bid to Convert Owners' Case DEEP PHOTONICS: nLight Photonics Seek Dismissal of Chapter 11 Case DEWEY & LEBOEUF: Judge Skeptical of Push to Toss Layoff Suit DIAGNOSTIC VENTURES: Ex-CEO Ducks Securities Suit Over Bankruptcy DEWEY & LEBOEUF: EY LLP to Provide Additional Services DEX ONE: To Discuss Proposed Merger Plans with Senior Lenders DISCOVERY TOURS: Case Summary & 20 Largest Unsecured Creditors DNL INDUSTRIES: Voluntary Chapter 11 Case Summary DO-JARR INC.: Case Summary & 3 Largest Unsecured Creditors DOUGLAS F. VAUGHAN: Wollen Mortgages Not Preferential DREIER LLP: Trustee Demands Ex-IP Head, Partners Cough Up Funds EASTMAN KODAK: Receives Approval for $844 Million Loan EDISON MISSION: Debtor and Creditors May Investigate Parent EDUCATION HOLDINGS: Prepack Plan Set for March 7 Confirmation ELECTRICAL COMPONENTS: Moody's Affirms 'B2' CFR; Outlook Stable ENERGY FUTURE: EFIH Revises 2012 Income Estimates to $321 Million EXECUTIVE CENTER: Seeking Dismissal of Chapter 11 Case FAIRPOINT COMMUNICATIONS: Maine High Court Affirms PUC Ruling FIRST HORIZON: Moody's Rates Non-Cumulative Preferred Stock 'Ba2' FLAT OUT CRAZY: Restaurant Chain Files for Bankruptcy FRANK PARSONS: Response Deadline in Clawback Suits Extended FRANK PARSONS: Chesapeake Mission Response Deadline Extended FREDDIE MAC: GE Settles FHFA Suit over Mortgage Bonds GALLANT ACQUISITIONS: Court Dismisses Chapter 11 Case GLACIAS LLC: Case Summary & 3 Largest Unsecured Creditors HAWKER BEECHCRAFT: Key Creditors Approve Reorganization Plan HAWKER BEECHCRAFT: Thurs. Hearing on Plan, Pensions & Retiree Deal HAWKER BEECHCRAFT: Asks for Approval of JPMorgan Exit Financing HERON LAKE: Extends AgStar Forbearance Agreement Until Feb. 28 HMC/CAH CONSOLIDATED: Emerges From Chapter 11 Bankruptcy HOSTESS BRANDS: Bows to Some Union Objections on Claim Process HOSTESS BRANDS: Creditors Object to Break-Up Fee in Flowers Deal HOWREY LLP: $159MM Antitrust Deal Bodes Well for Creditors HUNTINGTON INGALLS: Fitch Affirms Issuer Default Rating at 'BB' ICON HEALTH: S&P Lowers Rating on Senior Secured Notes to 'B-' IMMUCOR INC: S&P Affirms 'B+' Corporate Credit Rating JACKSONVILLE BANCORP: CapGen Discloses 45.6% Equity Stake JETSTAR PARTNERS: Facing Chapter 7 Liquidation JOHN TIMOTHY EAGAN: NC Developer Wins Confirmation of Exit Plan KB HOME: S&P Revises Outlook to Stable; Affirms 'B' CCR LAKELAND DEVELOPMENT: Cour Ruling Says Loeb Not "Disinterested" LARSON LAND: Trustee Employs Cook Martin as Accountants LAXMEE INC: Principals Hit With $380K Judgment on Contract Breach LCI HOLDING: Creditors Committee Taps Pachulski Stang as Counsel LCI HOLDING: Wins Approval for KCC as Claims and Notice Agent LEHIGH COAL: $93,800 in Claims for Wages, Medical Costs Allowed LERNOUT & HAUSPIE: Goldman Not Liable for Failed $580MM Deal LITHIUM TECHNOLOGY: Appoints Two Directors to Fill Vacancies LIVE OAK: Court Dismisses Chapter 11 Bankruptcy Case LNR PROPERTY: S&P Puts 'BB-' Issuer Credit Rating on CreditWatch LOCATION BASED TECHNOLOGIES: Amends Report on Accountant Switch LOCATION BASED TECHNOLOGIES: Director Ronald Warner Dies LOST PENINSULA: Contractor's Insurer Cleared From Liability MASSACHUSETTS LIFECARE: Sale Gives No Immunity From Suit MEDIA GENERAL: Gabelli Funds Owns 5.9% of Class A Shares MENDOCINO COAST: Jerry Seelig Named Patient Care Ombudsman MERIDEN HOTEL: Case Summary & 20 Largest Unsecured Creditors MOLYCORP INC: S&P Assigns 'CCC' ICR to Proposed Sr. Notes Due 2018 MONROEVILLE TAVERN: Case Summary & 20 Largest Unsecured Creditors MOORE FREIGHT: Hires Baker Donelson as Special Counsel MUSCLEPHARM CORP: Has Agreement to Sell 1.5MM Preferred Shares NEW ENGLAND COMPOUNDING: Committee Allowed to Sue Owners NEWLEAD HOLDINGS: Inks One-Year Coal Supply Agreement NEWLEAD HOLDINGS: Doesn't Know How to Treat Capital in Financial NNN PARKWAY 400: Breakwater Equity Files Suit vs. LNR NORTEL NETWORKS: Has First Approval to End Retiree Welfare Plans NORTEL NETWORKS: Creditor Mediation Ends Without Agreement OLD REDFORD: S&P Lowers Rating on Series 2005 & 2010 Bonds to 'BB' OLD SECOND BANCORP: Reports 4th Quarter Net Income of $253,000 PACKAGING DYNAMICS: S&P Affirms 'B' Corporate Credit Rating PARADISE VALLEY: Can Hire Patten Peterman as Counsel PARADISE VALLEY: Court Approves Holmes & Turner as Accountants PARADISE VALLEY: Court Approves Timothy Murphy as Realtor PATRIOT COAL: UMWA and Sureties' Motions to Transfer Venue Denied PEAK RESORTS: Court Approves Bonadio & Co as Accountant PEAK RESORTS: Court Okays BDO Capital as Investment Banker PENNFIELD CORP: Can Use Fulton Cash Collateral Until Feb. 2 QBEX ELECTRONICS: Can Employ GrayRobinson P.A. as Counsel RESIDENTIAL CAPITAL: To Pay $297.6-Mil. to Fannie Mae RICHARD C. SINCLAIR: Calif. Appeals Court Rules in Katakis Dispute ROCMEC MINING: Delays Filing of Annual Financial Statements SAMUEL ADAMS: Voluntary Chapter 11 Case Summary SATCON TECHNOLOGY: Revised Sale Procedures Motion Filed SATCON TECHNOLOGY: Committee's Challenge Period Extended SCOTTS MIRACLE-GRO: S&P Lowers Unsecured Debt Rating to 'BB-' SEDONA ASSOCIATES: Voluntary Chapter 11 Case Summary SESAC HOLDCO: Moody's Assigns 'B2' CFR; Rates 1st Lien Loan 'B1' SNO MOUNTAIN: Chapter 11 Trustee Hires SSG Advisors as Bankers SORENSON COMMUNICATION: Moody's Withdraws '(P)Caa2' Corp. Rating SOUTHERN AIR: Disclosure Statement Hearing on Jan. 29 SOUTHLAKE HOLDINGS: Case Summary & 4 Unsecured Creditors SPECIALTY PRODUCTS: Asbestos Creditors Tap Counsel for Bondex Suit SPIRIT REALTY: Inks Merger Agreement with Cole Credit Property ST. JOSEPH CAPITAL: Fitch Affirms 'BB-' Preferred Stock Rating STAGECOACH INN: Files Bankruptcy to Halt Seizure of Liquor License SUPERMEDIA INC: To Discuss Proposed Merger Plans with Sr. Lenders TERVITA CORP: Moody's Affirms 'B3' CFR; Outlook Negative TERVITA CORP: S&P Lowers Corporate Credit Rating to 'B-' THQ INC: Section 341(a) Meeting Set for Today THQ INC: Asset Sale Triples Value of Unsecured Notes UNI-PIXEL INC: Sets Conference Call on Feb. 26 to Discuss Results VELATEL GLOBAL: Unregistered Securities Sale Exceeds 5% Threshold VELO HOLDINGS: Plan Okayed, Secured Lenders Taking Ownership VERSO PAPER: S&P Lowers Sr. Unsecured Term Loan Rating to 'CC' VERTIS HOLDINGS: Has Authority to Continue Using Cash Collateral VERTIS HOLDINGS: Can Hire FTI as Communications Consultant VORNADO REALTY: Fitch Rates $300MM Series L Preferred Stock 'BB+' WEEKLEY HOMES: S&P Assigns 'BB-' CCR; Outlook Stable WELLNESS CENTER: Li and Company Raises Going Concern Doubt WEX INC: S&P Assigns 'BB' ICR; Rates $1.1BB Credit Facility 'BB' WORLDCOM INC: 2nd Cir. Split on Allowing Untimely Appeal ZINCO DO BRASIL: Incurs $1.7-Mil. Net Loss in Nov. 30 Quarter * Dems Want Private Student Loan Discharges in Bankruptcies * Moody's Says JOBS Act's Investment Sector Implications Mixed * Financial Market Turmoil in Europe Hits Banks' Credit Profiles * U.S. Auto ABS Losses End 2012 Higher, Fitch Reports * Mary Jo White Named Securities & Exchange Commission Chair * CAS Recognized as Best Attorneys in Foreclosure Defense * BOND PRICING -- For Week From Jan. 21 to 25, 2013 ********* 22ND CENTURY: Sabby Healthcare Discloses 9.9% Equity Stake ---------------------------------------------------------- In a Schedule 13G filing with the U.S. Securities and Exchange Commission, Sabby Healthcare Volatility Master Fund, Ltd., and its affiliates disclosed that, as of Jan. 15, 2013, they beneficially own 3,128,299 shares of common stock of 22nd Century Group, Inc., representing 9.99% of the shares outstanding. A copy of the filing is available at http://is.gd/iCAS6Y About 22nd Century Clarence, New York-based 22nd Century Group, Inc., through its wholly-owned subsidiary, 22nd Century Ltd, is a plant biotechnology company using technology that allows for the level of nicotine and other nicotinic alkaloids (e.g., nornicotine, anatabine and anabasine) in tobacco plants to be decreased or increased through genetic engineering and plant breeding. Freed Maxick CPAs, PC, in Buffalo, New York, expressed substantial doubt about 22nd Century Group's ability to continue as a going concern following the financial results for the year ended Dec. 31, 2011. The independent auditors noted that the Company has suffered recurring losses from operations and, as of Dec. 31, 2011, has negative working capital of $1.9 million and a shareholders' deficit of $1.2 million. "Additional financing will be required during 2012 in order to satisfy existing current obligations and finance working capital needs, as well as additional losses from operations that are expected in 2012." The Company incurred a net loss of $1.34 million in 2011, compared with a net loss of $1.42 million in 2010. The Company's balance sheet at Sept. 30, 2012, showed $2.63 million in total assets, $4.99 million in total liabilities and a $2.35 million total shareholders' deficit. 250 AZ: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------- Debtor: 250 AZ, LLC 6818 N. Oracle Road, Suite 420 Tucson, AZ 85704 Bankruptcy Case No.: 13-00851 Chapter 11 Petition Date: January 22, 2013 Court: U.S. Bankruptcy Court District of Arizona (Tucson) Judge: Eileen W. Hollowell About the Debtor: 250 AZ owns an 84.70818% tenant in common interest in a 29-story office building located at 250 East Fifth Street, in Cincinnati, Ohio. An appraisal dated Jan. 16, 2013, established the building value of $32,800,000. The Debtor is anticipating a partial interest valuation that is estimated to be 80% of the building value. The Debtor's interest in the property is thus valued at $22.04 million. The Debtor also owns other real estate in Ohio and Arizona. CW Capital Asset Management, as servicer for COBALT CMBS CM Mortgage Trust, is owed $64.4 million, secured by the Debtor's interest in the office building. Debtor's Counsel: Dennis M. Breen, III, Esq. BREEN OLSON & TRENTON, LLP 4720 N. Oracle Road, Suite 100 Tucson, AZ 85705-1673 Tel: (520) 742-0808 Fax: (520) 844-1618 E-mail: dennis@botlawfirm.com Scheduled Assets: $25,072,149 Scheduled Liabilities: $70,751,781 The petition was signed by George Hoxie, manager. Debtor's List of Its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ CW Capital Asset Mgmt - Tenant in Common $64,405,238 Servicer for COBALT CMBS CM MTG Interest TRST 2006-C1 7501 Wisconsin Avenue, Suite 500 West Bethesda, MD 20814 Armed Forces Bank, N.A. Property $4,696,924 1111 Main Street, Suite 1600 Kansas City, MO 64105 Gabroy, Rollman & Bosse, P.C. Commercial Office $300,000 Profit Sharing Plan and Trust Condos 3507 N. Campbell Avenue, Suite 111 Tucson, AZ 85719 CBRE Technical Services, LLC Services $149,801 The Predenkiewicz Rev. Trust Residential Rental $140,000 Joe & Sylvia Levkowitz Revocable Commercial Office $137,500 Trust Condo Susan S. Courtney Commercial Office $137,500 Condo ABM Janitorial Midwest Services $121,089 CB Richard Ellis Services $100,235 Craig and Janine Courtney Property $100,000 Securitas Security Ser. Inc Services $94,249 CBRE 608844 Services $65,589 DeBra-Kuempel dba Emcor Services Services $62,090 Otis Elevator Co Services $48,843 SMB Management Services Janitorial Contract $35,993 Chiquita Brands, LLC Services $34,433 SCS Construction Services, Inc. Services $18,402 TRANE ? Dallas Services $13,826 Process Pump & Seal, Inc. Services $12,486 Site Stuff, Inc. Supplies $10,884 ABB/CON-CISE: Moody's Affirms 'B2' CFR; Rates Facilities 'B2' ------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to ABB/Con-Cise Optical Group LLC's proposed first lien senior secured credit facilities, including a $260 million senior secured term loan B and a $70 million senior secured revolver. The proceeds from the senior secured credit facilities will be used, along with an additional equity contribution by financial sponsor, New Mountain Capital to finance the acquisition of Optical Distributor Group LLC, refinance existing debt, and pay transaction fees and expenses. At the same time, Moody's affirmed ABB Concise's B2 Corporate Family Rating and B3-PD Probability of Default Rating. The outlook for the ratings is stable. The ratings reflect a significant common equity contribution by NMC as well as rollover equity by ODG management and existing shareholders. Moody's assigned the following ratings: $70 million senior secured first lien revolving credit facility due 2018, rated B2 (LGD3, 34%) $260 million senior secured first lien term loan B due 2019, rated B2 (LGD3, 34%) Moody's expects to withdraw the following ratings upon close of the transaction: $40 million senior secured first lien revolving credit facility, rated B2 (LGD3, 31%) $115 million senior secured first lien term loan B, rated B2 (LGD3, 31%) Ratings affirmed: Corporate Family Rating, B2 Probability of Default Rating, B3-PD The rating outlook is stable. All ratings are subject to review of final documentation. Ratings Rationale "The B2 Corporate Family Rating reflects the company's small absolute size based on revenue and earnings, relatively high financial leverage, weak cash flow coverage of debt, and limited business-line and supplier diversity," stated Daniel Goncalves, an Analyst at Moody's Investors Service. "However, ABB's credit profile benefits from the company's leading scale and market position among U.S. distributors of soft contact lenses, further strengthened by the acquisition of ODG," continued Gon‡alves. On a pro forma basis for the twelve months ended September 30, 2012, the combined company's adjusted debt to EBITDA will be approximately 4.9 times on a Moody's adjusted basis, excluding the realization of acquisition synergies. Giving credit for management's targeted acquisition-related synergies would result in adjusted debt to EBITDA of about 4.5 times, and Moody's expects financial leverage to improve to below 4.5 times over the next 12 to 18 months. The ratings also reflect the company's relatively stable operating margins, good diversity across both customers and geographies, and strong customer retention rates. Over the intermediate-term, Moody's expects ABB to benefit from favorable fundamentals within the U.S. optical industry, as well as increased technological innovation within the contact lens market. The rating outlook is stable, reflecting Moody's expectation that financial leverage and free cash flow to debt will improve over the next 12 to 18 months. That said, it is unlikely that these improvements will be sufficient to warrant a higher rating over this time period, given the company's small size and limited business-line and supplier diversity. The ratings could be upgraded if positive free cash flow is sustained, and leverage is sustained below 3.5 times. The ratings could be downgraded if there is a material contraction in the level of operating cash flow, such that free cash flow remains negative or if leverage rises above 5.0 times on a sustained basis. In addition, the ratings could be lowered if the company's liquidity deteriorates. The principal methodology used in rating ABB Concise was the Global Distribution and Supply Chain Services methodology published in November 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Coral Springs, Florida, ABB/Con-Cise Optical Group LLC ("ABB Concise") is the largest distributor of soft contact lenses in the United States. On December 28, 2012, ABB Concise completed an acquisition of Optical Distributor Group LLC, the second largest distributor of contact lenses in the U.S., for $350 million. The combined company supplies more than 30,000 eye care professionals ("ECP") across the United States, primarily comprised of independent ECPs ("IECP"), as well as other ECPs including national retail chains and franchisees. ABB Concise also designs and manufactures customized contact lenses, and operates facilities in Florida, Massachusetts, and California. The company is privately owned by financial sponsor, New Mountain Capital. The combined company will have a pro forma revenue base of approximately $850 million. ACCREDITED HOME: REIT Shareholders OK Liquidation Plan ------------------------------------------------------ On Jan. 17, 2013, the shareholders of Accredited Mortgage Loan REIT Trust approved a Plan of Liquidation previously adopted and submitted to the shareholders by its Board of Trustees. Pursuant to the Plan of Liquidation, Accredited REIT will continue to collect amounts payable to it, marshal and liquidate its remaining assets and make periodic distributions to its shareholders. The primary purpose for adopting the Plan of Liquidation was to clarify that future distributions to shareholders should be treated as liquidating distributions for federal income tax purposes. The Plan of Liquidation contemplates completion of the liquidation process within three years. Accredited REIT has received additional payments from the Liquidating Trust and Consolidated Holdco estate in the matter styled In Re: Accredited Home Lenders Holding Co., et al., Case No. 09-11516 ("AHL Bankruptcy") pursuant to the provisions of the Debtors' Fifth Amended Chapter 11 Plan of Liquidation approved on May 24, 2011, by the U.S. Bankruptcy Court for the District of Delaware. The Board of Trustees of Accredited REIT has declared a partial liquidating distribution to the holders of its 9.75% Series A Perpetual Cumulative Preferred Shares in the aggregate amount of $20,468,390.00, representing $5.00 per preferred share outstanding. The distribution from Accredited REIT will be paid on February 22, 2013, to holders of record of its preferred shares as of the close of business on February 6, 2013. Upon completion of this latest distribution, Accredited REIT will have distributed an aggregate of $59,358,331.00, or $14.50 per share, to its preferred shareholders since confirmation of the Fifth Amended Plan. Accredited REIT has now received its final payment from the Liquidating Trust. Accredited REIT may receive additional payments from the Consolidated Holdco estate pursuant to the Fifth Amended Plan. However, the timing and amount of any such future payments are beyond the control of Accredited REIT. Copies of the Fifth Amended Plan, the Fifth Amended Disclosure Statement, the Bankruptcy Court's Order Confirming the Fifth Amended Plan and other information concerning the AHL Bankruptcy may be found at http://www.kccllc.com The Board of Trustees of Accredited REIT will declare additional liquidating distributions to the holders of its preferred shares if, as and to the extent determined in the sole discretion of its Board of Trustees, subject to the provisions of law, the Plan of Liquidation, and the Declaration of Trust of Accredited REIT, as amended and supplemented to date. About Accredited Mortgage Loan REIT Trust Accredited Mortgage Loan REIT Trust, a subsidiary of Accredited Home Lenders Holding Co., is a Maryland real estate investment trust that was formed in May 2004 for the purpose of acquiring, holding and managing real estate assets. About Accredited Home San Diego, California-based Accredited Home Lenders Holding Co. -- http://www.accredhome.com/-- was a mortgage banker servicing U.S. markets for conforming and non-prime residential mortgage loans operating throughout the U.S. and in Canada. Accredited sold its mortgage-servicing business in July 2009 as part of its bankruptcy. Accredited Home Lenders and its affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 09-11516) on May 1, 2009. Gregory G. Hesse, Esq., Lynnette R. Warman, Esq., and Jesse T. Moore, Esq., at Hunton & William LLP, serve as the Debtors' bankruptcy counsel. Laura Davis Jones, Esq., James E. O'Neill, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, serve as Delaware counsel. Kurtzman Carson Consultants is the Debtors' claims agent. Andrew I Silfen, Esq., Schuyler G. Carroll, Esq., Robert M. Hirsch, Esq., at Arent Fox LLP in New York, and Jeffrey N. Rothleder, Esq., at Arent Fox LLP in Washington, DC, represent the official committee of unsecured creditors as co-counsel. Neil R. Lapinski, Esq., and Shelley A. Kinsella, Esq., at Elliott Greenleaf, represent the Committee as Delaware and conflicts counsel. Accredited Home Lenders estimated its assets at $10 million to $50 million and its debts at $100 million to $500 million in its Chapter 11 petition. AHERN RENTALS: District Court Won't Restore Plan Exclusivity ------------------------------------------------------------ Nevada District Judge Larry R. Hicks on Wednesday denied the request of Ahern Rentals, Inc., for a stay pending its appeal from a bankruptcy court order rejecting its second motion for an order extending the exclusivity periods to file and solicit acceptances of a reorganization plan. On March 23, 2012, prior to the expiration of Ahern's exclusivity period, Ahern filed an initial motion seeking an extension of the exclusivity period. The bankruptcy court granted the motion and extended Ahern's exclusivity period until aug. 20, 2012. Prior to the expiration of the extended exclusivity period, Ahern filed its Second Motion for Order Extending the Exclusivity Period seeking to extend the exclusive plan filing date to Nov. 30, 2012, and the exclusive period to solicit votes until Feb. 1, 2013. The second motion was contested by several creditors, and following an initial hearing on Aug. 6, 2012, the bankruptcy court extended the exclusive plan filing period for a second time until further order of the court after another hearing. On Oct. 31, 2012, the bankruptcy court held another hearing on the extension of the exclusivity period. At the hearing, the bankruptcy court granted the motion as it related to extending the exclusive time to file a reorganization plan until Nov. 30, 2012, but placed certain conditions on Ahern including (1) delivering financial projections to certain creditors, (2) delivering a draft plan of the reorganization to major creditors, and (3) filing the plan and disclosure statement by Nov. 30, 2012. However, the bankruptcy court continued Ahern's request to extend the exclusive time to solicit creditor votes until the Nov. 30 deadline. On Nov. 30, the bankruptcy court held another hearing to discuss Ahern's reorganization plan. At that time, Ahern had not filed a copy of the reorganization plan as required. Further, at the hearing, the reorganization plan, which had been presented to the creditors, was opposed by several major creditors. As a result of the creditors' concerns that the plan violated certain bankruptcy rules, including the absolute priority rule, the bankruptcy court requested further briefing from the parties and set another hearing for Dec. 7. On Dec. 7, the bankruptcy court held a hearing to consider whether to extend Ahern's exclusivity period for vote solicitation until Feb. 1, 2013, as requested by Ahern. At the end of an extensive hearing, and based on Ahern's behavior throughout the bankruptcy proceedings, the bankruptcy court denied the request to extend the vote exclusivity period for a second time. On Dec. 20, 2012, two weeks after the bankruptcy court denied the motion to extend the exclusivity period to solicit creditor votes, Ahern filed the appeal. Along with the notice of appeal, Ahern filed an emergency motion to stay the bankruptcy court's order terminating exclusivity. The District Court granted that order and, after a motion to modify the stay order, modified the initial stay order. In response to both Ahern's appeal, and the District Court's orders, a group of creditors known as the Second Lien Noteholders -- which include Del Mar Master Fund Ltd.; Feingold O'Keeffe Capital, LLC; Nomura Corporate Research & Asset Management Inc.; Wazee Street Capital Management, LLC; and Och-Ziff Capital Management Group -- filed a motion to vacate the stay and dismiss the appeal for lack of subject matter jurisdiction. On Jan. 14, 2013, following a hearing before the court on Jan. 11, the District Court granted the Second Lien Noteholders' motion, dismissed the bankruptcy appeal, and vacated the court's stay orders (Troubled Company Reporter, Jan. 17, 2013). In response, Ahern appealed the court's order of dismissal. Thereafter, Ahern filed the motion to stay pending appeal. Ahern contends that a stay pending appeal is appropriate because it is likely to succeed on the merits of its appeal for three reasons: (1) the court's order dismissing the bankruptcy appeal for lack of jurisdiction was in error; (2) the issue of whether the exclusive period for plan solicitation is automatically extended upon an extension of the exclusive period for plan filing is a matter of first impression in the Ninth Circuit; and (3) the Ninth Circuit's review of the court's dismissal order is de novo. District Judge Hicks, however, disagrees and finds that a stay pending appeal is not warranted because Ahern is not likely to succeed on the merits of its appeal. Judge Hicks said Ahern's argument -- that the issue of whether the exclusive plan solicitation period is automatically extended 60 days beyond the extension of the exclusive plan filing period is an issue of first impression in the Ninth Circuit -- supports denying Ahern's motion because, as it is an issue of first impression for the court, Ahern has failed to make a showing that the Ninth Circuit is likely to agree with its interpretation of the bankruptcy rules. "This is especially true in light of earlier precedent from the bankruptcy appellate panel in In re Henry Mayo, which lead this court towards a different interpretation of the rules. Second, the only legal support Ahern proffers for its position is nonbinding, non-precedential, unpersuasive, and in some cases unpublished, district court cases from outside the Ninth Circuit. The court finds Ahern's proffered legal support disingenuous in light of its claim that the court's dismissal order was in error for citing to non-binding but persuasive, published Ninth Circuit precedent," Judge Hicks said. Judge Hicks also was not convinced with Ahern's argument that the District Court should issue a stay pending appeal because the Ninth Circuit would review the court's dismissal order de novo. "Ahern claims that because there is a de novo review of the court's order then that in itself constitutes a basis for finding that it is likely to succeed on the merits. This argument is nonsensical and without merit. At no point in its motion does Ahern put forth any reasonable argument as to why the Ninth Circuit would disagree with the court's dismissal order," Judge Hicks said. The case before the District Court is, AHERN RENTALS, INC., Appellant, v. GOLDMAN SACHS PALMETTO STATE CREDIT FUND, L.P., et al., Appellees, No. 3:12-CV-0676-LRH-VPC (D. Nev.). A copy of the District Court's Jan. 23, 2013 Order is available at http://is.gd/Sc2jOVfrom Leagle.com. About Ahern Rentals Founded in 1953 with one location in Las Vegas, Nevada, Ahern Rentals Inc. -- http://www.ahern.com/-- now offers rental equipment to customers through its 74 locations in Arizona, Arkansas, California, Colorado, Georgia, Kansas, Maryland, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia and Washington. Ahern Rentals filed a voluntary Chapter 11 petition (Bankr. D. Nev. Case No. 11-53860) on Dec. 22, 2011, after failing to obtain an extension of the Aug. 21, 2011 maturity of its revolving credit facility. In its schedules, the Debtor disclosed $485.8 million in assets and $649.9 million in liabilities. Judge Bruce T. Beesley presides over the case. Lawyers at Gordon Silver serve as the Debtor's counsel. The Debtor's financial advisors are Oppenheimer & Co. and The Seaport Group. Kurtzman Carson Consultants LLC serves as claims and notice agent. The Official Committee of Unsecured Creditors has tapped Covington & Burling LLP as counsel, Downey Brand LLP as local counsel, and FTI Consulting as financial advisor. Counsel to Bank of America, as the DIP Agent and First Lien Agent, are Albert M. Fenster, Esq., and Marc D. Rosenberg, Esq., at Kaye Scholer LLP, and Robert R. Kinas, Esq., at Snell & Wilmer. Attorneys for the Majority Term Lenders are Paul Aronzon, Esq., and Robert Jay Moore, Esq., at Milbank, Tweed, Hadley & McCloy LLP. Counsel for the Majority Second Lienholder are Paul V. Shalhoub, Esq., Joseph G. Minias, Esq., and Ana M. Alfonso, Esq., at Willkie Farr & Gallagher LLP. Attorney for GE Capital is James E. Van Horn, Esq., at McGuirewoods LLP. Wells Fargo Bank is represented by Andrew M. Kramer, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C. Allan S. Brilliant, Esq., and Glenn E. Siegel, Esq., at Dechert LLP argue for certain revolving lenders. The Debtor's Plan lists $379.2 million in debt held by major lenders plus much smaller amounts held by others. According to The Review-Journal's report, Judge Beesley said he does not think Ahern's plan offers full repayment -- known as present value -- so the owners cannot hang on to their entire positions under bankruptcy law. Attorneys for U.S. Bank National Association, as successor to Wells Fargo Bank, as collateral agent and trustee for the benefit of holders of the 9-1/4% Senior Secured Notes Due 2013 under the Indenture dated Aug. 18, 2005, is Kyle Mathews, Esq., at Sheppard, Mullin, Richter & Hampton LLP and Timothy Lukas, Esq., at Holland & Hart. AIRTRONIC USA: Global Digital Gets Bridge Loan for Planned Merger ----------------------------------------------------------------- Global Digital Solutions on Jan. 25 disclosed that it has secured $750,000 to finance a bridge loan that will facilitate the planned merger with Airtronic USA. Because Airtronic is currently a "debtor in possession" under Chapter 11 of the Bankruptcy Code, the $750,000 bridge loan from GDSI to Airtronic was subject to approval from the United States Bankruptcy Court for the Northern District of Illinois. Approval for the bridge loan was granted on October 18, 2012. On August 20, 2012, the companies announced that they had signed a letter of intent to enter into good faith discussions involving a potential strategic combination in which Airtronic would be acquired by GDSI. Having completed those good faith discussions, the companies signed a merger agreement and reorganization plan on October 16, 2012. The agreement, which is also subject to Bankruptcy Court approval, calls for Airtronic to continue to operate as a subsidiary of GDSI. "We're very excited that we have completed this critical phase of the merger process between GDSI and Airtronic and we're looking forward to completing the process as quickly as possible," said GDSI founder and largest shareholder Richard J. Sullivan, who will become chairman and CEO of GDSI after the acquisition is completed. "It's important to note," Mr. Sullivan added, "that Airtronic instituted a policy twelve years ago never to sell weapons to the domestic U.S. commercial and/or retail market. And I applaud Dr. Kett and her team for having the vision to embrace that policy. Airtronic only supplies these weapons to the U.S. military and designated militaries abroad. That's an important distinction that will continue to be a vital part of Airtronic's business model going forward." Airtronic's CEO and President, Dr. Merriellyn Kett, also commented on the bridge loan: "I'm very pleased that we have taken this important step in the merger process, which we believe will be very beneficial to both companies and to our shareholders and customers." Once the merger is finalized, Dr. Kett is expected to continue serving as CEO of Airtronic. Dick Sullivan is an entrepreneurial pioneer. He served as Chairman and CEO of Applied Digital Solutions, where he executed a technology rollup involving 42 acquisitions that succeeded in increasing the company's share price from $2.50 to a peak of $18 per share. During Mr. Sullivan's decade-long tenure as Chairman and CEO, Applied Digital was one of the highest volume traded stocks on NASDAQ. Mr. Sullivan also served as Chairman and CEO of Digital Angel Corporation and led the effort to spin off VeriChip Corporation. In 1970, he was a founding member of the management team of Manufacturing Data Systems, Inc., which listed at $7.50 per share and was sold to Schlumberger N.V. in 1980 at $65 per share. PhDAirtronic's CEO and President joined the company in 2003 as a partner and helped to refocus the business on several essential battlefield weapons, including the M203 40mm Grenade Launcher - one of the most widely used grenade launchers in the world - the .50 cal. Machine Gun, the MK 19 Grenade Machine Gun, and most recently the MK 777, a shoulder-fired recoilless rifle that is light, lethal, and affordable. Dr. Kett received her doctorate in analytic philosophy from DePaul University in Chicago, IL, and spent a year studying at the Sorbonne in Paris, France. Before joining Airtronic in 2003, she worked in infrastructure development in China, building a metallurgical coking plant in Shanxi Province. About Global Digital Solutions, Inc. Global Digital Solutions -- http://www.gdsi.co-- is refocusing its business strategy on providing knowledge-based and culturally attuned societal consulting and security-related solutions in unsettled areas. About Airtronic USA Airtronic -- http://www.Airtronic.net/-- is an electro-mechanical engineering design and manufacturing company. It provides small arms and small arms spare parts to the U.S. Department of Defense, foreign militaries, and the law enforcement market. The company also manufactures medical, avionics, and telecommunications original equipment. The company's products include grenade launchers, rocket propelled grenade launchers, grenade launcher guns, flex machine guns, grenade machine guns, rifles, and magazines. The company was founded in 1990 and is based in Elk Grove Village, Illinois. On May 16, 2012, the voluntary petition of Airtronic, Inc. for liquidation under Chapter 7 was converted to Chapter 11 reorganization. The company had filed for Chapter 7 bankruptcy on March 13, 2012. AIRVANA NETWORK: S&P Withdraws 'CCC-' Corporate Credit Rating ------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'CCC-' corporate credit rating on Chelmsford, Mass.-based Airvana Network Solutions Inc. at the request of the company. As of Jan. 23, 2013, all debt had been repaid, and the rated credit facility was terminated. As a result the issue level rating is also withdrawn. AMERICAN AIRLINES: To Sell $750MM of EETCs at Low Rates ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that AMR Corp., parent of American Airlines Inc., intends to take advantage of "historically low interest rates" to finance the purchase of four new Boeing 777-323 aircraft and refinance nine Boeing 737s already owned. The report relates that the airline filed papers in bankruptcy court Jan. 24 for approval of $750 million in aircraft financings known as enhanced equipment trust certificates. The economic terms of the proposed financing aren't being disclosed publicly. The new financing will be used to refinance debt on the nine 737s maturing from now through July. The 777s will be delivered from April to August. According to the report, there will be a bankruptcy court hearing on Feb. 14 for approval of the financing. At the same hearing, AMR will seek the court's approval for an agreement where Republic Airways Holdings Inc. will put 53 regional jets into service for AMR between the middle of this year and early 2015. The jets will have 76 seats each. The jets will fly under the banner of American Eagle, the feeder airline for the mainline carrier. The agreement with Republic represents the first time American has contracted with a regional carrier other than subsidiary American Eagle Airlines Inc. American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Court OKs Aircraft Purchase Agreements --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that AMR Corp., parent of American Airlines Inc., was given authority from the bankruptcy court to sign modified agreements with aircraft and engine manufacturers. The economic terms of the arrangements weren't disclosed publicly. According to the report, the most comprehensive agreement is with Boeing Co. to purchase new aircraft models, including the 737 Max. There are also agreements with engine makers Rolls-Royce Plc and General Electric Co. The agreement with Boeing provides for the manufacturer to provide financing for new aircraft purchases. The agreement with Airbus SAS provides for AMR to purchase A320 aircraft. The report notes the aircraft and engine purchase agreements, along with new labor contracts, are major steps in AMR's program to reduce operating expenses long term and short term. AMR will decide soon whether it will reorganize as a stand-alone airline or merge with US Airways Group Inc. American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Trans World Pilots Appeal Contract Approval -------------------------------------------------------------- The American Independent Cockpit Alliance claimed the bankruptcy court, which oversees American Airlines Inc.'s Chapter 11 case, erred when it overruled its objection to the airline's new labor contract with the Allied Pilots Association. The group represents pilots who previously worked for Trans World Airlines before it merged with American Airlines. In a court filing, the group said the arbitration process created by the letter agreement signed by American Airlines and the pilots' union under the new labor deal violates the Railway Labor Act by failing to include the former TWA pilots as a party to the arbitration. The group also said the letter agreement discriminates against the former TWA pilots and was entered into by the airline and the pilots union "in bad faith." The U.S. Bankruptcy Court in Manhattan approved last month the new labor deal, which could help the airline save as much as $315 million annually. The six-year agreement, which was ratified by 74% of pilots who voted, will give those pilots a 13.5% stake in the post- bankruptcy company and annual pay raises while freezing their pension and requiring longer work hours. American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Agrees with U.S. Bank on Suit Consolidation -------------------------------------------------------------- The U.S. Bankruptcy Court in Manhattan approved an agreement between American Airlines Inc. and U.S. Bank Trust N.A. The agreement calls for the procedural consolidation of the complaints filed by U.S. Bank, and the motion filed by AMR Corp. to obtain as much as $1.5 billion in financing. A copy of the agreement can be accessed for free at http://is.gd/jYzyia U.S. Bank sued the airline after its parent company AMR announced that it has negotiated terms of the financing and will repay $1.3 billion in outstanding notes. AMR wants to redeem its $174.2 million of 13% secured notes due in August 2016, the $703.6 million of 8.625 pass-through certificates, and $445.6 million of 10.375% pass-through debt without the payment of any make-whole amount or any other premium or prepayment penalty. American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN INT'L GROUP: Asks Ex-CEO to Inform Ct. If He Will Appeal ----------------------------------------------------------------- Leslie Scism, writing for The Wall Street Journal, reported that American International Group Inc. filed legal papers Wednesday asking its former chief executive to inform a federal court if he will challenge the company's decision to stay out of his lawsuit against the government. The suit is being pursued by AIG's longtime former leader, 87- year-old Maurice R. "Hank" Greenberg, through a company he leads. The entity, Starr International Co., was long one of AIG's biggest shareholders, the report related. The suit contends the U.S. government extracted onerous terms in its rescue package for AIG, and seeks about $25 billion. The U.S. Court of Federal Claims in Washington, D.C., ruled in July that the case could proceed, after federal officials sought to dismiss it. The court also required AIG to decide whether it would join Starr's complaint. WSJ related that news of AIG's possible involvement in the lawsuit earlier this month unleashed a torrent of criticism that the insurer appeared ungrateful toward taxpayers for the government's rescue effort, one of the biggest of the 2008-09 crisis. AIG has said that it wants to close the loop on its role in the lawsuit, after its board voted unanimously on Jan. 9 to pass on participating, WSJ reported. Starr's attorney, David Boies, said during a Jan. 10 television appearance on CNBC that "we're looking to the government, we're not looking to sue AIG," WSJ recalled. A spokeswoman for Mr. Boies declined to comment on AIG's filing. Starr, according to the report, could seek to overturn the board's decision, the AIG filing notes. If it does so, Starr would face certain hurdles, including demonstrating that the request for AIG's participation in the lawsuit was "wrongfully refused." The suit also includes some claims that can be pursued without the AIG board's participation. AIG attached a letter to the court filing that attorneys for its board sent Wednesday to Mr. Boies recapping many measures that directors have taken since September, when Starr in court filings demanded that the insurer respond to its invitation to join in the lawsuit, the report added. WSJ said the board retained counsel to help it consider how to respond, reviewed extensive materials about the lawsuit claims, heard legal briefings and ultimately ran a mock trial on Jan. 9, in which lawyers for Starr, the U.S. Treasury and the Federal Reserve made presentations. The board then deliberated. "Each director stated his or her view that the [request to join the suit] should be refused for one or more multiple reasons, including the low likelihood of success on the merits, the realistic potential damages," and "the potential harm to AIG's goodwill and the positive image that AIG had worked so hard to restore since September 2008," among other factors. WSJ added that the letter said AIG's current chief executive, Robert Benmosche, said that "AIG had no choice but to honor the deal AIG struck" in the crisis, and that "AIG should continue to focus on the future, not the past." About AIG American International Group, Inc. -- http://www.aig.com/-- is an international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through one of the most extensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers of life insurance and retirement services around the world. AIG common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo. At the height of the 2008 financial crisis, AIG experienced a liquidity crunch when its credit ratings were downgraded below "AA" levels by Standard & Poor's, Moody's Investors Service and Fitch Ratings. AIG almost collapsed under the weight of bad bets it made insuring mortgage-backed securities. The Company, however, was bailed out by the Federal Reserve, but even after an initial infusion of $85 billion, losses continued to grow. The later rescue packages brought the total to $182 billion, making it the biggest federal bailout in U.S. history. AIG sold off a number of its businesses and other assets to pay down loans received from the U.S. government. AMERICAN REALTY: Hearing on Plan Exclusivity on Feb. 13 ------------------------------------------------------- The hearing to consider the motion of American Realty Trust, Inc., to extend its exclusive plan filing and exclusive solicitation periods to June 25, 2013, and Aug. 26, 2013, respectively, will be held on Feb. 13, 2013, at 10:00 a.m. The Debtor says that there are unresolved contingencies relating to various pending legal and appellate proceedings that need to be addressed before it can proceed with the formulation of a confirmable Chapter 11 plan. About American Realty Trust Dallas, Texas-based American Realty Trust, Inc., is a subsidiary of the real estate giant American Realty Investors Inc. Coping with a $73 million legal judgment from an apartment purchase that collapsed more than a decade ago, American Realty Trust, Inc., filed for Chapter 11 protection (Bankr. D. Nev. Case No. 12-10883) in Las Vegas on Jan. 26, 2012. The case was later dismissed on Aug. 1 by Judge Mike K. Nakagawa. Creditors David M. Clapper, Atlantic XIII, LLC, and Atlantic Midwest, LLC, sought the dismissal, citing, among other things, the Debtor has been stripped of assets prepetition and its ownership structure changed 10 days before the bankruptcy filing in an admitted effort to avoid disclosures to the Securities and Exchange Commission. American Realty Trust then filed for Chapter 11 protection (Bankr. N.D. Ga. Case No. 12-71453) on Aug. 29, 2012. Bankruptcy Judge Barbara Ellis-Monro presides over the case. Bryan E. Bates, Esq., and Gary W. Marsh, Esq. at McKenna Long & Aldridge, LLP represent the Debtor in its restructuring effort. The petition was signed by Steven A. Shelley, vice president. The Debtor has scheduled assets totaling $79,954,551, comprised of: (i) real property valued at $87,884; (ii) equity interests in affiliated entities of an unknown value; and (iii) litigation claims valued at $79,866,667. The Debtor has scheduled liabilities totaling $85,347,587.95, comprised of: (i) $10,437.73 in unsecured priority tax claims; and (ii) unsecured non-priority claims of $85,336,886.61 (of which at least $77,164,701.14 are contested litigation claims against the Debtor). AMERICAN SUZUKI: Can Increase DIP Financing to $100 Million ----------------------------------------------------------- Judge Scott C. Clarkson of the the U.S. Bankruptcy Court for the Central District of California has approved, on a final basis, an amendment to American Suzuki Motor Corporation's Debtor-in- Possession Loan and Security Agreement, which among other things, increases the amount of the advances from $50,000,000 to $100,000,000, of which, $30,000,000 in additional borrowing would be available upon interim approval to be used in accordance with a budget. The Debtor notes other remaining material provisions of the DIP Credit Agreement remain unchanged. The Debtor said it requires immediate access to the additional financing provided by the DIP Credit Amendment to: (1) finance the purchase of approximately 2,500 automobiles that will be sold and distributed to the automotive dealers at a substantial profit to the estate (approximately $1.8 million); and (2) bridge the gap until the collection of receipts from the sale of automobiles, motorcycles and ATVs that was delayed by the commencement of the case. About American Suzuki Established in 1986, American Suzuki Motor Corporation is the sole distributor of Suzuki automobiles and vehicles in the United States. American Suzuki wholesales virtually all of its inventory through a network of independently owned and unaffiliated dealerships located throughout the continental United States. The dealers then market and sell the Suzuki Products to retail customers. Suzuki Motor Corp., the 100% interest holder in the Debtor, manufacturers substantially all of the Suzuki products. American Suzuki has 295 employees. There are approximately 220 automotive dealerships, over 900 motorcycle/ATV dealerships, and over 780 outboard marine dealerships. American Suzuki filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-22808) on Nov. 5, 2012, to sell the business to SMC, absent higher and better offers. SMC is not included in the Chapter 11 filing. The Debtor disclosed assets of $233 million and liabilities totaling $346 million. Debt includes $32 million owing to the parent on a revolving credit and $120 million for inventory financing. There is about $4 million owing to trade suppliers. The Debtor also filed a plan of reorganization together with the petition. Under the proposed Plan, the Motorcycles/ATV and Marine Divisions will remain largely unaffected including the warranties associated with the products. NounCo, Inc., a wholly owned subsidiary of SMC, will purchase the Motorcycles/ATV and Marine Divisions and the parts and service components of the Automotive Division. The restructured Automotive Division intends to honor automotive warranties and authorize the sale of genuine Suzuki automotive parts and services to retail customers through a network of parts and service only dealerships that will provide warranty services. Bankruptcy Judge Catherine E. Bauer signed an order Oct. 6 reassigning the case to Judge Scott Clarkson. ASMC's legal advisor on the restructuring is Pachulski Stang Ziehl & Jones LLP, and its financial advisor is FTI Consulting, Inc. Nelson Mullins Riley & Scarborough LLP is serving as special counsel on automobile dealer and industry issues. Further, ASMC has proposed the appointment of Freddie Reiss, Senior Managing Director at FTI Consulting, as chief restructuring officer, and has also added two independent Board members to assist it through this period. Rust Consulting Omni Bankruptcy, a division of Rust Consulting, Inc., is the claims and notice agent. The Debtor has retained Imperial Capital, LLC as investment banker. SMC is represented by lawyers at Klee, Tuchin, Bogdanoff & Stern LLP. AMERICAN SUZUKI: Files Schedules of Assets and Liabilities ---------------------------------------------------------- American Suzuki Motor Corporation filed with the U.S. Bankruptcy Court for the Central District of California its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $20,156,366 B. Personal Property $212,782,871 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $149,556,317 E. Creditors Holding Unsecured Priority Claims $48,131 F. Creditors Holding Unsecured Non-priority Claims $64,712,535 ----------- ----------- TOTAL $232,939,237 $214,316,983 A copy of the amended schedules is available for free at: http://bankrupt.com/misc/AMERICAN_SUZUKI_sal.pdf About American Suzuki Established in 1986, American Suzuki Motor Corporation is the sole distributor of Suzuki automobiles and vehicles in the United States. American Suzuki wholesales virtually all of its inventory through a network of independently owned and unaffiliated dealerships located throughout the continental United States. The dealers then market and sell the Suzuki Products to retail customers. Suzuki Motor Corp., the 100% interest holder in the Debtor, manufacturers substantially all of the Suzuki products. American Suzuki has 295 employees. There are approximately 220 automotive dealerships, over 900 motorcycle/ATV dealerships, and over 780 outboard marine dealerships. American Suzuki filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-22808) on Nov. 5, 2012, to sell the business to SMC, absent higher and better offers. SMC is not included in the Chapter 11 filing. The Debtor disclosed assets of $233 million and liabilities totaling $346 million. Debt includes $32 million owing to the parent on a revolving credit and $120 million for inventory financing. There is about $4 million owing to trade suppliers. The Debtor also filed a plan of reorganization together with the petition. Under the proposed Plan, the Motorcycles/ATV and Marine Divisions will remain largely unaffected including the warranties associated with the products. NounCo, Inc., a wholly owned subsidiary of SMC, will purchase the Motorcycles/ATV and Marine Divisions and the parts and service components of the Automotive Division. The restructured Automotive Division intends to honor automotive warranties and authorize the sale of genuine Suzuki automotive parts and services to retail customers through a network of parts and service only dealerships that will provide warranty services. Bankruptcy Judge Catherine E. Bauer signed an order Oct. 6 reassigning the case to Judge Scott Clarkson. ASMC's legal advisor on the restructuring is Pachulski Stang Ziehl & Jones LLP, and its financial advisor is FTI Consulting, Inc. Nelson Mullins Riley & Scarborough LLP is serving as special counsel on automobile dealer and industry issues. Further, ASMC has proposed the appointment of Freddie Reiss, Senior Managing Director at FTI Consulting, as chief restructuring officer, and has also added two independent Board members to assist it through this period. Rust Consulting Omni Bankruptcy, a division of Rust Consulting, Inc., is the claims and notice agent. The Debtor has retained Imperial Capital, LLC as investment banker. SMC is represented by lawyers at Klee, Tuchin, Bogdanoff & Stern LLP. APPLIED MINERALS: Receives $5.5 Million from Securities Sale ------------------------------------------------------------ Applied Minerals, Inc., has sold, in a privately negotiated transaction, 3,756,757 shares of its common stock at $1.48 per share for gross proceeds of $5.56 million. The transaction was priced at a 3.3% discount to the closing price on Jan. 17, 2013. The purchasers of the common stock included entities managed by Overbrook Management Corporation and two accredited investors. No broker was used and no commission was paid as part of the transaction. Andre Zeitoun, President and CEO of Applied Minerals, stated, "We are very pleased to have completed this financing. Armed with a strong balance sheet, the Company is well positioned to capitalize on the many commercial opportunities that lie ahead of us." Amends Report on Employment Pact In an 8-K filed on Nov. 26, 2012, the principal features of an employment agreement for Andre Zeitoun President and CEO, and amendments to the employment agreement for Mr. Gleeson, General Counsel, were reported. With respect to Mr. Zeitoun, the Nov. 26, 2012, 8-K misreported the terms of his bonus, indicating that "Mr. Zeitoun will be eligible for a bonus of up to $400,000, the decision as to whether to award a bonus and the amount to be determined in the discretion of the Board of Directors at the end of 2013." The actual terms of his bonus arrangement are as follows: His 2013 performance will be reviewed with a view to awarding an aggregate target bonus of $400,000, provided that such bonus may be less or more than the Target in the discretion of the Board or the Compensation Committee. That bonus may be paid at intervals determined by the Board or the Compensation Committee in their discretion based on achievement by Executive or the Company of objectives. The Compensation Committee has finalized Mr. Zeitoun's employment agreement and the amendment to Mr. Gleeson's employment agreement. Mr. Zeitoun's employment agreement provides that if he is terminated without Cause or he terminates his employment for Good Reason, he will receive in addition to accrued obligations: (a) a pro rata portion (based on the number of months of the Period of Employment worked through the date of termination relative to a full year) of the Net Target Bonus ("Net Target Bonus" means the Target less bonus amounts (including portions or installments thereof) paid in 2013 prior to year end), provided that such is not duplicative of bonus amounts included and to be paid as accrued obligations; plus (b)(i) six months of Base Salary, (ii) an amount equal to one half of the Target bonus, (iii) immediate vesting in (one- half of all unvested options held by him; and continuation of benefits for a period of six months (or applicable additional compensation to provide that he bears no more cost for benefits under COBRA for six months than he bore immediately prior to termination). All amounts payable will be payable on the tenth business day after the date of termination. Mr. Gleeson's employment agreement was amended to provide that if he is terminated without Cause or he terminates his employment for Good Reason, he is entitled to a severance amount as determined by the Company, acting through the Board or the Chief Executive Officer, in its discretion (which amount will be no less than two months of salary and continuation of Benefits n for a period of no less than two months (or applicable additional compensation to provide that Employee bears no more cost for Benefits under COBRA for that period than he bore immediately prior to termination). All amounts payable will be payable on the tenth business day after the date of termination. About Applied Minerals New York City-based Applied Minerals, Inc. (OTC BB: AMNL) is a leading global producer of halloysite clay used in the development of advanced polymer, catalytic, environmental remediation, and controlled release applications. The Company operates the Dragon Mine located in Juab County, Utah, the only commercial source of halloysite clay in the western hemisphere. Halloysite is an aluminosilicate clay that forms naturally occurring nanotubes. The Company reported a net loss attributable to the Company of $7.48 million in 2011, a net loss attributable to the Company of $4.76 million in 2010, and a net loss attributable to the Company of $6.76 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $9.53 million in total assets, $2.32 million in total liabilities and $7.21 million in total stockholders' equity. Going Concern The Company has incurred material recurring losses from operations. At March 31, 2012, the Company had a total accumulated deficit of approximately $43,084,500. For the three months ended March 31, 2012, and 2011, the Company sustained net losses from exploration stage before discontinued operations of approximately $4,056,700 and $1,695,100, respectively. The Company said that these factors indicate that it may be unable to continue as a going concern for a reasonable period of time. The Company's continuation as a going concern is contingent upon its ability to generate revenue and cash flow to meet its obligations on a timely basis and management's ability to raise financing or dispose of certain non-core assets as required. If successful, this will mitigate the factors that raise substantial doubt about the Company's ability to continue as a going concern. Bankruptcy Warning At Dec. 31, 2011, and 2010, the Company had accumulated deficits of $39,183,632 and $31,543,411, respectively, in addition to limited cash and unprofitable operations. For the year ended Dec. 31, 2011, and 2010, the Company sustained net losses before discontinued operations of $7,476,864 and $4,891,525, respectively. As of March 15, 2012, the Company has not commercialized the Dragon Mine and has had to rely on cash flow generated from the sale of stock and convertible debt to fund its operations. If the Company is unable to fund its operations through the commercialization of the Dragon Mine, the sale of equity or debt or a combination of both, it may have to file bankruptcy. ARCAPITA BANK: Wants 7th Extension of Exclusivity Until Feb. 28 --------------------------------------------------------------- Arcapita Bank B.S.C.(c), et al., want the U.S. Bankruptcy Court Southern District of New York to grant them a seventh extension of their exclusive period to propose a plan of reorganization until Feb. 28, 2013, and the period to solicit acceptances for that plan until March 28, 2013, respectively, in order to allow the Official Committee of Unsecured Creditors more time to provide the Debtors with additional inputs regarding various inter-creditor issues. Absent an extension, the Debtors' exclusivity periods currently expire on Jan. 28, 2013, and March 28, 2013, respectively. About Arcapita Bank Arcapita Bank B.S.C., also known as First Islamic Investment Bank B.S.C., along with affiliates, filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 12-11076) in Manhattan on March 19, 2012. The Debtors said they do not have the liquidity necessary to repay a US$1.1 billion syndicated unsecured facility when it comes due on March 28, 2012. Falcon Gas Storage Company, Inc., later filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-11790) on April 30, 2012. Falcon Gas is an indirect wholly owned subsidiary of Arcapita that previously owned the natural gas storage business NorTex Gas Storage Company LLC. In early 2010, Alinda Natural Gas Storage I, L.P. (n/k/a Tide Natural Gas Storage I, L.P.), Alinda Natural Gas Storage II, L.P. (n/k/a Tide Natural Gas Storage II, L.P.) acquired the stock of NorTex from Falcon Gas for $515 million. Arcapita guaranteed certain of Falcon Gas' obligations under the NorTex Purchase Agreement. The Debtors tapped Gibson, Dunn & Crutcher LLP as bankruptcy counsel, Linklaters LLP as corporate counsel, Towers & Hamlins LLP as international counsel on Bahrain matters, Hatim S Zu'bi & Partners as Bahrain counsel, KPMG LLP as accountants, Rothschild Inc. and financial advisor, and GCG Inc. as notice and claims agent. Milbank, Tweed, Hadley & McCloy LLP represents the Official Committee of Unsecured Creditors. Houlihan Lokey Capital, Inc., serves as its financial advisor and investment banker. Founded in 1996, Arcapita is a global manager of Shari'ah- compliant alternative investments and operates as an investment bank. Arcapita is not a domestic bank licensed in the United States. Arcapita is headquartered in Bahrain and is regulated under an Islamic wholesale banking license issued by the Central Bank of Bahrain. The Arcapita Group employs 268 people and has offices in Atlanta, London, Hong Kong and Singapore in addition to its Bahrain headquarters. The Arcapita Group's principal activities include investing on its own account and providing investment opportunities to third-party investors in conformity with Islamic Shari'ah rules and principles. The Arcapita Group has roughly US$7 billion in assets under management. On a consolidated basis, the Arcapita Group owns assets valued at roughly US$3.06 billion and has liabilities of roughly US$2.55 billion. The Debtors owe US$96.7 million under two secured facilities made available by Standard Chartered Bank. Arcapita explored out-of-court restructuring scenarios but was unable to achieve 100% lender consent required to effectuate the terms of an out-of-court restructuring. Subsequent to the Chapter 11 filing, Arcapita Investment Holdings Limited, a wholly owned Debtor subsidiary of Arcapita in the Cayman Islands, issued a summons seeking ancillary relief from the Grand Court of the Cayman Islands with a view to facilitating the Chapter 11 cases. AIHL sought the appointment of Zolfo Cooper as provisional liquidator. ARCAPITA BANK: Tide Reiterates Request to Lift Stay --------------------------------------------------- In response to the Bankruptcy Court's request at the Jan. 16, 2013 hearing on Falcon Gas Storage Co., Inc.'s motion for leave to file counter and third-party claims in the Hopper Adversary Proceeding to join Tide Natural Gas Storage I, LP, and Tide Natural Gas Storage II, LP, Tide filed a brief on subordination issues in further support of its motion to lift the automatic stay and in opposition to Falcon's motion (Dkt. No. 11 in Adv. No. 12-1662). Falcon has asserted that no court ever needs to consider Tide's fraud claims against it because Tide's claims can be "super subordinated" and thus, the Bankruptcy Court should take up Falcon's subordination arguments prior to any court ruling on Tide's fraud claim. According to Tide, its fraud claims must be adjudicated in order to determine whether the Escrowed Funds are property of the estate and Falcon's claims for subordination under Sec. 510(b) have no bearing on whether the Escrow Funds are property of the estate. Furthermore, even if Tide's claims were subject to subordination, the claims would still not be subject to "super subordination" as argued by Falcon and there would still be few or no other claims against the Falcon estate to which to subordinate Tide's claims. Therefore, Tide's fraud claims must be adjudicated before any distributions can be made in the Debtors' case, and for the reasons set forth in the Lift Stay Motion, such claims should be adjudicated in the District Court Action. Tide requests that the Bankruptcy Court lift the automatic stay to allow Tide to proceed with the District Court Action, deny the request of Falcon for permission to assert third party claims and counterclaims in the Hopper Adversary, and grant Tide such other and further relief as the Court deems just. A copy of Tide's brief on subordination issues is available at: http://bankrupt.com/misc/arcapita.doc808.pdf As reported in the TCR on Dec. 26, 2012, the Debtors, including Falcon, filed with the Bankruptcy Court a Status Report on (1) the Adversary Action filed by the Hopper Parties against Falcon, and (2) the related Motion for an Order Lifting the Automatic Stay Pursuant to 11 U.S.C. Section 362(d) to Allow Continuance of District Court Action filed by Tide, in which Tide claims titles to approximately $70 million of the total sales proceeds from the NorTex sale in escrow with HSBC. On Dec. 4, 2012, counsel and principals for the Hopper Parties, Tide and Falcon met in New York City before Judge John S. Martin (Ret.) in an attempt to resolve disputes. Despite the parties' efforts, the parties were unable to resolve the dispute through the Mediation. In the Status Report, the Debtors tell the Court that whether the Escrowed Money is property of the Falcon estate is a key threshold issue preventing any real progress toward settlement and is also central to the administration of Falcon's bankruptcy case. Further, because Tide's claim is based on "damages arising from the purchase or sale of a security of the debtor or an affiliate of the debtor," Tide's claim should be subordinated to the claims of the Hopper Parties and others pursuant to Section 510(b) of the Bankruptcy Code. Additionally, HSBC claims to hold a secured claim based on the Escrow Agreement. Thus, the adjudication of these threshold "core" legal issues is necessary before the claims may be resolved and Falcon's plan may be confirmed. "Tide and HSBC are indispensable to the issue pending in the Hopper Adversary Proceeding and, if Tide and HSBC are joined in the Hopper Adversary Proceeding, then all of these threshold core issues may be resolved in a single proceeding already pending before this Court," according to the Report. Falcon has filed a motion for leave to file counter and third- party claims in the Hopper Adversary Proceeding to join Tide and HSBC. The motion is scheduled to be heard by the Court at the next omnibus hearing on Jan. 16, 2013, at 11:00 a.m. "The Debtors believe that there are no disputes of material facts and that only the legal effect of those facts is at issue. Therefore, if the counter and third party claims are allowed by the Court, Falcon intends to file a motion for summary judgment when it is proper to do so under the Federal Rules of Bankruptcy Procedure." Falcon is asking the Court not to rule on the Lift Stay Motion or set it for final hearing at this point. Instead, Falcon proposes that the Court set a further status conference on both the Lift Stay Motion and the Hopper Adversary Proceeding to occur after (1) the Court has first ruled on Falcon's Motion for leave to file a counterclaim and third-party claims, and (2) the Court has adjudicated the core legal issues in response to a Motion for Summary Judgment to be filed by Falcon. About Arcapita Bank Arcapita Bank B.S.C., also known as First Islamic Investment Bank B.S.C., along with affiliates, filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 12-11076) in Manhattan on March 19, 2012. The Debtors said they do not have the liquidity necessary to repay a US$1.1 billion syndicated unsecured facility when it comes due on March 28, 2012. Falcon Gas Storage Company, Inc., later filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-11790) on April 30, 2012. Falcon Gas is an indirect wholly owned subsidiary of Arcapita that previously owned the natural gas storage business NorTex Gas Storage Company LLC. In early 2010, Alinda Natural Gas Storage I, L.P. (n/k/a Tide Natural Gas Storage I, L.P.), Alinda Natural Gas Storage II, L.P. (n/k/a Tide Natural Gas Storage II, L.P.) acquired the stock of NorTex from Falcon Gas for $515 million. Arcapita guaranteed certain of Falcon Gas' obligations under the NorTex Purchase Agreement. The Debtors tapped Gibson, Dunn & Crutcher LLP as bankruptcy counsel, Linklaters LLP as corporate counsel, Towers & Hamlins LLP as international counsel on Bahrain matters, Hatim S Zu'bi & Partners as Bahrain counsel, KPMG LLP as accountants, Rothschild Inc. and financial advisor, and GCG Inc. as notice and claims agent. Milbank, Tweed, Hadley & McCloy LLP represents the Official Committee of Unsecured Creditors. Houlihan Lokey Capital, Inc., serves as its financial advisor and investment banker. Founded in 1996, Arcapita is a global manager of Shari'ah- compliant alternative investments and operates as an investment bank. Arcapita is not a domestic bank licensed in the United States. Arcapita is headquartered in Bahrain and is regulated under an Islamic wholesale banking license issued by the Central Bank of Bahrain. The Arcapita Group employs 268 people and has offices in Atlanta, London, Hong Kong and Singapore in addition to its Bahrain headquarters. The Arcapita Group's principal activities include investing on its own account and providing investment opportunities to third-party investors in conformity with Islamic Shari'ah rules and principles. The Arcapita Group has roughly US$7 billion in assets under management. On a consolidated basis, the Arcapita Group owns assets valued at roughly US$3.06 billion and has liabilities of roughly US$2.55 billion. The Debtors owe US$96.7 million under two secured facilities made available by Standard Chartered Bank. Arcapita explored out-of-court restructuring scenarios but was unable to achieve 100% lender consent required to effectuate the terms of an out-of-court restructuring. Subsequent to the Chapter 11 filing, Arcapita Investment Holdings Limited, a wholly owned Debtor subsidiary of Arcapita in the Cayman Islands, issued a summons seeking ancillary relief from the Grand Court of the Cayman Islands with a view to facilitating the Chapter 11 cases. AIHL sought the appointment of Zolfo Cooper as provisional liquidator. ARCHDIOCESE OF MILWAUKEE: To Release Priest's Info to Police ------------------------------------------------------------ The Archdiocese of Milwaukee said it will allow a Fond du Lac police detective to review the file of a defrocked priest accused of molesting a minor, according to a report by Milwaukee Journal Sentinel. The move was in response to a motion filed last week by sex-abuse victims who asked U.S. Bankruptcy Judge Susan Kelley to make public all records, depositions and other sealed documents involving credibly accused priests and church workers, the report said. The motion accuses the archdiocese of using the bankruptcy's protective order, which is intended to shield victims, to withhold information about former priest Jerome Wagner from a Fond du Lac detective in December, The Journal Sentinel reported. Fond du Lac police are investigating allegations that Mr. Wagner molested a minor between 1997 and 2001, while he served at St. Patrick's parish there. He was restricted from ministry in 2002 and later defrocked. Archdiocese spokesman Jerry Topczewski said the archdiocese has a long-standing policy of cooperating with civil authorities investigating clergy abuse, and it blamed the lapse on an internal breakdown of communication, The Journal Sentinel reported. Mr. Topczewski said they first learned about the refusal with the filing of the motion and accused the victims' attorneys of exploiting an isolated error in an attempt to get the bankruptcy judge to revisit the protective order. The archdiocese asked the victims' attorneys to withdraw the motion, now that access to the file will be provided, according to the report. About Archdiocese of Milwaukee The Diocese of Milwaukee was established on Nov. 28, 1843, and was elevated to an Archdiocese on Feb. 12, 1875, by Pope Pius IX. The region served by the Archdiocese consists of 4,758 square miles in southeast Wisconsin which includes counties Dodge, Fond du Lac, Kenosha, Milwaukee, Ozaukee, Racine, Sheboygan, Walworth, Washington and Waukesha. There are 657,519 registered Catholics in the Region. The Catholic Archdiocese of Milwaukee, in Wisconsin, filed for Chapter 11 bankruptcy protection (Bankr. E.D. Wisc. Case No. 11-20059) on Jan. 4, 2011, to address claims over sexual abuse by priests on minors. The Archdiocese became at least the eighth Roman Catholic diocese in the U.S. to file for bankruptcy to settle claims from current and former parishioners who say they were sexually molested by priests. Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., in Milwaukee, Wisconsin, serves as the Archdiocese's counsel. The Official Committee of Unsecured Creditors in the bankruptcy case has retained Pachulski Stang Ziehl & Jones LLP as its counsel, and Howard, Solochek & Weber, S.C., as its local counsel. The Archdiocese estimated assets and debts of $10 million to $50 million in its Chapter 11 petition. (Catholic Church Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ARCHDIOCESE OF MILWAUKEE: No Statute of Limitations, Says Claimant ------------------------------------------------------------------ Claimant No. 89 filed a supplemental brief in opposition to the Archdiocese of Milwaukee's objection to Claim No. 89 on the issue of equitable estoppel. On behalf of Claimant No. 89, Rudolph J. Kuss, Esq., at Stevens & Kuss, S.C., in Brookfield, Wisconsin, says that the Archdiocese is using a January 17, 2003 letter from Daniel W. Stevens, Esq., to support the request to dismiss Claim No. 89. Mr. Kuss notes that in the February 5, 2003 reply sent by the Archdiocese's counsel, Matthew J. Flynn, Esq., Mr. Flynn stated that the Archdiocese did not have knowledge that Father Nuedling was abusing children in the 1960s. If Mr. Flynn was incorrect and the Archdiocese knew in the 1960s that Father Nuedling was abusing children, then, the Archdiocese should be equitably estopped from asserting the statute of limitations as a defense, Mr. Kuss contends. Mr. Kuss argues that discovery is needed on the issue whether or not the Archdiocese knew of Father Nuedling's conduct when it transferred him from St. Rita's to St. Lawrence's. Mr. Kuss insists that until discovery is completed, it cannot be known whether or not the Archdiocese's February 5, 2003 letter was an act of misconduct, and until then, it cannot be determined whether or not the Archdiocese should be equitably estopped from asserting the statute of limitations as a defense. About Archdiocese of Milwaukee The Diocese of Milwaukee was established on Nov. 28, 1843, and was elevated to an Archdiocese on Feb. 12, 1875, by Pope Pius IX. The region served by the Archdiocese consists of 4,758 square miles in southeast Wisconsin which includes counties Dodge, Fond du Lac, Kenosha, Milwaukee, Ozaukee, Racine, Sheboygan, Walworth, Washington and Waukesha. There are 657,519 registered Catholics in the Region. The Catholic Archdiocese of Milwaukee, in Wisconsin, filed for Chapter 11 bankruptcy protection (Bankr. E.D. Wisc. Case No. 11-20059) on Jan. 4, 2011, to address claims over sexual abuse by priests on minors. The Archdiocese became at least the eighth Roman Catholic diocese in the U.S. to file for bankruptcy to settle claims from current and former parishioners who say they were sexually molested by priests. Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., in Milwaukee, Wisconsin, serves as the Archdiocese's counsel. The Official Committee of Unsecured Creditors in the bankruptcy case has retained Pachulski Stang Ziehl & Jones LLP as its counsel, and Howard, Solochek & Weber, S.C., as its local counsel. The Archdiocese estimated assets and debts of $10 million to $50 million in its Chapter 11 petition. (Catholic Church Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ARCHDIOCESE OF MILWAUKEE: Church Bleeding Cash ---------------------------------------------- Jay Sorgi, writing for todaystmj4.com, reports Jerry Topczewski, the chief of staff of the Archdiocese of Milwaukee, says bankruptcy proceedings are putting Milwaukee's Catholic Church in a 'dire situation.' However, Mr. Topczewski told Newsradio 620 WTMJ's "Wisconsin's Morning News" that "The Church isn't going out of business by any means." The Journal Sentinel reports the Archdiocese filed court documents showing that it's losing so much money on legal fees that, under current legal demands, it will no longer be able to pay its regular operational expenses after Easter Sunday. It's asking Federal Judge Susan Kelley to let them stop making payments to lawyers except for reorganization. "It's a dire situation in the sense that the Archdiocese does not have a lot of resources. A lot of people think the Church is rich. Financially, the Archdiocese runs on a very small, balanced budget," explained Mr. Topczewski. "The Archdiocese has expenses. Those moneys have been eaten up by attorneys as we try to move through this bankruptcy in a responsible way." The Jan. 26 edition of the Troubled Company Reporter published a summary of the Archdiocese of Milwaukee's financial report for December 2012. About Archdiocese of Milwaukee The Diocese of Milwaukee was established on Nov. 28, 1843, and was elevated to an Archdiocese on Feb. 12, 1875, by Pope Pius IX. The region served by the Archdiocese consists of 4,758 square miles in southeast Wisconsin which includes counties Dodge, Fond du Lac, Kenosha, Milwaukee, Ozaukee, Racine, Sheboygan, Walworth, Washington and Waukesha. There are 657,519 registered Catholics in the Region. The Catholic Archdiocese of Milwaukee, in Wisconsin, filed for Chapter 11 bankruptcy protection (Bankr. E.D. Wisc. Case No. 11-20059) on Jan. 4, 2011, to address claims over sexual abuse by priests on minors. The Archdiocese became at least the eighth Roman Catholic diocese in the U.S. to file for bankruptcy to settle claims from current and former parishioners who say they were sexually molested by priests. Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., in Milwaukee, Wisconsin, serves as the Archdiocese's counsel. The Official Committee of Unsecured Creditors in the bankruptcy case has retained Pachulski Stang Ziehl & Jones LLP as its counsel, and Howard, Solochek & Weber, S.C., as its local counsel. The Archdiocese estimated assets and debts of $10 million to $50 million in its Chapter 11 petition. (Catholic Church Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ATARI INC: Gets New DIP Lender as Judge Blasts Prior Deal --------------------------------------------------------- Brian Mahoney of BankruptcyLaw360 reported that the U.S.-based arm of French video game company Atari SA on Thursday found a new debtor-in-possession lender to facilitate a quick exit from Chapter 11, the same day that a New York federal bankruptcy judge blasted the original DIP loan from Tenor Capital Management Co. LP funds as "extraordinary and offensive." At the case's first-day hearing, Atari's counsel Peter S. Partee of Hunton & Williams LLP told U.S. Bankruptcy Judge James M. Peck that he had spent much of Wednesday night and early Thursday morning hammering the deal, the report related. Joseph Checkler at Dow Jones' DBR Small Cap reports that a judge on Thursday said Atari Inc. could begin borrowing on a $5 million loan from distressed investment firm Alden Global Capital, a new financing package that came together after Atari's largest creditor sold its entire claim to Alden. About Atari Atari -- http://www.atari.com-- is a multi-platform, global interactive entertainment and licensing company. Atari owns and/or manages a portfolio of more than 200 games and franchises, including world renowned brands like Asteroids(R), Centipede(R), Missile Command(R), Pong(R), Test Drive(R), Backyard Sports(R), and Rollercoaster Tycoon(R). Atari Inc. and its U.S. affiliates filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Lead Case No. 13-10176) on Jan. 21, 2013, to break away from their unprofitable French parent company and secure independent capital. Peter S. Partee, Sr. and Michael P. Richman of Hunton & Williams LLP are proposed to serve as lead counsel for the U.S. companies in their respective Chapter 11 cases. BMC Group is the claims and notice agent. Protiviti Inc. is the financial advisor. ATP OIL: Sale Procedures' Approval Sought ----------------------------------------- BankruptcyData reported that ATP Oil & Gas filed with the U.S. Bankruptcy Court a motion for approval of bid and auction procedures related to the sale of substantially all of its remaining assets, including the Debtors' deepwater properties, deepwater facilities and related assets. The Debtors have yet to indentify a stalking horse bidder for the assets, the report said. The Court scheduled a February 14, 2013 hearing to consider the motion and the proposed bid procedures. About ATP Oil Houston, Tex.-based ATP Oil & Gas Corporation is an international offshore oil and gas development and production company focused in the Gulf of Mexico, Mediterranean Sea and North Sea. ATP Oil & Gas filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-36187) on Aug. 17, 2012. Attorneys at Mayer Brown LLP, serve as bankruptcy counsel. Munsch Hardt Kopf & Harr, P.C., is the conflicts counsel. Opportune LLP is the financial advisor and Jefferies & Company is the investment banker. Kurtzman Carson Consultants LLC is the claims and notice agent. Filings with the Bankruptcy Court and claims information are available at http://www.kccllc.net/atpog ATP disclosed assets of $3.6 billion and $3.5 billion of liabilities as of March 31, 2012. Debt includes $365 million on a first-lien loan where Credit Suisse AG serves as agent. There is $1.5 billion on second-lien notes with Bank of New York Mellon Trust Co. as agent. ATP's other debt includes $35 million on convertible notes and $23.4 million owing to third parties for their shares of production revenue. Trade suppliers have claims for $147 million, ATP said in a court filing. An official committee of unsecured creditors has been appointed in the case. Evan R. Fleck, Esq., at Milbank, Tweed, Hadley & McCloy, in New York, represents the Creditors Committee as counsel. AVCORP INDUSTRIES: Ceases Bombardier Litigation in Quebec Court --------------------------------------------------------------- Avcorp Industries Inc. on Jan. 24 disclosed that it has ceased any and all litigation against Bombardier Inc. which was commenced in 2010 by the Company in the Superior Court of Quebec, in connection with the termination by Bombardier of production work relating to the CRJ700 aircraft program. The Company and Bombardier agreed that each will be responsible for their respective costs. Avcorp is actively pursuing participation in Bombardier's supply chain for several of Bombardier's programs. The Company currently produces components for the Bombardier Challenger 605 and Challenger 850 business jets as well as composite floorboards for the CRJ, Q400, and Learjet programs. The Company looks forward to continuing its valued relationship as a supplier to Bombardier, the leading Canadian aerospace manufacturer. About Avcorp Avcorp designs and builds major airframe structures for some of the world's leading aircraft companies, including Boeing, Bombardier, and Cessna. With more than 50 years of experience, 473 skilled employees and 354,000 square feet of facilities, Avcorp offers integrated composite and metallic aircraft structures to aircraft manufacturers, a distinct advantage in the pursuit of contracts for new aircraft designs, which require lower-cost, light-weight, strong, reliable structures. Avcorp is a Canadian public company traded on the Toronto Stock Exchange (CA:AVP). As reported by the Troubled Company Reporter on April 5, 2011, as at Dec. 31, 2010, the Company was not in compliance with financial covenants associated with its operating lines of credit. In the absence of obtaining a waiver of such breach, the lender is entitled to demand immediate payment. Also, as at Dec. 31, 2010, the Company was not in compliance with a financial covenant associated with the convertible debenture held by Export Development Canada. The Company has obtained a waiver from the debenture holder for this non-compliance. Principal and interest on this loan are due March 31, 2011. AVCORP INDUSTRIES: Ceases Litigation with Bombardier in Quebec -------------------------------------------------------------- Avcorp Industries Inc. on Jan. 25 disclosed that it has ceased any and all litigation against Bombardier Inc. which was commenced in 2010 by the Company in the Superior Court of Quebec, in connection with the termination by Bombardier of production work relating to the CRJ700 aircraft program. The Company and Bombardier agreed that each will be responsible for their respective costs and Bombardier has not paid any consideration to Avcorp to dismiss the case. Avcorp is actively pursuing participation in Bombardier's supply chain for several of Bombardier's programs. The Company currently produces components for the Bombardier Challenger 605 and Challenger 850 business jets as well as composite floorboards for the CRJ, Q400, and Learjet programs. The Company looks forward to continuing its valued relationship as a supplier to Bombardier, the leading Canadian aerospace manufacturer. About Avcorp Avcorp designs and builds major airframe structures for some of the world's leading aircraft companies, including Boeing, Bombardier, and Cessna. With more than 50 years of experience, 473 skilled employees and 354,000 square feet of facilities, Avcorp offers integrated composite and metallic aircraft structures to aircraft manufacturers, a distinct advantage in the pursuit of contracts for new aircraft designs, which require lower-cost, light-weight, strong, reliable structures. Avcorp is a Canadian public company traded on the Toronto Stock Exchange (CA:AVP). As reported by the Troubled Company Reporter on April 5, 2011, as at Dec. 31, 2010, the Company was not in compliance with financial covenants associated with its operating lines of credit. In the absence of obtaining a waiver of such breach, the lender is entitled to demand immediate payment. Also, as at Dec. 31, 2010, the Company was not in compliance with a financial covenant associated with the convertible debenture held by Export Development Canada. The Company has obtained a waiver from the debenture holder for this non-compliance. Principal and interest on this loan are due March 31, 2011. BAKERS FOOTWEAR: Robert J. Blackwell Named Chapter 7 Trustee ------------------------------------------------------------ E.B. Solomont, writing for St. Louis Business Journal, reports that Robert J. Blackwell, Esq., has been appointed trustee in Bakers Footwear Group's Chapter 7 bankruptcy proceedings. Mr. Blackwell, principal of Blackwell & Associates PC in O'Fallon, was named trustee on Jan. 21 and will operate the business as it sells off its inventory and other assets. The report also notes Bakers' assets include 56 leased stores, footwear inventory, a website and intellectual property that Blackwell estimated has a value of $5 million to $7 million, according to court documents. Salus Capital Partners LLC, the company's DIP lender, agreed to pay all of the costs and expenses of operating Bakers in Chapter 7, including payroll, payroll and sales taxes, lease payments and Chapter 7 administrative costs, according to court documents. About Bakers Footwear Bakers Footwear Group Inc., a mall-based retailer of shoes for young women, filed for bankruptcy protection (Bankr. E.D. Mo. Case No. 12-49658) in St. Louis on Oct. 3, 2012, after announcing a plan to close stores and reduce costs. Bakers was founded in St. Louis in 1926 as Weiss-Kraemer, Inc., later renamed Weiss and Neuman Shoe Co., a regional chain of footwear stores. In 1997, Bakers was acquired principally by its current chief executive officer, Peter Edison, who had previously served in various senior management positions at Edison Brothers Stores Inc. In June 1999, Bakers purchased selected assets of the "Bakers" and "Wild Pair" footwear retailing chains from the bankruptcy estate of Edison Brothers. The "Bakers" footwear retailing chain was founded in 1924 and is the third-oldest soft goods retail concept still in operation in the United States. In February 2001, the Debtor changed its name to Bakers Footwear Group, Inc. In February 2004, Bakers conducted an initial public offering of its common stock. Bakers' common stock is quoted under the ticker symbol "BKRS" on the, the OTC Markets Group's quotation platform. As of the Petition Date, Bakers operates roughly 215 stores nationwide. In November 2012, the U.S. Bankruptcy Court in St. Louis authorized the company to hire a joint venture between SB Capital Group LLC and Tiger Capital Group LLC as agents to conduct closing sales for 150 stores. Bankruptcy Judge Charles E. Rendlen III presides over the case. Brian C. Walsh, Esq., David M. Unseth, Esq., and Laura Uberti Hughes, Esq., at Bryan Cave LLP, serve as the Debtor's counsel. Alliance Management serves as financial and restructuring advisors. Donlin, Recano & Company, Inc., serves as claims agent. The petition was signed by Peter A. Edison, chief executive officer and president. The Company's balance sheet at April 28, 2012, showed $41.90 million in total assets, $59.49 million in total liabilities and a $17.59 million total shareholders' deficit. Counsel for Crystal Financial, the DIP Lender, are Donald E. Rothman, Esq., at Riemer & Braunstein LLP; and Lisa Epps Dade, Esq., at Spencer, Fane, Britt & Brown, LLP. Bradford Sandler, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Official Committee of Unsecured Creditors. BAKERS FOOTWEAR: Great American Group to Handle Liquidation ----------------------------------------------------------- Great American Group, Inc. has been selected to handle the liquidation of Bakers Footwear Group, Inc., offering discounts for products in 56 of Bakers Footwear Groups' remaining stores, as well as online at http://www.bakersshoes.com "We are offering significant discounts online and on all store items, so consumers will have the opportunity to purchase quality, name-brand women's shoes at steep discounts," said Scott Carpenter, President of Great American Group's Retail Division. With merchandise being sold for at least 40 percent off, Carpenter urges shoppers to head to their local stores or visit the website soon for the best selection. Bakers locations in Alabama, California, Connecticut, Florida, Georgia, Illinois, Kansas, Kentucky, Louisiana, Michigan, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Texas, and Virginia are part of the sale event, which is also being conducted online at http://www.bakersshoes.com On Jan. 15, 2013 a bankruptcy judge for the U.S. Bankruptcy Court in St. Louis signed a Chapter 7 order allowing Bakers Footwear Group to conduct going-out-of-business sales at its remaining stores. Bakers Footwear Group is the third shoe retailer that has selected Great American Group to liquidate stores over the past 18 months. Great American Group assisted Payless ShoeSource and Sterling Shoes with store restructuring projects, consolidating store locations for both companies in 2011 and 2012. Bakers Footwear Group, once a leading national mall-based retailer of shoes for young women, operated 236 Bakers and Wild Pair shoe stores in 37 states before filing for Chapter 11 bankruptcy last October due to declining sales. At that time, the company hired GA Keen Realty Advisors, LLC of New York, a division of Great American Group, to market leases for 150 Bakers and Wild Pair shoe store locations in 31 states. About Great American Group Great American Group -- http://www.greatamerican.com-- is a provider of asset disposition and auction solutions, advisory and valuation services, capital investment, and real estate advisory services for an extensive array of companies. The corporate headquarters is located in Woodland Hills, Calif. with additional offices in Atlanta, Boston, Charlotte, N.C., Chicago, Dallas, New York, San Francisco and London. About Bakers Footwear Bakers Footwear Group Inc., a mall-based retailer of shoes for young women, filed for bankruptcy protection (Bankr. E.D. Mo. Case No. 12-49658) in St. Louis on Oct. 3, 2012, after announcing a plan to close stores and reduce costs. Bakers was founded in St. Louis in 1926 as Weiss-Kraemer, Inc., later renamed Weiss and Neuman Shoe Co., a regional chain of footwear stores. In 1997, Bakers was acquired principally by its current chief executive officer, Peter Edison, who had previously served in various senior management positions at Edison Brothers Stores Inc. In June 1999, Bakers purchased selected assets of the "Bakers" and "Wild Pair" footwear retailing chains from the bankruptcy estate of Edison Brothers. The "Bakers" footwear retailing chain was founded in 1924 and is the third-oldest soft goods retail concept still in operation in the United States. In February 2001, the Debtor changed its name to Bakers Footwear Group, Inc. In February 2004, Bakers conducted an initial public offering of its common stock. Bakers' common stock is quoted under the ticker symbol "BKRS" on the, the OTC Markets Group's quotation platform. As of the Petition Date, Bakers operates roughly 215 stores nationwide. In November 2012, the U.S. Bankruptcy Court in St. Louis authorized the company to hire a joint venture between SB Capital Group LLC and Tiger Capital Group LLC as agents to conduct closing sales for 150 stores. Bankruptcy Judge Charles E. Rendlen III presides over the case. Brian C. Walsh, Esq., David M. Unseth, Esq., and Laura Uberti Hughes, Esq., at Bryan Cave LLP, serve as the Debtor's counsel. Alliance Management serves as financial and restructuring advisors. Donlin, Recano & Company, Inc., serves as claims agent. The petition was signed by Peter A. Edison, chief executive officer and president. The Company's balance sheet at April 28, 2012, showed $41.90 million in total assets, $59.49 million in total liabilities and a $17.59 million total shareholders' deficit. Counsel for Crystal Financial, the DIP Lender, are Donald E. Rothman, Esq., at Riemer & Braunstein LLP; and Lisa Epps Dade, Esq., at Spencer, Fane, Britt & Brown, LLP. Bradford Sandler, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Official Committee of Unsecured Creditors. BEALL CORP: Wabash National Agrees to Acquire Certain Assets ------------------------------------------------------------ Wabash National Corporation on Jan. 25 disclosed that it has entered into a definitive agreement to acquire certain assets of the tank and trailer business of Beall Corporation, a Portland, Oregon-based manufacturer of aluminum tank trailers and related equipment, for approximately $15 million in cash. The acquisition is expected to close during the first quarter of 2013. "This acquisition represents the latest step in our ongoing initiative to diversify outside of our core Commercial Trailer Products business. Additionally, these assets and the Beall brand name strategically complement our Walker Group business through product portfolio expansion and geographic growth in the West," said Wabash National President and Chief Executive Officer, Dick Giromini. "Beall has a long-standing reputation for industry- leading product designs and quality. We're excited about strengthening our tank trailer offering with another premier brand as we continue to identify opportunities to further grow and enhance shareholder value." Commenting on the transaction, President of the Walker Group, Doug Chapple said, "Established in 1905, the Beall brand further enhances our industry-leading liquid tank product lines which include Walker Transport and Brenner Tank. The addition of Beall's 406 Petroleum tank trailer and Dry Bulk product line will open up new markets providing the broadest product portfolio in the tank industry and with the addition of production capabilities in Portland, Oregon, creates a truly nationwide footprint." Beall Corporation began Chapter 11 reorganization proceedings in September of 2012, followed by a bankruptcy-court approved auction of its assets in December. Wabash National was the winning bidder for certain assets of Beall's tank and trailer business, including its Portland, Oregon manufacturing facility, as well as equipment, inventory, certain product designs, intellectual property and other related assets. The closing of the transaction is subject to the Bankruptcy Court for the District of Oregon entering a final order approving the acquisition by Wabash National pursuant to and in accordance with the definitive agreement. The Company will provide additional information and discuss this transaction during its Fourth Quarter and Year-end earnings release conference call scheduled for Wednesday, February 6, 2013, at 10:00 a.m. EST. The phone number to access the conference call is 888-771-4371, participant code 34129820. A live audio webcast of the call will be available through the company's Web site at http://www.wabashnational.com About Wabash National Corporation Headquartered in Lafayette, Indiana, Wabash National Corporation -- http://www.wabashnational.com-- is a diversified industrial manufacturer and North America's leading producer of semi trailers and liquid transportation systems. Established in 1985, the company specializes in the design and production of dry freight vans, refrigerated vans, platform trailers, intermodal equipment, liquid tank trailers, frac tanks, engineered products, and composite products. Wabash National operates three wholly-owned subsidiaries: Transcraft Corporation, Walker Group Holdings LLC and Wabash National Trailer Centers, Inc. Its innovative products are sold under the following brand names: Wabash National(R), Transcraft(R), Benson(R), DuraPlate(R), ArcticLite(R), Walker Transport, Walker(R) Stainless Equipment, Walker(R) Defense Group, Walker(R) Barrier Systems, Walker(R) Engineered Products, Brenner(R) Tank, GarsiteTM, Progress TankTM, TST(R), Bulk Tank InternationalTM and Extract Technology(R). About Beall Corp. Portland, Oregon-based Beall Corporation, a manufacturer of lightweight, efficient, and durable tanker trucks, trailers and related products, filed a Chapter 11 bankruptcy petition (Bankr. D. Ore. Case No. 12-37291) on Sept. 24, 2012, estimating at least $10 million in assets and liabilities. Founded in 1905, Beall has four factories and nine sale branches across the U.S. The Debtor has 285 employees, with an average weekly payroll of $300,000. Judge Elizabeth L. Perris presides over the case. The Debtor has tapped Tonkon Torp LLP as counsel. The Debtor disclosed $14,015,232 in assets and $28,791,683 in liabilities as of the Chapter 11 filing. Robert D. Miller Jr., the U.S. Trustee for Region 18, appointed six members to the official committee of unsecured creditors. Ball Janik LLP represents the Committee. BEALL CORP: Wash. Revenue Dept. Loses Case Dismissal Bid -------------------------------------------------------- The Hon. Elizabeth Perris of the U.S. Bankruptcy Court for the District of Oregon denied the request of the State of Washington Department of Revenue to dismiss the Chapter 11 bankruptcy case of Beall Corporation. According to the Troubled Company Reporter on Jan. 9, 2013, the Department of Revenue told the Court the Debtor failed to remit the August 2012 sales tax in the amount of $13,481.22 (due Sept. 25, 2012) and the September 2012 sales tax in the amount of $10,816.15 (due Oct. 25, 2012), in violation of 11 U.S.C. Sec. 1112(a)(4)(1) and 28 U.S.C. Sec. 959(b). About Beall Corporation Portland, Oregon-based Beall Corporation, a manufacturer of lightweight, efficient, and durable tanker trucks, trailers and related products, filed a Chapter 11 bankruptcy petition (Bankr. D. Ore. Case No. 12-37291) on Sept. 24, 2012, estimating at least $10 million in assets and liabilities. Founded in 1905, Beall has four factories and nine sale branches across the U.S. The Debtor has 285 employees, with an average weekly payroll of $300,000. Judge Elizabeth L. Perris presides over the case. The Debtor has tapped Tonkon Torp LLP as counsel. The Debtor disclosed $14,015,232 in assets and $28,791,683 in liabilities as of the Chapter 11 filing. Robert D. Miller Jr., the U.S. Trustee for Region 18, appointed six members to the official committee of unsecured creditors. Ball Janik LLP represents the Committee. BIG PAPA'S: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Big Papa's BBQ, Inc. dba Big Papa's BBQ fdba Big Papa's BBQ Bar And Grill 6265 E. Evans Avenue, Unit #1 Denver, CO 80222 Bankruptcy Case No.: 13-10882 Chapter 11 Petition Date: January 23, 2013 Court: U.S. Bankruptcy Court District of Colorado (Denver) Judge: Michael E. Romero Debtor's Counsel: Guy B. Humphries, Esq. 1801 Broadway, Suite 1100 Denver, CO 80202 Tel: (303) 832-0029 Fax: (303) 382-4165 E-mail: guyhumphries@msn.com Scheduled Assets: $35,950 Scheduled Liabilities: $1,224,416 A copy of the Company's list of its 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/cob13-10882.pdf The petition was signed by Frank A Alfonso, CEO. BIOLITEC INC: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Biolitec, Inc. 515 Shaker Road East Longmeadow, MA 01028 Bankruptcy Case No.: 13-11157 Chapter 11 Petition Date: January 22, 2013 Court: U.S. Bankruptcy Court District of New Jersey (Newark) About the Debtor: Biolitec Inc. is a member of the Biolitec Group, a multinational group of affiliated companies that is a global market leader in the manufacture and distribution of fiber optic devices and products such as medical lasers and fibers, photo-pharmaceuticals and industrial fiber optics. Biolitec AG, a German public company listed on the highly regulated Prime Standard segment of the Frankfurt stock exchange, is the ultimate parent of the Debtor. Debtor's Counsel: Kenneth A. Rosen, Esq. LOWENSTEIN SANDLER, LLP 65 Livingston Avenue Roseland, NJ 07068 Tel: (973) 597.2500 Fax: (973) 597.2400 E-mail: krosen@lowenstein.com - and ? Paul Kizel, Esq. LOWENSTEIN SANDLER, LLP 65 Livingston Avenue Roseland, NJ 07068 Tel: (973) 597-2500 Fax: (973) 597-2400 E-mail: pkizel@lowenstein.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The petition was signed by Brian K. Foley, chief operating officer. Debtor's List of Its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ AngioDynamics, Inc. Litigation $23,156,287 603 Queensbury Avenue Queensbury, NY 12804 Covidien Trade Debt $232,920 15 Hampshire Street Mansfield, MA 02048 McCarter & English, LLP Professional Fees $187,177 Four Gateway Center Newark, NJ 07102 Michael Page International Trade Debt $15,250 University of Oklahoma Trade Debt $10,000 Lincoln Financial Group ER Contributions $9,426 Skyline Exhibits & Graphics Trade Debt $4,907 Manufacturing Technology, Inc. Trade Debt $3,825 Mauriello MD, John Trade Debt $3,000 Astrex, Inc. Trade Debt $2,580 Integrity Graphics, Inc. Trade Debt $2,437 Vein Therapy News Trade Debt $2,300 Zeus Industrial Products, Inc. Trade Debt $1,836 Health Canada Trade Debt $1,685 Service First Trade Debt $1,363 Federal Express Trade Debt $1,171 Columbia Gas Trade Debt $1,115 Shared Technologies, Inc. Trade Debt $1,073 Southwest Airlines Cargo Trade Debt $782 PIP Printing Trade Debt $700 BIOPURE CORP: Massachusetts Agency Loses 1st Cir. BAP Appeal ------------------------------------------------------------ The Bankruptcy Appellate Panel for the First Circuit affirmed a bankruptcy court order enforcing the sale of assets of PBBPC, Inc., formerly known as Biopure Corporation, free and clear of any interest, including the right of the Massachusetts Department of Unemployment Assistance to tax the purchaser at the debtor's unemployment contribution rate. The appellate case is, MASSACHUSETTS DEPARTMENT OF UNEMPLOYMENT ASSISTANCE, Appellant, v. OPK BIOTECH, LLC, Appellee, BAP No. MB 12-042 (1st Cir. BAP). A copy of the Court's Jan. 17, 2013 decision is available at http://is.gd/NTcwQafrom Leagle.com. The bankruptcy court decision was reported in the March 1, 2012 edition of the Troubled Company Reporter. Based in Cambridge, Massachusetts, BioPure Corporation -- http://www.biopure.com/-- developed and marketed pharmaceuticals, called oxygen therapeutics, which were intravenously administered to deliver oxygen to the body's tissues. BioPure filed for Chapter 11 bankruptcy protection on July 16, 2009 (Bankr. D. Mass. Case No. 09-16725). Christopher J. Panos, Esq., at Craig and Macauley, P.C., assisted the Debtor in its restructuring efforts. The Debtor listed $5,076,000 in assets and $2,729,000 in debts. On Aug. 20, 2009, the Debtor sold substantially all of its assets to OPK, which prevailed at an auction with a bid of $4,050,000. BioPure changed its name to PBBPC, Inc. BLUEGREEN CORP: Signs Marketing Alliance With Choice Hotels ----------------------------------------------------------- Bluegreen Corporation's wholly-owned subsidiaries, Bluegreen Vacations and Bluegreen Resorts Management, Inc., have entered into multi-year strategic alliance agreements with Choice Hotels International, Inc., which, among other things, name Bluegreen Vacations the "Official Vacation Ownership Provider of Choice Hotels." One of the largest and most successful lodging companies in the world, Choice Hotels currently franchises approximately 6,200 hotels, representing more than 495,000 rooms, in the United States and more than 30 countries and territories. The agreements between Bluegreen and Choice: * will allow Bluegreen Vacations to leverage Choice's brands and customer relationships to expand its vacation ownership offerings; * will brand 21 Bluegreen Vacation Club resorts as part of the Choice Hotels AscendTM Hotel Collection. Launched in fall 2008, Ascend Hotel Collection is a network of historic, boutique and unique hotels that offer guests an authentic, local experience. Today, Ascend Hotel Collection offers upscale independent hotels in the United States, Canada, Scandinavia and Latin America; * combines components of the Choice Hotels loyalty program, Choice Privileges(R), with Bluegreen Vacations' owner travel benefit program, TravelerPlusTM, so that all TravelerPlusTM participants will be eligible to enroll as members of Choice Privileges(R) and will be upgraded to Elite Gold status and receive special benefits. This will provide TravelerPlusTM members with access to all of the Choice hotels worldwide, including the more than 75 hotels in the Ascend Hotel Collection. Additionally, all Bluegreen Vacations' owners will be eligible to access discounted rates at all 6,200 Choice hotels, subject to availability. Choice's popular brands, which include Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge and Rodeway Inn brands, as well as its Ascend Hotel Collection membership program, range from limited-service to full-service and from economy to upscale, offering business and leisure travelers an array of high- value, high-quality options. Bluegreen believes that the agreements will provide it with the opportunity to introduce Bluegreen Vacations' offerings to Choice Hotels' expansive consumer base. "We look forward to a long and mutually beneficial relationship with Choice Hotels," Bluegreen President and CEO John M. Maloney, Jr. said. "While we certainly believe that we will benefit from the marketing opportunities, we are also excited by the other aspects of our alliance with Choice Hotels. We expect that this arrangement will add value for our current owners and will be very attractive to prospective owners based on the credibility of the Choice Hotel brands and the appeal of our expanded product offerings." Steve Joyce, President and CEO of Choice Hotels International said, "Bluegreen Vacations' experience and marketing innovation in the timeshare industry is unparalleled and they have created great ownership packages in premier destinations that appeal to 170,000 loyal Bluegreen Vacation Club owners. Choice Hotels International looks forward to working with Bluegreen Vacations to leverage our diverse range of brands, our Choice Privileges(R) loyalty program and the strength of our marketing channels. We look forward to a long and strong relationship with Bluegreen Vacations." Investor Presentation Bluegreen furnished materials which were prepared to be included in presentations to be given by the Company's management starting on Jan. 27, 2013. The Company disclosed, among other things, that as of Dec. 31, 2012, it had $87.59 million available under its credit facilities. The slides to be included in those presentations which contain certain information relating to the Company that has not previously been made publicly available are available at http://is.gd/1dIBhD About Bluegreen Corp. Bluegreen Corporation -- http://www.bluegreencorp.com/-- provides places to live and play through its resorts and residential community businesses. The Company reported a net loss of $17.25 million in 2011, compared with a net loss of $43.96 million in 2010. The Company's balance sheet at Sept. 30, 2012, showed $1.06 billion in total assets, $720.24 million in total liabilities and $340.77 million in total shareholders' equity. * * * In December 2010, Standard & Poor's Rating Services raised its corporate credit rating on Bluegreen Corp to 'B-' from 'CCC'. BROOKE CORP: Kansas Court Rules in Unicredit v. Eastman ------------------------------------------------------- Kansas District Judge J. Thomas Marten granted, in part, and denied, in part, the defendants' motion to dismiss the case, UNICREDIT BANK AG, NEW YORK BRANCH, f/k/a/ BAYERISCHE HYPO-UND VEREINSBANK AG, as agent for THE BANK OF NEW YORK MELLON, Plaintiff, v. DEBORAH R. EASTMAN, INC., et al., Defendants, Case No. 12-2249-JTM (D. Kan.). UniCredit brought the action on a defaulted loan, as agent for The Bank of New York Mellon, which was the indenture trustee under the Indentures. Mellon is the party in interest under the loan and the related commercial loan agreement and other relevant loan documents. Deborah R. Eastman, Inc., is the obligor of the loan. Deborah R. Eastman, in her personal capacity, is the guarantor of the loan received by the Eastman Agency. The action arises from the defendants' defaults under the loan documents and related guaranty, which allegedly caused damage to the plaintiff. The plaintiff and the defendants are connected by a securitization, also known as an asset-backed security arrangement. The dispute begins with Brooke Credit Corp., an entity located in Kansas that sponsored a number of securitizations. BCC was in the business of underwriting and making loans to duly licensed insurance agents, including the Eastman Agency. On March 28, 2003, Ms. Eastman, in her personal capacity, executed and delivered her Personal Guaranty to BCC providing that she would "absolutely and unconditionally" guarantee the debt of the Eastman Agency. On Sept. 30, 2003, BCC and the Eastman Agency executed an Agreement for Advancement of Loan establishing the terms of their lender/borrower relationship. Pursuant to the Eastman Loan Agreement, the Eastman Agency executed a Commercial Security Agreement granting BCC a security interest and lien in all assets used to operate the Eastman Agency. BCC perfected this security interest on Oct. 20, 2003, by filing a U.C.C. financing statement. On Feb. 28, 2006, BCC lent $745,459.52 to the Eastman Agency through Loan No. 5084, which referred to and incorporated the terms of the Eastman Loan Agreement and Security Agreement. The Eastman Agency used the loan proceeds to purchase insurance agency assets and for other agency-related purposes. To proceed with its securitizations, BCC created special purpose entities to which it sold various loans. In exchange, the SPEs would pay cash they had raised by issuing Notes. The specific securitization at issue here was formed through BCC's creations of the SPE Brooke Securitization Company 2006-1, LLC. BCC sold several loans in an asset pool to BSC 2006-1 by executing the Sale and Servicing Agreement. The asset pool included Loan No. 5084 from BCC to the Eastman Agency. BCC sold the loans in exchange for cash raised by BSC 2006-1 through its issuance of Notes. On July 1, 2006, BSC 2006-1 issued $52,346,089 in Notes pursuant to the Indenture. In the Indenture, BSC 2006-1 was the issuer and Mellon was the trustee. In exchange for the Notes issued in the Indenture, BSC 2006-1 assigned the collateral asset pool to Mellon, as security on behalf of the investors. This security took the form of a first priority perfected security interest in, and lien upon, virtually all of BSC 2006-1's assets, including its right, title and interest in the asset pool acquired from BCC, the security for the loans in the asset pool, the guaranties of the loans in the asset pool, and the proceeds of the foregoing. UniCredit became a Noteholder, acquiring 100% of the Notes issued in the Indenture. In 2008, BSC 2006-1 defaulted on its obligations under the Notes by failing to remit payments on those Notes. On Oct. 9, 2008, UniCredit sent a letter notifying Mellon of the default and instructing it to demand accelerated payment of the remainder due on the Notes and to take all permitted action against the collateral securing the Notes. Pursuant to a letter agreement and Power of Attorney dated October 22, 2008, Mellon designated UniCredit as its agent to take all actions with respect to the rights and remedies permitted under the Indenture, including collection on the collateral. On Oct. 28, 2008, several Brooke entities filed for Chapter 11 bankruptcy in U.S. District Court for the District of Kansas. The court entered an order permitting Mellon and UniCredit to enforce their rights and remedies including the right to foreclose on the collateral assigned to Mellon in the Indenture. Additionally, the Eastman Agency allegedly failed to remit payment when due, defaulting on Loan No. 5084. Ms. Eastman has also refused and failed to make payments due under her Personal Guaranty. UniCredit -- on behalf of Mellon -- filed suit in Kansas court, seeking to collect on Loan No. 5084 through the rights it has acquired through the chain of transactions in this securitization and subsequent defaults by the BSC 2006-1, the Eastman Agency, and Ms. Eastman. UniCredit alleges these causes of action: (I) Action on the Loan Against the Eastman Agency; (II) Action on the Guaranty Against Deborah R. Eastman; (III) Detinue and Collateral foreclosure Judgment Against the Eastman Agency; (IV) Quantum Meruit Against all Defendants; (V) Breach of Implied Covenant of good Faith and Fair Dealing Against all Defendants; (VI) Conversion Against all Defendants; and (VII) Account Notice/Declaratory Relief Against all Defendants. The Defendants filed a Motion to Dismiss, arguing that (1) UniCredit has not proved a valid chain of title sufficient for standing, and (2) Unicredit has failed to state a claim in claims IV, V, and VI. In last week's ruling, Judge Marten held that UniCredit has sufficiently established a chain of transactions that ultimately assigned it the rights necessary for standing in the case. The Court finds that none of the defects alleged by the defendants negate UniCredit's standing. The Court dismisses UniCredit's quantum meruit claim for failing to allege that it has conferred a benefit on the defendants. The Court does not dismiss UniCredit's breach of implied covenant and conversion claims. A copy of the Court's Jan. 22, 2013 Memorandum and Order is available at http://is.gd/Qxbli0from Leagle.com. About Brooke Corp. Based in Kansas, Brooke Corp. -- http://www.brookebanker.com/-- was an insurance agency and finance company. The company owned 81% of Brooke Capital. The majority of the company's stock was owned by Brooke Holding Inc., which, in turn was owned by the Orr Family. A creditor of the family, First United Bank of Chicago, foreclosed on the BHI stock. The company's revenues were generated from sales commissions on the sales of property and casualty insurance policies, consulting, lending and brokerage services. Brooke Corp. and Brooke Capital Corp. filed separate petitions for Chapter 11 relief on Oct. 28, 2008; Brooke Investments, Inc. filed for Chapter 11 relief on Nov. 3, 2008 (Bankr. D. Kan. Lead Case No. 08-22786). Angela R. Markley, Esq., was the Debtors' in-house counsel. Albert Riederer was appointed as the Debtors' Chapter 11 trustee. He acted as special master of Brooke in prepetition federal court proceedings. Benjamin F. Mann, Esq., John J. Cruciani, Esq., and Michael D. Fielding, Esq,, at Husch Blackwell Sanders LLP, and Kathryn B. Bussing, Esq., at Blackwell Sanders LLP, represented the Chapter 11 trustee as counsel. David A. Abadir, Esq., and Robert J. Feinstein, Esq., at Pachulski Stang Ziehl & Jones LLP, Kristen F. Trainor, Esq., and Mark Moedritzer, Esq., at Shook, Hardy & Bacon, represented the Official Committee of Unsecured Creditors as counsel. The Debtors disclosed assets of $512,855,000 and debts of $447,382,000. On Oct. 29, 2008, the Court granted a motion to jointly administer the bankruptcies of Brooke Corporation, Brooke Capital, and Brooke Investment with the Brooke Corporation bankruptcy case being the lead case. The case was converted to Chapter 7 on June 29, 2009. Christopher J. Redmond was named Chapter 7 Trustee. He is represented by Benjamin F. Mann, Esq., John J. Cruciani, Esq., and Michael D. Fielding, Esq., at Husch Blackwell LLP. CAPE FEAR BANK: FDIC Fails to Dismiss Trust's Counterclaims ----------------------------------------------------------- Bankruptcy Judge J. Rich Leonard denied the request of the Federal Deposit Insurance Corporation, as receiver of Cape Fear Bank, to dismiss count 2 of counterclaims asserted by Gerald A. Jeutter, Jr., as plan trustee of Cape Fear Bank Corporation, in the lawsuit, FEDERAL DEPOSIT INSURANCE CORPORATION, AS RECEIVER OF CAPE FEAR BANK, Plaintiff and Counterclaim Defendant, v. GERALD A. JEUTTER, JR., AS PLAN TRUSTEE UNDER FIRST AMENDED PLAN OF LIQUIDATION OF CAPE FEAR BANK CORPORATION, Defendant and Counterclaim Plaintiff, Adv. Proc. No. 12-00261 (Bankr. E.D.N.C.). The Trustee asserts that the FDIC-R violated the automatic stay when it filed a declaratory action in the U.S. District Court for the Eastern District of North Carolina. The FDIC-R asserts that the Trustee's failure to bring an action within six months of the effective date as designated in the plan enables it to bring the action to determine ownership of refunds. Judge Leonard, however, held that although the Trustee's failure to bring suit within six months of the effective date may mitigate the damages incurred from a violation of the stay, it does not change the analysis of whether the stay was in place when the FDIC-R filed the action in district court. On April 10, 2009, Cape Fear Bank was closed by the North Carolina Commissioner of Banks and the Federal Deposit Insurance Corporation was named as receiver. The debtor, a holding company that owns all the stock of the bank, filed a voluntary petition under chapter 11 of the Bankruptcy Code on June 23, 2009. Before the FDIC-R was appointed, the debtor and the bank executed a tax sharing agreement, which provided that the debtor would prepare and file a consolidated federal income tax return on an annual basis. Prior to filing the petition, the debtor filed the consolidated tax returns on behalf of the debtor and the bank. The Internal Revenue Service paid a 2008 federal tax refund to the debtor in the amount of $177,567.00. The FDIC-R repudiated the tax sharing agreement on April 15, 2009. The debtor submitted its first amended chapter 11 plan on Oct. 22, 2009, to which the FDIC-R objected, as the plan did not provide for treatment of the FDIC-R's claim to the tax refunds paid to the debtor. A confirmation hearing was held on Dec. 17, 2009, and an order confirming the plan, subject to modifications resolving the objection of the FDIC-R, was entered on Dec. 21, 2009. The plan provides that the debtor shall continue to hold the proceeds of tax refunds from the IRS in escrow pending the bankruptcy court's resolution of the ownership of the refunds. In the event that the debtor or the FDIC-R receive any additional refunds from any taxing authorities, such refunds shall be held in escrow accounts pending the court's resolution of the ownership of the funds. On Sept. 10, 2010, the debtor submitted a claim for refund to the IRS in the amount of $2,651,891.00. The IRS subsequently issued the refund and the refunds were placed in escrow. The FDIC-R notified the trustee of its claim to the tax refunds and demanded that the refunds be transferred to the FDIC-R. The Trustee declined to transfer the refunds and on June 22, 2011, the FDIC-R filed an action in the U.S. District Court for the Eastern District of North Carolina seeking a declaration of ownership of the refunds and an order requiring the trustee to turnover the refunds. The trustee answered the FDIC-R's complaint and asserted counterclaims, including a claim that the FDIC-R violated the automatic stay when it filed the action in the district court. The FDIC-R moved to dismiss the counterclaims asserted by the trustee. The FDIC-R sought dismissal of the counterclaim alleging a violation of the automatic stay on the grounds that the counterclaim failed to state a claim upon which relief could be granted. Prior to resolution of the motion to dismiss, the district court granted the trustee's motion to refer the matter to the bankruptcy court. In its referral order, the district court directed the bankruptcy court to consider motions pending at the time of referral. A copy of Judge Leonard's Jan. 24, 2013 Order is available at http://is.gd/kbBSQkfrom Leagle.com. About Cape Fear Bank Based in Raleigh, North Carolina, Cape Fear Bank Corporation, fdba Bank of Wilmington Corporation, filed for Chapter 11 bankruptcy protection on June 23, 2009 (Bankr. E.D.N.C. Case No. 09-05179). Judge J. Rich Leonard presides over the case. Trawick H. Stubbs, Jr., Esq., at Stubbs & Perdue, P.A., in New Bern, North Carolina, served as the Debtor's counsel. In its petition, the Debtor disclosed $473,852 in total assets and $10,560,000 in total debts. Cape Fear Bank Corp.'s primary asset consisted of its stock in Cape Fear Bank. Cape Fear Bank was closed April 10, 2009, by the North Carolina Office of Commissioner of Banks, which appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with First Federal Savings and Loan Association of Charleston, Charleston, South Carolina, to assume all of the deposits of Cape Fear Bank. The Bankruptcy Court confirmed Cape Fear Bank' First Amended Plan of Liquidation on Dec. 21, 2009. CCC ATLANTIC: Wants Court's Nod to Pay Critical Vendors -------------------------------------------------------- CCC Atlantic, LLC, wants the Bankruptcy Court to authorize it to pay the prepetition claims of certain of its critical vendors conditioned on those critical vendors continuing to supply goods and services pursuant to customary terms that were in effect within 120 days prior to the Petition Date. These critical vendors provide maintenance, security, utilities, trash, insurance and other core services to the Debtor. The Debtor estimates that, as of the Petition Date, critical vendor claims total $83,977.78. As an additional condition, certain of the critical vendors should also agree to take whatever action is necessary to remove any liens it may have obtained on the Debtor's assets at the sole expense of such critical vendors. About CCC Atlantic Based in Linwood, New Jersey, CCC Atlantic, LLC, filed for Chapter 11 protection on Dec. 6, 2012 (Bankr. D. Del. Case No. 12-13290). Kevin Scott Mann, Esq., at Cross & Simon LLC, represents the Debtor. The Debtor owns and maintains two commercial office condominiums in Linwood, New Jersey. The Debtor has scheduled assets totaling $48,890,617 and liabilities of $41,568,640 as of the Petition Date. CE GENERATION: S&P Lowers Rating on Senior Secured Notes to 'BB' ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating to 'BB' from 'BB+' on CE Generation LLC's (CE Gen) senior secured notes due 2018. The outlook is negative. The issue recovery rating is unchanged at '1.' "The rating action reflects our view of the inability of the largest operating unit, Salton Sea Funding Corp. (SSFC), to currently send dividends to CE Gen, and our anticipation of weaker-than-projected credit metrics because of SSFC's increased capital investment at the project and its revenue being tied to revised short-run avoided cost pricing," said Standard & Poor's credit analyst Tony Bettinelli. The rating on the senior secured bonds further reflects S&P's view of the following: -- CE Gen is highly concentrated, relying predominantly on SSFC; -- Dividends from SSFC to CE Gen are subject to a 1.5x debt service coverage (DSC) test (however, S&P anticipates that SSFC will continue to exceed this threshold by the end of 2013); -- Assets other than SSFC, which include the Saranac, Power Resources, and Yuma natural gas projects, have varying degrees of market exposure; and -- Consolidated average DSC will be 1x over the term of the debt. The negative outlook reflects S&P's base case expectation that DSC will remain less than 1x this year and will require CE Gen to draw on its debt service liquidity reserves or seek parental support, which S&P views as likely to be provided because of the value of SSFC assets to its sponsors and the maturity of the debt in 2018. CENTENNIAL BANK: Western Alliance Signs Deal to Buy Bank -------------------------------------------------------- On Jan. 18, 2013, Western Alliance Bancorporation's Western Alliance Bank subsidiary executed a definitive agreement to acquire Centennial Bank, located in Fountain Valley, California, for $57.5 million in cash, distribution of specified loans and assumption of Centennial Bank's transactional expenses up to $1.0 million. Subject to bankruptcy court and regulatory approval, the transaction is expected to close in the late first quarter 2013. The Company expects the acquisition to be accretive to its earnings per share. Western Alliance Bancorporation -- http://www.westernalliancebancorp.com-- is the parent company of Bank of Nevada, Western Alliance Bank doing business as Alliance Bank of Arizona and First Independent Bank, and Torrey Pines Bank. CHARLIE MCGLAMRY: Exclusive Plan Filing Period Extended to March 5 ------------------------------------------------------------------ U.S. Bankruptcy Judge James P. Smith has extended the period during which only Charlie N. McGlamry and its debtor-affiliates may propose and file plans of reorganization by 90 days, through and including March 5, 2013. Additionally, the period of time during which McGlamry and the Affiliates may solicit acceptances of their plans of reorganization is extended by 91 days, through and including May 6, 2013. This is the second extension request by the McGlamry entities. The Court record shows the Debtors have already made substantial progress and continues to work diligently on matters related to their reorganization. Since the Petition Date, the Debtors have concentrated on a number of significant issues relating to the estate. The McGlamry affiliates continue to work on preparing a financial plan that will form the basis of their Chapter 11 Plans. The Debtors have remained focused on developing a strategy to enable the Debtors to emerge successfully from Chapter 11, to the extent necessary to effectuate the overall plan for the Debtors. They are making progress toward the reorganization and the process of determining distributions to the Debtors' creditors. However, despite their progress toward this goal, the McGlamry affiliates are not at present in a position to propose plans. Additionally, Mr. McGlamry continues to negotiate with his creditors regarding the provisions of his Chapter 11 Plan. Because the Debtors are continuing to evaluate and pursue their alternatives, the parties in interest in this case will benefit from an extension of the exclusive periods. The McGlamry affiliates need additional time to develop plans that are in the best interest of creditors, which is time-consuming and somewhat complex. Additionally, Mr. McGlamry needs additional to continue negotiations with Synovus and his other creditors. The Debtors also argued that the filing of competing plans would present a direct impediment to the Debtors' progress. Extending the exclusive periods will allow the Debtors to work toward a resolution of the Debtors' financial issues and allow the McGlamry affiliates to propose plans based on a rational and well-developed financial plan and Mr. McGlamry to attempt to solicit further acceptances for his Plan. At this time in the Chapter 11 process, the Debtors said they should not be faced with the distraction and expense of a premature filing of a plan by other parties and a competing plan fight. About Charlie N. McGlamry Centerville, Georgia-based real estate developer Charlie N. McGlamry filed a petition for Chapter 11 protection, along with his 14 companies, in Macon, Georgia on May 9, 2012. Over the past 44 years, Mr. McGlamry has managed to successfully develop numerous real estate developments in and around Houston County, Georgia. Mr. McGlamry continues to operate his real estate development business through sole proprietorship McGlamry Properties -- http://www.mcglamryproperties.com-- and USA Land Development Inc. Mr. McGlamry individually owns, through his sole proprietorship, approximately, 74 acres of undeveloped commercial property at the intersection of Russell Parkway and Corder Road in Houston County, Georgia. Mr. McGlamry established a number of single member limited liability companies and sole shareholder corporations to own and develop specific tracts of land. Mr. McClamry and his affiliated companies sought joint administration of their Chapter 11 cases and have Mr. McGlamry's as the lead case (Bankr. M.D. Ga. Case No. 12-51197). Judge James P. Smith oversees the case. Cohen Pollock Merlin & Small, PC, serves as the Debtors' Chapter 11 counsel. Nichols, Cauley & Associates, LLC, serves as their accountant. Mr. McGlamry, as sole shareholder or member, signed Chapter 11 petitions for USA Land Development (Case No. 12-51198); Barrington Hall Development Corp. (12-51199); Bear Branch LLC; By- Pass/Courthouse LLC (12-51201); Chinaberry Place, LLC (12-51202); Eagle Springs LLC (12-51203); Elmdale Development, LLC (12-51204); Gurr/Kings Chapel Road, LLC (12-51205); Jaros Development LLC (12-51206); Lake Joy Development, LLC (12-51207); Old Hawkinsville Road, LLC (12-51208); South Houston Development, LLC (12-51209); The Villages at Nunn Farms, LLC (12-51210); and Houston-Peach Investments LLC (12-51212). Mr. McGlamry estimated up to $50 million in assets and up to $100 million in liabilities in his Chapter 11 filing. The Debtors tapped Cohen Pollock Merlin & Small, PC, as bankruptcy counsel. CHINA ORGANIC: Files Amended Annual Report for 2010 --------------------------------------------------- China Organic Fertilizer, Inc., has further amended its annual report on Form 10-K/A for the fiscal year ended March 31, 2010, in order to restate the consolidated financial statements. Nothing else has been changed in the Report and no effort to update the information has been made. The restatement had no effects to the Company's net loss for the period. The Company's restated balance sheet at March 31, 2010, showed $3.42 million in total assets, $1.71 million in total liabilities, all current, and $1.71 million in total stockholders' equity. The Company previously reported $3.67 million in total assets, $3.61 million in total liabilities, all current, and $66,202 in total stockholders' equity. A copy of the Amended Annual Report is available at: http://is.gd/HaRiEj About China Organic Headquartered in Beijing, PRC, China Organic Fertilizer, Inc., is a holding company that carries on the business of manufacturing and distributing organic fertilizer through wholly-owned subsidiaries located in the People's Republic of China. Indirectly, through a Delaware corporate subsidiary, it owns 100% of the registered capital stock of Beijing Shennongxing Technology Co., Ltd. Paritz & Company, P.A., in Hackensack, New Jersey, expressed substantial doubt about China Organic's ability to continue as a going concern following the March 31, 2011, annual results. The independent auditors noted that the Company had a working capital deficit of $1.5 million, an accumulated deficit of $4.8 million and a stockholders' deficiency of $668,361. The Company reported a net loss of $2.5 million on $954,143 of revenue in fiscal year 2011, compared with a net loss of $700,199 on $36,413 of revenue in fiscal year 2010. The Company's balance sheet at March 31, 2011, showed $1.1 million in total assets, $1.8 million in total current liabilities, and a stockholders' deficit of $668,361. CIRCLE ENTERTAINMENT: "Huff" Lawsuit Settlement Becomes Final ------------------------------------------------------------- The appeal period for the court-approved Stipulation and Settlement Agreement to settle the stockholder derivative lawsuit filed on April 28, 2010, by The Huff Alternative Fund, L.P., and The Huff Alternative Parallel Fund, L.P., on behalf of Circle Entertainment Inc. against certain of the Company's officers, directors and stockholders in the New York Supreme Court in Manhattan, New York (Index No. 650338-10) expired on Jan. 14, 2013, and the related court order approving the Settlement Agreement is final and non-appealable. The $950,000 payment due and payable under the Settlement Agreement to Huff was funded on Jan. 16, 2013; $650,000 by the Company and $300,000 by its insurance carrier. About Circle Entertainment New York City-based Circle Entertainment Inc. has been pursuing the development and commercialization of its new location-based entertainment line of business since Sept. 10, 2010, which has and will continue to require significant capital and financing. The Company does not currently generate any revenues from this new line of business. The Company has no long-term financing in place or commitments for such financing to develop and commercialize its new location-based entertainment line of business. As reported in the TCR on March 30, 2012, L.L. Bradford & Company, LLC, in Las Vegas, Nevada, expressed substantial doubt about Circle Entertainment's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has limited available cash, has a working capital deficiency and will need to secure new financing or additional capital in order to pay its obligations. The Company's balance sheet at Sept. 30, 2012, showed $3.09 million in total assets, $22.71 million in total liabilities, and a $19.62 million total stockholders' deficit. COEUR D'ALENE: Moody's Assigns 'B2' CFR; Rates $200MM Notes 'B3' ---------------------------------------------------------------- Moody's Investors Service assigned first-time ratings to Coeur d'Alene Mines, including a B2 Corporate Family Rating (CFR), B2-PD Probability of Default Rating, and SGL-2 Speculative Grade Liquidity Rating. Moody's also assigned a B3 rating to the company's proposed $200 million senior unsecured notes due 2021. Proceeds of the notes will be used to fund capital expenditures and for general corporate purposes, which may include redeeming 3.25% Convertible Senior Notes due 2028 that are put to the company at or after March 15, 2013. The rating outlook is stable. Ratings Rationale Coeur's B2 CFR reflects the company's modest size and limited product diversification, exposure to political risk in Bolivia and uncertainties over potential new investments that the company may make to boost its reserves and productive capacity. With approximately 18 million ounces of silver and 226,000 ounces of gold produced in 2012, Coeur represents only a small portion of the global supply of silver and gold. In addition, approximately 70% of the company's silver production comes from its Palmarejo (Mexico) and San Bartolome (Bolivia) mines, increasing the risk that operational or geological issues may significantly impact the company. The rating encompasses the company's diversification from four operating mines throughout North and South America. Moody's believes that at current gold and silver prices, Coeur's metrics will remain strong for its rating category over the next 12 to 18 months. Moody's also notes, however, that the company will depend on increasing silver production from its Rochester mine in Nevada to maintain or grow its production levels over the next three years. Although this leach pad operation has been profitable in part due to gold by-product credits, Moody's notes that it could become uneconomic if metal prices decline. Moody's also expects that over the next two to three years, the company will experience declining production levels at Palmarejo and declining silver recovery rates at San Bartolome, which could potentially increase costs at these mines. Declining production volumes as the mines approach the end of their lives also have the potential to pressure margins over medium term. Furthermore, cost inflation of key inputs such as energy, materials and labor costs, as well as relatively higher geopolitical risks constrain the rating. The fact that one of Coeur's largest mines, San Bartolome, is in Bolivia, is a negative factor for the rating. Moody's considers the event risk surrounding the government's attitude to nationalization, revision of mining contracts and increasing royalty payment requirements to be high. The government of Bolivia has recently moved to nationalize a number of foreign assets, and is in process of drafting a new mining law which may redefine the structure of mining contracts in Bolivia. Any issues with property nationalization or material limitations on the company's mining operations could have a significant detrimental impact on the company's results and would put negative pressure on the ratings, given that San Bartolome is responsible for nearly 20% of the company's revenues. Finally, proven and probable reserves at currently operating mines represent approximately twelve years of production at current production levels. Coeur will need to continue to be successful in development of its reserves to maintain existing production levels. The ratings reflect the uncertainties over the nature and extent of capital investments that Coeur may make in the medium term to ensure adequate reserves in the long term. The Speculative Grade Liquidity rating of SGL-2 reflects Moody's view that Coeur has good liquidity over the next four quarters. As of September 30, 2012, the company had over $140,000 in cash and cash equivalents. Moody's anticipates that following the proposed transaction, pro forma cash balances will be sufficient to cover the company's operating and capital needs over the next twelve months. Their external liquidity sources consist of an undrawn $100 million senior secured revolving credit facility. Moody's expects the company to be in compliance with the facility's restrictive covenants over the next twelve months. The B3 rating on Coeur's senior unsecured notes reflects their position in the capital structure behind the senior secured credit facility. As a consequence, the rating for the unsecured notes is one notch below the corporate family rating. The stable outlook reflects Moody's view that the price environment for gold and silver will remain favorable in the intermediate term and support credit metrics. The principal methodology used in this rating was the Global Mining Industry Methodology published in May 2009. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. COEUR D'ALENE: S&P Assigns 'BB-' ICR to Proposed $200MM Notes ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its issue-level rating of 'BB-' (one notch higher than the corporate credit rating) to Coeur d'Alene Mines Corp.'s proposed $200 million unsecured notes due 2021. The recovery rating on the loan is '2', indicating S&P's expectation of a substantial (70% to 90%) recovery in the event of a payment default under its default scenario. The ratings are based on preliminary terms and conditions. The revolving credit facility is unrated. Proceeds will be used to prefund capital expenditures and for general corporate purposes, including redeeming any 3.25% convertible senior notes that are put to the company on or after March 15, 2013. The 'B+' corporate credit rating on Coeur d'Alene Mines Corp. incorporates S&P's view of the company's "weak" business risk profile, characterized by its exposure to volatile metals prices, high cost position, limited mine diversity, relatively small size, and the risks of being a primary silver producer, given that the majority of silver supply comes as a by-product of other mining activities. The "significant" financial risk profile reflects S&P's view of the company's low absolute debt levels, strong cash flow generation, and adequate liquidity. In addition, recent operating performance and cash flow have benefitted from unprecedented high metals prices, increased volumes, and lower capital expenditures as new mines have been completed. "In 2012, we anticipate Coeur d'Alene Mines will generate EBITDA in the range of $365 million to $385 million, based on current average prices of $31 per ounce of silver and $1,650 per ounce of gold and production levels of about 18 million ounces of silver and 226,000 ounces of gold. Our baseline scenario for 2013 anticipates EBITDA in the range of $300 million to $320 million based on gold and silver price assumptions of $1,500 and $26 per ounce, respectively. We expect production levels in 2013 of about 19 million ounces of silver and 266,000 ounces of gold and assume that cash costs grow at the rate of industry-wide increases," S&P said. Pro forma for the transaction, S&P expects Coeur d'Alene Mines' total debt (including adjustments for royalty obligations, asset retirements, and operating leases) of about $450 million, with leverage of about 1.3x and funds from operations to debt of 50%. S&P expects the company will maintain credit metrics near these levels over the next year or so, barring any capital markets activity. While these metrics are what S&P would consider to be good for its assessment of the company's "significant" financial risk profile, it expects the company will use debt financing to continue its acquisition-oriented growth strategy and to fund capital expenditures related to mine development in future years. RATINGS LIST Coeur d'Alene Mines Corp. Corporate Credit Rating B+/Stable/-- New Rating Coeur d'Alene Mines Corp. $200 mil. unsecured notes due 2021 Senior Unsecured BB- Recovery Rating 2 CREDITRON FINANCIAL: Tues. Hearing on Bid to Convert Owners' Case ----------------------------------------------------------------- Ed Palattella, writing for Erie Times-News, reports that the owners of defunct telemarketer Telatron Marketing Group could learn this week whether they must sell their assets in their personal bankruptcy case. Alfred D. Covatto and his wife, Joyce M. Covatto, lost Telatron to bankruptcy in late 2011. They also filed for personal Chapter 11 bankruptcy, which would allow them to keep their assets as they reorganized their debts to pay creditors. The report says Chief U.S. Bankruptcy Judge Thomas P. Agresti is considering converting the Covattos' case to Chapter 7, which would require them to liquidate their assets, such as real estate, to settle their debts, including millions of dollars in unpaid taxes. The report says Judge Agresti will hold a hearing Tuesday on the case conversion. About Creditron Financial Based in Erie, Pennsylvania, Creditron Financial Corporation, dba Telatron Marketing Group Inc., filed for Chapter 11 bankruptcy protection (Bankr. W.D. Penn. Case No. 08-11289) on July 3, 2008. Stephen H. Hutzelman, Esq., at Plate Shapira Hutzelman Berlin May, et al., represents the Debtor. The Debtor disclosed $3 million in total assets and $4.8 million in total liabilities in its bankruptcy petition. New York-based Y & Y Holdings LLC, bought Telatron's assets for $600,000 and renamed it Agility Marketing Inc. DEEP PHOTONICS: nLight Photonics Seek Dismissal of Chapter 11 Case ------------------------------------------------------------------ nLight Photonics Corporation and Cary Kiest ask the Bankruptcy Court for an order dismissing the Chapter 11 case of Deep Photonics Corporation. In the alternative, the petitioners seek entry of an order converting the Chapter 11 to liquidation under Chapter 7. The petitioners are represented by: Robert J. Vanden Bos, Esq. Christopher N. Coyle, Esq. VANDEN BOS & CHAPMAN, LLP 319 S.W. Washington, Suite 520 Portland, OR 97204 Tel: (503) 241-4869 Fax: (503) 241-3731 Deep Photonics Corporation filed a Chapter 11 petition (Bankr. D. Ore. Case No. 12-35626) on July 20, 2012. Deep Photonics designs and manufactures innovative solid-state fiber lasers. The Debtor scheduled $75,111,128 in assets and $4,917,393 in liabilities. Bankruptcy Judge Trish M. Brown presides over the case. Timothy J. Conway, Esq., at Tonkon Torp LLP, serves as the Debtor's counsel. The petition was signed by Theodore Alekel, president. The U.S. Trustee has not appointed an official committee of unsecured creditors because an insufficient number of persons holding unsecured claims against the Debtor have expressed interest in serving on a committee. The U.S. Trustee reserves the right to appoint such a committee should interest developed among the creditors. DEWEY & LEBOEUF: Judge Skeptical of Push to Toss Layoff Suit ------------------------------------------------------------ Maria Chutchian of BankruptcyLaw360 reported that a New York bankruptcy judge appeared unconvinced Thursday by Dewey & LeBoeuf LLP's bid to chuck putative class allegations over the mass layoffs connected to the firm's bankruptcy last year, despite Dewey's argument that they belong in the Chapter 11 claims process. Thursday's hearing was on allegations that 550 former Dewey employees were not given proper advance notice about the layoffs under the New York state and federal Worker Adjustment and Retraining Notification Acts, the report related. 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 filed a Chapter 11 Plan of Liquidation and an accompanying Disclosure Statement on Nov. 21, 2012. It filed amended plan documents on Dec. 31, in an attempt to address objections lodged by various parties. A second iteration was filed Jan. 7, 2013. The plan is based on a proposed settlement between secured lenders and Dewey's official unsecured creditors' committee. It also incorporates a settlement approved by the bankruptcy court in October where 440 former partners will receive releases in return for $71.5 million in contributions. DIAGNOSTIC VENTURES: Ex-CEO Ducks Securities Suit Over Bankruptcy ----------------------------------------------------------------- Linda Chiem of BankruptcyLaw360 reported that the former head of a Diagnostic Ventures Inc. unit on Tuesday beat class claims that he misrepresented the company's financial health to investors before DVI entered bankruptcy, after a Pennsylvania federal judge ruled the investors couldn't prove they relied on his statements. U.S. District Judge Legrome D. Davis granted former DVI Business Credit Inc. President and CEO Terry Cady's motion for summary judgment, saying the plaintiffs had failed to prove they relied on Cady's alleged deceptive statements and acts, the report related. Diagnostic Ventures, Inc., was a healthcare finance company that extended loans to medical providers to facilitate the purchase of diagnostic medical equipment and leasehold improvements, and offered lines of credit for working capital secured by healthcare receivables. Founded in 1986, DVI was a publicly traded company with reported assets of $1.7 billion in 2003. Its common stock began trading on the New York Stock Exchange in 1992. It issued two tranches of 9 7/8% senior notes: the first, issued in 1997, totaled $100 million; the second, issued in 1998, totaled $55 million. DEWEY & LEBOEUF: EY LLP to Provide Additional Services ------------------------------------------------------ As reported in the TCR on Nov. 23, 2012, the Bankruptcy Court approved the retention of EY LLP as tax services provider for Dewey & LeBoeuf LLP, nunc pro tunc to Oct. 1, 2012. Pursuant to the Retention Order, EY LLP is authorized to provide only those services set forth in the Tax Engagement Letter. The Debtor now wants to expand EY LLP's retention to include the following additional services, as provided in the addendum to the Tax Engagement Letter, nunc pro tunc to Jan. 17, 2013. The Additional Services will include assisting the Debtor by providing tax advisory services in connection with the wind-down of its business and partnership operations. The services will be at the direction and control of the Debtor, and may include assistance and correspondence with taxing authorities, assisting the Debtor's legal advisors as directed by the Debtor, assisting with responding to tax questions raised by the Debtor's partners and other matters relating to the wind-down. EY LLP will bill the Debtor for the Additional Services at these agreed hourly rates: Partner $750 to $865 Executive Director $770 Senior Manager $730 to $770 Manager $685 Senior $410 to $465 Staff $175 to $300 The compensation for the Additional Services will not subject to the $250,000 cap discussed in the Retention Application with respect to previously approved services. EY LLP's fees (not expenses) for the Additional Services are capped at $25,000. 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 filed a Chapter 11 Plan of Liquidation and an accompanying Disclosure Statement on Nov. 21, 2012. It filed amended plan documents on Dec. 31, in an attempt to address objections lodged by various parties. A second iteration was filed Jan. 7, 2013. The plan is based on a proposed settlement between secured lenders and Dewey's official unsecured creditors' committee. It also incorporates a settlement approved by the bankruptcy court in October where 440 former partners will receive releases in return for $71.5 million in contributions. DEX ONE: To Discuss Proposed Merger Plans with Senior Lenders ------------------------------------------------------------- Certain members of management of Dex One Corporation and SuperMedia Inc. will be conducting a teleconference for the benefit of the Dex Media East, Inc., Dex Media West, Inc., R.H. Donnelley Inc. and SuperMedia Inc. senior secured lenders to discuss synergies and integration planning in connection with the proposed merger transactions previously announced by the Company and SuperMedia on Aug. 21, 2012. Numerous assessments of synergy opportunities from the merger over the last six months established and confirmed expected synergies of $150 million to $175 million over the next three years. The Company disclosed in the filing that the challenges of the proposed merger are, among other things: (a) to maintain focus on continuing to manage these companies as separate and independent enterprises thereby impeding the Companies' ability to take full advantage of their combined scope prior to close, (b) executive leadership are not named yet thereby slowing recommendations and decision making, and (c) both companies still have individual 2013 commitments to achieve. A copy of the discussion materials to be used during that teleconference is available at http://is.gd/VGPxe0 About Dex One Dex One, headquartered in Cary, North Carolina, is a local business marketing services company that includes print directories and online voice and mobile search. Revenue was approximately $1.1 billion for the LTM period ended Sept. 30, 2010. R.H. Donnelley Corp. and 19 of its affiliates, including Dex Media East LLC, Dex Media West LLC and Dex Media Inc., filed for Chapter 11 protection on May 28, 2009 (Bank. D. Del. Case No. 09- 11833 through 09-11852). They emerged from bankruptcy on Jan. 29, 2010. On the Effective Date and in connection with its emergence from Chapter 11, RHD was renamed Dex One Corporation. Dex One reported a net loss of $518.96 million in 2011 compared with a net loss of $923.59 million for the eleven months ended Dec. 31, 2010. The Company's balance sheet at Sept. 30, 2012, showed $2.86 billion in total assets, $2.77 billion in total liabilities, and $92.03 million in total shareholders' equity. * * * As reported in the April 2, 2012 edition of the TCR, Moody's Investors Service has downgraded the corporate family rating (CFR) for Dex One Corporation's to Caa3 from B3 based on Moody's view that a debt restructuring is inevitable. Moody's has also changed Dex's Probability of Default Rating (PDR) to Ca/LD from B3 following the company's purchase of about $142 million of par value bank debt for about $70 million in cash. The Caa3 rating also reflects Moody's view that additional exchanges at a discount are likely in the future since the company amended its bank covenants to make it possible to repurchase additional bank debt on the open market through the end of 2013. As reported by the TCR on April 4, 2012, Standard & Poor's Ratings Services raised its corporate credit rating on Cary, N.C.-based Dex One Corp. and related entities to 'CCC' from 'SD' (selective default). "The upgrade reflects our assessment of the company's credit profile after the completion of the subpar repurchase transaction in light of upcoming maturities, future subpar repurchases, and our expectation of a continued week operating outlook," explained Standard & Poor's credit analyst Chris Valentine. DISCOVERY TOURS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Discovery Tours, LLC 2340 Harrison Avenue Centralia, WA 98531 Bankruptcy Case No.: 13-40411 Chapter 11 Petition Date: January 23, 2013 Court: U.S. Bankruptcy Court Western District of Washington (Tacoma) Debtor's Counsel: Brian L. Budsberg, Esq. BUDSBERG LAW GROUP, PLLC 1115 W. Bay Drive, Suite 201 Olympia, WA 98502 Tel: (360) 584-9093 E-mail: paralegal@budsberg.com Scheduled Assets: $735,868 Scheduled Liabilities: $3,210,923 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/wawb13-40411.pdf The petition was signed by Melody Miranda, owner. DNL INDUSTRIES: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: DNL Industries, LLC 5 Winkler Farm Road Bedford, NY 10506 Bankruptcy Case No.: 13-22079 Chapter 11 Petition Date: January 22, 2013 Court: U.S. Bankruptcy Court Southern District of New York (White Plains) Judge: Robert D. Drain Debtor's Counsel: Stephen B. Selbst, Esq. HERRICK, FEINSTEIN, LLP 2 Park Avenue New York, NY 10016 Tel: (212) 592-1405 Fax: (212) 545-2313 E-mail: sselbst@herrick.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Roger D. Timpson, chief restructuring officer. DO-JARR INC.: Case Summary & 3 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: DO-JARR, Inc. P.O. Box 190159 San Juan, PR 00919 Bankruptcy Case No.: 13-00411 Chapter 11 Petition Date: January 23, 2013 Court: U.S. Bankruptcy Court District of Puerto Rico (Old San Juan) Debtor's Counsel: Juan Manuel Suarez Cobo, Esq. LEGAL PARTNERS, PSC 138 Winston Churchill Avenue, Suite 316 San Juan, PR 00926-6023 Tel: (787) 791-1818 Fax: (787) 791-4260 E-mail: suarezcobo@gmail.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $100,001 to $500,000 A copy of the Company's list of its largest unsecured creditors that contains only three entries is available for free at: http://bankrupt.com/misc/prb13-00411.pdf The petition was signed by Jaime Rodriguez Rosario, president. DOUGLAS F. VAUGHAN: Wollen Mortgages Not Preferential ----------------------------------------------------- Yvette Gonzales, the Chapter 7 Trustee of the Douglas F. Vaughan bankruptcy estate, seeks to avoid mortgage liens granted to creditors David H. Wollen and Rachel Wollen Adent, individually, Rachel Wollen Adent as trustee of the Leah Adent and Hannah Adent Trust, and John or Jane Doe, as trustee(s) of the Julius M. Wollen and Diana Wollen Revocable Trust. The Wollen Defendants, as many others had done, invested money with Mr. Vaughan and in exchange received promissory notes and mortgages. This promissory note program was the primary vehicle used to perpetrate the Ponzi scheme. In Count 1 of the complaint, Ms. Gonzales seeks to avoid the so- called Wollen Notes and the Wollen Mortgages under 11 U.S.C. Sec. 548 contending that Mr. Vaughan entered into these transactions with the intent to defraud creditors. Ms. Gonzales seeks to recover the Real Property free of liens for the benefit of creditors under 11 U.S.C. Sec. 550. In Count 2 of the Complaint, Ms. Gonzales alleges that the Wollen Mortgages were preferential and are avoidable under 11 U.S.C. Sec. 547. On Oct. 10, 2012, the Wollen Defendants filed their Motion to Dismiss as to the Wollen Defendants or, in the alternative, for summary judgment as to the Wollen Defendants on Count 2. The Wollen Defendants contend that the District Court lacks subject matter jurisdiction because Ms. Gonzales has no standing to assert these claims in federal court. In a ruling last week, Senior District Judge James A. Parker said the Wollen Mortgages were not preferences because they were not granted on account of an antecedent debt and they were substantially contemporaneous exchanges for new value. Accordingly, the Court granted summary judgment in favor of the Wollen Defendants dismissing Count 2 of the Complaint. The Court also ruled that the Court has subject matter jurisdiction. The case is, YVETTE GONZALES, Trustee Plaintiff, v. JUDITH A. WAGNER, Trustee of the Bankruptcy Estate of the Vaughan Company Realtors, DAVID H. WOLLEN, RACHEL WOLLEN ADENT, individually, RACHEL WOLLEN ADENT, as Trustee of the Leah Adent and Hannah Adent Trust, JOHN OR JANE DOE, as Trustee of the Julius M. Wollen and Diana Wollen Revocable Trust, and VAUGHAN CAPITAL, LLC, Defendants, No. 12 CV 411 JAP/SMV (D. N.M.). In the lawsuit, Ms. Gonzales also claims Mr. Vaughan transferred real property to Vaughan Company Realtors, a related entity currently in Chapter 11 bankruptcy, and that VCR subsequently transferred the Real Property to Vaughan Capital, LLC, as part of a scheme to defraud creditors. A copy of the Court's Jan. 22, 2013 Memorandum Opinion and Order is available at http://is.gd/hshCgwfrom Leagle.com. About Vaughan Company The Vaughan Company, Realtors, descended into bankruptcy after Douglas F. Vaughan, the former controlling shareholder, used the company to run a Ponzi scheme from 1993 until January 2010. Mr. Vaughan has entered into a plea agreement with the United States, admitting guilt to various securities violations. In March 2010, the Securities and Exchange Commission filed fraud charges against Mr. Vaughan, a New Mexico realtor, and obtained an emergency court order to halt his $80 million Ponzi scheme. The SEC's complaint, filed in federal court in Albuquerque, alleges Mr. Vaughan through his company issued promissory notes that he claimed would generate high fixed returns for investors. Mr. Vaughan also used another entity -- Vaughan Capital LLC -- to solicit investors for different types of real estate-related investments, such as buying residential properties at distressed prices. Mr. Vaughan relied entirely on new money raised from investors through both companies to fund Vaughan Company's ever- increasing obligations to note holders. The SEC also charged both of Mr. Vaughan's companies in the enforcement action. Neither Mr. Vaughan nor his companies are registered with the SEC to offer securities under the federal securities laws. The Vaughan Company Realtors filed for Chapter 11 protection on Feb. 22, 2010 (Bankr. N.M. Case No. 10-10759). George D. Giddens, Jr., Esq., represents the Debtor in its restructuring efforts. The Company estimated both assets and debts of between $1 million and $10 million. Judith A. Wagner was appointed as Chapter 11 Trustee. Mr. Vaughan filed a separate Chapter 11 petition (Bankr. D. N.M. Case No. 10-10763) on Feb. 22, 2010. The case was converted to a chapter 7 proceeding on May 20, 2010. Yvette Gonzales is the duly appointed trustee of the Chapter 7 estate. DREIER LLP: Trustee Demands Ex-IP Head, Partners Cough Up Funds --------------------------------------------------------------- Maria Chutchian of BankruptcyLaw360 reported that the liquidating trustee for Dreier LLP on Wednesday hit its former intellectual property head and two other former partners with a suit looking to recover profits earned from legal matters that the trustee says originated with the fallen firm. Sheila M. Gowan's complaint alleges that the former head of the firm's IP department, Albert L. Jacobs Jr., and former IP partners Gerard Diebner and Daniel Ladow collected funds for legal services provided to former Dreier clients that they brought with them to Jacobs LLP, the report related. About Marc Dreier and Dreier LLP Marc Dreier founded New York-based law firm Dreier LLP -- http://www.dreierllp.com/-- in 1996. On Dec. 8, 2008, the U.S. Securities and Exchange Commission filed a suit, alleging that Mr. Dreier made fraudulent offers and sales of securities in several cities, selling fake promissory notes to hedge and other private investment funds. The SEC asserted that Mr. Dreier also distributed phony financial statements and audit opinions, and recruited accomplices in connection with that scheme. Mr. Dreier, currently in prison, was charged by the U.S. government for conspiracy, securities fraud and wire fraud (S.D.N.Y. Case No. 09-cr-00085). Dreier LLP sought Chapter 11 protection (Bankr. S.D.N.Y. Case No. 08-15051) on Dec. 16, 2008. Stephen J. Shimshak, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP, was tapped as counsel. The Debtor estimated assets of $100 million to $500 million, and debts between $10 million and $50 million in its Chapter 11 petition. Sheila M. Gowan, a partner with Diamond McCarthy, was appointed Chapter 11 trustee for the Dreier law firm. Ms. Gowan is represented by Jason Porter, Esq., at Diamond McCarthy LLP. Wachovia Bank National Association, the Dreier LLP Chapter 11 trustee, and Steven J. Reisman as post-confirmation representative of the bankruptcy estate of 360networks (USA) Inc. signed a petition that put Mr. Dreier into bankruptcy under Chapter 7 on Jan. 26, 2009 (Bankr. S.D.N.Y. Case No. 09-10371). Mr. Dreier, 60, pleaded guilty to fraud and other charges in May 2009. The scheme to sell $700 million in fake notes unraveled in late 2008. Mr. Dreier is serving a 20-year sentence in a federal prison in Minneapolis. EASTMAN KODAK: Receives Approval for $844 Million Loan ------------------------------------------------------ Eastman Kodak Co. won court approval for $844 million in financing that it will use to complete its restructuring. David McLaughlin, writing for Bloomberg News, reported that the financing from a group of noteholders was approved at a hearing on Jan. 24 by U.S. Bankruptcy Judge Allan Gropper in Manhattan, Bloomberg related. It can be converted into $644 million of exit financing to fund Kodak's emergence from court protection, according to court papers, Bloomberg noted. Kodak is "well on its way" to completing its reorganization and the financing will support the company as it develops its plan, Andrew Dietderich, a Kodak attorney, said at the hearing, Bloomberg related. Kodak said in a statement that it plans to emerge from bankruptcy in the middle of this year. Chief Executive Officer Antonio Perez has been selling businesses to shrink the company and fund its shift into commercial printing and packaging, Bloomberg recalled. Earlier this month, it won court approval to sell patents to a group of technology companies including Apple Inc. and Google Inc. "The financial picture is a stark contrast to the company that filed for Chapter 11 this time last year," Mr. Dietderich said at the hearing, according to Bloomberg. Kodak's $400 million in 7% convertible notes due in 2017 last traded Jan. 23 for 13.6 cents on the dollar, up from 10.5 cents on Dec. 12, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. Eastman Kodak is obtaining the up to $844 million in financing from senior D.I.P. lenders and Wilmington Trust, National Association as administrative agent. "The Court's approval of this financing commitment puts Kodak in a strong position to emerge from Chapter 11. This agreement, in conjunction with the recently approved sale and licensing of our digital imaging patent portfolio, lays the financial foundation for our Plan of Reorganization and a successful emergence from Chapter 11 as a profitable and sustainable company," Antonio M. Perez, chairman and chief executive officer, said in a statement. "Taken together, these accomplishments, along with other recent developments, such as the resolution of certain of our legacy liabilities, demonstrate the tangible and meaningful progress Kodak is making as it moves through the final phase of its restructuring." About Eastman Kodak Rochester, New York-based Eastman Kodak Company and its U.S. subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan. Subsidiaries outside of the U.S. were not included in the filing and are expected to continue to operate as usual. Kodak, founded in 1880 by George Eastman, was once the world's leading producer of film and cameras. Kodak sought bankruptcy protection amid near-term liquidity issues brought about by steeper-than-expected declines in Kodak's historically profitable traditional businesses, and cash flow from the licensing and sale of intellectual property being delayed due to litigation tactics employed by a small number of infringing technology companies with strong balance sheets and an awareness of Kodak's liquidity challenges. In recent years, Kodak has been working to transform itself from a business primarily based on film and consumer photography to a smaller business with a digital growth strategy focused on the commercialization of proprietary digital imaging and printing technologies. Kodak has 8,900 patent and trademark registrations and applications in the United States, as well as 13,100 foreign patents and trademark registrations or pending registration in roughly 160 countries. Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. FTI Consulting, Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is the investment banker. Kurtzman Carson Consultants LLC is the claims agent. The Official Committee of Unsecured Creditors has tapped Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel. Michael S. Stamer, Esq., David H. Botter, Esq., and Abid Qureshi, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the Unofficial Second Lien Noteholders Committee. The Retirees Committee has hired Haskell Slaughter Young & Rediker, LLC, and Arent Fox, LLC as Co-Counsel; Zolfo Cooper, LLC, as Bankruptcy Consultants and Financial Advisors; and the Segal Company, as Actuarial Advisors. Robert J. Stark, Esq., Andrew Dash, Esq., and Neal A. D'Amato, Esq., at Brown Rudnick LLP, represent Greywolf Capital Partners II; Greywolf Capital Overseas Master Fund; Richard Katz, Kenneth S. Grossman; and Paul Martin. Kodak intends to reorganize by focusing on the commercial printing business. Other businesses are being sold or shut down. EDISON MISSION: Debtor and Creditors May Investigate Parent ----------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Edison Mission Energy and the official creditors' committee were given authorization from the bankruptcy court this week to obtain information from EME's parent Edison International Inc. According to the report, the discovery will relate to an agreement made before the Chapter 11 filing in December where ownership of EME will be transferred to creditors. Subpoena power granted by last week's order is designed to avoid strictures on information disclosure that might hamper the turnover of information from some EME's utility affiliates. Court approval included blessing a confidentiality agreement where information can be shared with creditors and noteholders. EME hasn't yet sought approval of the agreement with noteholders. Definitive documents are to be prepared. The $1.196 billion in 7% senior unsecured notes maturing in 2017 traded at 4:08 p.m. Jan. 24 for 47.827 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The day before bankruptcy, they went for 52.5 cents. About Edison Mission Santa Ana, California-based Edison Mission Energy is a holding company whose subsidiaries and affiliates are engaged in the business of developing, acquiring, owning or leasing, operating and selling energy and capacity from independent power production facilities. EME also engages in hedging and energy trading activities in power markets through its subsidiary Edison Mission Marketing & Trading, Inc. EME was formed in 1986 and is an indirect subsidiary of Edison International. Edison International also owns Southern California Edison Company, one of the largest electric utilities in the United States. EME and its affiliates sought Chapter 11 protection (Bankr. N.D. Ill. Lead Case No. 12-49219) on Dec. 17, 2012. EME has reached an agreement with the holders of a majority of EME's $3.7 billion of outstanding public indebtedness and its parent company, Edison International EIX, that, pursuant to a plan of reorganization and pending court approval, would transition Edison International's equity interest to EME's creditors, retire existing public debt and enhance EME's access to liquidity. The Company's balance sheet at Sept. 30, 2012, showed $8.17 billion in total assets, $6.68 billion in total liabilities and $1.48 billion in total equity. Kirkland & Ellis LLP is serving as legal counsel to EME, Perella Weinberg Partners, LP is acting as financial advisor and McKinsey Recovery & Transformation Services U.S., LLC is acting as restructuring advisor. GCG, Inc., si the claims and notice agent. EDUCATION HOLDINGS: Prepack Plan Set for March 7 Confirmation ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Education Holdings 1 Inc. held the first major hearing Jan. 23 after commencing a prepackaged Chapter 11 reorganization on Jan. 21. The bankruptcy judge scheduled the pivotal confirmation hearing on March 7 for approval of the plan already accepted by affected creditors. At the hearing Jan. 23, the judge gave interim approval for a loan of as much as $5.6 million. The loan can be increased to $7 million at a final financing hearing on Feb. 7. As reported in the Jan. 23 edition of the TCR, the primary purpose of the Plan is to effectuate a restructuring of the Debtor's current capital structure in order to align it with the Debtors' operating prospects and provide the Debtor with adequate liquidity. The claims and interests will be treated as follows: Claims/ Class Interests Treatment ----- --------- --------- 1 Senior Secured Claims ($36.3 million Outstanding) Impaired - The senior secured credit agreement will be amended and restated in its entirety by a $36 million exit facility agreement. Recovery: 100% 2 Priority Claims Unimpaired - Claimholders will receive ash equal to the amount of the claim. Recovery: 100% 3 Second Lien Facility Claims ($7 million) Impaired - Second lien claimants will receive $7 million of new second lien notes. Recovery: 100% 4 Senior Notes Claims ($69.4 million plus interest and fees) Impaired - Noteholders will receive 100% of the new senior subordinated notes, new preferred stock with face value of $40 million, and 30% of the new common stock. Recovery: 75.4% 5 Junior Notes Claims ($43.1 million plus interest plus fees) Impaired - Holders of the junior notes will receive 70% of the new common stock. Recovery: Less than 1% 6 General Unsecured Claims Unimpaired - General unsecured creditors will be paid in full in cash. Recovery: 100% 7 Section 510(b) Claims Impaired. Holders won't receive any distributions. Recovery: 0% 8 Old Equity Interests Impaired. Shareholders won't receive anything, and the existing equity interests will be cancelled. Recovery: 0% A copy of the Prepackaged Plan is available for free at: http://bankrupt.com/misc/EH_Prepack_Plan.pdf A copy of the Disclosure Statement is available for free at: http://bankrupt.com/misc/EH_Prepack_DS.pdf About Education Holdings 1 Education Holdings 1, Inc., is a holding company that through its Penn Foster division, operates the oldest and one of the largest distance career schools in the world - generating over 150,000 new enrollments annually for its accredited, career-focused, online degree and vocational programs in the U.S., Canada and over 150 other countries in the world. In March 2012, Education Holdings sold its higher education readiness (HER) division, including the name and brand the Princeton Review, to an affiliate of Charlesbank Capital Partners. Education Holdings, just three years after acquiring using borrowed funds the Penn Foster distance career schools for $170 million, sought Chapter 11 protection (Bankr. D. Del. Case No. 13- 10101) on Jan. 21, 2013, with a bankruptcy-exit plan negotiated with major debt holders. Penn Foster Education Group, Inc. nor Penn Foster Inc. are not included in the Chapter 11 filings. ELECTRICAL COMPONENTS: Moody's Affirms 'B2' CFR; Outlook Stable --------------------------------------------------------------- Moody's Investors Service revised the rating outlook of Electrical Components International, Inc. (ECI) to stable from negative. Concurrently, Moody's affirmed all of the company's ratings, including its B2 Corporate Family Rating and B3-PD Probability of Default Rating. The stabilization of the outlook is largely due to the company's improved liquidity profile. The following ratings were affirmed (with point estimate revisions): Corporate Family Rating at B2; Probability of Default Rating at B3-PD; $30 million senior secured revolving credit facility due 2016 to B1 (LGD2, 25%) from B1 (LGD2, 26%); and $160 million senior secured term loan due 2017 to B1 (LGD2, 25%) from B1 (LGD2, 26%). The rating outlook is stable Ratings Rationale ECI's B2 corporate family rating reflects its elevated though improving leverage profile, as well as its good liquidity, which benefits from expectations of positive free cash flow generation and the presence of a supply chain receivables factoring program. At the same time, the rating considers the company's high customer concentration within the North American white goods appliance sector, including its large reliance on a limited number of appliance manufacturers in the US. The rating benefits from the company's dominant position as a wire harness manufacturer in North America and Europe and its low cost manufacturing capabilities. The stable outlook reflects Moody's expectation that ECI will remain in compliance with its covenants during the next twelve months, largely as a result of ongoing improvement in operational performance. The company has strengthened its covenant cushion by improving its profitability, and Moody's would expect further cushion expansion should the company execute any voluntary debt repayments. While financial flexibility will tighten in the intermediate-term due to future contractual leverage covenant step-downs, Moody's believes the company will remain in compliance with its covenants. A ratings upgrade is not likely over the near term, primarily due to the company's small size, high customer concentration, and limited geographic revenue diversification. In addition, the potential for volatility in end-user demand for its products, which is inherent in the company's business, constrains the rating. However, if the company is able to grow its size over time while improving its customer and geographic revenue diversification, as well as maintain good liquidity, the ratings could be upgraded. A ratings downgrade could occur if ECI's financial flexibility weakens due to an inability to maintain a healthy covenant compliance cushion and/or failure to generate free cash flow. The principal methodology used in this rating was the Global Manufacturing Industry published in December 2010. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Electrical Components International, Inc., (ECI) headquartered in St. Louis, Missouri, is a leading manufacturer of wire harnesses and provider of contract assembly services to North American, European and Asian white goods appliance manufacturers. In addition, the company produces specialty wire harnesses for the transportation, heating, ventilations and air conditioning, construction and agriculture end markets. ECI is majority owned by a group of lead lenders to the company prior to its pre-planned reorganization in 2010. For the twelve month period ending September 30, 2012, the company generated revenues in excess of $560 million. ENERGY FUTURE: EFIH Revises 2012 Income Estimates to $321 Million ----------------------------------------------------------------- Energy Future Holdings Corp. and EFH Corp.'s direct wholly-owned subsidiaries Energy Future Intermediate Holding Company LLC and Energy Future Competitive Holdings Company disclosed in a current report on Form 8-K dated Jan. 22, 2013, selected preliminary unaudited financial data for the year ended Dec. 31, 2012, for each of EFH Corp., EFIH, and EFIH's direct wholly-owned subsidiary, Oncor Electric Delivery Holdings Company LLC. The Company has amended the initial Form 8-K to update the information provided under the heading "EFIH Unaudited Preliminary Financial Data." EFIH has amended its estimated net income for the year ended Dec. 31, 2012, to $321 million, compared to the previously disclosed estimate of $331 million net income. A copy of the Amended Current Report is available at: http://is.gd/Ne5c8q About Energy Future Energy Future Holdings Corp., formerly known as TXU Corp., is a privately held diversified energy holding company with a portfolio of competitive and regulated energy businesses in Texas. Oncor, an 80%-owned entity within the EFH group, is the largest regulated transmission and distribution utility in Texas. The Company delivers electricity to roughly three million delivery points in and around Dallas-Fort Worth. EFH Corp. was created in October 2007 in a $45 billion leverage buyout of Texas power company TXU in a deal led by private-equity companies Kohlberg Kravis Roberts & Co. and TPG Inc. Energy Future had a net loss of $1.91 billion on $7.04 billion of operating revenues for the year ended Dec. 31, 2011, compared with a net loss of $2.81 billion on $8.23 billion of operating revenues during the prior year. The Company's balance sheet at Sept. 30, 2012, showed $42.73 billion in total assets, $51.90 billion in total liabilities and a $9.16 billion total deficit. * * * As reported by the TCR on Aug. 15, 2012, Moody's downgraded the Corporate Family Rating (CFR) of EFH to Caa3 from Caa2 and affirmed its Caa3 Probability of Default Rating (PDR) and SGL-4 Speculative Grade Liquidity Rating. The downgrade of EFH's CFR to Caa3 from Caa2 reflects the company's financial distress and limited financial flexibility. As reported by the TCR on Dec. 7, 2012, Fitch Ratings has lowered the Issuer Default Rating (IDR) of EFH to 'Restricted Default' (RD) from 'CC'. Fitch Ratings has deemed the recently concluded exchange offer to exchange a portion of the LBO notes and legacy notes at Energy Future Holdings Corp (EFH) for new 11.25%/12.25% senior toggle notes due 2018 at Energy Future Intermediate Holding Company LLC (EFIH) as a distressed debt exchange (DDE). In the Dec. 28, 2012, edition of the TCR, Standard & Poor's Ratings Services lowered its corporate credit ratings on EFIH, TCEH, and EFCH to 'CC' from 'CCC'. "We lowered to 'CC' from 'CCC' our corporate credit rating on EFH subsidiary EFCH. EFCH guarantees TCEH's senior secured debt (which includes the revolver) and so falls to 'CC' along with TCEH," S&P said. EXECUTIVE CENTER: Seeking Dismissal of Chapter 11 Case ------------------------------------------------------ Executive Center of Simi Valley LLC has filed a motion with the U.S. Bankruptcy Case to dismiss its chapter 11 case. The case was filed to put a stop a state court action seeking to appoint a receiver on properties commonly known as 30077 and 30101 Agoura Court, Agoura Hills CA 91301. The Agoura properties were foreclosed upon Nov. 2, 2012, secured by creditor Platinum Courtyard, LLC. The Debtor still owns 1445 East Los Angeles Ave., Simi Valley CA 93065. The Debtor has never missed payment on that property. The Debtor has 471,782.37 in unsecured debt and said it can handle on its own. Hearing on the motion was set for Jan. 10, 2013. About Executive Center Executive Center of Simi Valley LLC, which operates the Agoura Hills Corporate Center, filed for Chapter 11 (Bankr. C.D. Calif. Case No. 12-11527) on Feb. 16, 2012. Judge Victoria S. Kaufman presides over the case. Janet A. Lawson, Esq., in Ventura, California, serves as the Debtor's counsel. The Debtor scheduled $29,576,254 in assets and $19,093,382 in debts. The petition was signed by Arnold A. Klein, managing partner. FAIRPOINT COMMUNICATIONS: Maine High Court Affirms PUC Ruling ------------------------------------------------------------- Northern New England Telephone Operations LLC, d/b/a FairPoint Communications-NNE, appeals from a 2012 order of the Public Utilities Commission determining how "addressability" will be measured when calculating FairPoint's broadband buildout commitments in Maine. Those commitments originated in a 2008 Commission order -- merger order -- that incorporated an amended stipulation presented by FairPoint and other parties. FairPoint primarily contends that the merger order constitutes a consent decree and that the Commission erred by failing to interpret the merger order in a manner consistent with the intent and understanding of the parties to the stipulation. Last week, the Supreme Judicial Court of Maine affirmed the Commission's order. FairPoint's broadband obligations in Maine arose from a utility reorganization effected by a merger between Verizon New England Inc., d/b/a Verizon Maine, and FairPoint. Pursuant to the merger, Verizon was to transfer its local exchange and long distance telephone businesses to FairPoint, and FairPoint would start providing regulated telephone utility service to Maine citizens and businesses. In February 2007, as required by 35-A M.R.S. Sec. 708 (2007), Verizon and FairPoint filed a request with the Commission seeking the approvals and authorizations needed for the utility reorganization to proceed. In considering the request, the Commission began an adjudicatory proceeding in which numerous parties intervened, including the Office of the Public Advocate. During the merger proceedings, the Commission's hearing examiner and advisory staff (examiners) issued a report reviewing the merger proposal. The examiners recommended that the merger not be approved because the debt FairPoint would acquire presented too great a risk of causing FairPoint to experience financial failure. In their report, the examiners stated that "FairPoint's commitment to increase investment in facilities that [would] deliver broadband services" to more Maine consumers than Verizon had was "the most obvious of [the] potential advantages offered by the proposed merger." In explaining FairPoint's proposal, the examiners noted that FairPoint used the term "addressability" when referring to its proposed expansion of broadband service. As the term was used by FairPoint, addressable lines included some lines that were not actually capable of providing broadband service because of line characteristics such as length or the presence of "disrupters." Verizon did not count those lines in its broadband buildout estimates. Thus, to facilitate a comparison of FairPoint's proposal with Verizon's broadband buildout estimates, the examiners, in their report, referred to addressable lines in the same way FairPoint did. After receiving the examiners' report, FairPoint, Verizon, the Commission's advocacy staff, the Public Advocate, and some of the other interveners filed a stipulation with the Commission in December 2007. This stipulation, as later amended in January 2008, committed FairPoint to expanding "DSL [a]vailability in Maine to reach . . . 83% addressability of Maine access lines within two years of the closing of the Merger" and "attaining 90% DSL addressability by the end of the five year period" beginning when the merger closes. "Addressability" was not defined in the stipulation. Upon its review, the Commission found that the proposed merger was "consistent with the interests of ratepayers and investors" and that its potential benefits outweighed its risks. Thereafter, the Commission added conditions to those contained in the amended stipulation, approved the merger with the new conditions, and "explicitly integrated [the amended stipulation] into, and made [it] a part of" its merger order. Although the merger order, like the amended stipulation, discusses FairPoint's broadband buildout obligations in terms of addressability, it contains no definition of the term. Approximately 20 months after the Commission's approval of the merger, FairPoint filed a voluntary Chapter 11 petition. In connection with those bankruptcy proceedings, FairPoint, the Public Advocate, and a Commission representative reached a regulatory settlement agreement that, among other things, reduced FairPoint's ultimate broadband buildout obligations from 90% addressability to 87%. The Commission agreed to that reduction in a July 6, 2010 order (the 2010 order), finding that "the benefit to be gained from a financially sound FairPoint, and the risks inherent in making substantive changes to the Regulatory Settlement, outweigh the potential hardship to be faced by the 3% of customers that may not receive broadband service." In the 2010 order, the Commission also amended the merger order by approving and incorporating other provisions that extended deadlines for FairPoint's broadband buildout4 and committed FairPoint to providing broadband technology with "a minimum upload speed of 512 kilobits and a download speed of 1.5 megabits per second." After the first milestone date, FairPoint notified the Commission that it had expanded broadband buildout to the level of 83%. The Public Advocate disagreed, contending that FairPoint had used the wrong measure of addressability and therefore overstated its results. In calculating its addressability ratio, FairPoint used as its numerator the number of lines that terminated at a DSL- equipped facility, regardless of whether a line's characteristics prevented it from being capable of providing DSL service. It used as its denominator the number of residential and business switched-access lines existing as of the summer of 2007. The Public Advocate argued that lines that cannot be made to actually provide DSL service in a short period of time should not be included in the numerator. Following a hearing, the Commission determined that when calculating addressability, FairPoint could include in the numerator only "those lines that are actually capable of receiving broadband service plus those lines that can be made ready to receive it within 15 days following a request for service by a customer." The Commission further held that only those lines that meet the requirements of the 2010 order, including the speed requirements, may be included in the numerator. FairPoint took an appeal pursuant to 35-A M.R.S. Sec. 1320 (2012). The case is, NORTHERN NEW ENGLAND TELEPHONE OPERATIONS LLC, v. PUBLIC UTILITIES COMMISSION, PUC-12-91 (Maine). A copy of the Supreme Judicial Court's Jan. 24, 2013 decision is available at http://is.gd/y4832Nfrom Leagle.com. About FairPoint Communications FairPoint Communications, Inc. (NYSE: FRP) -- http://www.fairpoint.com/-- owns and operates local exchange companies in 18 states offering advanced communications with a personal touch, including local and long distance voice, data, Internet, television and broadband services. FairPoint is traded on the New York Stock Exchange under the symbols FRP and FRP.BC. FairPoint and its affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Case No. 09-16335) on Oct. 26, 2009. Rothschild Inc. served as financial advisor for the Company; AlixPartners, LLP, acted as the restructuring advisor; and Paul, Hastings, Janofsky & Walker LLP served as the Company's counsel. BMC Group served as the claims and notice agent. As of June 30, 2009, FairPoint reported $3.24 billion in total assets, $321.41 million in total current liabilities, $2.91 billion in total long-term liabilities, and $1.23 million in stockholders' equity. Andrews Kurth served as counsel to the Official Committee of Unsecured Creditors. Altman Vilandrie acted as the operational consultant to the Creditors' Committee. Verrill Dana was the Creditors' Committee's special regulatory counsel. Jeffries served as the Creditors' Committee's financial advisor. FairPoint on Jan. 24, 2011, completed its balance sheet restructuring and emerged from Chapter 11. FairPoint reduced its outstanding debt by roughly 64%, from roughly $2.8 billion -- including interest rate swap liabilities and accrued interest -- to roughly $1.0 billion. In addition, the Company has a $75 million revolving credit facility available for working capital and general corporate purposes. Existing stock in the Company was cancelled and holders did not receive any distributions. FIRST HORIZON: Moody's Rates Non-Cumulative Preferred Stock 'Ba2' ----------------------------------------------------------------- Moody's Investors Service assigned shelf ratings and a non- cumulative preferred stock rating to First Horizon National Corporation (FHN; senior unsecured of Baa2 negative). The following shelf ratings were assigned: senior unsecured of (P)Baa2, junior subordinate of (P)Ba1, cumulative preferred stock of (P)Ba1, and non-cumulative preferred stock of (P)Ba2. Moody's assigned a rating of Ba2 (hyb) to FHN's non-cumulative perpetual preferred stock. The outlook on the preferred stock rating is negative, consistent with the outlook on the debt ratings of FHN and its lead bank, First Tennessee Bank (standalone bank financial strength rating/baseline credit assessment of C-/baa1, deposit ratings of Baa1/Prime-2). Ratings Rationale Moody's said that FHN's shelf and non-cumulative perpetual preferred stock ratings reflect the rating agency's normal notching practices for hybrid instruments. FHN is headquartered in Memphis, Tennessee and reported assets of $26 billion at 31 December 2012. The principal methodology used in this rating was Moody's Consolidated Global Bank Rating Methodology published in June 2012. FLAT OUT CRAZY: Restaurant Chain Files for Bankruptcy ----------------------------------------------------- Lisa Brown, writing for the St. Louis Post-Dispatch, reports that the Stir Crazy Fresh Asian Grill chain filed for bankruptcy on Jan. 25. Stir Crazy is part of Chicago-based Flat Out Crazy LLC, which operates Stir Crazy and Flat Top Grill locations in several states. The chain filed for Chapter 11 bankruptcy in New York. According to the report, the chain listed both assets and liabilities ranging between $10 million and $50 million. Unsecured creditors include landlord, Altus Properties, which is owed nearly $85,000. FRANK PARSONS: Response Deadline in Clawback Suits Extended ----------------------------------------------------------- Bankrutcy Judge Robert A. Gordon signed off on several stipulations that extend the time for defendants to respond to lawsuits filed by Edward T. Gavin, the duly appointed Trustee of the FPI Liquidating Trust. The Trust sued the defendants to avoid preferential transfers, recover property, and for related relief. The stipulations extend the response deadline to Feb. 15, 2013, for these defendants: -- Pro Tech Computer Supply, Inc., which is represented by: John J. Lovejoy, Esq. SHAPIRO SHER GUINOT & SANDLER 36 South Charles Street Suite 2000 Baltimore, MD 21201 Telephone: (410) 385-4204 E-mail: jjlovejoy@shapirosher.com A copy of the stipulation is available at http://is.gd/iju3wKfrom Leagle.com. -- Tiger Direct, Inc. and Syx Services Inc., which are represented by Tammy Yahiel -- yahiel@tstimpreso.com and Seth M. Choset, Esq. -- schoset@wgplaw.com -- at Weinberg, Gross & Pergament LLP. A copy of the Jan. 24-dated Stipulation is available at http://is.gd/6JXpH7from Leagle.com. -- Ribbons Express, Inc. d/b/a WP Wholesale, and Riverside Claims LLC, which are represented by: CIARDI CIARDI & ASTIN Marnie E. Simon, Esq. Nicole M. Nigrelli, Esq. 2005 Market Street, Suite 1930 Philadelphia, PA 19103 Telephone: (215) 557-3550 E-mail: msimon@ciardilaw.com A copy of the Jan. 24 stipulation is available at http://is.gd/TETe83from Leagle.com. The response deadline is extended to Feb. 18 for defendants Boise White Paper, L.L.C., and Boise Inc., which are represented by Alan Grochal, Esq. -- agrochal@tydingslaw.com -- at Tydings & Rosenberg LLP. A copy of the stipulation is available at http://is.gd/Cu3gcrfrom Leagle.com. About Frank Parsons Headquartered in Hanover, Maryland, Frank Parsons, Inc. -- http://www.frankparsons.com/-- aka Frank Parsons Paper Company Inc., was the largest employee-owned, business products, technology, and office supplies company in the United States, offering more than 180,000 products from companies such as Avery, Fujifilm, Hewlett Packard, IBM, Sony, Xerox, Xiotech, and more. Frank Parsons is an approved contractor on the GSA Schedule and an authorized AbilityOne Distributor. The company holds several environmental certifications, including FSC, SFI, and PEFC. Frank Parsons filed for Chapter 11 bankruptcy protection (Bankr. D. Md. Case No. 11-10338) on Jan. 6, 2011. The Debtor estimated its assets and debts at $10 million to $50 million. Judge Robert A. Gordon presides over the case. Gary H. Leibowitz, Esq., and Irving Edward Walker, Esq., at Cole Schotz Meisel Forman & Leonard, PA, served as the Debtor's bankruptcy counsel. The Debtor also tapped SSG Capital as an investment banker to explore strategic options. WeinsweigAdvisors LLC served as the financial advisor to the Debtor. Delaware Claims Agency, LLC, acted as the claims and noticing agent. Brent C. Strickland, Esq., at Whiteford, Taylor & Preston L.L.P., in Baltimore, Maryland, and Bradford J. Sandler, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, served as counsel to the Official Committee of Unsecured Creditors formed in the Chapter 11 case. Frank Parsons changed its name to "FPI Liquidation Corp." after closing of the sale of substantially all of its assets to TSRC, Inc., in May 2011. Pursuant to an asset purchase agreement, the Buyer paid $2,000,000, plus 50 % of the book value of the Closing Inventory, for the purchased assets. Edward T. Gavin, who serves as trustee of the FPI Liquidating Trust, is represented by: Brent C. Strickland, Esq. Stephen B. Gerald, Esq. Alan C. Lazerow, Esq. WHITEFORD TAYLOR PRESTON LLP Seven Saint Paul Street Baltimore, MD 21202-1636 Telephone: (410) 347-8700 E-mail: bstrickland@wtplaw.com sgerald@wtplaw.com alazerow@wtplaw.com - and - Andrew W. Caine, Esq. Michael R. Seidl, Esq. PACHULSKI STANG ZIEHL & JONES LLP 919 North Market Street P.O. Box 8705 Wilmington, DE 19899-8705 Telephone: (302) 652-4100 E-mail: acaine@pszjlaw.com mseidl@pszjlaw.com FRANK PARSONS: Chesapeake Mission Response Deadline Extended ------------------------------------------------------------ Bankruptcy Judge Robert A. Gordon signed off on a stipulation that extend the time for Chesapeake Mission Critical, L.L.C. d/b/a Mission Critical, to respond to lawsuit filed by Edward T. Gavin, the duly appointed Trustee of the FPI Liquidating Trust. The Trust sued the defendant to avoid preferential transfers, recover property, and for related relief. The stipulation extend the response deadline to Feb. 15, 2013. A copy of the Jan. 24 stipulation is available at http://is.gd/aGuJSBfrom Leagle.com. Chesapeake Mission is represented by: GIMMEL, WEIMAN, ERSEK, BLOMBERG & LEWIS, P.A. Steven T. Blomberg, Esq. 4 Professional Drive, Suite 145 Gaithersburg, MD 20879 Telephone: (301) 840-8565 E-mail: sblomberg@gweblaw.com About Frank Parsons Headquartered in Hanover, Maryland, Frank Parsons, Inc. -- http://www.frankparsons.com/-- aka Frank Parsons Paper Company Inc., was the largest employee-owned, business products, technology, and office supplies company in the United States, offering more than 180,000 products from companies such as Avery, Fujifilm, Hewlett Packard, IBM, Sony, Xerox, Xiotech, and more. Frank Parsons is an approved contractor on the GSA Schedule and an authorized AbilityOne Distributor. The company holds several environmental certifications, including FSC, SFI, and PEFC. Frank Parsons filed for Chapter 11 bankruptcy protection (Bankr. D. Md. Case No. 11-10338) on Jan. 6, 2011. The Debtor estimated its assets and debts at $10 million to $50 million. Judge Robert A. Gordon presides over the case. Gary H. Leibowitz, Esq., and Irving Edward Walker, Esq., at Cole Schotz Meisel Forman & Leonard, PA, served as the Debtor's bankruptcy counsel. The Debtor also tapped SSG Capital as an investment banker to explore strategic options. WeinsweigAdvisors LLC served as the financial advisor to the Debtor. Delaware Claims Agency, LLC, acted as the claims and noticing agent. Brent C. Strickland, Esq., at Whiteford, Taylor & Preston L.L.P., in Baltimore, Maryland, and Bradford J. Sandler, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, served as counsel to the Official Committee of Unsecured Creditors formed in the Chapter 11 case. Frank Parsons changed its name to "FPI Liquidation Corp." after closing of the sale of substantially all of its assets to TSRC, Inc., in May 2011. Pursuant to an asset purchase agreement, the Buyer paid $2,000,000, plus 50 % of the book value of the Closing Inventory, for the purchased assets. Edward T. Gavin, who serves as trustee of the FPI Liquidating Trust, is represented by lawyers at Whiteford Taylor Preston LLP, and Pachulski Stang Ziehl & JONES LLP. FREDDIE MAC: GE Settles FHFA Suit over Mortgage Bonds ----------------------------------------------------- David McLaughlin and Clea Benson, writing for Bloomberg News, reported that General Electric Co. settled a lawsuit filed by the Federal Housing Finance Agency over losses on mortgage bonds sold to Freddie Mac, the regulator said. FHFA, which oversees Fannie Mae and Freddie Mac, sued GE and underwriters Morgan Stanley (MS) and Credit Suisse Group AG (CS), saying mortgage loans backing about $550 million in securities didn't live up to their promised quality, the report related. "This settlement resolves the dispute between FHFA and GE consistent with FHFA's responsibilities as conservator of Freddie Mac," Alfred M. Pollard, FHFA's general counsel, said in a statement, Bloomberg quoted. "FHFA is pleased this lawsuit has been resolved and appreciates the work of Freddie Mac in this matter." Pollard didn't disclose the terms of the settlement and a spokesman for Fairfield, Connecticut-based GE couldn't be reached for comment, Bloomberg related. The case against GE is among a group of lawsuits FHFA filed against banks over mortgage securities sold to Fannie Mae and Freddie Mac, Bloomberg said. The agency said in a court filing yesterday that it was dropping claims against GE, Morgan Stanley and Credit Suisse. The case is Federal Housing Finance Agency v. General Electric Co., 11-7048, U.S. District Court, Southern District of New York (Manhattan). About Fannie Mae Federal National Mortgage Association, aka Fannie Mae, is a government-sponsored enterprise that was chartered by U.S. Congress in 1938 to support liquidity, stability and affordability in the secondary mortgage market, where existing mortgage-related assets are purchased and sold. Fannie Mae has been under conservatorship, with the Federal Housing Finance Agency acting as conservator, since September 6, 2008. As conservator, FHFA succeeded to all rights, titles, powers and privileges of the company, and of any shareholder, officer or director of the company with respect to the company and its assets. The conservator has since delegated specified authorities to Fannie Mae's Board of Directors and has delegated to management the authority to conduct day-to-day operations. The U.S. Department of the Treasury owns Fannie Mae's senior preferred stock and a warrant to purchase 79.9% of its common stock, and Treasury has made a commitment under a senior preferred stock purchase agreement to provide Fannie with funds under specified conditions to maintain a positive net worth. Fannie Mae reported a net loss of $16.85 billion in 2011, a net loss of $14.01 billion in 2010, and a net loss of $72.02 billion in 2009. The Company's balance sheet at March 31, 2012, showed $3.20 trillion in total assets, $3.20 trillion in total liabilities and $268 million in total equity. About Freddie Mac Based in McLean, Virginia, the Federal Home Loan Mortgage Corporation, known as Freddie Mac (OTCBB: FMCC) -- http://www.FreddieMac.com/-- was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters. Freddie Mac is under conservatorship and is dependent upon the continued support of Treasury and the Federal Housing Finance Agency acting as conservator to continue operating its business. GALLANT ACQUISITIONS: Court Dismisses Chapter 11 Case ----------------------------------------------------- The U.S. Bankruptcy Court has granted the motion filed by the U.S. Trustee to dismiss the chapter 11 case of Gallant Acquisitions Ltd with prejudice to re-filing for 180 days. Willis, Texas-based Gallant Acquisitions Ltd. filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-33353) in Houston, Texas, on May 1, 2012. In the petition, the Debtor disclosed total assets of $10 million and total debts of $9.15 million, all on account of liquidated secured debt. The Debtor owns various properties in Texas, including a 130-acre Land & Golf Course and 32-acre multiuse land on Highway 105, in Conroe, Texas. Judge Jeff Bohm oversees the case. Barbara Mincey Rogers, Esq., at Rogers & Anderson, PLLC, serves as the Debtor's counsel. The petition was signed by Warrant Gallant, president of Gallan GP, LLC, general partner. GLACIAS LLC: Case Summary & 3 Largest Unsecured Creditors --------------------------------------------------------- Debtor: GLACIAS LLC, a California Limited Liability Corporation 1701 Quail Street Newport Beach, CA 92660 Bankruptcy Case No.: 13-10657 Chapter 11 Petition Date: January 23, 2013 Court: U.S. Bankruptcy Court Central District of California (Santa Ana) Debtor's Counsel: Ashishkumar Patel, Esq. LAW OFFICE OF ASHISHKUMAR PATEL, APC 2102 Business Center Drive Irvine, CA 92612 Tel: (949) 253-4192 Fax: (949) 253-4193 E-mail: apatelesq@yahoo.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 The list of largest unsecured creditors filed with the petition contains only three entries http://bankrupt.com/misc/cacb13-10657.pdf The petition was signed by Tom Krucker, director. HAWKER BEECHCRAFT: Key Creditors Approve Reorganization Plan ------------------------------------------------------------ Hawker Beechcraft, Inc. on Jan. 25 announced the key creditors voting in the company's solicitation process have overwhelmingly approved its proposed Joint Plan of Reorganization. The company also announced that J.P. Morgan Securities LLC and Credit Suisse Securities (USA) LLC have agreed to act as joint lead arrangers and joint bookrunners to structure, arrange and syndicate $600 million in exit financing, consisting of a term loan and a revolving line of credit. The affiliated banks of the joint lead arrangers, JPMorgan Chase Bank, N.A. and Credit Suisse AG, have committed to underwrite the financing. The financing will be used to repay all claims under the debtor-in-possession (DIP) post-petition credit facility, pay certain settlement and cure payments and fund ongoing operations. The financing is subject to, among other things, completion of definitive financing documentation and Bankruptcy Court approval. Robert S. "Steve" Miller, CEO of Hawker Beechcraft, Inc., said, "The tremendous show of support of our creditors for the Plan, which will dramatically reduce Hawker Beechcraft's debt load, and the financing commitment from JPMorgan and Credit Suisse mark an important milestone for the company as it moves closer to emerging from the restructuring process." Bill Boisture, Chairman of Hawker Beechcraft Corporation, said, "The reorganized Beechcraft Corporation will emerge from this process in a strong operational and financial position, with the working capital and flexibility to execute a strategy built around our core products like the world-renowned King Air twin engine turboprop and the T-6 military training aircraft, which will enable the company to compete well into the future." Hawker Beechcraft will seek approval from the Court to exit bankruptcy at the confirmation hearing scheduled for Jan. 31 and expects to emerge from Chapter 11 in the second half of February. Upon emergence, pre-petition secured bank debt, unsecured bond debt, and certain general unsecured claims will be canceled and holders of such claims will receive equity in the reorganized company in the percentages negotiated by the major creditor groups at the time the company commenced its Chapter 11 proceedings. A new Board of Directors, to be appointed by the new owners of the company, will take over on the date of emergence. Hawker Beechcraft's legal representative is Kirkland & Ellis LLP; its financial advisor is Perella Weinberg Partners LP; and its restructuring advisor is Alvarez & Marsal North America, LLC. The Ad Hoc Committee of Senior Secured Lenders' legal representative is Wachtell Lipton Rosen & Katz. Credit Suisse serves as agent for the lenders under Hawker Beechcraft's secured pre-petition and debtor-in-possession credit facilities. Credit Suisse's legal representative is Sidley Austin LLP and its financial advisor is Houlihan Lokey. The Unsecured Creditors Committee's legal representative is Akin Gump Strauss Hauer & Feld LLP and its financial advisor is FTI Consulting, Inc. 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%. HAWKER BEECHCRAFT: Thurs. Hearing on Plan, Pensions & Retiree Deal ------------------------------------------------------------------ Molly McMillin, writing for The Wichita Eagle, reports that the Bankruptcy Court at a hearing Jan. 24 postponed ruling on Hawker Beechcraft's three pension programs until Jan. 31. The Court also postponed ruling on a proposed settlement with an ad hoc group of retired salaried employees. The Bankruptcy Court is also slated to consider confirmation of Hawker Beechcraft's plan of reorganization on Jan. 31. If approved, Hawker plans to emerge from bankruptcy in the last half of February. The report recounts Hawker is seeking to terminate two of its retirement plans -- a salaried plan and a base retirement plan -- and for the Pension Benefit Guaranty Corp. to take them over and pay benefits to vested participants. Hawker intends to continue a benefit plan for hourly workers in an agreement reached with the Machinists union last year. Under the agreement, accruals for the hourly workers were to be frozen at the end of 2012 and a new Retirement Income Savings plan created. That plan would continue to operate after Hawker Beechcraft emerges from bankruptcy. According to the report, Hawker agreed to set aside $250,000 a year for 10 years to cover shortfalls recipients represented by the ad hoc group would lose as a result of the bankruptcy. The settlement covers about 70 former salaried employees whose benefits would exceed caps the PBGC sets on how much a retiree can collect in a year. The report relates the PBGC will pay retirement benefits up to a legal limit of about $56,000 a year for a 65-year-old, according to the agency. Hawker will pay $80,000 for fees and expenses for legal counsel incurred by the ad hoc retiree group, according to a court filing. 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%. HAWKER BEECHCRAFT: Asks for Approval of JPMorgan Exit Financing --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York will convene a hearing on Jan. 29, 2013, at 12:00 p.m., to consider Hawker Beechcraft, Inc., et al.'s request to: a) enter into (i) the exit financing commitment letter with JPMorgan Chase Bank, N.A. and J.P. Morgan Securities LLC; and (ii) the related fee letter; and b) incur and pay certain fees and expenses as set forth in the exit financing letters. Objections, if any are due Jan. 29 at 11:30 a.m. The Debtors stated that they are soliciting votes on their Plan and a confirmation hearing has been scheduled for Jan. 31, 2013. In preparation for emergence from bankruptcy, the Debtors have focused their efforts on procuring the exit financing necessary to consummate the Plan and to provide sufficient working capital to the reorganized Debtors for their business operations and other general corporate purposes. The exit financing will consist of (a) a $375 million senior secured term loan facility and (b) a $225 million senior secured asset-based revolving credit facility. The Debtors will use the funds to pay in full all outstanding amounts under the super- priority $400 million debtor-in-possession facility, pay certain settlement and cure payments, and provide working capital to the reorganized Debtors for their business operations and other general corporate purposes. The revolving facility likely will remain undrawn on the effective date of the Amended Plan, and will be available thereafter to support the Debtors' operating needs. 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%. HERON LAKE: Extends AgStar Forbearance Agreement Until Feb. 28 -------------------------------------------------------------- Heron Lake BioEnergy, LLC, entered into an Amended and Restated Forbearance Agreement with AgStar Financial Services, PCA, that provides for a forbearance period until Feb. 28, 2013, relating to certain covenant defaults and required monthly principal installment payments. The Company and AgStar previously entered into a Forbearance Agreement dated Dec. 21, 2012. The Company is indebted to AgStar under an Amended and Restated Term Note dated Sept. 1, 2011, in the principal amount of $40,000,000, and an Amended and Restated Term Revolving Note dated Sept. 1, 2011, in the principal amount of $8,008,689. The Company's obligations to AgStar are further evidenced by a Fifth Amended and Restated Master Loan Agreement dated Sept. 1, 2011. The loans were made by AgStar to the Company for the purpose of constructing and operating an ethanol production facility in Heron Lake, Minnesota. As of Dec. 1, 2012, the outstanding principal balance of the indebtedness was approximately $36.3 million for the Term Note and approximately $4.2 million for the Revolving Note. The Company did not make the required monthly installment of principal required by the Notes on Dec. 1, 2012, and Jan. 1, 2013, and will not make the required monthly installment of principal required by the Notes on Feb. 1, 2013. The Company also was in default of certain financial covenants under the MLA. On account of those defaults, AgStar had the right to declare the Notes fully and immediately due and payable without defense or right of setoff prior to entry into the Forbearance Agreement. In addition, AgStar is entitled to collect the late charges and to recover from the Company its costs and expenses, including reasonable attorney fees incurred in connection with the negotiation and execution of the Forbearance Agreement. On Jan. 3, 2013, the Company entered into an Asset Purchase Agreement, as the sole member of Lakefield Farmers Elevator, LLC, under which it has proposed to sell substantially all of the real property and personal property of Lakefield Farmers Elevator used in connection with the operation of its grain storage and handling facilities to FCA Co-op. Under the Forbearance Agreement, AgStar agreed to forbear from exercising its legal and contractual rights and remedies provided in the Loan Documents and by applicable law, including, but not limited to, the right to foreclose the real estate mortgages and security agreements and to obtain the appointment of a receiver pursuant to applicable law, until Feb. 28, 2013, in order to permit the Company to close on the transactions contemplated by the Asset Purchase Agreement dated Jan. 22, 2013, between the Company and Guardian and the Elevator APA. Advances under the Revolving Note may only be advanced to the Company for the purpose of funding normal operating expenses pending the closing of the transactions contemplated by the Ethanol Plant APA and Elevator APA, including the payment of interest to AgStar in accordance with the Forbearance Agreement. Those advances may not exceed $1,750,000. In connection with the Forbearance Agreement, the Company paid a forbearance fee of $10,000, plus all other costs and expenses incurred by AgStar in connection with the preparation, negotiation and execution of the Forbearance Agreement, including, without limitation, reasonable attorneys' fees. About Heron Lake Minnesota-based Heron Lake BioEnergy, LLC, owns and operates a dry mill corn-based, natural gas fired ethanol plant near Heron Lake, Minnesota. The plant has a stated capacity to produce 50 million gallons of denatured fuel grade ethanol and 160,000 tons of dried distillers' grains (DDGS) per year. As reported in the Troubled Company Reporter on Feb. 7, 2012, Boulay, Heutmaker, Zibell & Co. P.L.L.P., in Minneapolis, Minn., expressed substantial doubt about Heron Lake BioEnergy's ability to continue as a going concern, following the Company's results for the fiscal year ended Oct. 31, 2011. The independent auditors noted that the Company previously incurred operating losses related to difficult market conditions and operating performance. The Company was previously out of compliance with its master loan agreement and had a lower level of working capital than was desired. The Company's balance sheet at July 31, 2012, showed $94.1 million in total assets, $47.1 million in total liabilities, and members' equity of $47.0 million. HMC/CAH CONSOLIDATED: Emerges From Chapter 11 Bankruptcy -------------------------------------------------------- HMC/CAH Consolidated, Inc., emerged from Chapter 11 bankruptcy on Jan. 17, according to a statement sent to YadkinRipple.com. According to the statement, HMC/CAH's exit from bankruptcy ended its 15 months of intense reorganization and HMC/CAH emerged stronger financially with all 12 hospitals intact. HMC/CAHs facilities are located in rural communities across the United States. The Joint Plan of Reorganization was filed June 6, 2012. According to the statement, the major cornerstone of the reorganization plan was a consensus reached by creditors who voted for HMC/CAH's reorganization plan that was ultimately approved by the bankruptcy court. In addition, HMC/CAH orchestrated the sale of its management rights to a new company named Rural Community Hospitals of America, LLC that will operate independent of HMC/CAH. Larry Arthur, formerly the CEO of HMC/CAH, has now become the CEO of Rural Community Hospitals of America. Mr. Arthur noted that "HMC/CAH will emerge from bankruptcy a stronger organization." Arthur also noted his appreciation for the community and for the hospital employees "without their support our emergence from bankruptcy would not have been possible." Mr. Arthur also noted that "through the reorganization process, HMC/CAH has significantly reduced its debt and emerged with a sustainable capital structure. Our exit from bankruptcy will provide liquidity to meet our working capital and capital investment needs." In September, the Bankruptcy Court authorized CAH Acquisition Company #2, LLC, to employ The Olsen Law Firm, LLC, for the special purpose of providing legal services to CAH 2, in connection with Claim No. 20 filed in Case No. 11-44740-11 by Diamond Healthcare West, Inc., upon the terms and conditions contained in an engagement letter, dated Aug. 22, 2012. As reported by the Troubled Company Reporter on Sept. 10, 2012, CAH 2 told the Court that its lead bankruptcy counsel, Husch Blackwell LLP, has a potential conflict of interest with respect to Diamond Healthcare West, Inc., and, as such, CAH 2 has determined it is necessary to employ special legal counsel to analyze the Claim and prosecute any objection to the Claim. Jill D. Olsen, Esq., the professional working for CAH 2, charges $275 per hour. To the best of CAH 2's knowledge, Olsen does not hold or represent an interest adverse to its estate and that Olsen is disinterested, as that term is defined in Section 101(14) of the Bankruptcy Code. About HMC/CAH Consolidated Kansas City, Missouri-based HMC/CAH Consolidated, Inc., is in the business of acquiring and operating a system of acute care hospitals located in rural communities that are certified by The Centers for Medicare and Medicaid Services as Critical Access Hospitals or CAHs. The core focus of HMC/CAH's business plan is to replace the technologically out of date and operationally inefficient medical facilities of its CAHs with newly constructed state-of-the art facilities. Since its incorporation, HMC/CAH has purchased 12 rural hospitals certified as Critical Access Hospitals. These CAH Hospitals are located in Kansas (3), Oklahoma (5), Missouri (1), Tennessee (1) and North Carolina (2). The CAH Hospitals are the lifeline of the communities that they serve. The CAH Hospitals provide critical health services to rural residents, including emergency medical services. HMC/CAH and 12 affiliates filed for Chapter 11 bankruptcy (Bankr. W.D. Mo. Case Nos. 11-44738 to 11-44750) on Oct. 10, 2011. Judge Dennis R. Dow presides over the case. Mark T. Benedict, Esq., Marshall C. Turner, Esq., and Matthew Gartner, Esq., at Husch Blackwell LLP, in Kansas City, Mo., represent the Debtors as counsel. In its petition, the Debtors estimated $10 million to $50 million in assets and debts. The petition was signed by Dennis Davis, chief legal officer. Nancy J. Gargula, U.S. Trustee for Region 13, appointed five members to serve on the Official Committee of Unsecured Creditors of HMC/CAH Consolidated, Inc. Kilpatrick Townsend & Stockton LLP serves as the committee's counsel. HOSTESS BRANDS: Bows to Some Union Objections on Claim Process -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Hostess Brands Inc. is modifying procedures for filing claims based on debt arising during the aborted reorganization process. The changes mostly affect claims by labor unions and employees. According to the report, the baker of Wonder Bread had a hearing in bankruptcy court Jan. 25 to ask the judge to require creditors to file claims by March 21 based on unpaid liabilities arising during bankruptcy. Hostess needs a fix on the universe of administrative claims because, as the company said in a court filing, "it is presently unclear whether these estates are administratively insolvent," meaning there aren't enough unencumbered assets to pay debt arising during bankruptcy. The report relates that Hostess originally wanted to halt grievance arbitrations with union workers and allow only the international unions to file claims. Hostess pulled back on both. Hostess, the report discloses, bowed to arguments by local unions that the internationals don't have the right to step into their shoes on disputes involving 372 collective bargaining agreements. Consequently, locals will have the right to file claims. Hostess is sticking by its demand that individual workers be prohibited from filing claims, based on the notion that the unions are individual workers' exclusive representatives on issues arising under union contracts. The company will also allow grievance arbitrations to go ahead, with limitations. Hostess wants the bankruptcy judge to rule that arbitrators only determine the amount of a debt, with the timing of payment to be determined in bankruptcy court. Hostess also wants to reserve the right to have the bankruptcy court halt an arbitration if a union is attempting to sidestep a prior ruling by the bankruptcy judge saying when certain categories of claims can be paid. According to the report, the Jan. 25 hearing will also consider auction and sale rules for the bread business. The stalking horse is Flowers Foods Inc., already under contract to buy 20 bread plants, 38 depots, and brand names for $390 million. 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: Creditors Object to Break-Up Fee in Flowers Deal ---------------------------------------------------------------- Tanya Agrawal, writing for Reuters, reported that Hostess Brands Inc's bid to sell its bread brands to Flowers Foods Inc has hit a roadblock with unsecured creditors objecting to the break-up fees Flowers is entitled to for being appointed as the initial or "stalking horse" bidder. The break-up fees is too high and contains an unusual "most favored nation" provision that gives Flowers a windfall without conferring an equal benefit to Hostess, a committee representing unsecured creditors said in its objections filed on Tuesday, the report related. Flowers on Jan. 11 agreed to buy Wonder and other well-known bread brands from Hostess for $360 million as well as its Beefsteak brand for another $30 million, Reuters related. The Flowers purchase is subject to higher bids at a court-supervised auction and the company is entitled to a break-up fee of $12.6 million for the bread brands and $1.05 million for the Beefsteak brand. The committee said the fee is too high and will hamper bidding and wants the bankruptcy court to reduce the break-up fee to $10 million for the bread brands and $810,000 for the Beeksteak brand, according to the report. The unsecured creditors committee also said in its objections the "most favored nation" provision is highly unusual and inappropriate as it alters established market practice and gives Flowers additional financial windfall in case of future events that may take place. Reuters noted that under the provision, if Hostess were to propose another sale for a price exceeding $10 million with a break-up fee of more than 3.5 percent, Flowers would be entitled to an additional cash payment equal to the difference between the amount of the break-up fee calculated at 3.5 percent rate and the higher rate. 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. HOWREY LLP: $159MM Antitrust Deal Bodes Well for Creditors ---------------------------------------------------------- Jacqueline Palank, writing for The Wall Street Journal's Bankruptcy Beat, reported that a newly reached $159 million antitrust settlement is good news for creditors of defunct law firm Howrey LLP, whose former role in the case could entitle it to a share of the attorneys' fees. The Wall Street Journal reported Tuesday on the $158.6 million settlement for dairy farmers. The farmers had sued the farmer cooperative Dairy Farmers of America for allegedly conspiring with Dean Foods Co. to undercut competition and thereby depress the milk prices the farmers received. The cooperative doesn't admit any wrongdoing under the settlement, which canceled a trial that was to have begun Tuesday. Once Howrey's job to represent the farmer plaintiffs, its lawyers took the case with them to their new home at Baker & Hostetler LLP following Howrey's March 2011 dissolution, the report said. All's not lost for Howrey's creditors, however, WSJ added. As previously reported, the now-liquidating Howrey is currently in talks to divvy up the $48 million in attorneys' fees and $7 million in expenses awarded in connection with the farmers' $140 million settlement with Dean Foods, reached in July 2011. Court papers show that lead plaintiffs' lawyer Bob Abrams, the former Howrey litigation co-chairman and current chairman of Baker's antitrust group, is in charge of divvying up the fees among the various firms working for the plaintiffs, including the Howrey estate, the report said. The report added that it's likely that the Dairy Farmers of America settlement will follow the same path as the Dean settlement. Court papers show that the plaintiffs' lawyers want a third of the DFA settlement amount, about $53 million, plus expenses, although it's ultimately up to the judge. Whatever they get, Baker's role as lead law firm entitles it to a significant portion of the fees, some of which it could decide to share with Howrey. Allan Diamond, the lawyer in charge of Howrey's liquidation, has long been optimistic about the fees the so-called milk litigation could bring in for the firm's creditors, according to WSJ. In court papers filed earlier this month, he said he anticipates recovering a "substantial" amount of fees from the case. It could be a while, however, before that dream becomes reality. Talks continue to portion out the Dean settlement fees, while the new settlement is slated for an April 3 "fairness" hearing before the U.S. District Court in Greeneville, Tenn, according to WSJ. It could be some time before the court decides whether to approve the settlement, let alone the attorneys' fees. About Howrey LLP Three creditors filed an involuntary Chapter 7 petition (Bankr. N.D. Calif. Case No. 11-31376) on April 11, 2011, against the remnants of the Washington-based law firm Howrey LLP. The filing was in San Francisco, where the firm had an office. The firm previously was known as Howrey & Simon and Howrey Simon Arnold & White LLP. The firm at one time had more than 700 lawyers in 17 offices. The partners voted to dissolve in March 2011. The firm specialized in antitrust and intellectual-property matters. The three creditors filing the involuntary petition together have $36,600 in claims, according to their petition. The involuntary chapter 7 petition was converted to a chapter 11 case in June 2011 at the request of the firm. In its schedules filed in July, the Debtor disclosed assets of $138.7 million and liabilities of $107.0 million. Representing Citibank, the firm's largest creditor, is Kelley Cornish, Esq., a partner at Paul, Weiss, Rifkind, Wharton & Garrison. Representing Howrey is H. Jason Gold, Esq., a partner at Wiley Rein. The Official Committee of Unsecured Creditors is represented in the case by Bradford F. Englander, Esq., at Whiteford, Taylor And Preston LLP. In September 2011, Citibank sought conversion of the Debtor's case to Chapter 7 or, in the alternative, appointment of a Chapter 11 Trustee. The Court entered an order appointing a Chapter 11 Trustee. In October 2011, Allan B. Diamond was named as Trustee. HUNTINGTON INGALLS: Fitch Affirms Issuer Default Rating at 'BB' --------------------------------------------------------------- Fitch Ratings has affirmed Huntington Ingalls Industries, Inc.'s Issuer Default Rating (IDR) and senior unsecured debt ratings at 'BB'. Fitch has also affirmed HII's senior secured facilities at 'BBB-'. The Rating Outlook is Stable. The ratings cover approximately $1.8 billion of outstanding debt. HII's ratings are supported by a solid liquidity position, positive free cash flow (FCF; cash from operations less capital expenditures and dividends), the high level of current Department of Defense (DoD) spending, and HII's position in the current DoD spending environment with roles on three of the DoD's top 12 programs in the fiscal 2013 budget. Fitch also considered HII's role as a sole source manufacturer on about 70% of its revenues, and its large and highly visible backlog. Fitch's rating concerns include risks to core defense spending during and after fiscal 2013, including sequestration, HII's revenue concentration with the U.S. Navy and Coast Guard, and the ongoing restructuring at the company's Ingalls operations. HII generates nearly all of its revenues from the U.S. government, exposing the company to changes in U.S. Navy and U.S. Coast Guard plans regarding future fleet needs. Fitch is also concerned by the company's program execution risks and the high percentage of the workforce that is unionized. In addition, Fitch is concerned with future potential cash deployment actions as the company continues refining its cash deployment strategy. The notching up of the senior secured credit facility by two rating notches from the IDR of 'BB' to 'BBB-' is supported by the coverage provided by HII's tangible assets and operating EBITDA compared to the fully drawn facility. The collateral for the facility includes substantially all of HII's assets with the exception of the Avondale shipyard and a few other exclusions. HII's leverage was approximately 3.1x for the last 12 months ended at Sept. 30, 2012. HII's current leverage is in line with Fitch's initial expectations. Fitch expects HII's leverage will remain in the 3.0x to 3.1x range over the next couple of years with the potential for steady improvement after that with some debt reduction and restructuring-driven margin expansion. HII has a good liquidity position of approximately $1.4 billion which includes $766 million in cash and $604 million available under its $650 million domestic credit revolving facility, after giving effect to $46 million of outstanding letters of credit. Fitch expects HII's liquidity to remain strong; however, it will likely be lower once the company's board makes further decisions on the cash deployment strategy. HII generated approximately $433 million of cash flow from operating activities during the last 12 months ended (LTM) Sept. 30, 2012, down from $528 million at the end of 2011. Lower cash flow was primarily due to higher pension contributions. Correspondingly, HII's FCF totaled $263 million during the LTM ended Sept. 30, 2012, down from $331 million at the end of 2011. Fitch expects HII's FCF in 2012 to be in line with the results of 2010 and LTM ended Sept. 30, 2011. Fitch also expects FCF margin to continue improving beyond 2013. HII focuses its cash deployment towards capital expenditures and pension contributions. In the fourth quarter of 2012, HII announced a $150 million share repurchase program and declared a 10c per share quarterly dividend (approximately $5 million). Fitch expects that HII will refine its cash deployment strategies following the resolution of sequestration and higher clarity of future DoD plans. At year end 2011 the company's pension plans were underfunded by $801 million (80% funded) while other post-employment benefits (OPEB) obligations totaled $753 million. The funded status deteriorated in 2011 due to a decline in the discount rate. As of Dec. 31, 2010, HII's pension plans were 92% funded. During 2012, HII expected to contribute $236 million to its defined benefit (DB) plans, of which $144 million was the expected minimum contributions for the company's defined benefit (DB) plans. HII also expected to contribute $33 million for its OPEB plans. Through the first nine months of the year, HII had contributed $233 million and $25 million to its DB and OPEB plans respectively. The discount rate of 5.23% used to value HII's pension obligations in 2011 is likely to be lowered at year end 2012 due to market conditions. Therefore, pension obligations are likely to be somewhat higher. HII's status as a defense contractor mitigates some of the risks associated with its pension obligations. Most of HII's pension contributions are recoverable through government contracts because they qualify as allowable costs under government Cost Accounting Standards (CAS). Most of HII's revenues are derived from the defense industry. High levels of defense spending currently support HII's ratings, but the Department of Defense (DoD) budget environment is highly uncertain after fiscal 2013 because of large U.S. government budget deficits and the potential for large, automatic spending cuts during fiscal 2013. Fitch expects 2013 to be a challenging year for the U.S. defense contractors. However, it does not anticipate a significant deterioration in HII's credit profile. Sequestration continues to be a large threat in the near term, but Fitch's base case is that it will be avoided, at least in terms of timing. However, DOD spending reductions are likely to be a part of any deal that avoids sequestration. The spending environment will likely continue to be uncertain through 2013. Also, most of the proposed spending 'cuts' are from projected budget growth and come off of the existing high spending levels - inflation adjusted spending will likely decline, but modestly, over 10 years. A key risk in the sector remains cash deployment to offset the impact on earnings from lower revenues. Fitch believes that modest declines in defense spending would not lead to negative rating actions given the strategic importance of HII's portfolio, long lead times for program execution and the amount of DOD funding HII received in both fiscal 2011 and fiscal 2012. The exposure to DoD spending is also mitigated by HII's good liquidity position. What Could Trigger a Rating Action: Fitch may consider a positive rating action if HII decreases its current leverage by either a reduction of debt or an increase in EBITDA driven by an execution of its margin improvement initiatives. A negative rating action may be considered should the company's leverage (debt to EBITDA) increase to above approximately 3.6-3.8x; or if defense spending cuts have a more significant impact on the company's earnings and FCF than currently anticipated. ICON HEALTH: S&P Lowers Rating on Senior Secured Notes to 'B-' -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Logan, Utah-based fitness equipment maker ICON Health & Fitness Inc. to 'B' from 'B+'. At the same time, S&P lowered its issue-level rating on ICON's senior secured notes by one notch to 'B-' from 'B'. The recovery rating on this debt remains '5', indicating S&P's expectation for modest recovery (10% to 30%) for lenders in the event of a payment default. All ratings have been placed on CreditWatch with negative implications. The rating downgrade to 'B' and the CreditWatch listing reflect a continued decline in operating performance through the first half of fiscal 2013 (ICON's fiscal year ends May 31) that has resulted in credit measures deteriorating to levels that are no longer in line with the previous 'B+' corporate credit rating. At Dec. 1, 2012, operating lease-adjusted leverage and interest coverage declined to 8.1x and 1.4x, respectively, compared with adjusted leverage and coverage of 5.6x and 1.7x at May 31, 2012. Also, for the trailing-12-month period ended Dec. 1, 2012, free operating cash flow generation remained negative. The weakening of credit measures and cash flow resulted from a 34% year-over-year decline in EBITDA and a 213 basis point decline in EBITDA margin in the first half of the fiscal year, despite nearly flat revenue in the period. The decline in EBITDA in the period was driven in part by lower sales of higher margin products and higher selling expenses. In addition, ICON has cited reduced sales to its largest retail customer during the period. Given ICON's fairly high concentration of sales to this customer, S&P believes any further pull back in demand could significantly hurt ICON's revenue over the intermediate term. Continued softness in revenue in conjunction with higher expenses could drive a further deterioration of free cash flow generation. This could result in reduced availability under ICON's asset-based revolver, which the company relies upon for liquidity, particularly in the first half of the fiscal year as the company builds inventory and finances accounts receivables before the holiday selling season. The EBITDA decline in the fiscal first half of 2013 represented a meaningful underperformance compared with S&P's prior expectation for EBITDA growth in fiscal 2013. S&P had previously anticipated operating improvements in fiscal 2013 from management's efforts to address challenges that arose in fiscal 2012 and led to manufacturing cost inefficiencies related to the many product updates introduced during the period. In resolving S&P's CreditWatch listing, it will review management plans to address the decline in operating performance. S&P will consider a downgrade if it do not believe there is a likely and timely path for improving EBITDA margin in manner that enables ICON to sustain EBITDA coverage of interest expense in the mid-1x area and to maintain adequate revolver availability. Absent improved profitability, it is unlikely that credit measures or liquidity will support the 'B' rating. IMMUCOR INC: S&P Affirms 'B+' Corporate Credit Rating ----------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Immucor Inc. The outlook is stable. At the same time, S&P affirmed its issue-level rating on the senior secured debt at 'BB-' with a recovery rating of '2', indicating its expectation for substantial (70% to 90%) recovery in the event of a payment default. S&P also affirmed its issue- level rating on the senior unsecured debt at 'B-' with a recovery rating of '6', indicating its expectation for negligible (0% to 10%) recovery in the event of a default. The acquisition of LIFECODES is debt leverage neutral as it will contribute to EBITDA and Immucor will receive equity funding from its sponsor. While S&P believes the acquisition is a good strategic fit given that the businesses are complementary (Immucor matches patients with blood transfusions, and LIFECODES matches patients with organ transplants), the acquisition is small relative to Immucor's existing business. Both companies have a core competency in antigen typing and antibody screening and identification. The ratings on Norcross, Ga.-based Immucor Inc. continue to reflect a "fair" business risk profile and "highly leveraged" financial risk profile, unchanged as a result of this transaction. Leverage remains high, around 7.3x both before and after the new debt issue, supporting S&P's financial risk assessment. S&P believes the company's business risk profile is characterized by its important role in blood transfusion procedures and its position for recovery in demand for its products, which has been hurt by global economic weakness. Immucor is a manufacturer of reagents and automated systems for blood typing and screening. "We expect Immucor to post low-single-digit organic revenue growth over the next 12 months, aided by the essential role that its diagnostic equipment and reagents play in the testing of donor and patient blood for the purpose of transfusion. Revenues for the second quarter fiscal year 2013 (ended Nov. 30, 2012) were up 2.4% (compared with the same prior-year period), adjusted for foreign exchange fluctuations and fewer ship cycles. The LIFECODES acquisition should add over $46 million in annualized revenues. Margins in fiscal 2012 and the first half of 2013 were under some pressure by infrastructure investment that included an expansion of the U.S. sales force. Revenues, EBITDA, and EBITDA margins in the first half of fiscal 2013 were also hurt by one-time events such as fewer ship cycles and negative exchange rate fluctuations. In fiscal 2013, we anticipate there will be a normalization of ship cycles and that, coupled with the acquisition of LIFECODES, will lead to low double-digit revenue growth. Cash flow generation (excluding a $22 million legal settlement payment) roughly covered capital expenditures, which totaled $20 million for the last 12 months," S&P noted. Immucor provides over one-half of the reagents needed for blood testing in the U.S. and is the sole supplier for approximately one-third of its red blood cell reagents. S&P believes it is well-positioned to benefit from an eventual firming in customer demand, which has been soft for the past three fiscal years. Some improvement in equipment demand with an increase in economic confidence by hospitals (80% of sales), blood donor centers (15% of sales), and reference/clinical laboratories (5% of sales) could suggest a subsequent pick-up in highly profitable reagent use, which accounts for about 83% of Immucor's revenues. While S&P assumes that this could bolster EBITDA margins in a few years, it also expects a lag in that pick-up will limit margin improvement in fiscal 2013. JACKSONVILLE BANCORP: CapGen Discloses 45.6% Equity Stake --------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, CapGen Capital Group IV LP, CapGen Capital Group IV LLC and Eugene A. Ludwig disclosed that, as of Dec. 31, 2012, they beneficially own 2,684,144 shares of common stock Jacksonville Bancorp, Inc., representing 45.6% of the shares outstanding. A copy of the filing is available at: http://is.gd/X2TM5u About Jacksonville Bancorp Jacksonville Bancorp, Inc., a bank holding company, is the parent of The Jacksonville Bank, a Florida state-chartered bank focusing on the Northeast Florida market with approximately $583 million in assets and eight full-service branches in Jacksonville, Duval County, Florida, as well as the Company's virtual branch. The Jacksonville Bank opened for business on May 28, 1999, and provides a variety of community banking services to businesses and individuals in Jacksonville, Florida. According to the Form 10-Q for the period ended June 30, 2012, the Bank was adequately capitalized at June 30, 2012. Depository institutions that are no longer "well capitalized" for bank regulatory purposes must receive a waiver from the FDIC prior to accepting or renewing brokered deposits. The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") generally prohibits a depository institution from making any capital distribution (including paying dividends) or paying any management fee to its holding company, if the depository institution would thereafter be undercapitalized. The Bank had a Memorandum of Understanding ("MoU") with the FDIC and the Florida Office of Financial Regulation that was entered into in 2008, which required the Bank to have a total risk-based capital of at least 10% and a Tier 1 leverage capital ratio of at least 8%. Recently, on July 13, 2012, the 2008 MoU was replaced by a new MoU, which, among other things, requires the Bank to have a total risk-based capital of at least 12% and a Tier 1 leverage capital ratio of at least 8%. "We did not meet the minimum capital requirements of these MOUs at June 30, 2012, and Dec. 31, 2011, when the Bank had total risk-based capital of 8.09% and 9.85% and Tier 1 leverage capital of 5.26% and 6.88%, respectively." Jacksonville's balance sheet at Sept. 30, 2012, showed $551.55 million in total assets, $537.97 million in total liabilities and $13.57 million in total shareholders' equity. JETSTAR PARTNERS: Facing Chapter 7 Liquidation ---------------------------------------------- Madison J-Star, Ltd., successor in interest to Symetra Life Insurance Company, filed a motion to convert the chapter 11 case of Jetstar Partners, Ltd. to Chapter 7. Prior to the Petition Date and continuing through Sept. 4, 2012, the Debtor's principal asset consisted of an office complex located in Irving, Texas made up of two platted lots on which five buildings were constructed. Prior to the Petition Date and pursuant to that certain Real Estate Note dated Dec. 8, 2006 and executed by the Debtor as maker, payable to the order of Symetra, as payee, Symetra loaned the Debtor the original principal sum of $8,460,000. The Note was secured, among other things, by perfected mortgages, liens and security interests in the Irving Property and the rental income from the Irving Property. As of the Petition Date, Symetra was owed the amount of $8,196,339.12. On July 2, 2012, the Court granted Symetra relief from the automatic stay. On Sept. 4, 2012, Madison foreclosed its liens in the Irving Property and the Debtor's personal property. As a result of the foreclosure, the Debtor has no remaining assets that generate income. The Debtor's only remaining asset of any significance consists of approximately $370,000 of funds in the Debtor's bank account. These funds are the cash collateral of Madison. Madison said cause exists to convert the case to Chapter 7 due to the absence of a reasonable likelihood of reorganization and continuing loss to the estate. The bankruptcy estate is incurring penalties of approximately $2,500 per month for its unpaid 2011 ad valorem property taxes. In January, penalties will begin accruing on the past due 2012 property taxes. The tax penalties are depleting the funds of the estate which would otherwise be available to pay creditors. Madison also said the Debtor has no realistic prospects of reorganizing since it does not have sufficient unencumbered cash to pay in full the unsecured priority claims of the ad valorem taxing entities. In particular, the Debtor owes unpaid ad valorem taxes in excess of $330,000 for the 2011 and 2012 tax years. The Debtor has insufficient funds on hand to pay the administrative claims and the unsecured priority taxes owed to the ad valorem taxing authorities, assuming, in arguendo, that such funds are not encumbered by a lien in favor of Madison. Madison said the Debtor is not managing its affairs as a fiduciary by allowing the property tax penalties to continue to diminish the estate at the rate of $2,500 per month. The Debtor has sufficient cash to pay the 2011 taxes in full and avoid the penalties, but has not done so. Moreover, in late August 2012, immediately prior to the Sept. 4, 2012 foreclosure, the Debtor made a $24,713 payment to an insider who was to purchase insurance to cover the Irving Property. The bankruptcy estate is owed a sizeable refund from the insider since insurance coverage was only needed on the Irving Property for four days due to the foreclosure by Madison. The Debtor has failed to recover the insurance rebate owed by the insider to the estate. Again, this demonstrates the Debtor's failure to manage the estate as a fiduciary in accordance with the Debtor's fiduciary duties and responsibilities imposed by 11 U.S.C. Sec. 1106 and 1107 and constitutes cause to convert the Debtor's case. Madison also said the Debtor has no reasonable likelihood of rehabilitation as it has lost its principal asset and has no other source of continued income. No legitimate reason exists for the bankruptcy estate to continue to incur quarterly fees to the U.S. Trustee and the administrative costs of maintaining the case in chapter 11. The Debtor's case can be efficiently administered in chapter 7. On April 30, 2012, the Court signed off on a Stipulation Related to the Authorized Use of Cash Collateral. Pursuant to the Stipulation, by no later than May 4, 2012, the Debtor was to transfer all funds, other than the tax and insurance escrow funds, in its various Debtor-in-Possession Accounts into one cash collateral accounts. As of that date, the Debtor has failed to comply with the Stipulation by failing to consolidate all of its accounts into one Debtor-in-Possession Account. About Jetstar Partners Jetstar Partners, Ltd., was formed on Oct. 14, 1999, for the purpose of owning and developing real property in Dallas County, Texas. Jetstar owns and operates certain real property in Irving, Dallas County. Collinternational IV, Inc., a Texas corporation, is the sole general partner of Jetstar. Jetstar Partners, Ltd., filed a bare-bones Chapter 11 petition (Bankr. N.D. Tex. Case No. 12-31444) on March 5, 2012. In its schedules, the Debtor disclosed $11,435,476 in total assets and $7,860,399 in total liabilities. Judge Harlin DeWayne Hale oversees the case. According to the Disclosure Statement, the Reorganized Debtor will make all distributions required under the Plan. The Reorganized Debtor will continue to operate using the funds generated from its leases and no exit financing will be obtained. JOHN TIMOTHY EAGAN: NC Developer Wins Confirmation of Exit Plan --------------------------------------------------------------- Real estate developer John Timothy Eagan III defeated a bankruptcy administrator's objection to his plan of reorganization and convinced a bankruptcy judge in Charlotte, N.C., that confirmation of his plan is in the best interests of the Debtor, his estate, his creditors, and all other parties in interest. On Jan. 22, Bankruptcy Judge J. Craig Whitley gave his stamp of approval on Mr. Eagan's Amended Plan of Reorganization, overruling objections by the bankruptcy administrator and one creditor. The appropriate valuation of the Debtor's so-called Corporate Holdings was a contested issue in the case. The Debtor retained The Finley Group as financial advisors to the bankruptcy estate. The services provided by TFG included valuation of the Corporate Holdings. Upon motion of the Bankruptcy Administrator, the Court appointed Edward P. Bowers of Middleswarth, Bowers and Co., L.L.P. as examiner, charged with investigating the value of the Corporate Holdings. TFG concluded in its amended report filed in November that the Corporate Holdings had a fair market value of $963,214. The Examiner, on the other hand, opined that the fair market value of the Corporate Holdings was $1,262,815. The Debtor filed the Amended Plan of Reorganization on Nov. 20. The Plan generally provided for satisfaction of allowed secured claims through surrender of the underlying collateral. With respect to general unsecured claims (Class 13), including the allowed unsecured deficiency claims of secured creditors, the Plan afforded creditors an election between two distribution options. Under Option A, holders of allowed unsecured claims would receive pro rata distributions of the Debtor's projected disposable income -- PDI -- in six installments over a five-year period. The Debtor's PDI is derived from recurring annual distributions he receives as a minority member of the commercial real estate entities, estimated at roughly $180,000 per year. Pursuant to Option B, holders of allowed general unsecured claims would receive their respective pro rata shares of $650,000, in a single payment within 60 days of the Plan's effective date. The Plan further provided that the treatment afforded to the unsecured class would be determined according to the distribution option selected by a majority in number of those unsecured creditors voting to accept the Plan. In addition, the Plan called for two alternative new value contributions from the Debtor's family members. If the unsecured class selected periodic distributions under Option A, the Debtor's mother agreed to contribute $24,489.65 (the amount of the Debtor's exemption claims in his bankruptcy schedules). The Debtor's brother also agreed to contribute a separate sum of $200,000. Thus, the total new value contribution under Option A amounted to $224,489.65. If the unsecured class elected a single distribution under Option B, the new value contribution would include only $200,000 from the Debtor's brother. While the Debtor's mother also agreed to loan the Debtor the principal sum of $450,000 to fund the single distribution called for under Option B, the loan was not a new value contribution per se. Rather, it was an obligation that the Debtor would be required to repay with interest under the terms of the Plan. All secured creditors casting ballots voted in favor of confirmation. All but one of the unsecured creditors casting ballots voted to accept the Plan and elected distribution Option B (the $650,000 lump sum payment). However, RL Regi-NC Sugarm LLC voted against the Plan. Simultaneously, RL-NC marked Option A on its ballot (indicating a preference for periodic distributions). RL-NC is the holder of a disputed unsecured claim in the amount of $5,032,743.27 arising from a pre-petition judgment against the Debtor. If allowed, RL- NC's claim would account for approximately 43% of all claims in the unsecured pool. The Debtor filed a Modification of Plan on Dec. 17, 2012. The Modification bifurcated the class of general unsecured creditors (Class 13), such that the claim of RL-NC was separately classified as Class 13A. The Modification stated that RL-NC would receive payments equal to its pro rata share of the amounts that would have been distributed to all unsecured creditors had they elected Option A as a group under the Plan. Under the Modification, distributions to RL-NC are anticipated to total $495,661. The principal amount of the Option B Loan from the Debtor's mother increased from $450,000 to $550,000 under the Modification. The Modification then provided that the remaining general unsecured creditors (Class 13B) would receive their pro rata share of $750,000, rather than the lower $650,000 amount set forth under Option B in the Plan, less the pro rata share of such amount that would be distributed to RL-NC if it were included in Class 13B. Thus, distributions to the claim holders in Class 13B would equal 57% of $750,000, or $427,500. The Modification would not adversely affect the treatment afforded to any creditor under the Plan. After the filing of the Plan, but prior to the Dec. 19 confirmation hearing, the North Carolina Supreme Court effectively banned operation of Internet sweepstakes businesses such as those operated by the financial/operating companies in which the Debtor holds an interest. This ruling had a negative impact on the overall valuations of the Corporate Holdings previously rendered by TFG and the Examiner. TFG performed a hypothetical liquidation analysis of the Debtor's estate in connection with the confirmation hearing. It estimated the estate's fair market value to be in the range of $786,047 to $979,141 following the North Carolina Supreme Court ruling referenced above. After deducting liquidation costs (which the Examiner did not dispute), TFG concluded that the resulting amount available for distribution to unsecured creditors in a Chapter 7 liquidation would range from $653,845 to $825,699. Based on differing views of the appropriate income capitalization rate to apply when valuing the commercial real estate entities, how to account for net working capital retained by those companies, and whether to apply discounts for the Debtor's minority ownership interests and related lack of control, the Examiner concluded that the liquidation value of the Debtor's estate would be $946,000 to $967,000. According to Judge Whitley, the choice of income capitalization rate had no material net effect on the experts' competing conclusions. However, TFG's application of a slightly higher rate was supported by the testimony of an additional business valuation expert, W. Andrew Barbee, and other evidence of current market conditions for the types of assets at issue. It is also consistent with TFG's treatment of the net working capital of the commercial real estate entities. With respect to such net working capital, the Court is persuaded by TFG's explanation that the assets would be subsumed in production of the net operating income of the commercial real estate entities given the ages of their underlying real properties. Therefore, it would be inappropriate to consider the net working capital as a separate component of the companies' overall value. The Court finds the application of a minority discount proper when gauging the fair market value of the Corporate Holdings. The Court finds that the fair market value of the estate is $786,047 and its liquidation value is $653,845. The Corporate Holdings include minority interests in real estate businesses and companies that can no longer operate legally. It is speculative to conclude that a Chapter 7 trustee would yield anything other than the lowest end of the range presented by the Debtor when trying to sell such assets under current market conditions. At the confirmation hearing, the Bankruptcy Administrator asserted that the Plan is proposed in bad faith in violation of section 1129(a)(3) of the Bankruptcy Code. The Bankruptcy Administrator's concerns stem from the fact that the Debtor unilaterally loaned funds of the estate to one of his development companies without Court approval during the pendency of his bankruptcy case. These loans, which were made without the prior knowledge of Debtor's counsel, were disclosed in the Debtor's monthly operating reports and were ultimately repaid. RL-NC also argued that the Plan fails to satisfy the best interest test of section 1129(a)(7)(A). RL-NC also argued that the Plan violates the absolute priority rule as set forth in section 1129(b)(2)(B). Judge Whitley, however, held that the unauthorized loans made by the Debtor to his company are not relevant to whether the Plan itself was proposed in good faith when all of the circumstances in this case are considered. The Plan, if confirmed, would duly restructure and/or satisfy the claims against the Debtor's estate and would provide the Debtor with the "fresh start" that is the underlying goal in any bankruptcy. Those results, the judge said, are consistent with the objectives and purposes of the Bankruptcy Code. Judge Whitley also pointed out that, as shown in TFG's testimony and accompanying calculations, the net present value of the expected distribution to RL-NC under the Plan far exceeds what it would receive in a liquidation scenario. Therefore, the Plan satisfies the best interest test of section 1129(a)(7)(A). A copy of the Court's Jan. 22, 2013 Order is available at http://is.gd/xBBhxPfrom Leagle.com. John Timothy Eagan, III, filed a voluntary Chapter 11 petition (Bankr. W.D.N.C. Case No. 12-30525) on March 2, 2012. He is a real estate developer. His primary assets consist of ownership interests in three types of businesses: (a) the "commercial real estate entities," which own and/or operate subsidized housing developments throughout North Carolina; (b) the "development companies," which were the vehicles by which the Debtor and his business partners developed various residential subdivisions; and (c) the "financial/operating companies," which hold publicly traded securities or operate Internet sweepstakes businesses in conjunction with other investors. With the exception of certain of the development companies, the Debtor is a minority equity holder or member of the various business entities. KB HOME: S&P Revises Outlook to Stable; Affirms 'B' CCR ------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on KB Home to stable from negative and affirmed its 'B' corporate credit rating on the company and issue-level ratings on $1.7 billion of debt. At the same time, S&P assigned a 'B' issue-level rating and a '3' recovery rating to KB Home's proposed $150 million convertible senior notes due 2019. S&P revised its recovery rating on the exisiting notes to '3' from '4', which indicates its expectation that lenders would receive a meaningful (50%-70%) recovery in the event of default. KB Home plans to use the net proceeds from the convertible senior note sale, as well as a concurrent $100 million common equity sale for general corporate purposes. In S&P's view, the proceeds will bolster KB Home's cash liquidity, which the company could use to fund additional investments in land and possibly repay its 2014 debt maturity. "Our rating on KB Home primarily reflects the company's "highly leveraged" financial profile as evidenced by high book and EBITDA based leverage metrics," said credit analyst George Skoufis. "Our "fair" business risk assessment reflects our view that KB Home's market position in regions experiencing a sound recovery and investments in new product and communities should contribute to volume growth in fiscal 2013 and beyond and a return to consistent profitability." "Our rating on the company's senior unsecured notes is 'B' (the same as our corporate credit rating on KB Home), with a recovery rating of '3', which indicates our expectation that lenders would receive a meaningful (50%-70%) recovery in the event of default. The improved prospects for recovery are driven by our expectation for higher inventory levels and a lower blended discount on its inventory at the point of default (2015)," S&P added. LAKELAND DEVELOPMENT: Cour Ruling Says Loeb Not "Disinterested" --------------------------------------------------------------- The Bankruptcy Court has denied Lakeland Development Company's application to employ Loeb & Loeb LLP as its special environmental counsel, without prejudice to the Debtor's filing of a a new application pursuant to 11 U.S.C. Sec. 327(e). Based on the declarations filed in support of the motion, the Court found that Loeb & Loeb is a professional and is not disinterested as defined under U.S.C. Sec. 101(14). The Debtor will be required to demonstrate why Loeb & Loeb is entitled to nunc pro tunc employment pursuant to existing Ninth Circuit Law. As reported in the Nov 12, 2012, Loeb & Loeb is currently a large, unsecured creditor. On July 3, 2012, Loeb & Loeb filed an unsecured proof of claim in the Debtor's estate in the total amount of $306,448.21, representing Loeb & Loeb's unpaid fees and costs incurred for pre-petition services rendered to the Debtor. Loeb & Loeb has not agreed to waive this claim. Lance N. Jurich, a partner at Loeb & Loeb, attested to the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Lakeland Development Santa Fe Springs, California-based Lakeland Development Company is a privately held subsidiary in a family of companies headed by Energy Merchant Corp. Lakeland owns the real property located at 12345 Lakeland Road, Santa Fe Springs, California. The real property is composed of 10 parcels totaling roughly 55 acres. Lakeland filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-25842) in Los Angeles on May 4, 2012. Judge Richard M. Neiter presides over the case. Lawrence M. Jacobson, Esq., at Glickfeld, Fields & Jacobson LLP, and The Law Offices of Richard T. Baum, Esq., serve as the Debtor's counsel. The petition was signed by Michael Egner, chief financial officer. LARSON LAND: Trustee Employs Cook Martin as Accountants ------------------------------------------------------- The Bankruptcy Court authorized John L. Davidson, the Chapter 11 trustee for Larson Land Company, LLC, to employ Cook Martin Poulson, PC, as his accountants. As reported in the TCR on Dec, 27, 2012, Cook Martin will perform services consisting of accounting for and preparation of the estate's tax returns for the period from the petition date to Dec. 31, 2012. In addition, Cook Martin will prepare returns for any prepetition periods for which returns have not been filed by the Debtor, which the trustee will furnish to the taxing authorities. Cook Martin would prepare the returns for a flat fee of $12,000. Upon Court approval of Cook Martin's employment, the trustee would pay $12,000 to Cook Martin as a retainer for its services. The $12,000 retainer would come from the carve-out for professional fees provided by Ontario Asset Holdings, LLC. About Larson Land Ontario, Oregon-based Larson Land Company LLC, fka Select Onion Co. LLC -- http://www.selectonion.com/-- a privately held agribusiness company that grows, stores, processes and ships bagged onions, fresh processed onions, whole peel onions, IQF onions, and delicious raw breaded hand packed onion rings, filed a Chapter 11 petition (Bankr. D. Idaho Case No. 12-00820) in Boise, Idaho, on April 12, 2012, estimating assets of up to $100 million and debts of up to $500 million. Other than some dry land wheat, as of the Petition Date there were no crops growing on the Debtor's farm land. The Debtor also ceased processing operations following the Petition ate. Brent T. Robinson, Esq., at Robinson, Anthon & Tribe, serves as the Debtor's counsel. Judge Terry L. Myers, at the behest of the U.S. Trustee, ordered the appointment of a Chapter 11 trustee to replace management of the Debtor. Hawley Troxell Ennis & Hawley, LLP and Ball Janik LLP represent John L. Davidson, the Chapter 11 trustee for the Debtor. Robert D. Miller, Jr., U.S. Trustee for Region 18, appointed five unsecured creditors to serve on the Official Committee of Unsecured Creditors. LAXMEE INC: Principals Hit With $380K Judgment on Contract Breach ----------------------------------------------------------------- Gita R. Raj and Falguni D. Patel, principals of Laxmee, Inc., are liable to Baymont Franchise Systems, Inc., for Laxmee's breach under a franchise agreement, New Jersey District Judge William J. Martini ruled last week. According to Judge Martini, Baymont is entitled to judgment against Messrs. Raj and Patel, as Laxmee's guarantors, in the amount of $380,837.53 stemming from Laxmee's breaches. Baymont is the successor in interest to Amerihost Franchise Systems, Inc., and a franchisor of a guest lodging facility franchise system. Laxmee is a former franchisee. Laxmee failed to timely pay recurring fees due to Baymont, and on Feb. 10, 2010, Laxmee filed for Chapter 11 bankruptcy. In response, by letter dated July 28, 2010, Baymont terminated the Franchise Agreement, effective as of July 20, 2010. The case is, BAYMONT FRANCHISE SYSTEMS INC., successor in interest to AMERIHOST FRANCHISE SYSTEMS, INC., a Delaware Corporation, Plaintiff, v. GITA R. RAJ, an individual; and FALGUNI D. PATEL, an individual, Defendants, Civ. No. 11-3777 (D. N.J.). A copy of the Court's Jan. 22, 2013 Opinion is available at http://is.gd/3rwf8t from Leagle.com. LCI HOLDING: Creditors Committee Taps Pachulski Stang as Counsel ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in the Chapter 11 case of LCI Holding Company, Inc., et al., asks the U.S. Bankruptcy Court for the District of Delaware for permission to retain Pachulski Stang Ziehl & Jones LLP as its counsel. The hourly rates of PSZJ's personnel are: Partners $525 - $975 Of Counsel $495 - $745 Associates $395 - $495 Paralegals $185 - $275 The professionals and paralegals designated to represent the Committee and their standard hourly rates are: Laura Davis Jones $955 Bradford J. Sandier $695 James B. O'Neill $675 Peter J. Keane $395 Lynzy McGee $275 To the best of the Committee's knowledge, PSZJ is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. A hearing on Feb. 8, 2013, at 2 p.m., has been set. Objections, if any, are due Feb. 1. About LifeCare LCI Holding Company, Inc., and its affiliates, doing business as LifeCare Hospitals, operate eight "hospital within hospital" facilities and 19 freestanding facilities in 10 states. The hospitals have about 1,400 beds at facilities in Louisiana, Texas, Pennsylvania, Ohio and Nevada. LifeCare is controlled by Carlyle Group, which holds 93.4 percent of the stock following a $570 million acquisition in August 2005. LCI Holding Company, Inc., and its affiliates, including LifeCare Holdings Inc., sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-13319) on Dec. 11, 2012, with plans to sell assets to secured lenders. Ken Ziman, Esq., and Felicia Perlman, Esq., at Skadden, Arps, Slate Meagher & Flom LLP, serve as counsel to the Debtors. Rothschild Inc. is the financial advisor. Huron Management Services LLC will provide the Debtors an interim chief financial officer and certain additional personnel; and (ii) designate Stuart Walker as interim chief financial officer. The steering committee of lenders is represented by attorneys at Akin Gump Strauss Hauer & Feld LLP and Blank Rome LLP. The agent under the prepetition and postpetition secured credit facility is represented by Simpson Thacher & Barlett LLP. The Debtors disclosed assets of $422 million and liabilities totaling $575.9 million as of Sept. 30, 2012. As of the bankruptcy filing, total long-term obligations were $482.2 million consisting of, among other things, institutional loans and unsecured subordinated loans. A total of $353.4 million is owing under the prepetition secured credit facility. A total of $128.4 million is owing on senior subordinated notes. LifeCare Hospitals of Pittsburgh, LLC, a debtor-affiliate disclosed $24,028,730 in assets and $484,372,539 in liabilities as of the Chapter 11 filing. The Official Committee of Unsecured Creditors is represented by Pachulski Stang Ziehl & Jones LLP. FTI Consulting, Inc., serves as its financial advisor. LCI HOLDING: Wins Approval for KCC as Claims and Notice Agent ------------------------------------------------------------- LCI Holding Company Inc., and its affiliates sought and obtained approval to employ Kurtzman Carson Consultants LLC as notice and claims agent, nunc pro tunc to the Chapter 11 petition date. The Debtors say they need the services of a claims agent because they have thousands of potential creditors and thousands of other parties-in-interest. The fees to be charged by KCC are set forth in an agreement for services dated Nov. 7, 2012. Prepetition, the Debtors paid KCC an initial retainer of $25,000. KCC will bill the Debtors at a 30% discounted rate for its consulting services: Discounted Position Hourly Rate -------- ----------- Clerical $28 to $42 Project Specialist $56 to $98 Technology/Programming Consultant $70 to $140 Consultant $87.5 to $140 Senior Consultant $157.5 to $192.5 Senior Managing Consultant $295 to $192.5 As for the noticing services, the firm will charge $0.10 per page for domestic facsimile, and $50 per 1,000 e-mails for electronic noticing, and $0.10 per notice for claim acknowledgement cards. For the claims administration and management, KCC will waive the fee for a case-specific public website hosting but will charge $0.10 per creditor per month for license fee and data storage. For its call center support services, KCC will charge $0.45 per minute for its interactive voice response (IVR). Albert Kass, vice president of Corporate Restructuring Services for KCC, says the firm neither holds nor represents any interest materially adverse to the Debtors' estates in connection with any matter on which it would be employed and that it is a "disinterested person" within the meaning of section 101(14) of the Bankruptcy Code. About LifeCare LCI Holding Company, Inc., and its affiliates, doing business as LifeCare Hospitals, operate eight "hospital within hospital" facilities and 19 freestanding facilities in 10 states. The hospitals have about 1,400 beds at facilities in Louisiana, Texas, Pennsylvania, Ohio and Nevada. LifeCare is controlled by Carlyle Group, which holds 93.4 percent of the stock following a $570 million acquisition in August 2005. LCI Holding Company, Inc., and its affiliates, including LifeCare Holdings Inc., sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-13319) on Dec. 11, 2012, with plans to sell assets to secured lenders. Ken Ziman, Esq., and Felicia Perlman, Esq., at Skadden, Arps, Slate Meagher & Flom LLP, serve as counsel to the Debtors. Rothschild Inc. is the financial advisor. Huron Management Services LLC will provide the Debtors an interim chief financial officer and certain additional personnel; and (ii) designate Stuart Walker as interim chief financial officer. The steering committee of lenders is represented by attorneys at Akin Gump Strauss Hauer & Feld LLP and Blank Rome LLP. The agent under the prepetition and postpetition secured credit facility is represented by Simpson Thacher & Barlett LLP. The Debtors disclosed assets of $422 million and liabilities totaling $575.9 million as of Sept. 30, 2012. As of the bankruptcy filing, total long-term obligations were $482.2 million consisting of, among other things, institutional loans and unsecured subordinated loans. A total of $353.4 million is owing under the prepetition secured credit facility. A total of $128.4 million is owing on senior subordinated notes. LEHIGH COAL: $93,800 in Claims for Wages, Medical Costs Allowed --------------------------------------------------------------- At the behest of the United Mine Workers of America, Bankruptcy Judge John J. Thomas allowed: -- 36 administrative expense claims totaling $65,237, representing unpaid wages owed to certain former employees of Lehigh Coal and Navigation Company, and -- 13 administrative expense claims totaling $28,635, representing medical expenses incurred by certain former employees after the Debtor terminated their health insurance. Judge Thomas said UMWA's administrative expense claims in the amounts of $65,237.25 and $28,634.63, allowed by Orders dated Nov. 22, 2010, are now disallowed. The 49 administrative expense claims allowed by the Order will have the same priority as the two administrative expense claims previously allowed to UMWA. A copy of the Court's Jan. 24, 2013 Consent Order is available at http://is.gd/XAfNfffrom Leagle.com. Lehigh Coal & Navigation Co. -- http://www.lcncoal.com/-- has been mining anthracite coal since the late 1700s, with 8,000 acres of coal-producing properties. Creditors filed an involuntary Chapter 11 petition against the Company on July 15, 2008 (Bankr. M.D. Penn. Case No. 08-51957). The involuntary filing was the third filed against the Company in less than four years. Jeffrey Kurtzman, Esq., at Klehr, Harrison, Harvey, Branzburg and Ellers, LLP, represents the petitioners. The Debtor consented to being in Chapter 11 in August 2008. Lawrence G. McMichael, Esq., and Jennifer L. Maleski, Esq., at Dilworth Paxson LLP, in Philadelphia, represent the Debtor. LERNOUT & HAUSPIE: Goldman Not Liable for Failed $580MM Deal ------------------------------------------------------------ Janelle Lawrence, writing for Bloomberg News, reported that Goldman Sachs Group Inc. (GS) defeated a $580 million negligence suit over its role as adviser to speech-recognition pioneer Dragon Systems Inc. in a doomed merger, one of its biggest victories in a string of claims by dissatisfied clients since the financial crisis. According to the report, a federal jury in Boston on Jan. 23 rejected the claims of Dragon's founders Jim and Janet Baker and two other shareholders that Goldman Sachs failed to properly vet Belgium-based Lernout & Hauspie Speech Products NV. The all-stock deal in June 2000 was rendered worthless months later when the fraud at Lernout & Hauspie was exposed and the company filed for bankruptcy, Bloomberg said. The verdict, Bloomberg noted, relieves Goldman Sachs of responsibility for a sale that left its clients with worthless shares in a failed company. The four Dragon founders sold some Lernout & Hauspie shares for $11 million before the stock collapsed and the Bakers lost the technology they spent decades developing, the report said. "This was the most important business decision of our lives," Janet Baker had said in an interview in May in the couple's home in West Newton, Massachusetts, Bloomberg recalled. "We chose Goldman because of their global reach and their reputation as the world's most important investment bank." As she left the courthouse yesterday, Janet Baker said "we're disappointed. I'd like to know what the jury saw that we didn't," Bloomberg quoted. Several members of the jury declined to comment as they left the courthouse. Mishandled Roles Bloomberg further related that the jury found Goldman Sachs proved that the Bakers mishandled their roles in the negotiation. The jury said the Bakers breached their fiduciary duty to Dragon co- founders Paul G. Bamberg and Robert Roth and made negligent representations about the deal that went before Dragon's board of directors, the report added. The jury wasn't asked to assess damage on those claims. "We are pleased the jury rejected these claims," Tiffany Galvin, a spokeswoman for New York-based Goldman Sachs, told Bloomberg in an e-mailed statement. "We fulfilled all our advisory duties to Dragon Systems." "It is regrettable the plaintiffs went to such lengths to unfairly and publicly attack the reputations of the Goldman Sachs bankers who advised Dragon Systems," the bank said. "Those bankers have our full support." Goldman Sachs's lawyers, Bloomberg noted, said during the trial that Dragon's leaders ignored the bank's advice to conduct a comprehensive accounting of the suitor and that Dragon rushed to sign the deal amid declining sales and cash-flow problems. 'Speed, Certainty' The bank's witnesses during 19 days of evidence included Dragon's former president John Shagoury, who said the company was focused on "speed and certainty" when the deal closed, Bloomberg pointed out. He said he didn't blame Goldman Sachs for the worthless stock options he was left holding. Deliberations began Jan. 18. Lawyers for the Bakers, who started the company in their suburban Boston home in the 1980s, said Goldman Sachs used an unsupervised, inexperienced team of four bankers on the transaction, according to Bloomberg. Members of the banking team testified that their work on the deal was good. Dragon paid Goldman $5 million for the advice. The leader of the banking team, Richard Wayner, who has since left Goldman Sachs, never revealed to Dragon that the bank no longer had an analyst devoted to following Lernout & Hauspie, Dragon's lawyers argued, according to Bloomberg. Wayner duped Dragon into believing another analyst was closely monitoring the company, they said. Wayner and other members of the banking team testified they did good work brokering the deal and weren't hired to render an opinion on the sale. Earnings Report One of the clues to the fraud came in an earnings report in February 2000, when Lernout & Hauspie reported revenue gains in Asia of 1,500 percent, Bloomberg said, citing attorneys for the Bakers and Dragon co-founders Bamberg and Roth, who held minority stakes in the company. Lernout & Hauspie created bogus customers, booked circular transactions with shell companies and recorded loans as sales from 1996 to 2000, according to a separate U.S. Securities and Exchange Commission probe, Bloomberg added. Four executives were sentenced to prison for fraud. During the trial against Goldman Sachs, Jim Baker testified that it "felt like part of me had died" when he learned about the scandal, Bloomberg quoted. He said he and his wife lost the technology they had spent 30 years developing. He tried to buy back some of the Dragon's intellectual property during Lernout & Hauspie's bankruptcy proceedings. ScanSoft Inc. bought the technology. The Dragon founders sued other companies involved in the Lernout & Hauspie deal and received more than $70 million in settlements, according to court records, Bloomberg said. The case is Baker v. Goldman Sachs & Co., 09-cv-10053, U.S. District Court, District of Massachusetts (Boston). About Lernout & Hauspie Lernout & Hauspie Speech Products and its debtor-affiliates filed for Chapter 11 protection (Bankr. Del. Case No. 00-04398) on November 29, 2000. Judge Judith Wizmur confirmed the Creditors' Committee's Plan of Liquidation for Lernout & Hauspie Speech Products, N.V., on May 29, 2003. Robert J. Dehney, Esq., Gregory W. Werkheiser, Esq., at Morris, Nichols, Arsht & Tunnell and Luc A. Despins, Esq., then at Milbank, Tweed, Hadley & McCloy LLP, as well as Milbank's Matthew S. Barr, Esq., and James C. Tecce, Esq., represented the Debtors. Ira S. Dizengoff, Esq., and James R. Savin, Esq., at Akin Gump Strauss Hauer & Feld LLP, and Francis A. Monaco, Esq., and Joseph J. Bodnar, Esq., at Monzack and Monaco, represented the software company's Creditors' Committee. Scott Baena, Esq., at Bilzen Sumberg Baena Price & Axelrod LLP, serves as the Litigation Trustee of the Lernout & Hauspie Speech Products N.V. Litigation Trust established under the Debtors' Chapter 11 plan. Massachusetts-based ScanSoft Inc., now called Nuance Communications Inc, paid $39.5 million for most of L&H's assets in 2001. Nuance sells the Dragon line of speech software. LITHIUM TECHNOLOGY: Appoints Two Directors to Fill Vacancies ------------------------------------------------------------ The sitting members of the board of directors of Lithium Technology Corporation , pursuant to Section 3.1 of the Company's bylaws, which authorizes remaining duly sitting board members to fill vacancies on the board of directors, resolved to appoint William (Bill) Armstrong Clemens Eppo Marie van Nispen tot Sevenaerto fill the recent vacancies. Bill graduated from the University of Newcastle upon Tyne in 1983 with a BSc in Electrical and Electronic Engineering. His first role was with Farnell Instruments Ltd. designing switch mode power supplies. In 1987 Bill joined FKI Cableform Ltd. as a Senior Engineer designing controls for industrial electric vehicles. Bill gained an MBA from the Open University in 1994, and was promoted to Engineering Manager in 1996. Bill joined Frazer-Nash Research Ltd in 1998, and in 2012 was appointed as technical director. Clemens van Nispen (The Hague 1940) read law at Leiden University in The Netherlands and at the University of Pennsylvania Law School. Mr. van Nispen practiced law in The Hague and Brussels and was, before he retired in 2007 i.a the managing resp. senior partner of the law firm BarentsKrans in The Hague. He had several functions related to the law profession. He sat on the Disciplinary Court of the Bar in The Hague and is a former president of the AEA (European Association of Lawyers). Mr. Van Nispen is a member of the Supervisory Board of Arch Hill Capital N.V. since the early 1990s. The board now consists of Hugorinus C. Nujit (Chairman) Martin Koster (CEO), William (Bill) Armstrong, and Clemens Eppo Marie van Nispen tot Sevenaer. About Lithium Technology Plymouth Meeting, Pa.-based Lithium Technology Corporation is a mid-volume production stage company that develops large format lithium-ion rechargeable batteries to be used as a new power source for emerging applications in the automotive, stationary power, and national security markets. The Company was not able to file its annual report for the period ended Dec. 31, 2011, and its quarterly reports for the succeeding periods. For the nine months ended Sept. 30, 2011, the Company reported a net loss of $12.26 million on $6.06 million of total revenue. The Company reported a net loss of $7.25 million on $6.35 million of products and services sales for the year ended Dec. 31, 2010, compared with a net loss of $10.51 million on $7.37 million of product and services sales during the prior year. The Company's balance sheet at Sept. 30, 2011, showed $8.83 million in total assets, $35.09 million in total liabilities and a $26.26 million total stockholders' deficit. Going Concern As reported by the TCR on April 8, 2011, Amper, Politziner & Mattia, LLP, Edison, New Jersey, after auditing the Company's financial statements for the year ended Dec. 31, 2010, noted that the Company has recurring losses from operations since inception and has a working capital deficiency that raise substantial doubt about its ability to continue as a going concern. Bankruptcy Warning The Form 10-Q for the quarter ended Sept. 30, 2011, noted that the Company's operating plan seeks to minimize its capital requirements, but the expansion of its production capacity to meet increasing sales and refinement of its manufacturing process and equipment will require additional capital. The Company raised capital through the sale of securities closing in the second quarter of 2011 and realized proceeds from the licensing of its technology pursuant to the terms of a licensing agreement and the sale of inventory used in manufacturing its batteries as part of the establishment of a joint venture in the fourth quarter of 2011, but is continuing to seek other financing initiatives and needs to raise additional capital to meet its working capital needs, for the repayment of debt and for capital expenditures. Such capital is expected to come from the sale of securities. The Company believes that if it raises approximately $4 million in additional debt and equity financings it would have sufficient funds to meet its needs for working capital, capital expenditures and expansion plans through the year ending Dec. 31, 2012. No assurance can be given that the Company will be successful in completing any financings at the minimum level necessary to fund its capital equipment, debt repayment or working capital requirements, or at all. If the Company is unsuccessful in completing these financings, it will not be able to meet its working capital, debt repayment or capital equipment needs or execute its business plan. In that case the Company will assess all available alternatives including a sale of its assets or merger, the suspension of operations and possibly liquidation, auction, bankruptcy, or other measures. These conditions raise substantial doubt about the Company's ability to continue as a going concern. LIVE OAK: Court Dismisses Chapter 11 Bankruptcy Case ---------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas dismissed the Chapter 11 bankruptcy case of Live Oak Land Development Ltd., at the behest of Thousand Oaks Property Owners Association, a creditor and party-in-interest in the Debtor's case. Live Oak told the Court that the Debtor's Chapter 11 case was not filed in good faith. Jameson Watts, Esq., at Wyatt & Gracey, PC, counsel for Thousand Oaks, said the Debtor is attempting to use the provisions of the Bankruptcy Code to gain an unfair advantage in a dispute between the Debtor and Thousand Oaks. Mr. Watts added that the Debtor's only significant assets are undeveloped, now-separated tracts of real estate and there are no employees of the Debtor other than its sole owner. Mongolia, Texas-based Live Oak Development, Ltd., filed for Chapter 11 protection (Bankr. S.D. Tex. Case No. 12-35873) Aug. 6, 2012. The Hon. Letitia Z. Paul presides over the bankruptcy case. J. Craig Cowgill, Esq., at J. Craig Cowgill & Associates, P.C., in Houston, represents the Debtor. In its petition, the Debtor disclosed assets of between $10 million and $50 million, and debts of between $1 million and $10 million. LNR PROPERTY: S&P Puts 'BB-' Issuer Credit Rating on CreditWatch ---------------------------------------------------------------- Standard & Poor's Ratings Services said it placed its 'BB-' issuer credit rating on LNR Property LLC on CreditWatch with developing implications. S&P also placed its 'BB+' ratings on LNR's senior secured term loan and revolving credit facility on CreditWatch developing. "Our CreditWatch developing reflects our expectation that Starwood Property Trust will complete its purchase of LNR in the first or second quarter of 2013 and will repay LNR's senior secured term loan and revolving credit facility in the process," said Standard & Poor's credit analyst Brendan Browne. "We also expect LNR to operate with little to no recourse debt following the transaction." Starwood Property Trust (not rated) agreed to purchase most of LNR--its special servicing, mortgage origination, and real estate management operations; its investment securities portfolio; and half of its ownership in Auction.com--for $856 million in cash. A private equity fund run by Starwood Capital Group (not rated), an affiliated organization of Starwood Property Trust, will purchase the remaining assets of LNR--the other half of its ownership in Auction.com and a commercial property investment platform--for $197 million in cash. Starwood Property Trust will fund the transaction in part with debt, but that debt will not reside at LNR. It will initially operate LNR as an independent subsidiary, although it may integrate the company differently over time. "Our CreditWatch with developing implications reflects our expectation that LNR's sale to Starwood will close in the first or second quarter of 2013 and that its senior secured term loan and revolving credit facility will be fully repaid at that point," S&P noted. When the sale closes, S&P will resolve its CreditWatch on LNR by assessing its business and financial positions under Starwood's ownership. At that point, S&P would withdraw its rating on LNR's senior secured term loan and revolving credit facility since they would be repaid. LOCATION BASED TECHNOLOGIES: Amends Report on Accountant Switch --------------------------------------------------------------- Location Based Technologies, Inc., has amended its current report on Form 8-K which was filed on Jan. 15, 2013, to amend and restate Items 4.01, 4.02 and 9.01 thereof in response to certain comments on the original filing raised by the Securities and Exchange Commission. Item 4.01 Changes in Registrant's Certifying Accountant. At the conclusion of the Aug. 31, 2012, audit, Comiskey & Company, P.C., the Company's then independent registered public accounting firm, had discussions with the Company's internal accounting personnel regarding a legal requirement imposed by the Sarbanes- Oxley Act of 2002, which calls for the mandatory rotation of the lead engagement partner and concurring audit partner every five years. Comiskey, which had provided auditing services to the Company since 2007, informed the Company that Comiskey would be unable to rotate partners as required by the Sarbanes-Oxley Act of 2002 and that therefore, the Company would be required to change auditors for the Company's financial statements effective for the quarter ending Nov. 30, 2012. Acting on that information, on Dec. 14, 2012, the Company delivered to Friedman LLP an engagement letter signed by the Company on Dec. 13, 2012, pursuant to which the Company engaged Friedman as the Company's new independent registered public accounting firm. Friedman is located at 1700 Broadway, New York, NY 10019. During the period from Sept. 1, 2010, to Dec. 13, 2012, the Company did not consult with Friedman regarding the application of accounting principles to any completed or proposed transaction, the type of audit opinion that might be rendered on the Company's financial statements or any other matter. On Jan. 14, 2013, the Board of Directors of the Company formally approved the termination of Comiskey and the Company formally dismissed Comiskey. Since Dec. 14, 2012, Comiskey has not performed any audit or review services relating to the Company. During the year ended Aug. 31, 2012, and through the date of discontinuance of Comiskey's engagement as the Company's independent registered public accounting firm, there were no disagreements with Comiskey on any matter of accounting principles or practices, financial statement disclosure, auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Comiskey, would have caused it to make reference to the subject matter of the disagreement in its reports on our financial statements for those periods. During the period the Company engaged Comiskey, neither the Company nor anyone on the Company's behalf consulted with Comiskey regarding either (i) the application of accounting principles to a specified transaction, either contemplated or proposed, or the type of audit opinion that might be rendered on the Company's financial statements or (ii) any matter that was either the subject of a disagreement or a reportable event. The Company has authorized Comiskey to respond fully to all inquiries of Friedman. Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review. On Jan. 14, 2013, the Board of Directors of the Company, concluded that previously issued audited financial statements of the Company for its fiscal year ended Aug. 31, 2012, which were included in the Company's annual report on Form 10-K which was filed on Nov. 29, 2012, should no longer be relied upon. The conclusion of the Board that the financial statements for the period should not be relied upon was based on statements made by the Company's chief financial officer, who reported to the Board that Amendment No. 1 to Company's Annual Report on Form 10-K would be filed to restate revenue and cost of revenue for PocketFinder devices sold to the Company's main distributor due to an accounting error and change in accounting policy. Revenues are recognized in accordance with Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements, as amended by SAB No. 104, Revenue Recognition. The Company has reevaluated the factors that it used to determine revenue recognition for devices sold to its distributor and concluded that it is appropriate to restate revenue and cost of revenue for year ended Aug. 31, 2012. Other related accounts affected include allowance for sales returns, deferred revenue, inventory purchase commitment, device revenue and cost of revenue. The Company is also amending Footnote 1 "Nature of Operations and Summary of Significant Accounting Policies" and Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations" to reflect changes to the financial statements as a result of the restatement. An Amendment No. 1 to the Company's Annual Report on Form 10-K was filed on Jan. 17, 2013, to restate those financials and Management's Discussion and Analysis of Financial Condition and Results of Operations. The net effect of the restatement was a positive impact on the Company's income statement and balance sheet. About Location Based Technologies Irvine, Calif.-based Location Based Technologies, Inc., designs, develops, and sells leading-edge personal locator devices and services. Comiskey & Company, the Company's independent registered public accounting firm, included an explanatory paragraph in its report on the Company's financial statements for the fiscal year ended Aug. 31, 2012, which expresses substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred recurring losses since inception and has an accumulated deficit in excess of $45,000,000. There is minimal sales history for the Company's products, which are new to the marketplace. The Company's balance sheet at Nov. 30, 2012, showed $4.72 million in total assets, $7.35 million in total liabilities and a $2.62 million total stockholders' deficit. LOCATION BASED TECHNOLOGIES: Director Ronald Warner Dies -------------------------------------------------------- Ronald Warner passed away suddenly in his home on Jan. 17, 2013. Mr. Warner has served faithfully on Location Based Technologies, Inc.'s Board since October 2011 and was a valued member of the Compensation and Audit Committees as well as Chair of the Governance and Nominating Committee. "Ron's expertise and contribution will be greatly missed," the Company said in a regulatory filing with the Securities and Exchange Commission. About Location Based Technologies Irvine, Calif.-based Location Based Technologies, Inc., designs, develops, and sells leading-edge personal locator devices and services. Comiskey & Company, the Company's independent registered public accounting firm, included an explanatory paragraph in its report on the Company's financial statements for the fiscal year ended Aug. 31, 2012, which expresses substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred recurring losses since inception and has an accumulated deficit in excess of $45,000,000. There is minimal sales history for the Company's products, which are new to the marketplace. The Company's balance sheet at Nov. 30, 2012, showed $4.72 million in total assets, $7.35 million in total liabilities and a $2.62 million total stockholders' deficit. LOST PENINSULA: Contractor's Insurer Cleared From Liability ----------------------------------------------------------- In December 2009, David W. Allard, the Chapter 11 Trustee of Lost Peninsula Marina Development Company LLC, Lost Peninsula Marina LLC, and Maumee Bay Supplies LLC obtained a default judgment of $2,558,058.65 against Double D Fire Protection, Inc. On April 3, 2012, the Trustee filed a garnishment action against West Bend Mutual Insurance Company, Double D's insurer. The garnishment action sought to collect from West Bend the amounts owed on the default judgment. On Oct. 3, 2012, West Bend filed a Motion for Summary Judgment, seeking a finding that it is not liable for payment of the default judgment obtained against Double D. West Bend argued it had no duty to defend or indemnify Double D for the claims asserted in the Trustee's action because there was no "property damage" caused by an "occurrence"; and even if there were an initial grant of coverage, numerous exclusions in the Policy exclude coverage. In a Jan. 17 ruling, Bankruptcy Judge Marci B. McIvor granted summary judgment in favor of West Bend. Judge McIvor said Double D's failure constitutes defective workmanship and relieves West Bend of an obligation to cover Double D for any damages caused by Double D's failure. However, even if there is insurance coverage, West Bend's liability to the Trustee would be limited to any amounts which could have been recovered directly from Double D for accepting payment of the bid amount on a contract which could not be successfully fulfilled. The lawsuit is, DAVID W. ALLARD, CHAPTER 11 TRUSTEE OF LOST PENINSULA MARINA DEVELOPMENT COMPANY, LLC, LOST PENINSULA MARINA, LLC AND MAUMEE BAY SUPPLIES, LLC, Plaintiff, v. DOUBLE D FIRE PROTECTION, INC., a Michigan corporation, DESIGN ENGINEERS & CONSULTING ASSOCIATES, INC., an Ohio Corporation, COPPER CREEK DEVELOPMENT CORP., a Michigan corporation, and MICHIGAN WETLANDS DEVELOPMENT & CONSTRUCTION, LLC, a Michigan limited liability company. Defendants, and WEST BEND MUTUAL INSURANCE COMPANY, a Wisconsin Corporation, Garnishee Defendant, Adv. Proc. No. 09-6788 (Bankr. E.D. Mich.). A copy of the Court's Jan. 17, 2013 Opinion is available at http://is.gd/YqXmVsfrom Leagle.com. Lost Peninsula Marina Development Company, LLC. was the owner of roughly 82 acres of real property located at 6300 Edgewater Drive, Erie Township, Michigan, which contains a facility known as the Lost Peninsula Marina. Mel Belovicz and Christopher Connolly were the sole members of LPMDC. Lost Peninsula Marina Development Company LLC and affiliates, Lost Peninsula Marina LLC, and Maumee Bay Supplies LLC, filed for Chapter 11 bankruptcy (Bankr. E.D. Mich. Case Nos. 07-62230, 07-62333, and 07-62336) on Nov. 27, 2007. Each of the Debtors listed under $1 million in both assets and debts. MASSACHUSETTS LIFECARE: Sale Gives No Immunity From Suit -------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that U.S. District Judge William G. Young in Boston ruled on Jan. 23 that a bankruptcy court order approving sale of collateral does not confer immunity on an indenture trustee if secured bondholders later sue based on a contention the trustee violated duties to the holders. The report recounts that the case involved a retirement community sold during the bankruptcy of Western Massachusetts Lifecare Corp. begun in 2009. U.S. Bank NA was indenture trustee for the bondholders. The bankruptcy court approved sale of the bondholders' collateral, given support from the indenture trustee. Bondholders later sued in state court, contending the bank violated duties to the holders. The case was transferred to federal district court. According to the report, Judge Young denied the bank's motion for summary judgment, where the bank contended there were no disputed facts of legal significance. The bank argued it was entitled to dismissal of the suit because the sale was approved in bankruptcy court as being in the best interest of creditors. Judge Young, the report discloses, concluded that the bank couldn't rely on the doctrine of "issue preclusion," for several reasons. He said that the same issues weren't actually litigated in bankruptcy court because it's possible the sale was the best available even though the bank "misled the bondholders and breached their contract." Issue preclusion also didn't apply because the bankruptcy judge took no evidence on fairness of the sale. He only relied on the parties' agreement, Judge Young said. In addition, bondholders didn't receive notice of the sale and weren't individually permitted to appear at the bankruptcy court hearing and object. The bankruptcy court ruling in any event wasn't binding on bondholders because individually they likely didn't have standing, or the right to be heard in bankruptcy court. The bank, according to Young, still may win after trial and beat back the bondholders' argument that the sale approved in bankruptcy court was a "sweetheart deal." The opinion by Judge Young was "strictly procedural," bank spokeswoman Teri Charest said in an e-mailed statement to Bloomberg News. She said the bank "acted appropriately" and will continue to defend the suit "vigorously." She noted there has been "no finding or decision relating to the underlying facts." The case is Peterson v. U.S. Bank NA, 12-10009, U.S. Bankruptcy Court, District of Massachusetts (Boston). A copy of District Judge William G. Young's Jan. 23, 2013 Memorandum is available at http://is.gd/Rz7eAZfrom Leagle.com. About Western Massachusetts Lifecare Springfield, Massachusetts-based Western Massachusetts Lifecare Corporation, a/k/a Reeds Landing, provides residential care services. The Company filed for Chapter 11 on May 4, 2009 (Bankr. D. Mass. Case No. 09-30737). Sean Monahan, Esq., at Choate Hall & Stewart represents the Debtor in its restructuring efforts. The Debtor listed $10 million to $50 million in assets and $50 million to $100 million in debts. MEDIA GENERAL: Gabelli Funds Owns 5.9% of Class A Shares -------------------------------------------------------- In a Schedule 13G filing with the U.S. Securities and Exchange Commission, Gabelli Equity Series Funds, Inc. - The Gabelli Small Cap Growth Fund disclosed that, as of Dec. 31, 2012, it beneficially owns 1,615,000 shares of Class A common stock Media General, Inc., representing 5.90% of the shares outstanding. A copy of the filing is available at http://is.gd/35p7oZ About Media General Richmond, Virginia-based Media General Inc. (NYSE: MEG) -- http://www.mediageneral.com/-- is an independent communications company with interests in newspapers, television stations and interactive media in the United States. The Company reported a net loss of $74.32 million for the fiscal year ended Dec. 25, 2011, a net loss of $22.64 million for the fiscal year ended Dec. 26, 2010, and a net loss of $35.76 million for the fiscal year ended Dec. 27, 2009. The Company's balance sheet at Sept. 23, 2012, showed $773.96 million in total assets, $933.87 million in total liabilities and a $159.91 million stockholders' deficit. * * * As reported by the Troubled Company Reporter on April 12, 2012, Moody's Investors Service downgraded, among other things, Media General's Corporate Family Rating (CFR) and Probability of Default Rating (PDR) to Caa1 from B3, concluding the review for downgrade initiated on Feb. 13, 2012. The downgrade reflects the significant increase in interest expense associated with the company's credit facility amend and extend transaction and an assumed issuance of at least $225 million of new notes, which will result in limited free cash flow generation and constrain Media General's capacity to reduce its very high leverage. The weak free cash flow and high leverage create vulnerability to changes in the company's highly cyclical revenue and EBITDA generation. In the Oct. 10, 2012, edition of the TCR, Standard & Poor's Ratings Services raised its rating on Richmond, Va.-based Media General Inc. to 'B-' from 'CCC+' and removed it from CreditWatch, where it was placed with positive implications on May 18, 2012. "The corporate credit rating on Media General is based on our expectation that the company will be able to maintain adequate liquidity despite its very high leverage," noted Standard & Poor's credit analyst Jeanne Shoesmith. MENDOCINO COAST: Jerry Seelig Named Patient Care Ombudsman ---------------------------------------------------------- Jerry Seelig is serving as the patient care ombudsman in the chapter 11 case of Mendocino Coast Health Care District. The U.S. Bankruptcy Court has approved the appointment of Mr. Seelig in a Nov. 20 order. Mendocino Coast Health Care District, the operator of a 25-bed acute-care hospital in Fort Bragg, California, filed for Chapter 9 municipal bankruptcy protection (Bankr. N.D. Calif. Case No. 12-12753) on Oct. 17, 2012. Andrea T. Porter, Esq., at Friedman and Springwater LLP, serves as counsel to the Chapter 9 Debtor. Bankruptcy ensued when mediation failed to reach agreement with the union. The hospital district complied with California law requiring negotiations before filing a Chapter 9 petition. The petition showed that assets and debt both exceed $10 million. MERIDEN HOTEL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Meriden Hotel Partners, LLC 900 E. Main Street Meriden, CT 06450 Bankruptcy Case No.: 13-30139 Chapter 11 Petition Date: January 23, 2013 Court: U.S. Bankruptcy Court District of Connecticut (New Haven) Judge: Lorraine Murphy Weil Debtor's Counsel: Timothy D. Miltenberger, Esq. COAN LEWENDON GULLIVER & MILTENBERGER 495 Orange Street New Haven, CT 06511 Tel: (203) 624-4756 Fax: (203) 243-4488 E-mail: tmiltenberger@coanlewendon.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/ctb13-30139.pdf The petition was signed by Bhupen Yaduvanshi, member. MOLYCORP INC: S&P Assigns 'CCC' ICR to Proposed Sr. Notes Due 2018 ------------------------------------------------------------------ Standard & Poor's Ratings Services said that it assigned its 'CCC' issue-level rating to Colorado-based Molycorp Inc.'s proposed convertible senior notes due 2018. The recovery rating on the notes is '5', indicating its expectation for modest (10%-30%) recovery in the event of payment default. The company is issuing the notes under its shelf registration for well-known and seasoned issuers filed on Aug. 16, 2012. The convertible notes will be senior unsecured obligations and will rank equal to all of Molycorp's existing and future senior unsecured indebtedness. The company intends to use the proceeds from this offering, along with net proceeds from the concurrent offering of common stock, expected to collectively generate at least $300 million, to fund capital expenditures and other cash requirements for 2013, including capital expenditures at the Molycorp Mountain Pass facility. The 'CCC+' corporate credit rating and developing outlook on Molycorp, a miner, processor, and producer of rare earth elements, reflect what S&P considers to be the combination of the company's "vulnerable" business risk profile and "highly leveraged" financial risk profile. Molycorp is aggressively pursuing a strategy to become one of the world's most integrated producers of rare earth products, including oxides, metals, alloys, and magnets used in high tech, defense, clean energy, and water treatment technology. RATINGS LIST Molycorp Inc. Corporate Credit Rating CCC+/Developing/-- New Ratings Molycorp Inc. Senior Unsecured due 2018 CCC Recovery Rating 5 MONROEVILLE TAVERN: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Monroeville Tavern Company dba Tolerico's Ristorante 3417 Universal Road Monroeville, PA 15235 Bankruptcy Case No.: 13-20307 Chapter 11 Petition Date: January 23, 2013 Court: U.S. Bankruptcy Court Western District of Pennsylvania (Pittsburgh) Judge: Jeffery A. Deller Debtor's Counsel: Gary William Short, Esq. 436 Seventh Avenue 2317 Koppers Building Pittsburgh, PA 15219 Tel: (412) 765-0100 Fax: (412) 765-2211 E-mail: gwshort@verizon.net Estimated Assets: $100,001 to $500,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/pawb13-20307.pdf The petition was signed by Anthony (Casey) G. Tolerico, president. MOORE FREIGHT: Hires Baker Donelson as Special Counsel ------------------------------------------------------ Moore Freight Service, Inc. and G.R.E.A.T. Logistics Inc. ask the U.S. Bankruptcy Court for permission to employ Baker, Donelson, Bearman, Caldwell & Berkowitz, PC as special counsel. The firm attests that it is a "disinterested person" as the term is defined. The firm's rates are: Professional Rates ------------ ----- Members $290-465/hour Associates $185-250/hour Paralegals $115-150/hour About Moore Freight Service and G.R.E.A.T. Logistics Moore Freight Service, Inc. and G.R.E.A.T. Logistics Inc. sought Chapter 11 protection (Bankr. M.D. Tenn. Case Nos. 12-08921 and 12-08923) in Nashville on Sept. 28, 2012. Moore Freight is a freight service company specializing in flat gas transportation. Founded in 2001, Moore is the largest commercial flat glass logistics firm in the U.S. It operates in the U.S., Canada and Mexico. GLI does not have any operations other than the limited, occasional freight brokerage services currently provided to Moore Freight. Bankruptcy Judge Keith M. Lundin oversees the cases. Attorneys at Harwell Howard Hyne Gabbert & Manner PC serve as counsel. LTC Advisory Services LLC serves as the Debtor's financial advisors. Moore Freight estimated assets and debts of $10 million to $50 million. CEO Dan R. Moore signed the petitions. Counsel for the Debtor's pre-bankruptcy and DIP lender, Marquette Transportation Finance, Inc., are Linda W. Knight, Esq., at Gullett, Sanford, Robinson & Martin, PLLC; and Thomas J. Lallier, Esq., at Foley & Mansfield PLLP. MUSCLEPHARM CORP: Has Agreement to Sell 1.5MM Preferred Shares -------------------------------------------------------------- MusclePharm Corporation entered into a placement agency agreement with GVC Capital LLC pursuant to which the Placement Agent agreed to use its best efforts to arrange for the sale of up to an aggregate of 1,500,000 shares of Series D Convertible Preferred Stock in a registered direct offering. The Placement Agent has no commitment to purchase or sell any of the Preferred Shares. The Placement Agency Agreement contains customary representations, warranties and covenants of the Registrant and the Placement Agent. The Placement Agency Agreement requires the Company to indemnify the Placement Agent and certain of its affiliates against certain liabilities or to contribute to payments the Placement Agent may be required to make because of any of those liabilities. The Preferred Shares offered pursuant to the Offering were registered under a registration statement on Form S-1 (Registration No. 333-184625), which the Securities and Exchange Commission declared effective on Jan. 16, 2013. About MusclePharm Headquartered in Denver, Colorado, MusclePharm Corporation (OTC BB: MSLP) -- http://www.muslepharm.com/-- is a healthy life- style company that develops and manufactures a full line of National Science Foundation approved nutritional supplements that are 100% free of banned substances. MusclePharm is sold in over 120 countries and available in over 5,000 U.S. retail outlets, including GNC and Vitamin Shoppe. MusclePharm products are also sold in over 100 online stores, including bodybuilding.com, Amazon.com and Vitacost.com. The Company reported a net loss of $23.28 million in 2011, compared with a net loss of $19.56 million in 2010. The Company's balance sheet at Sept. 30, 2012, showed $7.81 million in total assets, $15.10 million in total liabilities, and a $7.29 million total stockholders' deficit. In the auditors' report accompanying the consolidated financial statements for the year ended Dec. 31, 2011, Berman & Company, P.A., in Boca Raton, Florida, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has a net loss of $23,280,950 and net cash used in operations of $5,801,761 for the year ended Dec. 31, 2011; and has a working capital deficit of $13,693,267, and a stockholders' deficit of $12,971,212 at Dec. 31, 2011. NEW ENGLAND COMPOUNDING: Committee Allowed to Sue Owners -------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the bankruptcy judge called for the appointment of a Chapter 11 trustee for New England Compounding Pharmacy Inc. and authorized the official committee of unsecured creditors to file suit designed for seizing the four owners' assets. According to the report, the committee joined a request by the U.S. Trustee for appointment of an independent trustee wresting control from the chief restructuring officer appointed by the owners. As reason for a trustee, the committee pointed to more than $21 million the owners took out of the company in the year before bankruptcy on Dec. 21. The bankruptcy judge called for a trustee to come on board as quickly as possible. The report relates the committee says NEC produced and sold tainted medication causing a fungal meningitis outbreak resulting in 44 deaths, 678 injuries, and more than 160 lawsuits. Immediately after the hearing, the committee filed a complaint to recover the $21 million from President Barry Cadden, shareholder and director Lisa Conigliaro Cadden, Vice President Gregory Conigliaro, and shareholder and director Carla Conigliaro. The committee's complaint, the report discloses, states the owners continued taking millions out of the company after contaminated medication was discovered and even after NEC shut down in October. The complaint also seeks to recover about $4.7 million from companies controlled by the owners. The committee will be asking U.S. Bankruptcy Judge Henry J. Boroff in Boston to freeze all the owners' assets, except enough to pay "necessary living or operating expenses." In addition, they want the judge to freeze their bank and brokerage accounts while precluding them from transferring or encumbering assets like real estate. About New England Compounding New England Compounding Pharmacy Inc., filed a Chapter 11 petition (Bankr. D. Mass. Case No. 12-19882) in Boston on Dec. 21, 2012. Daniel C. Cohn, Esq., at Murtha Cullina LLP, serves as counsel. Verdolino & Lowey, P.C. is the financial advisor. The Debtor estimated assets and liabilities of at least $1 million. The Debtor owns and operates the New England Compounding Center is located in Framingham, Mass. The company said at the outset of bankruptcy that it would work with creditors and insurance companies to structure a Chapter 11 plan dealing with personal injury claims. The outbreak linked to the pharmacy has killed 39 people and sickened 656 in 19 states, though no illnesses have been reported in Massachusetts. In October, the company recalled all its products, not just those associated with the meningitis outbreak. An official unsecured creditors' committee was formed to represent individuals with personal-injury claims. The members selected Brown & Rudnick LLP to be the committee's lawyers. NEWLEAD HOLDINGS: Inks One-Year Coal Supply Agreement ----------------------------------------------------- NewLead Holdings Ltd. on Jan. 24 disclosed that it has signed an agreement to supply 720,000 metric tons of thermal coal to a third party buyer. The contract is expected to generate approximately $64.0 million in revenue over a 12-month period. The contract provides for the sale of 60,000 metric tons of coal per month (720,000 metric tons annually) for the 12 months beginning February 4, 2013. All tonnage is subject to a variation of 10%. The price was established based on the prevailing market price for coal at the time the contract was entered into. The agreement is subject to satisfactory completion of a trial shipment of approximately 60,000 metric tons, expected to be completed in the first quarter of 2013. Michael Zolotas, Chairman, President and Chief Executive Officer of NewLead, stated, "We have secured an additional contract to supply thermal coal to a third party creditworthy counterparty. This agreement further expands our commodities business." Michael Zolotas continued, "NewLead has the option to transport the coal. We are currently in discussion with a number of financial institutions to secure financing for fleet expansion to fulfill the transportation needs of our commodities arm." About NewLead Holdings NewLead Holdings Ltd. -- http://www.newleadholdings.com-- is an international, vertically integrated shipping company that owns and manages product tankers and dry bulk vessels. NewLead currently controls 22 vessels, including six double-hull product tankers and 16 dry bulk vessels of which two are newbuildings. N ewLead's common shares are traded under the symbol "NEWL" on the NASDAQ Global Select Market. PricewaterhouseCoopers S.A. in Athens, Greece, said in a May 15, 2012, audit report NewLead Holdings Ltd. has incurred a net loss, has negative cash flows from operations, negative working capital, an accumulated deficit and has defaulted under its credit facility agreements resulting in all of its debt being reclassified to current liabilities. These raise substantial doubt about its ability to continue as a going concern, PwC said. NEWLEAD HOLDINGS: Doesn't Know How to Treat Capital in Financial ---------------------------------------------------------------- NewLead Holdings Ltd. previously received a capital contribution of 3,750 grams of nickel wire valued at $236.4 million for 258,536,585 common shares representing a 36.8% equity interest in the Company. The Company intends to use the investment to provide collateral for loans funding our capital-intensive activities and to provide a platform upon which to execute our diversified growth strategy. The Nickel has been certified and is being held with an internationally known repository for those industrial metals. Upon completion of this transaction, it is expected that the Company will have a total of 701,904,963 common shares outstanding. The Company will issue, following approval from NASDAQ Stock Market LLC, unregistered common shares in exchange for the new investment. Vasileios Telikostoglou and Essential Holding LTD, the new shareholders, have agreed, subject to certain limited exceptions, not to offer, sell, agree to offer or sell, solicit offers to purchase, grant any call option or purchase any put option with respect to, pledge, borrow or dispose of the Company's shares or otherwise transfer ownership of the shares until June 30, 2014. Vasileios Telikostoglou and Essential Holding LTD will not have board representation or other rights. The value of the Nickel was established on Jan. 7, 2013, by an independent appraiser. The foreign currency exchange rate on Jan. 7, 2013, was used for currency translation. The Company has not yet determined how this capital contribution will be reflected on its financial statements. Further, there can be no assurance that the Company will, in the future, be able to sell the Nickel at a price comparable to the value received in this transaction, or at all. The value of the Nickel may be subject to wide fluctuations and is affected by numerous factors beyond the Company's control, including international economic and political conditions, levels of supply and demand, the availability and costs of substitutes, inventory levels maintained by users, actions of participants in the commodities markets and currency exchange rates. In addition, the market price of the Nickel may also be subject to rapid short-term changes. These factors may cause the Company to fail to recover all or a portion of its investment in the Nickel and may require financial write- downs adversely impacting the Company;s financial results. The purchase agreement governing the capital contribution is available for free at http://is.gd/gSOyOh About NewLead Holdings NewLead Holdings Ltd. -- http://www.newleadholdings.com-- is an international, vertically integrated shipping company that owns and manages product tankers and dry bulk vessels. NewLead currently controls 22 vessels, including six double-hull product tankers and 16 dry bulk vessels of which two are newbuildings. N ewLead's common shares are traded under the symbol "NEWL" on the NASDAQ Global Select Market. PricewaterhouseCoopers S.A. in Athens, Greece, said in a May 15, 2012, audit report NewLead Holdings Ltd. has incurred a net loss, has negative cash flows from operations, negative working capital, an accumulated deficit and has defaulted under its credit facility agreements resulting in all of its debt being reclassified to current liabilities. These raise substantial doubt about its ability to continue as a going concern, PwC said. Newlead Holdings's balance sheet balance sheet at June 30, 2012, showed US$111.28 million in total assets, US$299.37 million in total liabilities and a US$188.08 million total shareholders' deficit. NNN PARKWAY 400: Breakwater Equity Files Suit vs. LNR ----------------------------------------------------- Breakwater Equity Partners, a commercial real estate consultancy and investment firm, has filed a contempt-of-court motion against special servicer LNR Partners, LLC for allegedly violating the automatic stay provisions of Section 362 of the bankruptcy code (case 8:12-bk-24593-TA). The motion was filed on behalf of the 35 tenant-in-common owners of the Parkway 400 buildings in Alpharetta, Georgia. Judge Theodor C. Albert of the Santa Ana Bankruptcy Court (Central District of California) will hear the motion. Breakwater alleges that LNR violated the automatic stay by purportedly foreclosing on the property after bankruptcy was filed on January 2nd. "This is an intentional violation of the automatic stay," said Phil Jemmett, Breakwater CEO. "LNR has repeatedly flouted the automatic stay provisions of the bankruptcy code. We believe that the court should address this ongoing pattern and practice of renegade behavior. The owners of this property are elderly investors who have been defrauded and are now being victimized a second time." "LNR's actions are outrageous," said Ralph Farinas, one of the tenant-in-common owners. "This is yet another example of the greedy behavior that has become so common with lenders. All we want is an opportunity to save our investment. Most of the investors are depending on this property to provide income for their golden years." The 35 tenant-in-common owners purchased Parkway 400 in 2007 for $33.85MM. According to Breakwater Equity Partners, the deal sponsor, Grubb & Ellis, told the mom-and-pop investors that Parkway 400 was a reliable investment that would produce solid dividend distributions. Grubb & Ellis failed to disclose material adverse information related to the investment. "We are confident that the owners will prevail on this contempt of court motion," said Jemmett. "We have litigated this issue in other bankruptcies with LNR and it is clear that the law is well settled. Breakwater is committed to protecting these vulnerable investors from predatory lenders." Breakwater Equity Partners -- http://www.breakwaterequity.com-- is a San Diego-based commercial real estate workout consultancy and investment firm. Through Breakwater's extensive experience on over 200 engagements with loan values in excess of a $3B, the firm has devised a unique, multidisciplinary approach to uncovering and resolving distressed assets. Breakwater's professional team combines legal, financial, economic, banking, tax, and regulatory expertise to devise customized strategies for each property regardless of market (primary to tertiary), asset class (office, retail, multi-family, industrial, flex, land) or loan type (portfolio or CMBS). About NNN Parkway 400 NNN Parkway 400 26, LLC, filed a bare-bones Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-24593) in Santa Ana, California, on Dec. 31, 2012. According to the docket, the schedules of assets and liabilities, the statement of financial affairs and other incomplete filings are due Jan. 14, 2013. Dana Point, California-based NNN Parkway estimated assets and debts of $10 million to $50 million. NORTEL NETWORKS: Has First Approval to End Retiree Welfare Plans ---------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Nortel Networks Inc. and the official committee representing retirees won approval Jan. 23 from the bankruptcy court for the first step in a settlement ending retirees' medical and life insurance benefits. According to the report, retirees will be given notice of the proposed settlement and an opportunity to object. There will be another hearing on April 2 for approval of the settlement where Nortel will pay the retiree committee $66.9 million in return for a release of all claims related to post-employment welfare plans. The report relates that welfare plans for Nortel's 4,400 retirees has been costing as much as $1 million a month. The payment Nortel will make can be used by retirees to purchase replacement insurance. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation and its various affiliated entities provided next-generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel did business in more than 150 countries around the world. Nortel Networks Limited was the principal direct operating subsidiary of Nortel Networks Corporation. On Jan. 14, 2009, Nortel Networks Inc.'s ultimate corporate parent Nortel Networks Corporation, NNI's direct corporate parent Nortel Networks Limited and certain of their Canadian affiliates commenced a proceeding with the Ontario Superior Court of Justice under the Companies' Creditors Arrangement Act (Canada) seeking relief from their creditors. Ernst & Young was appointed to serve as monitor and foreign representative of the Canadian Nortel Group. That same day, the Monitor sought recognition of the CCAA Proceedings in U.S. Bankruptcy Court (Bankr. D. Del. Case No. 09-10164) under Chapter 15 of the U.S. Bankruptcy Code. That same day, NNI and certain of its affiliated U.S. entities filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 09-10138). In addition, the High Court of England and Wales placed 19 of NNI's European affiliates into administration under the control of individuals from Ernst & Young LLP. Other Nortel affiliates have commenced and in the future may commence additional creditor protection, insolvency and dissolution proceedings around the world. On May 28, 2009, at the request of administrators, the Commercial Court of Versailles, France, ordered the commencement of secondary proceedings in respect of Nortel Networks S.A. On June 8, 2009, Nortel Networks UK Limited filed petitions in U.S. Bankruptcy Court for recognition of the English Proceedings as foreign main proceedings under Chapter 15. U.S. Bankruptcy Judge Kevin Gross presides over the Chapter 11 and 15 cases. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. In the Chapter 11 case, James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as the U.S. Debtors' general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The United States Trustee appointed an Official Committee of Unsecured Creditors in respect of the U.S. Debtors. An ad hoc group of bondholders also was organized. Fred S. Hodara, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, and Christopher M. Samis, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, represent the Official Committee of Unsecured Creditors. An Official Committee of Retired Employees and the Official Committee of Long-Term Disability Participants tapped Alvarez & Marsal Healthcare Industry Group as financial advisor. The Retiree Committee is represented by McCarter & English LLP as Delaware counsel, and Togut Segal & Segal serves as the Retiree Committee. The Committee retained Alvarez & Marsal Healthcare Industry Group as financial advisor, and Kurtzman Carson Consultants LLC as its communications agent. Several entities, particularly, Nortel Government Solutions Incorporated and Nortel Networks (CALA) Inc., have material operations and are not part of the bankruptcy proceedings. As of Sept. 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of Sept. 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Since the commencement of the various insolvency proceedings, Nortel has sold its business units and other assets to various purchasers. Nortel has collected roughly $9 billion for distribution to creditors. Of the total, $4.5 billion came from the sale of Nortel's patent portfolio to Rockstar Bidco, a consortium consisting of Apple Inc., EMC Corporation, Telefonaktiebolaget LM Ericsson, Microsoft Corp., Research In Motion Limited, and Sony Corporation. The consortium defeated a $900 million stalking horse bid by Google Inc. at an auction. The deal closed in July 2011. Nortel has filed a proposed plan of liquidation in the U.S. Bankruptcy Court. The Plan generally provides for full payment on secured claims with other distributions going in accordance with the priorities in bankruptcy law. NORTEL NETWORKS: Creditor Mediation Ends Without Agreement ---------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that mediation among the U.S., U.K. and Canada creditors of Nortel Networks Inc. was called off Jan. 24. The chief justice of Ontario, serving as mediator, said that further talks wouldn't be worthwhile. According to the report, failure of the parties to settle means that creditors are faced with years of delay before they receive distributions of $9 billion in cash collected from the sale of assets. The delay also means tens of millions of dollars of legal expenses will go to lawyers, not to creditors. The mediation that began Jan. 14 was intended for forge agreement on how to carve up the $9 billion among creditors in the countries where Nortel operated and went bankrupt. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation and its various affiliated entities provided next-generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel did business in more than 150 countries around the world. Nortel Networks Limited was the principal direct operating subsidiary of Nortel Networks Corporation. On Jan. 14, 2009, Nortel Networks Inc.'s ultimate corporate parent Nortel Networks Corporation, NNI's direct corporate parent Nortel Networks Limited and certain of their Canadian affiliates commenced a proceeding with the Ontario Superior Court of Justice under the Companies' Creditors Arrangement Act (Canada) seeking relief from their creditors. Ernst & Young was appointed to serve as monitor and foreign representative of the Canadian Nortel Group. That same day, the Monitor sought recognition of the CCAA Proceedings in U.S. Bankruptcy Court (Bankr. D. Del. Case No. 09-10164) under Chapter 15 of the U.S. Bankruptcy Code. That same day, NNI and certain of its affiliated U.S. entities filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 09-10138). In addition, the High Court of England and Wales placed 19 of NNI's European affiliates into administration under the control of individuals from Ernst & Young LLP. Other Nortel affiliates have commenced and in the future may commence additional creditor protection, insolvency and dissolution proceedings around the world. On May 28, 2009, at the request of administrators, the Commercial Court of Versailles, France, ordered the commencement of secondary proceedings in respect of Nortel Networks S.A. On June 8, 2009, Nortel Networks UK Limited filed petitions in U.S. Bankruptcy Court for recognition of the English Proceedings as foreign main proceedings under Chapter 15. U.S. Bankruptcy Judge Kevin Gross presides over the Chapter 11 and 15 cases. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. In the Chapter 11 case, James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as the U.S. Debtors' general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The United States Trustee appointed an Official Committee of Unsecured Creditors in respect of the U.S. Debtors. An ad hoc group of bondholders also was organized. Fred S. Hodara, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, and Christopher M. Samis, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, represent the Official Committee of Unsecured Creditors. An Official Committee of Retired Employees and the Official Committee of Long-Term Disability Participants tapped Alvarez & Marsal Healthcare Industry Group as financial advisor. The Retiree Committee is represented by McCarter & English LLP as Delaware counsel, and Togut Segal & Segal serves as the Retiree Committee. The Committee retained Alvarez & Marsal Healthcare Industry Group as financial advisor, and Kurtzman Carson Consultants LLC as its communications agent. Several entities, particularly, Nortel Government Solutions Incorporated and Nortel Networks (CALA) Inc., have material operations and are not part of the bankruptcy proceedings. As of Sept. 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of Sept. 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Since the commencement of the various insolvency proceedings, Nortel has sold its business units and other assets to various purchasers. Nortel has collected roughly $9 billion for distribution to creditors. Of the total, $4.5 billion came from the sale of Nortel's patent portfolio to Rockstar Bidco, a consortium consisting of Apple Inc., EMC Corporation, Telefonaktiebolaget LM Ericsson, Microsoft Corp., Research In Motion Limited, and Sony Corporation. The consortium defeated a $900 million stalking horse bid by Google Inc. at an auction. The deal closed in July 2011. Nortel has filed a proposed plan of liquidation in the U.S. Bankruptcy Court. The Plan generally provides for full payment on secured claims with other distributions going in accordance with the priorities in bankruptcy law. OLD REDFORD: S&P Lowers Rating on Series 2005 & 2010 Bonds to 'BB' ------------------------------------------------------------------ Standard & Poor's Ratings Services has lowered its long-term rating to 'BB' from 'BBB-' on Michigan Finance Authority's series 2005 and series 2010 bonds, issued on behalf of Old Redford Academy and placed the ratings on CreditWatch with negative implications. "The rating actions reflect our view of Old Redford Academy's adequate, but weak, financial metrics in conjunction with the increased credit risk posed by the IRS' revocation of the tax- exempt status of the Clothilde R. Smith Charitable Foundation, the school's foundation," said Standard & Poor's credit analyst Avani Parikh. The IRS automatically revoked the tax-exempt status, effective Nov. 15, 2011, for failure to receive the foundation's form 990 filings for the past three fiscal years. According to management, the foundation's accounting firm has prepared its form 990s in a timely manner every year and procedures have since been implemented so that this situation does not occur again in the future. According to the series 2010 and 2005 bond documents, the loss of the foundation's tax-exempt status constitutes a covenant violation, which could mature into an event of default, unless corrected or corrective action is taken and diligently pursued within 45 days of written notice from the trustee. According to management, the trustee has not yet issued such written notice but has been notified of the situation. In addition, management indicates that the foundation has filed the appropriate forms with the IRS to request retroactive reinstatement of its tax-exempt status and expects resolution within the next 90 days. Standard & Poor's expects to receive timely disclosure from school officials regarding the outcome of the IRS' review and the financial impact, if any, to the foundation and school. Should the covenant violation mature into an event of default, it would result in immediate acceleration of the bonds. The outcome of the IRS' decision will also indicate whether there is any taxable impact to bondholders. Standard & Poor's will continue to monitor the school's performance and complete a full review pending the outcome of the IRS' decision, which, as previously noted, management expects within the next 90 days. The downgrade reflects Standard & Poor's opinion of the increased vulnerability to the school's credit profile, especially due to its limited liquidity position and operational flexibility, as well as the need for stronger management and governance practices, in light of the nature of this issue and the delay in making this information public. Currently, Standard & Poor's deems the school's financial profile still adequate, with breakeven to small operating surpluses posted in each of the past three fiscal years; maximum annual debt service coverage greater than 1x; and a weak, but adequate liquidity position. In Standard & Poor's view, the school's enrollment and demand profile provides rating support, with continued enrollment growth for the past several years, a healthy waiting list, stabilizing student retention and strong graduation rates. OLD SECOND BANCORP: Reports 4th Quarter Net Income of $253,000 -------------------------------------------------------------- Old Second Bancorp, Inc., reported net income available to common stockholders of $253,000 on $17.56 million of total interest and dividend income for the three months ended Dec. 31, 2012, compared with a net loss available to common stockholders of $4.20 million on $19.97 million of total interest and dividend income for the same period during the prior year. For the year ended Dec. 31, 2012, the Company incurred a net loss available to common stockholders of $5.05 million on $75.08 million of total interest and dividend income, compared with a net loss available to common stockholders of $11.22 million on $85.42 million of total interest and dividend income during the preceding year. The Company's balance sheet at Dec. 31, 2012, showed $2.04 billion in total assets, $1.97 billion in total liabilities and $72.55 million in total stockholders' equity. "Fourth quarter and full year results reflect ongoing progress on both improved credit quality and overall sustainable profitability," said Bill Skoglund, Chairman and CEO. "Our problem loan remediation work resulted in nonaccrual loans declining by 39% since December 31, 2011 (down 16% since September 30, 2012). Net charge offs continued at levels consistent with the improved results seen in third quarter and are much improved from results seen in 2011." "We had some unusual items in fourth quarter earnings, including sizable gains on sales of OREO properties and loan prepayment fee income. For the second consecutive quarter, a provision for loan loss was not taken as our credit quality continued to show improvements. Further, I am confident that our restored loan pipeline will benefit future core earnings and lead to cross sell opportunities enabling us to expand our services to current and prospective customers in our chosen markets. While that business develops, we have increased our portfolio of investment securities 89% or $272 million since December 31, 2011. Growing franchise value and sustained core profitability remain our main objectives." A copy of the press release is available for free at: http://is.gd/nnvhYF About Old Second 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. PACKAGING DYNAMICS: S&P Affirms 'B' Corporate Credit Rating ----------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Packaging Dynamics. At the same time, S&P affirmed its 'B' issue-level rating on the company's $425 million senior secured notes due 2016. S&P's '4' recovery rating indicates its expectation for average (30%-50%) recovery in the event of a payment default. "The rating on Packaging Dynamics reflects our assessment of the company's financial risk as aggressive and its business risk as weak," said Standard & Poor's credit analyst James Fielding. Standard & Poor's aggressive financial risk assessment reflects its view that Packaging Dynamics' leverage will remain near 5x EBITDA over the next several fiscal quarters due to weak organic sales growth and modestly higher debt levels following a 2012 acquisition. S&P's weak business risk assessment acknowledges the company's limited operating diversity and participation in small and mature niche specialty paper and packaging end markets. "The stable outlook reflects our expectation for steady demand for most of Packaging Dynamics' products and relatively flat pricing and input costs. We expect our ratings to hold even if revenues were to decline 5% to 10% over the next year. We would lower our rating if revenues dropped 20% or more, because leverage would likely climb to about 6x EBITDA. We view an upgrade to be less likely over the next 12 months, given our relatively subdued economic forecast. However, we would raise our rating if leverage dropped and stayed below 4.5x. This could occur if the economy recovers more quickly than we currently anticipate and input costs fall significantly. Still, any upgrade would be limited to one notch given the indeterminate financial policies associated with the company's private equity ownership. PARADISE VALLEY: Can Hire Patten Peterman as Counsel ---------------------------------------------------- Paradise Valley Holdings LLC sought and obtained permission from the U.S. Bankruptcy Court to employ Patten, Peterman, Bekkedahl & Green as its legal counsel. The firm's professionals who will be working on the case are James A. Patten, Craig D. Martinson, W. Scott Green, Patricia D. Peterman, Bruce O. Bekkedahl, Michael McGuinness, and Benjamin J. Halverson. Services rendered by attorneys James A. Patten, Patricia D. Peterman, Bruce O. Bekkedahl, W. Scott Green, and Craig D. Martinson will be paid at $315 per hour. Services rendered by Michael McGuinness will be compensated at $150 per hour. Services rendered by attorney, Benjamin J. Halverson will be compensated at $125 per hour. Services rendered by paralegals Diane S. Kephart and April J. Boucher will be compensated at $125 per hour. Services rendered by paralegals Valerie Cox, Phyllis Dahl, Marcia Berg, and Leanne Beatty will be compensated at $110 per hour. To the best of the Debtor's knowledge, neither Patten Peterman nor its professionals have any connection with the creditors, or any other party in interest, or their attorneys and accountants, the United States Trustee, or any person employed in the office of the United States Trustee, and are "disinterested persons" as defined in 11 U.S.C. 101(14). The firm received $1,046 for the filing fee and $5,532 for prepetition legal fees. The firm also holds $28,527 as retainer. Paradise Valley Holdings LLC filed a Chapter 11 petition (Bankr. D. Mont. Case No. 12-61585) in Butte, Montana on Sept. 28, 2012. Paradise Valley, also known as Bullis Creek Ranch, disclosed $14.2 million in total assets and $13.1 million in total liabilities. The Debtor owns properties in Park County, worth $14.0 million, and secures a $12.0 million debt to American Bank. The Debtor disclosed that part of the secured claims against the property is a judgment lien in the amount of $250,000 held by the Museum of the Rockies Inc. resulting from a lawsuit against the debtor for breach of contract. A copy of the schedules is available at http://bankrupt.com/misc/mtb12-61585.pdf Judge Ralph B. Kirscher oversees the case. Patten, Peterman, Bekkedahl & Green serves as the Debtor's legal counsel. PARADISE VALLEY: Court Approves Holmes & Turner as Accountants -------------------------------------------------------------- Paradise Valley Holdings LLC sought and obtained permission from the Bankruptcy Court to employ Holmes & Turner, P.C., of Bozeman, Montana, as accountants to prepare income tax returns, financial statements and reports for the Debtor. To the best of the Debtor's knowledge, Holmes & Turner has no connection with the creditors, or any other party in interest, or their respective attorneys and accountants, the United States Trustee, or any person employed in the office of the United States Trustee, and is a "disinterested person" as defined in 11 U.S.C. 101(14). The firm's hourly rates are: Ernest J. Turner $250 Duane Moulton $165 Carol Dismore $150 Rosalie Barndt $140 Kristine Yakawich $95 Amanda Flohr $90 Chandra Inman $40 Paradise Valley Holdings LLC filed a Chapter 11 petition (Bankr. D. Mont. Case No. 12-61585) in Butte, Montana on Sept. 28, 2012. Paradise Valley, also known as Bullis Creek Ranch, disclosed $14.2 million in total assets and $13.1 million in total liabilities. The Debtor owns properties in Park County, worth $14.0 million, and secures a $12.0 million debt to American Bank. The Debtor disclosed that part of the secured claims against the property is a judgment lien in the amount of $250,000 held by the Museum of the Rockies Inc. resulting from a lawsuit against the debtor for breach of contract. A copy of the schedules is available at http://bankrupt.com/misc/mtb12-61585.pdf Judge Ralph B. Kirscher oversees the case. Patten, Peterman, Bekkedahl & Green serves as the Debtor's legal counsel. PARADISE VALLEY: Court Approves Timothy Murphy as Realtor --------------------------------------------------------- Paradise Valley sought and obtained permission from the U.S. Bankruptcy Court to employ Timothy Murphy of Hall & Hall Partners LLP as realtor. The Debtor attests that it is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Commission will be 4% with 3% going to the broker that also represents a buyer. In the event that an outside broker shall receive a 2% of the fee and the balance shall be split equally between the two listing parties. Applicants said they have no fee sharing agreement. Paradise Valley Holdings LLC filed a Chapter 11 petition (Bankr. D. Mont. Case No. 12-61585) in Butte, Montana on Sept. 28, 2012. Paradise Valley, also known as Bullis Creek Ranch, disclosed $14.2 million in total assets and $13.1 million in total liabilities. The Debtor owns properties in Park County, worth $14.0 million, and secures a $12.0 million debt to American Bank. The Debtor disclosed that part of the secured claims against the property is a judgment lien in the amount of $250,000 held by the Museum of the Rockies Inc. resulting from a lawsuit against the debtor for breach of contract. A copy of the schedules is available at http://bankrupt.com/misc/mtb12-61585.pdf Judge Ralph B. Kirscher oversees the case. Patten, Peterman, Bekkedahl & Green serves as the Debtor's legal counsel. PATRIOT COAL: UMWA and Sureties' Motions to Transfer Venue Denied ----------------------------------------------------------------- On Jan. 23, 2013, the U.S. Bankruptcy Court for the Southern District of New York entered orders denying motions to transfer the venue of Patriot Coal Corporation's case to the U.S. Bankruptcy Court for the Southern District of West Virginia. 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 U.S. Trustee appointed a seven-member creditors committee. Kramer Levin Naftalis & Frankel LLP serves as its counsel. Houlihan Lokey Capital, Inc., serves as its financial advisor and investment banker. Epiq Bankruptcy Solutions, LLC, serves as its information agent. On Nov. 27, 2012, the New York bankruptcy judge moved Patriot's bankruptcy case to St. Louis. The order formally sending the reorganization to Missouri was signed December 19 by the bankruptcy judge. PEAK RESORTS: Court Approves Bonadio & Co as Accountant ------------------------------------------------------- The Hon. Margaret Cangilos-Ruiz of the U.S. Bankruptcy Court for the Northern District of New York authorized Peak Resorts, Inc., et al., to employ Bonadio & Co., LLP, as accountant. According to the Troubled Company Reporter on Dec. 26, 2012, Bonadio will: a. prepare federal and New York State income tax returns for the year ending Sept. 30, 2012, and going forward for the Debtors; and b. perform audits in accordance with generally accepted auditing standards of the financial statements of: (i) Hope Lake Investors, LLC, and (ii) the consolidated financial statements of Peak Resorts, Inc., for the year ended Sept. 30, 2012, prepared in accordance with generally accepted accounting principles. Bonadio said it believes that the work will be completed at these costs: Peak Resorts ------------ a. audit of financial statements for the year-ended Sept. 30, 2012: $25,000 b. preparation of Federal and New York State Income Tax Returns for the year ended Sept. 30, 2012: $3,000 Hope Lake --------- a. audit of financial statements for the year ended Sept. 30, 2012: $25,000 b. preparation of Federal and New York State Income Tax Returns for the year ended Sept. 30, 2012: $3,000 Out-of-pocket travel costs which will be billed in addition to the fees will not exceed $2,000. Prior to commencement of this engagement, Bonadio required a $15,000 retainer to be paid. The funds will be held in escrow by Bonadio until the accountant is awarded fees by the Court. James J. Zielinski, a partner at Bonadio, said the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Peak Resorts Peak Resorts, Inc., dba Greek Peak Mountain Resort, and four affiliates filed for Chapter 11 bankruptcy (Bankr. N.D.N.Y. Case Nos. 12-31471 to 12-31473, 12-31475 and 12-31476) in Syracuse on Aug. 1, 2012. The affiliates are Hope Lake Investors LLC, V.R.P.D. II L.P., REDI LLC, and A.R.K. Enterprises Inc. Peak Resorts owns 888.5 acres of real estate, including the "Greek Peak Mountain Resort", a four-season resort development located in Virgil, New York. The 888.5-acre property is located 8 miles from Cortland, New York and has the largest day trip area in Central New York state. REDI LLC owns 402.7 acres of adjacent property. Hope Lake Investors owns the Hope Lake Lodge & Cascades Indoor Water Park, a 151-room hotel and resort facility in Virgil, Cortland County. The Debtors have a total of 264 employees. Chief Bankruptcy Judge Robert E. Littlefield Jr. presides over the case. Lawyers at Harris Beach PLLC serve as the Debtors' counsel. The Debtors scheduled these assets and debts: Scheduled Assets Scheduled Liabilities ---------------- --------------------- Hope Lake $27,180,635 $48,800,528 Peak Resorts $12,991,230 $26,558,438 REDI, LLC $1,298,401 $3,851,808 The petitions were signed by Allen R. Kryger, president. PEAK RESORTS: Court Okays BDO Capital as Investment Banker ---------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of New York authorized Peak Resorts Inc. et al. to employ BDO Capital Advisors LLC as investment banker and financial advisor. Jeffrey R. Manning attested that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Peak Resorts Peak Resorts, Inc., dba Greek Peak Mountain Resort, and four affiliates filed for Chapter 11 bankruptcy (Bankr. N.D.N.Y. Case Nos. 12-31471 to 12-31473, 12-31475 and 12-31476) in Syracuse on Aug. 1, 2012. The affiliates are Hope Lake Investors LLC, V.R.P.D. II L.P., REDI LLC, and A.R.K. Enterprises Inc. Peak Resorts owns 888.5 acres of real estate, including the "Greek Peak Mountain Resort", a four-season resort development located in Virgil, New York. The 888.5-acre property is located 8 miles from Cortland, New York and has the largest day trip area in Central New York state. REDI LLC owns 402.7 acres of adjacent property. Hope Lake Investors owns the Hope Lake Lodge & Cascades Indoor Water Park, a 151-room hotel and resort facility in Virgil, Cortland County. The Debtors have a total of 264 employees. Chief Bankruptcy Judge Robert E. Littlefield Jr. presides over the case. Lawyers at Harris Beach PLLC serve as the Debtors' counsel. The Debtors scheduled these assets and debts: Scheduled Assets Scheduled Liabilities ---------------- --------------------- Hope Lake $27,180,635 $48,800,528 Peak Resorts $12,991,230 $26,558,438 REDI, LLC $1,298,401 $3,851,808 The petitions were signed by Allen R. Kryger, president. PENNFIELD CORP: Can Use Fulton Cash Collateral Until Feb. 2 ----------------------------------------------------------- In a fourth interim order, the U.S. Bankruptcy Court for the Eastern District of Pennsylvania authorized Pennfield Corporation to use cash collateral of Fulton Bank during the period from Jan. 19, 2013, through Feb. 2, 2013. As of the Petition Date, the unpaid aggregate liability of the Debtor to the Bank is $9,974,167. As adequate protection, the Bank is granted post-petition replacement liens on the Debtor's assets acquired after the Petition Date. The Replacement Liens will have the same priority and validity as pre-petition security interests and liens held by Fulton Bank in the collateral as of the Petition Date. About Pennfield Corporation Pennfield Corporation and Pennfield Transport Company filed a Chapter 11 petition (Bankr. E.D. Pa. Case No. 12-19430 and 12-19431) on Oct. 3, 2012, in Philadelphia. Founded in 1919, Pennfield is a Lancaster, Pennsylvania-based manufacturer of bulf and bagged feeds for dairy, equine and other commercial and backyard livestock. The Company owns and operates three production mills located in Mount Joy, Martinsburg, and South Montrose, in Pennsylvania. The Debtors filed for bankruptcy to sell their assets to Carlisle Advisors, LLC, subject to higher and better offers. Carlisle had also agreed to provide a $2.0 million DIP Loan but later defaulted on this commitment. Judge Bruce I. Fox presides over the case. Attorneys at Maschmeyer Karalis P.C., in Philadelphia, serve as the Debtors' bankruptcy counsel. Skadden, Arps, Slate, Meagher & Flom LLP is the special counsel. Groom Law Group, Chartered, is the employee benefits counsel. AEG Partners LLC is the financial advisor. Lakeshore Food Advisors, LLC, is the investment banker. Pennfield filed official lists showing assets of $7.2 million and liabilities totaling $26.1 million, including $11.3 million in secured claims. Debt includes $10 million owing to secured lender Fulton Bank NA. QBEX ELECTRONICS: Can Employ GrayRobinson P.A. as Counsel --------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida authorized QBEX Electronics Corporation to employ GrayRobinson P.A. as bankruptcy counsel to the Debtor. As reported in the TCR on Nov. 22, 2012, the firm's Robert A. Schatzman will lead the engagement. The firm will, among others, represent the Debtor in negotiations with its creditors in the preparation of a bankruptcy plan. About QBEX Electronics QBEX Electronics Corporation, Inc., based in Miami, Florida, filed for Chapter 11 bankruptcy (Bankr. S.D. Fla. Case No. 12-37551) on Nov. 15, 2012. Judge Robert A. Mark oversees the case. Robert A. Schatzman, Esq., and Steven J. Solomon, Esq., at GrayRobinson, P.A., serve as the Debtor's counsel. QBEX scheduled assets of $11,027,058 and liabilities of $8,246,385. The petitions were signed by Jorge E. Alfonso, president. Qbex Colombia, S.A., also sought Chapter 11 protection (Bankr. S.D. Fla. Case No. 12-37558) on Nov. 15, listing $433,627 in assets and $5,792,217 in liabilities. RESIDENTIAL CAPITAL: To Pay $297.6-Mil. to Fannie Mae ----------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Residential Capital LLC settled with Federal National Mortgage Association by agreeing to pay Fannie Mae $297.6 million on completion of the sale of the mortgage servicing business. The report recounts that Fannie Mae had objected to the sale, which the bankruptcy court approved in November. The sale will generate $4.5 billion for ResCap from sale of the loan-servicing business and the primary loan portfolio. In consultation with the creditors' committee, ResCap agreed that Fannie Mae should be paid the $297.6 million when the sale is completed. From the total, $265 million is for curing payment defaults under Fannie Mae agreements being acquired by the purchaser. The settlement is scheduled for approval on Jan. 30 by the bankruptcy judge in New York unless someone objects. ResCap's $2.1 billion in third-lien 9.625% secured notes due 2015 traded at 1:52 p.m. Jan. 24 for 106.65 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The $473.4 million of ResCap senior unsecured notes due April 2013 traded at 3:52 p.m. Jan. 24 for 30.20 cents on the dollar, a 29% increase since Dec. 19, according to Trace. About Residential Capital Residential Capital LLC, the unprofitable mortgage subsidiary of Ally Financial Inc., filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012. Neither Ally Financial nor Ally Bank is included in the bankruptcy filings. ResCap, one of the country's largest mortgage originators and servicers, was sent to Chapter 11 with 50 subsidiaries amid "continuing industry challenges, rising litigation costs and claims, and regulatory uncertainty," according to a company statement. ResCap disclosed $15.68 billion in assets and $15.28 billion in liabilities as of March 31, 2012. Centerview Partners LLC and FTI Consulting are acting as financial advisers to ResCap. Morrison & Foerster LLP is acting as legal adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is the conflicts counsel. Rubenstein Associates, Inc., is the public relations consultants to the Company in the Chapter 11 case. Morrison Cohen LLP is advising ResCap's independent directors. Kurtzman Carson Consultants LLP is the claims and notice agent. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves as counsel to Ally Financial. The Bankruptcy Court in November 2012 approved ResCap's sale of its mortgage servicing and origination platform assets to Ocwen Loan Servicing, LLC and Walter Investment Management Corporation for $3 billion; and its portfolio of roughly 50,000 whole loans to Berkshire Hathaway for $1.5 billion. The sale of the assets, subject to satisfaction of customary closing conditions including certain third party consents, is expected to close in the first quarter of 2013. The partnership of Ocwen and Walter defeated the last bid of $2.91 billion from Fortress Investment Group's Nationstar Mortgage Holdings Inc., which acted as stalking horse bidder, at an auction that began Oct. 23, 2012. The $1.5 billion offer from Warren Buffett's Berkshire Hathaway Inc. was declared the winning bid for a portfolio of loans at the auction on Oct. 25. Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Residential Capital LLC and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). RICHARD C. SINCLAIR: Calif. Appeals Court Rules in Katakis Dispute ------------------------------------------------------------------ The Court of Appeals of California, Fifth District, issued a ruling in the case, RICHARD C. SINCLAIR et al., Plaintiffs and Appellants, v. ANDREW KATAKIS et al., Defendants and Appellants, No. F058822 (Calif. App. Ct.). The case includes three appeals from the judgment and the postjudgment orders following litigation over the ownership of eight lots in the Fox Hollow subdivision in Turlock, California. A copy of the Jan . 23, 2013 decision is available at http://is.gd/fgrUpQfrom Leagle.com. Richard C. Sinclair, who serves as counsel for some of the plaintiffs on appeal; his company Lairtrust, LLC; Mr. Sinclair's son, Brandon Sinclair; Brandon's company, Capstone, LLC; Stanley Flake, as an individual and as trustee of Capstone Trust; and Gregory Mauchley. Each plaintiff has had an ownership interest in the Fox Hollow property. The defendants are Andrew Katakis, his company California Equity Management Group, Inc., and the Fox Hollow of Turlock Owners Association. Mr. Katakis and CEMG acquired the properties that the plaintiffs lost through foreclosures. The FHOA foreclosed on two of plaintiffs' properties for delinquent dues and special assessments. The plaintiffs claimed they were deprived of their property by wrongful foreclosures and the defendants' tortious acts. The Defendants denied the allegations and asserted that the plaintiffs' unclean hands precluded recovery. The Defendants also cross-complained for abuse of process. A California trial court found against the plaintiffs on their complaint and concluded the plaintiffs' unclean hands barred their recovery as well. The trial court found against defendants on their cross-complaint. On appeal (1) the plaintiffs challenge essentially all of the trial court's rulings against them, (2) Stanley Flake, as an individual and as trustee of Capstone Trust, challenges the unclean hands findings and the denial of a motion to enforce a settlement agreement, and (3) the defendants cross-appeal and challenge the trial court's ruling that some of the plaintiffs' claims were not barred by the doctrine of res judicata. In 1993, Mr. Sinclair and his wife filed a chapter 11 bankruptcy proceeding. Eventually, the bankruptcy court granted Stockton Savings and Loan Association relief from the automatic stay, and the bank foreclosed on Fox Hollow. ROCMEC MINING: Delays Filing of Annual Financial Statements ----------------------------------------------------------- Rocmec Mining Inc. on Jan. 24 disclosed that it will not be able to file its annual financial statements, accompanying management's discussion and analysis and related CEO and CFO certifications for the financial year ended September 30, 2012, within the period prescribed for the filing of such documents under Parts 4 and 5 of Regulation 51-102 respecting Continuous Disclosure Obligations and pursuant to Regulation 52-109 respecting Certification of Disclosure in Issuers' Annual and Interim Filings, namely within 120 days of year-end, being January 28, 2013. Despite its efforts, the Corporation is currently not in a position to timely file the 2012 Annual Financial Statements, primarily as a result of the time and costs required for auditors in Peru to complete the audit of the annual financial statements, such audit being required due to the mining operations conducted by Rocmec during the financial year ended September 30, 2012 on the Rey Salomon property located in Peru. Rocmec has made an application to the Autorite des marches financiers (the "AMF") for a management cease trade order (the "MCTO"), which would restrict all trading in securities of the Corporation, whether direct or indirect, by management of the Corporation. The MCTO would not affect the ability of shareholders who are not insiders of the Corporation to trade their securities. There is no certainty that the MCTO will be granted. If the MCTO is not issued by the AMF, the applicable Canadian securities regulatory authorities could issue a general cease trade order against the Corporation for failure to file the 2012 Annual Financial Statements within the prescribed time period. Rocmec's board of directors and its management are working expeditiously to meet Rocmec's obligations relating to the filing of the 2012 Annual Financial Statements. The Corporation expects to file the 2012 Annual Financial Statements on or about February 25, 2013. The Corporation confirms that it intends to satisfy the provisions of the alternative information guidelines found at sections 4.3 and 4.4 of Policy Statement 12-203 respecting Cease Trade Orders for Continuous Disclosure Defaults for so long as it remains in default as a result of the late filing of the 2012 Annual Financial Statements. During the period of default, Rocmec will issue bi-weekly default status reports in the form of further press releases, which will also be filed on SEDAR. The Corporation confirms that there are no insolvency proceedings against it as of the date of this press release. The Corporation also confirms that there is no other material information concerning the affairs of the Corporation that has not been generally disclosed as of the date of this press release. Rocmec is active in the exploration and the development of gold resources in Quebec and Peru. SAMUEL ADAMS: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Samuel Adams Enterprises, LLC 38-11 Ditmars Boulevard, Suite 364 Astoria, NY 11105 Bankruptcy Case No.: 13-40381 Chapter 11 Petition Date: January 23, 2013 Court: U.S. Bankruptcy Court Eastern District of New York (Brooklyn) Judge: Elizabeth S. Stong Debtor's Counsel: Richard S. Feinsilver, Esq. One Old Country Road, Suite 125 Carle Place, NY 11514 Tel: (516) 873-6330 Fax: (516) 873-6183 E-mail: feinlawny@yahoo.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Gerardo Sanchez, managing member. SATCON TECHNOLOGY: Revised Sale Procedures Motion Filed ------------------------------------------------------- BankruptcyData reported that Satcon Technology filed with the U.S. Bankruptcy Court an emergency motion for approval of revised bid and sale procedures with respect to the sale of substantially all of the Debtors' assets. Satcon explains, "As the Debtors have been unsuccessful in obtaining a stalking horse bidder and are in default under the Final Cash Collateral Order, the schedule proposed in the Original Bid Procedures Motion is no longer advisable or achievable. Thus, the Debtors, after discussions with SVB, Horizon/Velocity and the Committee, determined that an expedited Sale process represented the best resolution of these chapter 11 cases. Therefore the Debtors, in consultation with SVB, Horizon/Velocity and the Committee, are seeking an expedited Auction and Sale to allow potentially interested parties to submit bids for either the Debtors' business as a going-concern or for individual aspects of the Debtors' business, including bids submitted by parties interested in potentially liquidating the Assets," BData related, citing court papers. The Debtors withdrew their previously-filed motion for sale procedures, and the Court scheduled a January 28, 2013 hearing on this revised motion, the report added. About SatCon Technology Based in Boston, SatCon Technology Corporation (NasdaqCM: SATC) -- http://www.satcon.com/-- and its wholly owned subsidiaries provide utility-grade power conversion solutions for the renewable energy market, primarily for large-scale commercial and utility- scale solar photovoltaic markets. Satcon Technology Corporation, along with six related entities, filed Chapter 11 petitions (Bankr. D. Del. Case No. 12-12869) on Oct. 17, 2012. Satcon disclosed assets of $92.3 million and liabilities totaling $121.9 million. Liabilities include $13.5 million in secured debt owing to Silicon Valley Bank. There is another $6.5 million in secured subordinated debt. Unsecured liabilities include $16 million on subordinated notes. The Hon. Kevin Gross presides over the case. Dennis A. Meloro, Esq., at Greenberg Traurig serves as the Debtors' counsel. Fraser Milner Casgrain LLP acts as the general Canadian counsel. Lazard Middle Market LLC serves as the Debtors' financial advisor and investment banker. Epiq Bankruptcy Solutions, LLC, serves as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors tapped to retain Holland & Knight LLP as its counsel, Sullivan Hazeltine Allinson LLC as its co-counsel. SATCON TECHNOLOGY: Committee's Challenge Period Extended -------------------------------------------------------- The Hon. Kevin Gross has approved a stipulation between Satcon Technology Corporation, et al., and the Debtors' prepetition lenders, Silicon Valley Bank, and Horizon Credit I LLC and Velocity Venture Funding, LLC, pertaining to the deadline for the Official Committee of Unsecured Creditors to initiate certain claims on behalf of the Debtors' estates challenging the validity, amount, priority, among others, of the lenders. Pursuant to the Stipulation, the period established in the Final Cash Collateral Order for the Committee to bring Claims is extended through and including Jan. 25, 2013 at 5:00 p.m. (EST). As reported in the Troubled Company Reporter on Dec. 20, 2012, the U.S. Bankruptcy Court for the District of Delaware, in a final order, authorized Satcon to use the cash collateral of senior secured creditor Silicon Valley Bank until March 2, 2013. The Debtors may use the cash collateral to fund the daily operation of their business. The Debtors had been unable to obtain financing from sources on terms more favorable than provided in the final order. Pursuant to a stipulation dated Oct. 16, 2012, the Debtors are liable to the senior secured creditor in the approximate amount of $14,536,165 plus accrued interest of $88,896 and other fees. The Debtors relate that Compass Horizon Funding Company LLC has transferred agreements to Horizon Credit LLC and Velocity Venture Funding, LLC. The subordinated secured creditors assert that the Debtors owe (i) Horizon Credit LLC -- $5,277,964 in principal plus $101,638 in interest plus $21,601 for other fees; and (ii) Velocity Venture Funding, LLC -- $1,055,592 in principal plus $20,327 in interest plus $4,320 in other fees, costs and expenses. As adequate protection from any diminution in value of the lenders' collateral, the Debtors will grant the senior secured creditor and subordinated secured creditors replacement liens in all assets, superpriority administrative claim status, subject to carve out on certain expenses. Additionally, the Debtors will pay postpetition interest. About SatCon Technology Based in Boston, SatCon Technology Corporation (NasdaqCM: SATC) -- http://www.satcon.com/-- and its wholly owned subsidiaries provide utility-grade power conversion solutions for the renewable energy market, primarily for large-scale commercial and utility- scale solar photovoltaic markets. Satcon Technology Corporation, along with six related entities, filed Chapter 11 petitions (Bankr. D. Del. Case No. 12-12869) on Oct. 17, 2012. Satcon disclosed assets of $92.3 million and liabilities totaling $121.9 million. Liabilities include $13.5 million in secured debt owing to Silicon Valley Bank. There is another $6.5 million in secured subordinated debt. Unsecured liabilities include $16 million on subordinated notes. The Hon. Kevin Gross presides over the case. Dennis A. Meloro, Esq., at Greenberg Traurig serves as the Debtors' counsel. Fraser Milner Casgrain LLP acts as the general Canadian counsel. Lazard Middle Market LLC serves as the Debtors' financial advisor and investment banker. Epiq Bankruptcy Solutions, LLC, serves as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors tapped to retain Holland & Knight LLP as its counsel, Sullivan Hazeltine Allinson LLC as its co-counsel. SCOTTS MIRACLE-GRO: S&P Lowers Unsecured Debt Rating to 'BB-' ------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its unsecured debt rating to 'BB-' from 'BB' on Ohio-based Scotts Miracle-Gro Co.'s existing 7.25% senior notes due 2018 and 6.625% senior notes due 2020. At the same time, S&P is revising the recovery rating to '6' from '5', indicating its expectation for negligible (0% to 10%) recovery for noteholders in the event of a payment default. S&P also assigned its preliminary 'BB-' unsecured debt rating to the company's Rule 415 shelf registration. The 'BB+' corporate credit rating on Scotts remains unchanged. The outlook is stable. "We are lowering our issue-level rating to reflect a lower enterprise value as a result of the decline in EBITDA for fiscal 2012 (ended September 2012). The company's credit metrics also declined modestly due to weakened operating performance for fiscal 2012, with debt to EBITDA increasing to about 2.9x from 2.5x one year ago. However, we believe leverage could decline back toward the mid-2x area over the next 12 months, given management's renewed focus on increasing profitability and reducing leverage in line with its unadjusted leverage target of 2.0x to 2.5x. Scotts' leverage remains low relative to our indicative ratio of debt to EBITDA of 3x to 4x for a "significant" financial risk profile. We believe this provides some cushion to support ongoing fluctuations in operating performance," S&P said. The ratings on Scotts reflect Standard & Poor's view that the company's financial risk profile continues to be "significant," particularly given the company's moderate financial policy and S&P's expectations for credit metrics to improve modestly. In addition, S&P believes the company's business risk profile continues to be "fair," reflecting the company's strong market positions, well-recognized brand names, and favorable long-term demographic trends in the consumer lawn and garden care segment. S&P's business risk assessment also incorporates the fluctuation in operating performance due to the highly seasonal and weather- dependent nature of the industry, as well as fluctuations in commodity and energy costs. RATINGS LIST Scotts Miracle-Gro Co. Corporate credit rating BB+/Stable/-- Issue Rating Lowered/Recovery Rating Revised To From Unsecured debt BB- BB Recovery rating 6 5 Rating Assigned Unsecured debt Rule 415 shelf registration BB- (Prelim) SEDONA ASSOCIATES: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Sedona Associates, LLC 1445 Wampanoag Trail, Suite 203 E. Providence, RI 02915 Bankruptcy Case No.: 13-10150 Chapter 11 Petition Date: January 23, 2013 Court: U.S. Bankruptcy Court District of Rhode Island (Providence) Judge: Diane Finkle Debtor's Counsel: John Boyajian, Esq. BOYAJIAN HARRINGTON RICHARDSON & FURNESS 182 Waterman Street Providence, RI 02906 Tel: (401) 273-9600 E-mail: john@bhrlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Patrick T. Conley. SESAC HOLDCO: Moody's Assigns 'B2' CFR; Rates 1st Lien Loan 'B1' ---------------------------------------------------------------- Moody's Investors Service has assigned to SESAC Holdco II LLC a B2 Corporate Family Rating (CFR), B2-PD Probability of Default Rating (PDR), B1 rating to the company's proposed 6-year $220 million senior secured first-lien term loan and 5-year $15 million senior secured revolving credit facility, and Caa1 rating to the proposed 6.5 year $105 million senior secured second-lien term loan. The rating outlook is stable. New issue proceeds together with $190 million of new equity and $94 million of rollover equity will be used to permanently fund the acquisition of SESAC by private equity firm Rizvi Traverse for a total purchase price of $590.5 million. The new credit facilities will refinance a $325 million bridge loan that was underwritten by Jefferies Finance LLC in December 2012 when the acquisition closed. The Jefferies bridge loan was used to repay SESAC's approximately $104 million royalty backed notes and to fund the buyout. The transaction will result in pro-forma leverage of about 6.6x (as of September 30, 2012 and including Moody's adjustments) and is expected to increase cash interest expense by approximately $20 million annually. The B2 CFR reflects SESAC's high pro-forma leverage, relatively small scale, and key-man risk associated with Chairman & CEO Stephen Swid's historic influence on the company, as well as a history of debt-financed shareholder-friendly transactions. Despite the increase in leverage and negative impact on free cash flow, Moody's expects SESAC will continue to grow revenue and EBITDA in the mid-to-low single digit range and generate positive free cash flow. The stable contractual nature of the business model and high barriers to entry also support the rating. Ratings Assigned: Issuer: SESAC Holdco II LLC Corporate Family Rating -- B2 Probability of Default Rating -- B2-PD $220 Million Senior Secured First-Lien Term Loan due 2019 -- B1 (LGD-3, 33%) $15 Million Senior Secured Revolving Credit Facility due 2018 -- B1 (LGD-3, 33%) $105 Million Senior Secured Second-Lien Term Loan due 2019 -- Caa1 (LGD-5, 87%) The assigned ratings are subject to review of final documentation and no material change in the size, terms and conditions of the transaction as advised to Moody's. Ratings Rationale SESAC's B2 rating reflects the company's high leverage of around 6.6x (Moody's adjusted) pro-forma for the proposed transaction and small scale. Moody's projects the company will de-lever to the high 5x range over the next 18 months aided by EBITDA growth as well as the scheduled amortization and mandatory excess cash flow sweep on the term loan. The company generated LTM revenue of approximately $151 million through September 30, 2012, representing a small percentage of the market, which is dominated by its much larger Performing Rights Organization (PRO) competitors, ASCAP and BMI. SESAC's ratings also capture the history of aggressive financial behavior, including dividend payments and preferred share redemptions totaling over $175 million through fiscal year 2008. Moody's anticipates the terms of the credit agreement (which have not been finalized as of the date of this publication) will attempt to limit the company's ability to distribute cash to shareholders, but are mindful that amendments, use of incremental credit facilities or changes to the final terms of the credit agreement are possible. The historic influence of its Chairman and CEO, Stephen Swid, provides some additional concern, though mitigated by SESAC's new majority owner, Rizvi Traverse. The potential for prolonged litigation associated with the current antitrust allegations against SESAC is also factored in the B2 CFR. SESAC's ratings are supported by Moody's expectation for positive free cash flow generation, stable EBITDA margins and continued revenue and EBITDA growth. Moody's believes this will be driven by SESAC's further share gains in an underpenetrated PRO market, growth in higher margin segments and negotiated price increases in existing contracts. Ratings are also supported by the stable contractual nature and diversification of its growing licensee contracts, with the two largest licensees accounting for just under 7% of total revenue, and the relatively high barriers to entry in the PRO space. The contractual nature of the business provides the company not only with a stable and relatively predictable revenue stream, but also consistent annual increases and automatic renewals which help drive growth year over year. With approximately $31 million in cash on the balance sheet (as of September 30, 2012), free cash flow projected to be around $15 million annually, and a fully available $15 million revolver, Moody's expects SESAC will maintain a good liquidity profile over the next 12 to 15 months. The proposed transaction will increase cash interest by around $20 million, but after accounting for a reduction in cash taxes, the expected reduction in dividend payments, and higher EBITDA, Moody's believes SESAC will generate sufficient free cash flow to cover all of its mandatory near-term debt payments under the credit facilities. Although Moody's does not expect the company will rely on its proposed $15 million revolving credit facility over the next 12 months, given its cash balance, positive free cash flow, and low maintenance capex, the facility improves the company's liquidity profile. Moody's anticipates the credit agreement will include total leverage and minimum interest coverage tests with initial cushions set in the 25% to 30% range, allowing the company to comfortably remain in compliance over the next 12 to 18 months. Rating Outlook SESAC's stable rating outlook reflects Moody's expectation of continued top line revenue and EBITDA growth in the mid-to low- single digit range resulting in modest de-leveraging over the rating horizon. Moody's projects free cash flow to be around $15 million, allowing SESAC to de-lever to the high 5x range over the next 18 months. What Could Change the Rating -- Up Given the company's high pro-forma leverage of 6.6x (Moody's adjusted), SESAC is weakly positioned in the B2 rating category. Moody's would consider an upgrade if the company were to meaningfully reduce leverage to the low 4x range driven by expectation of continued revenue and EBITDA expansion. Moody's would also look for continued free cash flow generation resulting in free cash flow to debt around 10%. What Could Change the Rating -- Down Ratings could see downward pressure if leverage were to remain above 6x (Moody's adjusted) or if EBITDA growth is insufficient to keep free cash flow as a percentage of debt around 5%. Additional leveraging transactions or sizable distributions to shareholders could also result in a downgrade. To the extent any plaintiff is successful in the pending lawsuits against the company resulting in significant damages above the contemplated litigation escrows, Moody's could lower the rating. The principal methodology used in rating SESAC Holdco II LLC was Global Business & Consumer Service Industry published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Nashville Tennessee, SESAC is a performing rights organization (PRO) which represents songwriters, music publishers and other creators of music. The company is the third largest PRO in the US and generates revenue by tracking the public performance of their affiliates' music , collecting licensing income from broadcasters and other users of music ,and distributing royalties to its affiliate base of writers, publishers and composers. Revenue for the twelve months ended September 30, 2012 totaled approximately $151 million. SNO MOUNTAIN: Chapter 11 Trustee Hires SSG Advisors as Bankers -------------------------------------------------------------- Gary F. Seitz, the chapter 11 trustee of Sno Mountain LP, asks the U.S. Bankruptcy Court for permission to employ SSG Advisors, LLC as investment banker. The firm, among other things, will provide these services: a. prepare an information memorandum describing the Debtor, its historical SSG Managing Director J. Scott Victor attests that it is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code; b. assist the Trustee in compiling data room of any necessary and appropriate documents related to the Sale; and c. assist the Trustee in developing a list of suitable potential buyer who will be contracted on a discreet and confidential basis after approval by the Trustee. The parties agreed to this compensation package: a. Monthly Fees. Monthly fees if $25,000 per month payable beginning Jan. 1, 2013 and continuing on Feb. 1, 2013, March 1, 2013 for a total of 4 monthly fees. All monthly fees paid will be credited against the transaction fee. b. Sale Fee. Upon the consummation of a Sale Transaction, SSG shall be entitled to a fee (the Sale Fee), payable in cash, in federal funds via wire transfer or certified check, at and as a condition of closing of such Sale, equal to four and one half percent of Total Consideration. c. Financing Fee. Upon the closing of a Financing, SSG shall be entitled to a fee equal to $40,000 which shall be paid directly from the Financing proceeds prior to payment to any super priority claim, secured claim, or administrative claim. e. In addition to the Transaction Fee, SSG will be entitled to accrue and seek reimbursement for all of SSG's reasonable out-of-pocket expenses incurred from the estate in the event of a Sale, Financing or Restructuring. In a separate ruling, the U.S. Bankruptcy Court approved the employment of Maschmeyer Karalis PC as counsel to the trustee. The Bankruptcy Court also has approved Deloitte Financial Advisory Services LLP; McColgan and Company LLC as real estate appraisers; and Bederson & Company as accountants in the case. Various parties -- predominated by various limited partners of Sno Mountan LP, including Richard Ford, Charles Hertzog, Edward Reitmeyer, who are each guarantors of certain obligations owing by Sno Mountain -- filed an involuntary Chapter 11 petition against Sno Mountain (Bankr. E.D. Pa. Case No. 12-19726) on Oct. 15, 2012. The other petitioning parties include Wynnewood Capital Partners, L.L.C., t/a WCP Snow Mountain Partners, L.P., and Kathleen Hertzog. The Alleged Debtor is the owner and operator of a popular ski mountain resort and water park known as "Sno Mountain," located at 1000 Montage Mountain Road in Scranton, Pennsylvania. The Debtor's bankruptcy case is a "single asset real estate" case within the meaning of 11 U.S.C. Sec. 101(51)(B). Judge Jean K. FitzSimon oversees the case. Brian Joseph Smith, Esq., at Brian J. Smith & Associates PC, represents the petitioning creditors. Gary Seitz has been appointed as trustee overseeing the bankruptcy of the Sno Mountain recreation complex. SORENSON COMMUNICATION: Moody's Withdraws '(P)Caa2' Corp. Rating ---------------------------------------------------------------- Moody's Investors Service withdrew the provisional (P)Caa2 Corporate Family and other ratings from Sorenson Communication as the exchange offer and related new financings upon which the ratings were premised are not currently being pursued. Ratings Rationale Moody's last rating action on Sorenson was on December 13, 2012 to issue a provisional (P)Caa2 Corporate Family rating and provisional instrument ratings of (P)B1 to then proposed Senior Secured Revolving Credit Facility, (P)B2 to the then proposed Senior Secured Term Loan and First Lien Senior Secured Notes and (P)Caa3 to the then proposed Exchange Notes. Sorenson is the leading provider of IP-based video communication technology and services to the deaf and hard of hearing. The company's sign language interpreters join telephone calls by or to deaf customers via its videophones. The service is provided free of charge to qualified deaf individuals as mandated by the Americans with Disabilities Act of 1990. Moody's expects 2013 revenues of over $500 million. The principal methodology used in rating Sorenson was the Global Business & Consumer Service Industry Rating Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. SOUTHERN AIR: Disclosure Statement Hearing on Jan. 29 ----------------------------------------------------- Southern Air Holdings Inc. and its affiliates filed a disclosure statement in support of its second amended joint plan dated Jan. 18, 2013. The hearing on the disclosure statement is scheduled on Jan. 29, 2013, at 10:00 A.M. Pursuant to the Disclosure Statement, on the effective date of the Plan, the Oak Hill Leases will be amended pursuant to the Oak Hill Lease Amendments, in accordance with the terms set forth in the Plan Support Agreement, and assumed as executory contracts. From and after the Effective Date, subject to the terms and conditions of the OHAA Funding Agreement, the Oak Hill Entities will make these payments: a. the Oak Hill Entities will make monthly payments on the first Business Day of each month in the amount of $833,333.33 to Reorganized Southern Air, until Southern Air has received $10,000,000 of 12-Month Payments. The OHAA Escrow Account will at all times be funded with at least $833,333.33 and OH Acquisition LLC (OHAA) will promptly fund additional amounts necessary to maintain the OHAA Escrow Minimum Amount. b. within one Business Day following OHAA's receipt of confirmation that Reorganized Southern Air has timely paid a monthly lease payment due under the applicable Oak Hill Leases, the Oak Hill Entities shall pay to Reorganized Southern Air $41,666.66, in four separate installments, representing one installment per Oak Hill Lease, in the aggregate amount of $166,666.66 per month ($2,000,000 per year), up to an aggregate amount of $10,000,000. Additionally, OHAA shall create an escrow for the benefit of Reorganized Southern Air containing $500,000 as security for the remaining Additional Monthly Payments. c. the Oak Hill Entities shall pay to Reorganized Southern Air $875,000, which shall be included in the Creditor Cash and be distributed to holders of Allowed General Unsecured Claims in accordance with the provisions of the Plan. Pursuant to the Oak Hill 1110 Stipulation, the Oak Hill Entities will assist the Debtors to utilize OHAA's deposit with The Boeing Company in the amount of $1,925,000. Boeing US Training and Flight Services LLC asserted a general unsecured claim against Southern Air in the amount of $2,739,174.77 for services rendered prepetition. Boeing Commercial Airplanes also asserted a general unsecured claim against Southern Air in the amount of $659,997.91 for goods delivered prepetition. The Debtors and Boeing are in discussions regarding the reconciliation of these claims. Additionally, the Oak Hill Entities, the Debtors, and Boeing are engaged in discussions with respect to the utilization of the Boeing Credit to offset the general unsecured claims asserted by Boeing's affiliates, as they may be reconciled. OHAA will receive shares of Reorganized Southern Air Parent Common Stock, representing 17.5% of the duly authorized common stock of Reorganized Southern Air Parent to be issued as of the Effective Date, distributable in shares of Class A-2 Common Stock. OHAA will also receive the Oak Hill Warrants, which will have a term of 10 years from the Effective Date to be exercisable in two equal tranches. On the Effective Date, the proofs of claim filed by Oak Hill Capital Partners II LP will be deemed withdrawn. In satisfaction of the Prepetition Lender Claims, which exceeded $295,000,000 and secured by first priority liens against substantially all of the Debtors' assets, the Prepetition Lenders have agreed to exchange their Prepetition Lender Claims for a Pro Rata Share of (i) the Exit Term Loans in the aggregate principal amount of $17,500,000, and (ii) a portion of the Reorganized Southern Air Parent Common Stock, representing 82.5% of the authorized common stock, a portion of which may be issued in the form of the Prepetition Lender Warrants. The Consenting Lenders have also agreed to provide the Debtors with necessary DIP financing, committing to provide up to $25,000,000 pursuant to the terms of the DIP Agreement, and to forego a portion of their recoveries. On the Effective Date, Southern Air Management will receive a grant of 400,000 shares of Reorganized Southern Air Parent Common Stock, representing 4% of the shares of Reorganized Debtor, and the Southern Management Warrants. On the Effective Date, all of the Debtors' outstanding obligations related to the DIP Agreement will be satisfied as follows: Each DIP Lender will be entitled to receive its Pro Rata Share of: (a) Exit Term Loans in the original principal amount of $62,500,000, the repayment of which will be pari passu in recovery to the indebtedness to the Exit Term Loans to be issued on account of Allowed Prepetition Lender Claims; and (b) a cash payment equal to the greater of 5% of the total equity value of the Reorganized Debtors, and 5% of the total equity value of the Reorganized Debtors pursuant to the transactions contemplated by the Plan. The Debtors will be relieved of any and all other obligations with respect to the DIP Agreement and all Liens and other encumbrances granted pursuant the Final DIP Order with respect to the property and interests in property claimed by the Debtors will be released. On the Effective Date, the Oak Hill Entities will have an Allowed Claim against each Debtor for the Secured OHAA Payment Obligations, in the aggregate amount of the payments received by the Debtors pursuant to the Oak Hill 1110 Stipulation during the Chapter 11 Cases, to the extent permitted pursuant to the Interim DIP Order and the Final DIP Order. The Debtors will create a Delaware limited liability corporation named Cargo 360, LLC, under which all of the capital stock in Southern Air and Air Mobility will be contributed. Cargo LLC will enter into a senior secured exit facility consisting of $20 million in Exit Revolving Credit Facility and $80 million in Exit Term Loans; provided, however, that notwithstanding the foregoing, the Debtors shall use commercially reasonable efforts to enter into a new money facility so that the DIP New Money Loans and the DIP Roll Up Loans, or both, are paid in full, in Cash. The Plan documents say 10 million shares of Reorganized Southern Air Parent will be issued as of the Effective Date, comprised of Class A-1 Common Stock, Class A-2 Common Stock, Class A-3 Common Stock, Class B Common Stock, Class C-1 Common Stock, and Class C-2 Common Stock, each having a par value of $0.01 per share and, to the extent applicable, governed by the provisions of the Reorganized Debtors By-Laws, Reorganized Debtors Certificate of Incorporation, and the Reorganized Southern Air Parent Stockholders Agreement. A full text copy of the disclosure statement is available for free at http://bankrupt.com/misc/SOUTHERN_AIR_ds.pdf About Southern Air Based in Norwalk, Connecticut, military cargo airline Southern Air Inc. -- http://www.southernair.com/-- its parent Southern Air Holdings Inc. and their affiliated entities filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Case Nos. 12-12690 to 12-12707) in Wilmington on Sept. 28, 2012, blaming the decline in business from the U.S. Department of Defense, which reduced its troop count in Afghanistan and hired Southern Air less frequently. Bankruptcy Judge Christopher S. Sontchi presides over the case. Brian S. Rosen, Esq., Candace Arthur, Esq., and Gabriel Morgan, Esq., at Weil, Gotshal & Manges LLP; and M. Blake Cleary, Esq., and Maris J. Kandestin, Esq., at Young, Conaway, Stargatt & Taylor, serve as the Debtor's counsel. Zolfo Cooper LLC serves as the Debtors' bankruptcy consultant and special financial advisor. Kurtzman Carson Consultants, LLC, serves as claims and notice agent. CF6-50, LLC, debtor-affiliate, disclosed $338,925,282 in assets and $288,000,000 in liabilities as of the Chapter 11 filing. The petition was signed by Jon E. Olin, senior vice president. Canadian Imperial Bank of Commerce, New York Agency, the DIP agent and prepetition agent, is represented by Matthew S. Barr, Esq., and Samuel Khalil, Esq., at Milbank Tweed Hadley & McCloy LLP; and Mark D. Collins, Esq., and Katherine L. Good, Esq., at Richards Layton & Finger PA. Stephen J. Shimshak, Esq., and Kelley A. Cornish, Esq., at Paul Weiss Rifkind Wharton & Garrison LLP; and Mark E. Felger, Esq., at Cozen O'Connor, represent Oak Hill Capital Partners II, LP, OH Aircraft Acquisition LLC, and Oak Hill Cargo 360 LLC. The Debtors' Plan provides that lenders agreed to accept ownership of the company as payment for their $288 million loan. On Nov. 21, 2012, Roberta DeAngelis, U.S. Trustee for Region 3, appointed the statutory committee of unsecured creditors. Lowenstein Sandler PC and Pachulski, Stang, Ziehl & Jones LLP serves as its co-counsels, and Mesirow Financial Consulting LLC serves as its financial advisor. SOUTHLAKE HOLDINGS: Case Summary & 4 Unsecured Creditors -------------------------------------------------------- Debtor: Southlake Holdings, LLC c/o Kim G. Linville, Manager 14041 Clarendon Point Court Huntersville, NC 28078 Bankruptcy Case No.: 13-30126 Chapter 11 Petition Date: January 23, 2013 Court: U.S. Bankruptcy Court Western District of North Carolina (Charlotte) Judge: J. Craig Whitley Debtor's Counsel: G. Martin Hunter, Esq. G. MARTIN HUNTER, ATTORNEY AT LAW 301 S. McDowell Street, Suite 1014 Charlotte, NC 28204 Tel: (704) 377-8764 Fax: (704) 377-0590 E-mail: mhunter@martinhunterlaw.com Scheduled Assets: $2,245,023 Scheduled Liabilities: $1,831,717 A copy of the Company's list of its four largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/ncwb13-30126.pdf The petition was signed by Kim G. Linville, manager. SPECIALTY PRODUCTS: Asbestos Creditors Tap Counsel for Bondex Suit ------------------------------------------------------------------ The Official Committee of Asbestos Personal Injury Claimants and Eric D. Green, the Future Claimants' Representative of Specialty Products Holdings Corp., ask the Bankruptcy Court for authority to retain Keating Muething & Klekamp PLL as Ohio litigation counsel, nunc pro tunc to Dec. 21, 2012. The PI Committee and Future Claimants' Representative want to hire the firm in connection with the filing and prosecution of a Motion to Intervene filed Dec. 21, 2012, in the matter captioned Bondex International, Inc. v. Hartford Accident and Indemnity Company, Case No. 1:03 CV 1322, in the United States District Court for the Northern District of Ohio. The Ohio District Court issued its ruling denying the Motion to Intervene on Dec. 28, 2012. Consequently, KMK's engagement has substantially concluded, subject to the prosecution of this Application and any subsequent fee application, and its fees and expense reimbursements currently total approximately $6,000. The Committee and Future Claimants' Representative are familiar with the professional standing and reputation of KMK and understand and recognize the value of KMK's experience in practicing before the Ohio District Court. KMK's limited-duration services are necessary to enable the Applicants to prosecute the Motion to Intervene and prepare effectively for the Estimation Hearing. Payment of KMK's compensation and expenses is the obligations of the Debtors' estates and, as such, the Committee and Future Claimants' Representative will not be personally responsible for providing compensation or expenses to KMK under any circumstances. The Applicants have selected KMK based on their extensive experience practicing before the Ohio District Court and the Applicants believe that KMK is well qualified to represent them regarding the Motion to Intervene. Additionally, KMK has significant experience in mass tort bankruptcy proceedings and the representation of victims' trusts resulting from such proceedings. KMK has agreed to be retained by the Committee and Future Claimants' Representative in exchange for payment of its fees at its normal rates and reimbursement of reasonable out-of-pocket costs. The rates of KMK's professionals are: Professional Position Rate ------------ -------- ---- Kevin E. Irwin Partner $800 Michael L. Scheier Partner $495 Brandi Stewart Associate $230 To the best of KMK's knowledge, information, and belief (i) KMK is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b) of the Bankruptcy Code, and holds no interest adverse to the Debtors or their estates, and (ii) KMK has no connection with the Debtors, their creditors, the U.S. Trustee, or other parties in interest in the Debtors' Chapter 11 cases. Cleveland, Ohio-based Specialty Products Holdings Corp., aka RPM, Inc., is a wholly owned subsidiary of RPM International Inc. The Company is the holding company parent of Bondex International, Inc., and the direct or indirect parent of certain additional domestic and foreign subsidiaries. The Company claims to be a leading manufacturer, distributor and seller of various specialty chemical product lines, including exterior insulating finishing systems, powder coatings, fluorescent colorants and pigments, cleaning and protection products, fuel additives, wood treatments and coatings and sealants, in both the industrial and consumer markets. The Company filed for Chapter 11 bankruptcy protection on May 31, 2010 (Bankr. D. Del. Case No. 10-11780). Gregory M. Gordon, Esq., Dan B. Prieto, Esq., and Robert J. Jud, Esq., at Jones Day, serve as bankruptcy counsel. Daniel J. DeFranceschi, Esq., and Zachary I. Shapiro, Esq., at Richards Layton & Finger, serve as co-counsel. Logan and Company is the Company's claims and notice agent. The Company estimated its assets and debts at $100 million to $500 million. The Company's affiliate, Bondex International, Inc., filed a separate Chapter 11 petition on May 31, 2010 (Case No. 10-11779), estimating its assets and debts at $100 million to $500 million. SPIRIT REALTY: Inks Merger Agreement with Cole Credit Property -------------------------------------------------------------- Spirit Realty Capital, Inc., Spirit Realty, L.P., Cole Credit Property Trust II, Inc., and Cole Operating Partnership II, LP, entered into an Agreement and Plan of Merger on Jan. 22, 2013. The Merger Agreement provides for the merger of the Company with and into Cole with Cole continuing as the surviving corporation and the merger of the Cole Partnership with and into the Spirit Partnership with the Spirit Partnership continuing as the surviving limited partnership. The board of directors of the Company has unanimously approved the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement. Pursuant to the Merger Agreement, at the effective time of the Company Merger, each outstanding share of common stock, par value $0.01 per share, of the Company will be converted into the right to receive 1.9048 shares of common stock, par value $0.01 per share, of the Surviving Corporation. At and after the Company Merger Effective Time, each share of common stock, par value $0.01 per share, of Cole, issued and outstanding immediately prior to the Company Merger Effective Time will remain outstanding. At the effective time of the Partnership Merger, (i) each outstanding partnership unit in the Cole Partnership will automatically be converted into one validly issued share of Surviving Corporation Common Stock; (ii) each outstanding partnership unit in the Spirit Partnership will remain outstanding; and (iii) the general partner interest of the Spirit Partnership will constitute the only general partner interests in the Surviving Partnership. Under the terms of the Merger Agreement, at the Company Merger Effective Time, the Surviving Corporation will assume the Company's 2012 Incentive Award Plan and the number and kind of shares available for issuance under the Plan will be converted into shares of Surviving Corporation Common Stock, after giving effect to the Exchange Ratio, in accordance with the provisions of the Plan. Similarly, all outstanding shares of Company Common Stock that are subject to vesting and other restrictions will convert into restricted shares of Surviving Corporation Common Stock, after giving effect to the Exchange Ratio, with the same terms and conditions as were applicable to those shares of Company Common Stock immediately prior to the Company Merger Effective Time. The completion of the Company Merger is subject to customary conditions, including, among others: (i) approval by the holders of a majority of the outstanding shares of Company Common Stock; (ii) approval by the holders of a majority of the outstanding shares of Cole Common Stock; (iii) the authorization of the listing on the New York Stock Exchange of the Surviving Corporation Common Stock, including the Surviving Corporation Common Stock to be issued in connection with the Mergers; (iv) the registration statement on Form S-4 registering the applicable Surviving Corporation Common Stock to be issued as consideration for the Mergers having been declared effective by the Securities and Exchange Commission; and (v) the obtaining of certain third party consents. At the Company Merger Effective Time, the size of the board of directors of the Surviving Corporation will be set at nine, and all of the directors of the Company immediately prior to the consummation of the Company Merger and up to two individuals designated by Cole and reasonably satisfactory to the Company, will comprise the board of directors of the Surviving Corporation. In addition, at the Company Merger Effective Time, the charter and bylaws of the Surviving Corporation will be amended and restated to be substantially identical to the charter and bylaws of the Company, as in effect immediately prior to the Company Merger Effective Time. The name of the Surviving Corporation will be "Spirit Realty Capital, Inc." The Merger Agreement provides that, in connection with the termination of the Merger Agreement under specified circumstances, one party may be required to pay to the other a termination fee of $55,000,000 or reimburse the other party's transaction expenses up to an amount equal to $10,000,000. A copy of the Merger Agreement is available for free at: http://is.gd/LDdENd Voting Agreements Concurrently with the execution of the Merger Agreement, Macquarie Group (US) Holdings No. 1 Pty Ltd., TPG-Axon Partners, LP, and TPG-Axon Spirit Holdings Ltd. have each entered into a voting agreement with Cole and the Cole Partnership pursuant to which each of Macquarie, TPG-AXON Partners and TPG-AXON Spirit, who together own approximately 15% of the currently outstanding shares of Company Common Stock, has agreed to vote its shares of Company Common Stock in favor of the Company Merger and the other transactions contemplated by the Merger Agreement, upon the terms and subject to the conditions set forth in such agreements. Advisory and Property Management Matters Agreement In connection with the Mergers, on Jan. 22, 2013, Cole and Cole Partnership entered into an Advisory and Property Management Matters Agreement with Cole REIT Advisors II, LLC, Cole Realty Advisors, Inc. The Company is a signatory to the agreement as an express third party beneficiary. The agreement provides, among other things, that the Advisor Parties' current agreements with Cole and Cole Partnership will terminate upon closing of the Company Merger. The Advisor Parties will continue to be paid the asset management, property management and other fees payable pursuant to the current agreements, as applicable, for services rendered between the date of the Merger Agreement and the closing of the Mergers, but agree to waive any fees due upon the termination of their current agreements, including (i) any fees due upon listing of the Surviving Corporation Common Stock on the NYSE; (ii) any performance fees due upon the consummation of the Mergers; and (iii) any other fees that would be payable under the current agreements with respect to the Mergers and the other transactions contemplated by the Merger Agreement. First Amendment to Change of Control Severance Plan On Jan. 22, 2013, the Company executed a First Amendment to the Change of Control Severance Plan for Certain Covered Participants of Spirit Finance Corporation. The Severance Plan was amended to provide that the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement will not constitute a "change of control" as defined in, and for purposes of, the Severance Plan. Executives Waivers In connection with the Mergers, Thomas H. Nolan, Jr., chief executive officer; Peter M. Mavoides, president and chief operating officer; Michael A. Bender, chief financial officer and senior vice president; Mark Manheimer, senior vice president - Head of Asset Management; and Gregg A. Seibert, senior vice president each entered into waiver agreements, dated Jan. 22, 2013, which provide that (i) the Mergers will not constitute a "change in control" for purposes of the Executive's employment agreement and related restricted stock agreement(s) and (ii) any change in position that occurs in connection with the Mergers will not constitute "good reason" or a termination without "cause" (each, as defined in the Executive's applicable employment agreement) for purposes of the Executive's employment agreement and related restricted stock agreements. In addition, under the Waivers executed by Messrs. Nolan, Mavoides and Bender, each waived his entitlement to a tax gross-up payment under Internal Revenue Code Section 280G as a result of any payments made to the individual in connection with the Mergers. A complete copy of the Form 8-K is available for free at: http://is.gd/tw34bJ About Spirit Realty Spirit Finance Corporation (now known as Spirit Realty Capital, Inc.) headquartered in Phoenix, Arizona, is a REIT that acquires single-tenant, operationally essential real estate throughout United States to be leased on a long-term, triple-net basis to retail, distribution and service-oriented companies. The Company's balance sheet at Sept. 30, 2012, showed $3.20 billion in total assets, $1.98 billion in total liabilities and $1.22 billion in total stockholders' equity. * * * As reported by the TCR on Oct. 9, 2012, Standard & Poor's Ratings Services raised its corporate credit rating on Spirit Realty Capital Inc. (Spirit) to 'B' from 'CCC+'. "The upgrade reflects Spirit Realty Capital Inc.'s successful completion of an IPO of its common stock, which raised $465 million of net proceeds," said credit analyst Elizabeth Campbell. In the Sept. 15, 2011, edition of the TCR, Moody's Investors Service affirmed the corporate family rating of Spirit Finance Corporation at Caa1. "This rating action reflects Spirit's consistent compliance with its term loan covenants throughout the downturn (despite relatively thin cushion at certain times), as well as the recent debt paydown which, in Moody's view, will help Spirit remain in compliance within the stated covenant limits going forward." ST. JOSEPH CAPITAL: Fitch Affirms 'BB-' Preferred Stock Rating -------------------------------------------------------------- Fitch Ratings has affirmed and withdrawn the ratings for Old National Bank and its principal banking subsidiary Old National Bank, NA at 'BBB'. Fitch notes that there has been no material change in ONB's credit risk profile since the bank's ratings were affirmed at the Community Bank Peer committee in October 2012. At the beginning of 2013, ONB announced that it will be purchasing 24 bank branches from Bank of America which will include $780 million in deposits and $8 million in loans. The deal is expected to close in 3Q'13. Fitch does not view this event as a primary rating driver. Fitch is withdrawing ONB's ratings as the ratings are no longer relevant to Fitch's rating coverage. Fitch has affirmed and withdrawn the following ratings: Old National Bancorp -- Long-term IDR at 'BBB'; -- Short-term IDR at 'F2'; -- Viability Rating at 'bbb'; -- Support Floor at 'NF'; -- Support '5' Old National Bank -- Long-term IDR at 'BBB'; -- Short-Term IDR at 'F2'; -- Long-term Deposit at 'BBB+'; -- Short-Term Deposit 'F2'; -- Viability Rating at 'bbb'; -- Support Floor at 'NF'; -- Support '5'. St. Joseph Capital Trust I and II -- Preferred stock at 'BB-'. STAGECOACH INN: Files Bankruptcy to Halt Seizure of Liquor License ------------------------------------------------------------------ Audrey Dutton, writing for The Idaho Stateman, reports that Stagecoach Inn, a steakhouse restaurant and lounge in Garden City, has filed for bankruptcy in federal court. The restaurant has 28 employees. Ther report recounts Stagecoach Inn opened in 1959. Current owners Rick and Jennifer Fraser bought it in 2007, but fell behind on tax payments to the state. The state pulled the restaurant's liquor license the Friday afternoon before New Year's Eve, Jennifer Fraser said. Ms. Fraser said the bankruptcy "was our only recourse to keep our [liquor] license." She also said Stagecoach now has the money to pay its back taxes and wants to make good on its debts -- it just couldn't get the funds together before losing its license. According to the report, court filing shows a total of $515,886 in debts owed by Stagecoach Inn's company, including many that are related to business expenses. The company has about $360,000 in assets, and the liquor license accounts for about two-thirds of that. The report notes the license could then be resold. According to court papers, the license is worth $250,000. The report says the bankruptcy filing also lists tax-related debts to the Idaho Department of Labor and Ada County Assessor's Office; $120,000 of 2010 taxes to the Internal Revenue Service; and $75,000 of unsecured debts to the Idaho State Tax Commission. It listed as one of its debts about $6,000 in unpaid state sales tax. Getting behind on sales tax is what led to the license seizure, according to Ms. Fraser. Idaho Stateman also reports that another local restaurant has closed: European bistro and bakery La Vie en Rose has closed in Downtown Boise. Its last day of business was Sunday. SUPERMEDIA INC: To Discuss Proposed Merger Plans with Sr. Lenders ----------------------------------------------------------------- Certain members of management of Dex One Corporation and SuperMedia Inc. will be conducting a teleconference for the benefit of the Dex Media East, Inc., Dex Media West, Inc., R.H. Donnelley Inc. and SuperMedia Inc. senior secured lenders to discuss synergies and integration planning in connection with the proposed merger transactions previously announced by the Company and SuperMedia on Aug. 21, 2012. Numerous assessments of synergy opportunities from the merger over the last six months established and confirmed expected synergies of $150 million to $175 million over the next three years. The Company disclosed in the filing that the challenges of the proposed merger are, among other things: (a) to maintain focus on continuing to manage these companies as separate and independent enterprises thereby impeding the Companies' ability to take full advantage of their combined scope prior to close, (b) executive leadership are not named yet thereby slowing recommendations and decision making, and (c) both companies still have individual 2013 commitments to achieve. A copy of the discussion materials to be used during that teleconference is available at http://is.gd/VGPxe0 About Supermedia Inc. Headquartered in D/FW Airport, Texas, Idearc, Inc., now known as SuperMedia Inc., is the second largest U.S. yellow pages publisher. Idearc was spun off from Verizon Communications, Inc. Idearc and its affiliates filed for Chapter 11 protection (Bankr. N.D. Tex. Lead Case No. 09-31828) on March 31, 2009. The Debtors' financial condition as of Dec. 31, 2008, showed total assets of $1,815,000,000 and total debts of $9,515,000,000. Toby L. Gerber, Esq., at Fulbright & Jaworski, LLP, represented the Debtors in their restructuring efforts. The Debtors tapped Moelis & Company as their investment banker; Kurtzman Carson Consultants LLC as their claims agent. Idearc completed its debt restructuring and its plan of reorganization became effective as of Dec. 31, 2009. In connection with its emergence from bankruptcy, Idearc changed its name to SuperMedia Inc. Under its reorganization, Idearc reduced its total debt from more than $9 billion to $2.75 billion of secured bank debt. Less than two years since leaving bankruptcy protection, SuperMedia remains in quandary. Early in October 2011, Moody's Investors Service slashed its corporate family rating for SuperMedia to Caa1 from B3 prior. The downgrade reflects Moody's belief that revenues will continue to decline at a double digit rate for the foreseeable future, leading to a steady decline in free cash flow. SuperMedia's sales were down 17% for the second quarter of 2011 in a generally improving advertising sector. Moody's ratings outlook for SuperMedia remains negative. While SuperMedia is attempting to transition the business away from its reliance on print advertising through development of online and mobile directory service applications, Moody's is increasingly concerned that the company will not be able to make this change quickly enough to stabilize the revenue base over the intermediate term. Further, the high fixed cost nature of SuperMedia's business could lead to steep margin compression, notwithstanding continued aggressive cost management. The Company's balance sheet at Sept. 30, 2012, showed $1.44 billion in total assets, $1.91 billion in total liabilities, and a $470 million total stockholders' deficit. TERVITA CORP: Moody's Affirms 'B3' CFR; Outlook Negative -------------------------------------------------------- Moody's Investors Service affirmed all ratings of Tervita Corporation (B3 corporate family (CFR), B3-PD probability of default, B1 senior secured, Caa2 senior unsecured, Caa2 senior subordinate and SGL-3 speculative grade liquidity rating) and changed the company's outlook to negative from stable. "We are concerned that the company's EBITDA has declined over the past few quarters despite anticipated earnings contributions from the significant growth capital spent in 2011 and 2012," said Darren Kirk, a Vice President and Senior Credit Officer with Moody's. "The negative outlook signals that we will lower Tervita's rating if we fail to gain confidence that the company will improve its earnings and reduce its significant leverage through 2013." Ratings Rationale Tervita's B3 CFR primarily reflects the company's very high leverage (7.5x adjusted Debt/ EBITDA) which Moody's expects will increase towards 8x through 2013 as stable industry demand inhibits meaningful earnings growth and the company funds up to $100 million in negative free cash flow with revolver drawings. The ratings also incorporate Moody's view that Tervita's execution has been weak as its earnings growth has been limited over the past couple of years despite generally favorable market conditions and after a significant amount of debt-funded growth capital has been spent. Moody's views Tervita's business profile as a positive to the rating. The company is one of the largest providers of waste management services to the Canadian oil & gas sector, long- term industry fundamentals are favorable, barriers to entry are high, and Tervita has a diverse list of blue chip customers. Tervita nevertheless is exposed to the cyclical land drilling business with a concentration in western Canada. The negative outlook reflects Moody's expectation that Tervita's leverage will remain elevated for its B3 rating through 2013 and that the company's rating will be lowered if this metric fails to improve. The rating could be upgraded if debt to EBITDA trends towards 5.5x and the company generates sustainable positive free cash flow. The rating could be downgraded if it appears likely debt to EBITDA will remain above 7x or if the company's liquidity becomes strained. The principal methodology used in rating Tervita Corporation was the Global Oilfield Services Industry Methodology published in December 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. TERVITA CORP: S&P Lowers Corporate Credit Rating to 'B-' -------------------------------------------------------- Standard & Poor's Rating Services said it lowered its long-term corporate credit rating on Calgary, Alta.-based integrated environmental service company Tervita Corp. (formerly CCS Corp.) to 'B-' from 'B'. At the same time, Standard & Poor's lowered its issue-level rating on the company's senior secured debt to 'B-' from 'B', and its issue-level ratings on the company's unsecured and subordinated debt to 'CCC' from 'CCC+'. The '3' recovery rating on the secured debt and '6' recovery rating on the unsecured and subordinated debt are unchanged, and indicate S&P's expectation of meaningful (50%-70%) and negligible (0%-10%) recovery, respectively, in its default scenario. The outlook is stable. "We expect Tervita's balance sheet to remain overleveraged into 2013; in fact, we do not expect any deleveraging through mid- 2014," said Standard & Poor's credit analyst Aniki Saha- Yannopoulos. In September 2012, we had expected the company to exit end with debt-to-EBITDA of 5.5x-6.0x; we have revised our expectations for 2013 and expect that Tervita's leverage and cash flow protection measures will remain at elevated levels (that is, debt-to-EBITDA at about 7.0x and EBITDA-interest coverage below 2x) through 2013. Weak EBITDA in the fourth quarter of 2012, partially due to weaker drilling activity and lower-than-expected EBITDA generation from growth projects and acquisitions, have caused us to revise our expectations for Tervita's 2013 cash flow. We forecast 2013 EBITDA to be C$400 million-C$430 million, down from our expectation of C$470 million-C$500 million; we project the company to end 2013 with 7.0-7.5x debt to EBITDA. The ratings on Tervita reflect Standard & Poor's view of the company's "fair" business risk profile and "highly leveraged" financial risk profile. S&P's ratings take into account Tervita's high debt leverage due to management's aggressive financial policy, participation in the competitive and cyclical oilfield services market, and lack of long-term contracts. The ratings also incorporate S&P's positive assessment of the company's relatively stable operating margins and integrated strategy that provides cross-selling opportunities. In S&P's opinion, the highly leveraged financial risk profile constrains the ratings. Tervita is an integrated environmental service company that provides services in various fields, including energy-related waste management, environmental remediation, and well servicing. Most of its operations are in western Canada (85% of gross profit), with some in the U.S. As of Sept. 30, 2012, the company had about C$2.66 billion in adjusted debt (adjusted mostly for operating leases and asset-retirement obligations), compared with C$2.36 billion of balance-sheet debt. The stable outlook reflects S&P's view that Tervita's debt-to- EBITDA will remain at 7.0-7.5x as it exits 2013. Despite improved EBITDA compared with 2012 levels, S&P forecasts the company's debt-to-EBITDA will remain elevated throughout its forecast period due to its high balance sheet debt. S&P deems Tervita's leverage metric as high relative to its overall business risk profile and S&P regards management's financial strategy as risky. At current EBITDA and debt, the company has little flexibility in adding debt without affecting the ratings. "We would downgrade Tervita if the company's credit measures continues to deteriorate more than expected, such that debt-to- EBITDA ratios deteriorates above 7.5x in 2013. This could also occur if 2013 gross profit increases less than 25% from 2012 level. Also, debt-financing of growth initiatives, either acquisition or capital expenditures, without prospects for rapid deleveraging, could lead us to revisit our ratings and outlook on Tervita. Deterioration in the company's liquidity position could also affect the ratings," S&P said. A positive action for Tervita would depend on an improving financial risk profile--for example, if the company's debt-to- EBITDA improves to 5.0x-5.5x by reducing debt post-IPO. From an operational perspective, if S&P expects Tervita to continue with EBITDA growth, either through lower overhead costs or more cross- selling opportunities, such that S&P expects debt-to-EBITDA to improve below 5.5x, S&P could take a positive rating action. Given S&P views on industry conditions, it believes this is unlikely in 2013. THQ INC: Section 341(a) Meeting Set for Today --------------------------------------------- Roberta A. DeAngelis, U.S. Trustee for Region 3, will convene a meeting of creditors in THQ Inc.'s Chapter 11 case today, Jan. 28, 2013, at 1 p.m. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. About THQ Inc. THQ Inc. (NASDAQ: THQI) -- http://www.thq.com/-- is a worldwide developer and publisher of interactive entertainment software. The Company develops its products for all popular game systems, personal computers, wireless devices and the Internet. Headquartered in Los Angeles County, California, THQ sells product through its network of offices located throughout North America and Europe. THQ Inc. and its affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-13398) on Dec. 19, 2012. THQ has a deal to sell its video-game development business to Clearlake Capital Group LP for about $60 million, absent higher and better offers at an auction proposed for January 2013. Clearlake and existing lender Wells Fargo Capital Finance LLC are providing $10 million of DIP financing. Attorneys at Young Conaway Stargatt & Taylor, LLP and Gibson, Dunn & Crutcher LLP serve as counsel to the Debtors. FTI Consulting, Inc., serves as financial advisors, and Centerview Partners LLC as investment banker. Kurtzman Carson Consultants is the claims and notice agent, and administrative agent. The Court approve a sale of the majority of THQ's assets to multiple buyers. The Official Committee of unsecured Creditors is represented by Landis Rath & Cobb LLP, and Andrews Kurth LLP. THQ INC: Asset Sale Triples Value of Unsecured Notes ---------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that THQ Inc. held a 22-hour auction this week with 10 bidders who made offers for the entire business and individual titles. When the dust cleared, the company will be broken up because the bankruptcy court held a hearing approving sales to five buyers for a combined $72 million. The report relates that as a result of the sale, the price of THQ's unsecured notes more than tripled in value since the Chapter 11 filing in December. THQ's unsecured notes last traded Jan. 23 for 40 cents on the dollar, about double the price on Jan. 11, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The notes more than tripled in price since the date of bankruptcy. According to the report, THQ said it expects the bankruptcy judge in Delaware to sign an order Jan. 24 formally approving the sales. Some of the assets didn't sell. Those that didn't are worth about $29 million, a company lawyer said at the Jan. 23 hearing. Before bankruptcy, Clearlake Capital Group LP signed a contract to buy Agoura Hills, California-based THQ for a price said to be worth $60 million. Clearlake offered $6.65 million cash and a $10 million seven-year note bearing 2% interest. In addition, Clearlake would have assumed about $15 million in debt while paying off financing for the Chapter 11 effort estimated to be $29 million. About THQ Inc. THQ Inc. (NASDAQ: THQI) -- http://www.thq.com/-- is a worldwide developer and publisher of interactive entertainment software. The Company develops its products for all popular game systems, personal computers, wireless devices and the Internet. Headquartered in Los Angeles County, California, THQ sells product through its network of offices located throughout North America and Europe. THQ Inc. and its affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-13398) on Dec. 19, 2012. THQ has a deal to sell its video-game development business to Clearlake Capital Group LP for about $60 million, absent higher and better offers at an auction proposed for January 2013. Clearlake and existing lender Wells Fargo Capital Finance LLC are providing $10 million of DIP financing. Attorneys at Young Conaway Stargatt & Taylor, LLP and Gibson, Dunn & Crutcher LLP serve as counsel to the Debtors. FTI Consulting and Centerview Partners LLC are the financial advisors. Kurtzman Carson Consultants is the claims and notice agent. UNI-PIXEL INC: Sets Conference Call on Feb. 26 to Discuss Results ----------------------------------------------------------------- UniPixel, Inc., will hold a conference call on Feb. 26, 2013, at 4:30 p.m. Eastern time to discuss the fourth quarter and full year ended Dec. 31, 2012. Financial results will be issued in a press release prior to the call. UniPixel President and CEO Reed Killion and CFO Jeff Tomz will host the presentation, followed by a question and answer period. Date: Tuesday, February 26, 2013 Time: 4:30 p.m. Eastern time (3:30 p.m. Central time) Dial-In Number: 1-877-941-4774 International: 1-480-629-9760 Conference ID#: 4593770 Webcast: http://public.viavid.com/index.php?id=103296 The conference call will be broadcast live and available for replay via the Investors section of the Company's Web site at www.unipixel.com. Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860. A replay of the call will be available after 7:30 p.m. Eastern time on the same day through March 26, 2013. Toll-free replay number: 1-877-870-5176 International replay number: 1-858-384-5517 Replay pin number: 4593770 About Uni-Pixel Inc. The Woodlands, Tex.-based Uni-Pixel, Inc. (OTC BB: UNXL) -- http://www.unipixel.com/-- is a production stage company delivering its Clearly Superior(TM) Performance Engineered Films to the Lighting & Display, Solar and Flexible Electronics market segments. The Company reported a net loss of $8.57 million in 2011 compared to a net loss of $3.82 million in 2010. The Company's balance sheet at Sept. 30, 2012, showed $16.39 million in total assets, $103,588 in total liabilities and $16.29 million in total shareholders' equity. VELATEL GLOBAL: Unregistered Securities Sale Exceeds 5% Threshold ----------------------------------------------------------------- Since its most recent report filed on any of Forms 8-K, 10-K or 10-Q, VelaTel Global Communications, Inc., has made sales of unregistered securities, namely shares of the Company's Series A common stock and shares of the Company's Series B common stock and warrants granting the holder a right to acquire one Series A Share for each warrant. The Company filed a Form 8-K on Jan. 23, 2013, because the aggregate number of Series A Shares sold exceeds 5% of the total number of those shares issued and outstanding as of the Company's latest filed Report in which the Sale of Series A Shares was reported, on Form 8-K filed on Dec. 17, 2012. Series A Shares Under SEC Rule 144 On Dec. 18, 2012, the Company issued 3,328,082 Series A Shares to Asher Enterprises, Inc., in partial payment of a promissory note in the amount of $500,000 in favor of Isaac Organization, Inc., and assigned by Isaac to America Orient, LLC, and partially assigned by America Orient to Asher. This sale of Shares resulted in a principal reduction of $150,000 in notes payable of the Company, and payment of $0 of accrued interest. The Company also issued 3,328,082 Warrants to America Orient as consideration for its assignment to Asher. Each Warrant has an exercise price of $0.045071 and an exercise term of three years. On Jan. 4, 2013, the Company issued 578,501 Series A Shares to Continental Equities, LLC, in partial payment of a promissory note in the amount of $500,000 in favor of Isaac Organization, Inc., and assigned by Isaac to America Orient, LLC, and partially assigned by America Orient to Continental. This sale of Shares resulted in a principal reduction of $33,000 in notes payable of the Company, and payment of $0 of accrued interest. The Company also issued 578,501 Warrants to America Orient as consideration for its assignment to Continental. Each Warrant has an exercise price of $0.057044 and an exercise term of three years. On Jan. 11, 2013, the Company issued 1,540,832 Series A Shares and 1,540,832 Warrants to James Shaw in partial payment of a line of credit promissory note of up to $1,052,631 in favor of Weal Group, Inc. and partially assigned to James Shaw. Each Warrant has an exercise price of $0.0649 and an exercise term of three years. This sale of Shares resulted in a principal reduction of $100,000 in notes payable of the Company, and payment of $0 of accrued interest. On Jan. 11, 2013, the Company issued 1,304,859 Series A Shares to Steve O. Smith in payment of accrued compensation owed to Steve O. Smith as an independent contractor. This sale of Shares resulted in a reduction of $97,733 in accounts payable of the Company. On Jan. 11, 2013, the Company issued 501,519 Series A Shares to Continental Equities, LLC in partial payment of a promissory note in the amount of $500,000 in favor of Isaac Organization, Inc. and assigned by Isaac to America Orient, LLC, and partially assigned by America Orient to Continental. This sale of Shares resulted in a principal reduction of $33,000 in notes payable of the Company, and payment of $0 of accrued interest. The Company also issued 501,519 Warrants to America Orient as consideration for its assignment to Continental. Each Warrant has an exercise price of $0.0658 and an exercise term of three years. On Jan. 15, 2013, the Company issued 4,990,151 Series A Shares and 4,990,151 Warrants to Jane M. Morrell Revocable Trust in partial payment of a promissory note of $684,210 in favor of Kevin J. Morrell Revocable Trust. Each Warrant has an exercise price of $0.0649 and an exercise term of three years. This sale of Shares resulted in a principal reduction of $265,000 in notes payable of the Company, and payment of $58,860 of accrued interest. On Jan. 15, 2013, the Company issued 787,106 Series A Shares and 2,505,319 Warrants to Kenneth L. Waggoner in payment of accrued compensation owed to Kenneth L. Waggoner as an independent contractor. All of the Warrants have an exercise term of three years. 1,718,213 of the Warrants have an exercise price of $0.0291 and 787,106 of the Warrants have an exercise price of $0.0759. This sale of Shares resulted in a reduction of $59,741 in accounts payable of the Company. On Jan. 15, 2013, the Company issued 389,754 Series A Shares and 389,754 Warrants to David S. (Sean) McEwen in partial payment of a line of credit promissory note of up to $1,052,631 in favor Sean McEwen. Each Warrant has an exercise price of $0.08477, and an exercise term of three years. This sale of Shares resulted in a principal reduction of $22,852 in notes payable of the Company, and payment of $10,187 of accrued interest. On Jan. 17, 2013, the Company issued 200,000 Series A Shares to Dian Griesel as an incentive payment pursuant to a consulting contract for investor relations services between the Company and Dian Griesel, Inc. This sale of Shares resulted in a reduction of $14,000 in accounts payable of the Company. Series A Shares Under Section 3(a)(10) of 1933 Act On Jan. 17, 2013, the Company issued 9,000,000 Series A Shares to Ironridge Global IV, Ltd. The Sixth Issuance was pursuant to an Order for Approval of Stipulation for Settlement of Claims between the Company and Ironridge, in settlement of $1,367,693 of accounts payable of the Company which Ironridge had purchased from certain creditors of the Company, in an amount equal to the Assigned Accounts, plus fees and costs. The Sixth Issuance followed five prior issuances totaling 13,595,000 Series A Shares for purposes of the calculations. The Order, as amended, provides for an adjustment in the total number of shares which may be issuable to Ironridge based on a calculation period for the transaction, defined as that number of consecutive trading days following the date on which the Initial Shares have been issued, received in Ironridge's account in electronic form, and fully cleared for trading required for the aggregate trading volume of the Series A Shares, as reported by Bloomberg LP, to exceed $6.5 million. Pursuant to the Order, Ironridge will receive an aggregate of (a) 1,000,000 Series A Shares, plus (b) that number of Series A Shares with an aggregate value equal to (i) the sum of the Claim Amount plus a 6% agent fee, plus Ironridge's reasonable attorney fees and expenses (less $10,000 previously paid), (ii) divided by 80% of the following: the volume weighted average price of the Series A Shares during the Calculation Period, not to exceed the arithmetic average of the individual daily VWAPs of any five trading days during the Calculation Period. The Order further provides that if at any time during the Calculation Period the total Series A Shares previously issued to Ironridge are less than any reasonably possible Final Amount, or a daily VWAP is below 80% of the closing price on the day before the Issuance Date, Ironridge shall have the right to request (subject to the limitation below), and the Company will upon Ironridge's request reserve and issue additional Series A Shares, subject to a 9.99% beneficial ownership limitation specified in the Order. At the end of the Calculation Period, (a) if the sum of the Initial Issuance and any Additional Issuance is less than the Final Amount, the Company shall issue additional Series A Shares to Ironridge, up to the Final Amount, and (b) if the sum of the Initial Issuance and any Additional Issuance is greater than the Final Amount, Ironridge will promptly return any remaining Series A Shares to the Company and its transfer agent for cancellation. Ironridge demonstrated to the Company's satisfaction that it was entitled to an Additional Issuance, and that following the Sixth Issuance Ironridge will own less than 9.99% of the total Series A Shares then outstanding. Series B Shares Under SEC Rule 144 On Jan. 15, 2013, the Company issued 20,000,000 Series B Shares to Kenneth Hobbs, the Company's Vice-President of Mergers & Acquisition. Each Series B Share has the right to cast ten votes for each action on which the Company's shareholders have a right to vote, whereas each Series A Share has the right to cast one vote. The Company believes it is in its best interests to maintain management voting control of the Company, including avoidance of the expense of soliciting proxies for corporate actions requiring shareholder approval. The Series B Shares do not participate in any declared dividends and are not convertible into Series A Shares. The consent of 80% of the holders of issued and outstanding Series B Shares is required in order to sell, assign or transfer any of the Series B Shares. The Series B Shares are redeemable on May 23, 2023 at par value of $0.001 per share. The issuance of 20,000,000 Series B Shares therefore constitutes compensation to Kenneth Hobbs equal to the $20,000 redemption value of those shares in 2023. On Jan. 14, 2013, Kenneth Hobbs issued an irrevocable proxy in favor of George Alvarez, the Company's Chief Executive Officer, of all 20,000,000 Series B Shares issued to him on Jan. 15, 2013, plus 220,606 Series B Shares previously issued to him. On Jan. 15, 2013, Kenneth L. Waggoner, the Company's General Counsel, and Carlos Trujillo, the Company's Chief Financial Officer, each issued irrevocable proxies in favor of George Alvarez of 220,605 and 220,606 Series B Shares previously issued to each of them, respectively. In total, George Alvarez holds irrevocable proxies for 21,330,909 Series B Shares. Colin Tay, the Company's President, owns 18,669,091 Series B Shares. Reliance on Exemptions The restricted Series A and Series B Shares issued to the individuals and entitles described above relied upon exemptions from registration requirements provided for in Sections 4(2) and 4(5) of the 1933 Act, as amended, including Regulation D promulgated thereunder, based on the knowledge of such persons of our operations and financial condition, and their respective experience in financial and business matters that allowed them to evaluate the merits and risk of receipt of these securities. Total Shares Outstanding As of Jan. 17, 2013, and immediately following the issuances the Company has 124,445,928 shares of its Series A common stock outstanding, with a par value of $0.001, and 40,000,000 shares of its Series B common stock outstanding, with a par value of $0.001. A copy of the Form 8-K is available at http://is.gd/hIgD4H About VelaTel Global VelaTel acquires spectrum assets through acquisition or joint venture relationships, and provides capital, engineering, architectural and construction services related to the build-out of wireless broadband telecommunications networks, which it then operates by offering services attractive to residential, enterprise and government subscribers. VelaTel currently focuses on emerging markets where internet penetration rate is low relative to the capacity of incumbent operators to provide comparable cutting edge services, or where the entry cost to acquire spectrum is low relative to projected subscribers. VelaTel currently has project operations in People's Republic of China, Croatia, Montenegro and Peru. Additional target markets include countries in Latin America, the Caribbean, Southeast Asia and Eastern Europe. VelaTel's administrative headquarters are in Carlsbad, California. For more information, please visit www.velatel.com. After auditing the 2011 results, Kabani & Company, Inc., in Los Angeles, California, expressed substantial doubt as to the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred a net loss for the year ended Dec. 31, 2011, cumulative losses of $254 million since inception, a negative working capital of $16.4 million and a stockholders' deficiency of $9.93 million. The Company reported a net loss of $21.79 million in 2011, compared with a net loss of $66.62 million in 2010. The Company's balance sheet at Sept. 30, 2012, showed $21.55 million in total assets, $26.54 million in total liabilities and a $4.99 million total stockholders' deficiency. VELO HOLDINGS: Plan Okayed, Secured Lenders Taking Ownership ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that first-lien lenders are on the cusp of taking ownership of Velo Holdings Inc. given signature by the bankruptcy judge on a Jan. 23 confirmation order approving the reorganization plan for the direct marketer. The report relates that Velo sought Chapter 11 reorganization in April already planning for senior secured lenders to assume ownership in exchange for debt. The disclosure statement accompanying the plan projected a 57% to 60% recovery by first- lien lenders initially owed $386 million. Second-lien creditors owed $210 million receive nothing. Unsecured creditors owed $36 million carve up $375,000, for a 1% recovery. First-lien lenders receive the new stock with an expected value ranging between $30 million and $40 million, according to the disclosure statement. In addition, senior creditors take home a new $80 million term loan payable in 5 years with interest at 15%. According to the report, the lenders' recovery is supplemented by $20 million that was transformed into a post-bankruptcy secured loan and $75.5 million in payments made on secured debt during bankruptcy. About Velo Holdings V2V Corp. is a premier direct marketing services company, providing individuals and businesses with access to a wide-variety of consumer benefits in the United States, Canada, and the United Kingdom. V2V was founded in 1989 as a membership services company that marketed its membership programs exclusively via telemarketing and, after having nearly a decade of continued growth, went public in 1996. In 2007, V2V was acquired by a consortium of private equity firms led primarily by investing affiliates of One Equity Partners. Norwalk, Connecticut-based Velo Holdings Inc. and various affiliates, including V2V, filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case Nos. 12-11384 to 12-11386 and 12-11388 to 12-11398) on April 2, 2012. The debtor-affiliates are V2V Holdings LLC, Coverdell & Company, Inc., V2V Corp., LN Inc., FYI Direct Inc., Vertrue LLC, Idaptive Marketing LLC, My Choice Medical Holdings Inc., Adaptive Marketing LLC, Interactive Media Group (USA) Ltd., Brand Magnet Inc., Neverblue Communications Inc., and Interactive Media Consolidated Inc. Judge Martin Glenn presides over the case. Lawyers at Dechert LLP serve as the Debtors' counsel. The Debtors' financial advisors are Alvarez & Marsal Securities LLC. The Debtors' investment banker is Alvarez & Marsal North America, LLC. Quinn Emanuel Urquhart & Sullivan, LLP, serves as the Debtors' special counsel. Epiq Bankruptcy Solutions serves as the Debtors' claims agent. Velo Holdings estimated $100 million to $500 million in assets and $500 million to $1 billion in debts. The petitions were signed by George Thomas, general counsel. Lawyers at Willkie Farr & Gallagher LLP represent Barclays, the First Lien Prepetition Agent and the DIP Agent. The First Lien Prepetition Agent and DIP Agent also has hired FTI Consulting, Inc. Sidley Austin LLP represents the Second Lien Prepetition Agent. Tracy Hope Davis, U.S. Trustee for Region 2, appointed three unsecured creditors to serve on the Official Committee of Unsecured Creditors of Velo Holdings Inc., et al. VERSO PAPER: S&P Lowers Sr. Unsecured Term Loan Rating to 'CC' -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its issue-level rating on Verso Paper Finance Holdings LLC's (HoldCo) senior unsecured term loan to 'CC' from 'CCC'. All other ratings, including Verso Paper Holdings LLC's (Verso Paper) corporate credit rating, are unchanged. The rating action follows Verso Paper's announcement that it intends to enter privately negotiated transactions with certain lenders that hold the HoldCo's senior unsecured term loan. Pursuant to this transaction, Verso Paper and Verso Paper Corp. would issue new first lien notes to the HoldCo lenders in exchange for the assignment to Verso Paper of their HoldCo loans and the cancellation of such HoldCo loans. Verso Paper also announced that it can provide no assurance that any such transactions will be consummated. As of Sept. 30, 2012, about $89 million was outstanding on the HoldCo term loan. The HoldCo loan matures Feb. 1, 2013, and Verso Paper's first lien notes mature Jan. 15, 2019. According to S&P's criteria, it would view this as a distressed exchange and tantamount to a default. The offer, in S&P's view, implies the investor could receive less value than the promise of the original securities and the new securities' maturities extend beyond the original maturity date. S&P previously lowered its ratings on Verso Paper Holdings LLC and Verso Paper Finance Holdings LLC to 'SD' and subsequently raised them following a series of debt exchanges completed in 2012 that S&P viewed as tantamount to default. Ratings List Ratings Unchanged Verso Paper Holdings LLC Verso Paper Finance Holdings LLC Corporate Credit Rating B-/Stable/-- Ratings Lowered/Recovery Rating Unchanged To From Verso Paper Finance Holdings LLC Senior Unsecured CC CCC Recovery Rating 6 6 VERTIS HOLDINGS: Has Authority to Continue Using Cash Collateral ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has issued a bridge order authorizing Vertis Holdings, Inc., et al., to use cash collateral of the prepetition term loan lenders up to Feb. 1, 2013. The Bankruptcy Court earlier authorized, in a final basis, Vertis Holdings, Inc., et al., to use cash collateral of the prepetition term loan lenders led by General Electric Capital Corporation as administrative agent and collateral agent, and Wells Fargo Capital Finance LLC. Under the terms of the final term loan adequate protection order, the Debtors' authorization to use Cash Collateral terminates automatically upon consummation of the sale of the Debtors' assets to Quad/Graphics Inc. The Prepetition Term Loan agents have agreed to extend the period through which the Debtors are authorized to use Cash Collateral beyond the date of consummation of the Quad Sale. Quad/Graphics on Jan. 16 disclosed it completed the acquisition of substantially all of the assets of Vertis Holdings for a net purchase price of $170 million. This assumes the purchase price of $267 million less the payment of $97 million for current assets in excess of normalized working capital requirements. Quad/ Graphics used cash on hand and drew on its revolving credit facility to finance the acquisition. About Vertis Vertis Holdings Inc. -- http://www.thefuturevertis.com/-- provides advertising services in a variety of print media, including newspaper inserts such as magazines and supplements. Vertis and its affiliates (Bankr. D. Del. Lead Case No. 12-12821), returned to Chapter 11 bankruptcy on Oct. 10, 2012, this time to sell the business to Quad/Graphics, Inc., for $258.5 million, subject to higher and better offers in an auction. As of Aug. 31, 2012, the Debtors' unaudited consolidated financial statements reflected assets of approximately $837.8 million and liabilities of approximately $814.0 million. Bankruptcy Judge Christopher Sontchi presides over the 2012 case. Vertis is advised by Perella Weinberg Partners, Alvarez & Marsal, and Cadwalader, Wickersham & Taft LLP. Quad/Graphics is advised by Blackstone Advisory Partners, Arnold & Porter LLP and Foley & Lardner LLP, special counsel for antitrust advice. Kurtzman Carson Consultants LLC is the Debtors' claims agent. Quad/Graphics is a global provider of print and related multichannel solutions for consumer magazines, special interest publications, catalogs, retail inserts/circulars, direct mail, books, directories, and commercial and specialty products, including in-store signage. Headquartered in Sussex, Wis. (just west of Milwaukee), the Company has approximately 22,000 full-time equivalent employees working from more than 50 print-production facilities as well as other support locations throughout North America, Latin America and Europe. Vertis first filed for bankruptcy (Bankr. D. Del. Case No. 08-11460) on July 15, 2008, to complete a merger with American Color Graphics. ACG also commenced separate bankruptcy proceedings. In August 2008, Vertis emerged from bankruptcy, completing the merger. Vertis against filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 10-16170) on Nov. 17, 2010. The Debtor estimated its assets and debts of more than $1 billion. Affiliates also filed separate Chapter 11 petitions -- American Color Graphics, Inc. (Bankr. S.D.N.Y. Case No. 10-16169), Vertis Holdings, Inc. (Bankr. S.D.N.Y. Case No. 10-16170), Vertis, Inc. (Bankr. S.D.N.Y. Case No. 10-16171), ACG Holdings, Inc. (Bankr. S.D.N.Y. Case No. 10-16172), Webcraft, LLC (Bankr. S.D.N.Y. Case No. 10-16173), and Webcraft Chemicals, LLC (Bankr. S.D.N.Y. Case No. 10-16174). The bankruptcy court approved the prepackaged Chapter 11 plan on Dec. 16, 2010, and Vertis consummated the plan on Dec. 21. The plan reduced Vertis' debt by more than $700 million or 60%. GE Capital Corporation, which serves as DIP Agent and Prepetition Agent, is represented in the 2012 case by lawyers at Winston & Strawn LLP. Morgan Stanely Senior Funding Inc., the agent under the prepetition term loan, and as term loan collateral agent, is represented by lawyers at White & Case LLP, and Milbank Tweed Hadley & McCloy LLP. VERTIS HOLDINGS: Can Hire FTI as Communications Consultant ---------------------------------------------------------- The Hon. Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware has authorized Vertis Holdings Inc., et al., to employ FTI Consulting, Inc., as communications consultants nunc pro tunc to the Petition Date. FTI will assist the Debtors in developing and implementing effective communications strategies to preserve continuity, maximize value and facilitate the orderly administration of the Debtors' cases. In this regard, among others things, FTI will support the Debtors with respect to: (a) ensuring consistency of messaging across all communications, including appropriate levels of coordination with the buyer; (b) providing ongoing employee updates to preserve the workforce and ensure continued focus during the Debtors' busiest season and throughout this transition; (c) developing ongoing updates as well as specific presentations and letters, to address customer and vendor concerns, preserve these critical relationships and meet sale conditions; (d) coodinating with vendor and employee support center operators to ensure accurate, up-to-date information is provided to all who use these resources; (e) serving as primary media representative for all inquiries related to the Chapter 11 and sales processes; and (f) performing other services commonly associated with strategic communications. FTI's current hourly billing rates are: Senior Managing Director $650 Managing Director $600 Sr. Director $525 Director $425 Sr. Consultant $350 Consultant $250 Paraprofessional $125 FTI attests that the firm (i) is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b), and holds no interest adverse to the Debtors or their estates, and (ii) has no connection with the Debtors, their creditors, the U.S. Trustee, or other parties in interest in the Debtors' Chapter 11 cases. About Vertis Vertis Holdings Inc. -- http://www.thefuturevertis.com/-- provides advertising services in a variety of print media, including newspaper inserts such as magazines and supplements. Vertis and its affiliates (Bankr. D. Del. Lead Case No. 12-12821), returned to Chapter 11 bankruptcy on Oct. 10, 2012, this time to sell the business to Quad/Graphics, Inc., for $258.5 million, subject to higher and better offers in an auction. As of Aug. 31, 2012, the Debtors' unaudited consolidated financial statements reflected assets of approximately $837.8 million and liabilities of approximately $814.0 million. Bankruptcy Judge Christopher Sontchi presides over the 2012 case. Vertis is advised by Perella Weinberg Partners, Alvarez & Marsal, and Cadwalader, Wickersham & Taft LLP. Quad/Graphics is advised by Blackstone Advisory Partners, Arnold & Porter LLP and Foley & Lardner LLP, special counsel for antitrust advice. Kurtzman Carson Consultants LLC is the Debtors' claims agent. Quad/Graphics is a global provider of print and related multichannel solutions for consumer magazines, special interest publications, catalogs, retail inserts/circulars, direct mail, books, directories, and commercial and specialty products, including in-store signage. Headquartered in Sussex, Wis. (just west of Milwaukee), the Company has approximately 22,000 full-time equivalent employees working from more than 50 print-production facilities as well as other support locations throughout North America, Latin America and Europe. Vertis first filed for bankruptcy (Bankr. D. Del. Case No. 08-11460) on July 15, 2008, to complete a merger with American Color Graphics. ACG also commenced separate bankruptcy proceedings. In August 2008, Vertis emerged from bankruptcy, completing the merger. Vertis against filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 10-16170) on Nov. 17, 2010. The Debtor estimated its assets and debts of more than $1 billion. Affiliates also filed separate Chapter 11 petitions -- American Color Graphics, Inc. (Bankr. S.D.N.Y. Case No. 10-16169), Vertis Holdings, Inc. (Bankr. S.D.N.Y. Case No. 10-16170), Vertis, Inc. (Bankr. S.D.N.Y. Case No. 10-16171), ACG Holdings, Inc. (Bankr. S.D.N.Y. Case No. 10-16172), Webcraft, LLC (Bankr. S.D.N.Y. Case No. 10-16173), and Webcraft Chemicals, LLC (Bankr. S.D.N.Y. Case No. 10-16174). The bankruptcy court approved the prepackaged Chapter 11 plan on Dec. 16, 2010, and Vertis consummated the plan on Dec. 21. The plan reduced Vertis' debt by more than $700 million or 60%. GE Capital Corporation, which serves as DIP Agent and Prepetition Agent, is represented in the 2012 case by lawyers at Winston & Strawn LLP. Morgan Stanely Senior Funding Inc., the agent under the prepetition term loan, and as term loan collateral agent, is represented by lawyers at White & Case LLP, and Milbank Tweed Hadley & McCloy LLP. Quad/Graphics on Jan. 16, 2013, disclosed it completed the acquisition of substantially all of the assets of Vertis Holdings for a net purchase price of $170 million. This assumes the purchase price of $267 million less the payment of $97 million for current assets in excess of normalized working capital requirements. Quad/Graphics used cash on hand and drew on its revolving credit facility to finance the acquisition. VORNADO REALTY: Fitch Rates $300MM Series L Preferred Stock 'BB+' ----------------------------------------------------------------- Fitch Ratings has assigned a credit rating of 'BB+' to the $300 million 5.40% series L preferred stock issued by Vornado Realty Trust (NYSE: VNO). Net proceeds from the offering are expected to be used for general corporate purposes including the redemption of all of the 6.75% series F and 6.75% series H preferred stock ($262.5 million in aggregate). The issuance will have no impact on VNO's leverage and will result in a negligible improvement in fixed charge coverage. Fitch currently rates VNO and Vornado Realty, L.P. (collectively, Vornado) as: Vornado Realty Trust: --Issuer Default Rating (IDR) 'BBB'; --Preferred stock 'BB+'; Vornado Realty, L.P.: --IDR 'BBB'; --Unsecured revolving credit facility 'BBB'; --Senior unsecured notes 'BBB'. The Rating Outlook is Stable. The ratings reflect Vornado's credit strengths, including its strong access to capital, exceptional unencumbered assets to unsecured debt ratio, and maintenance of leverage appropriate for the rating category, a high-quality portfolio of properties, manageable lease maturities and granular tenant base. These positive rating elements are offset by the likelihood for declining recurring operating EBITDA and higher recurring capital expenditures as the Base Realignment and Closure statute (BRAC) related leases expire resulting in a lower fixed charge coverage ratio. Fitch also notes the company's debt maturity schedule has sizable concentrations of secured debt in 2013 but should be refinanced and not negatively impact liquidity. Fitch will also monitor whether Vornado's future investments deviate from its renewed focus on its core New York and Washington, D.C. office and retail markets. Leverage Appropriate For Rating Vornado's leverage ratio remains consistent with a 'BBB' rating and was 6.5 times (x) for the trailing 12 months (TTM) ended Sept. 30, 2012, down from 6.7x and 6.8x as of Dec. 31, 2011 and 2010, respectively. Leverage including Fitch's estimate of recurring cash distributions from partially owned entities (namely dividends from ownership interests in Alexander's Inc. and Lexington Realty Trust) in recurring operating EBITDA lowers leverage to 6.3x for the TTM ended Sept. 30, 2012. Fitch forecasts leverage including distributions from partially owned entities to remain around the 6.5x level through 2014 and the preferred issuance does not change Fitch's forecast. Fitch defines leverage as net debt divided by recurring operating EBITDA. Coverage Slightly Low For Rating The company's fixed-charge coverage ratio was 1.9x for the TTM ended Sept. 30, 2012, consistent with 2.0x in 2011 and in 2010. Fitch expects coverage to decline to 1.8x in 2014 due to BRAC, and be modestly higher than 1.8x when incorporating Fitch's estimate of recurring cash distributions from partially owned entities. Fitch defines fixed-charge coverage as recurring operating EBITDA less recurring capital expenditures and straight-line rents, divided by interest incurred and preferred stock and OP unit distributions. BRAC Exposure Offsets Tenant Diversity The company's portfolio benefits from tenant diversification with the top 30 tenants representing only 26% of total revenue. However, the largest tenant is the United States Government which accounts for 5% of total revenue and the implementation of BRAC for the Department of Defense, coupled with the move by related contractors have caused this exposure to become a temporary credit negative. Offsetting this exposure is the otherwise manageable lease expiration schedule (as measured by annual escalated expiring rent) with no segment's expiring rent (excluding Merchandise Mart) surpassing 17% annually through 2017. Strong Unencumbered Asset Coverage The ratings are further supported by VNO's unencumbered property coverage of unsecured debt, which gives the company significant financial flexibility as a source of contingent liquidity. Consolidated unencumbered asset coverage of net unsecured debt (calculated as annualized first-quarter 2012 unencumbered property EBITDA divided by a blended 7.7% stressed capitalization rate) results in coverage of 3.8x. The ratio is strong for the rating, particularly given the unencumbered Manhattan office and retail properties are highly sought after by secured lenders and foreign investors, resulting in stronger contingent liquidity relative to many asset classes. The company's investments in public companies improves coverage by a half-turn after a 50% haircut although they are not captured under Fitch's criteria. Preferred Stock Notching The two-notch differential between VNO's IDR and preferred stock rating is consistent with Fitch's criteria for corporate entities with an IDR of 'BBB'. Based on Fitch's research on 'Treatment and Notching of Hybrids in Nonfinancial Corporate and REIT Credit Analysis', available on Fitch's Web site at www.fitchratings.com, these preferred securities are deeply subordinated and have loss absorption elements that would likely result in poor recoveries in the event of a corporate default. Stable Outlook The Stable Rating Outlook is driven in part by Fitch's expectation that VNO will maintain appropriate credit metrics in light of the BRAC related earnings erosion, in addition to its average liquidity profile. For the period Oct. 1, 2012 to Dec. 31, 2014, the company's sources of liquidity (cash, availability under the company's unsecured revolving credit facility, and Fitch's expectation of retained cash flows from operating activities after dividends and distributions) covered uses of liquidity (debt maturities and Fitch's expectation of committed development and recurring capital expenditures) by 1.5x. What Could Trigger A Rating Action Although Fitch does not anticipate positive ratings momentum in the near to medium term, the following factors may result in positive momentum on the rating and/or Outlook: -- Fitch's expectation of net debt to recurring operating EBITDA sustaining below 5.5x (leverage was 6.5x as of Sept. 30, 2012); -- Fitch's expectation of fixed-charge coverage sustaining above 2.7x (coverage was 1.9x for the TTM ended Sept. 30, 2012). These factors may result in negative momentum on the rating and/or Outlook: -- Fitch's expectation of leverage sustaining above 7.5x; -- Fitch's expectation of fixed-charge coverage sustaining below 1.8x; -- Fitch's expectation of a sustained liquidity coverage ratio below 1.0x. WEEKLEY HOMES: S&P Assigns 'BB-' CCR; Outlook Stable ----------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Weekley Homes LLC and its subsidiary Weekley Finance Corporation (together David Weekley). The outlook is stable. At the same time, S&P assigned a 'BB-' issue-level rating and a '3' recovery rating to the homebuilder's proposed offering of $200 million of senior unsecured notes due 2023. The '3' recovery rating indicates prospects for meaningful recovery (50% to 70%) of principal in the event of payment default. The company will use proceeds from the notes to repay all outstanding borrowings under its secured revolving credit facilities and for general corporate purposes including investment in new home construction and finished lots. S&P's ratings on Houston, Texas-based David Weekley reflect the company's "fair" business risk profile. David Weekley is a privately held company that ranks among the 17 largest North American homebuilders as measured by 2011 new home deliveries. The company was founded in 1976 by current chairman, David Weekley. The Weekley family currently owns the majority of the company, with management owning the remainder. "Unlike many of the homebuilders that we rate, David Weekley does not carry significant land inventory positions and instead relies primarily on option contracts to acquire finished lots," said credit analyst Susan Madison. "In our view, the use of option contracts affords the company more flexibility to respond to market downturns than direct land ownership and development. This "land light" strategy proved beneficial during the recent severe housing downturn, enabling David Weekley to quickly right-size inventory levels to meet significantly reduced demand for new homes. The company's "significant" financial profile, characterized by more consistent profitability and relatively modest leverage compared with most of its homebuilding peers, also provides support for the 'BB-' corporate credit rating." The outlook is stable. S&P expects David Weekley will be able to drive meaningful sales growth over the next two years, while continuing to minimize direct land investment, primarily through the use of options to acquire finished lots. However as the housing industry recovers and competition for well-located land parcels intensifies, S&P expects the need to fund larger option deposits, pay higher lot prices, and in some instances use its own balance sheet to acquire land in desirable locations may pressure revenue growth and operating margins, as well as require higher than anticipated debt capital to fund inventory investment. S&P could lower its rating if expansion into some new markets is less profitable than expected or debt-to-EBITDA materially exceeds 5x on a sustained basis, which S&P believes is not likely. Alternatively, S&P could raise its rating if revenue growth and margin expansion result in better than expected EBITDA growth such that debt-to-EBITDA approaches the mid-3x area on a sustained basis, and the company is able to continue utilizing primarily options, rather than direct land investment and development to acquire a sufficient supply of finished lots to support continued revenue growth. WELLNESS CENTER: Li and Company Raises Going Concern Doubt ---------------------------------------------------------- Wellness Center, USA, Inc., filed on Jan. 16, 2013, its annual report on Form 10-K for the fiscal year ended Sept. 30, 2012. Li and Company, PC, in Skillman, N.J., the Company's independent accountants, expressed substantial doubt about the Company's ability to continue as a going concern. Li and Company noted that the Company had an accumulated deficit at Sept. 30, 2012, and had a net loss and net cash used in operating activities for the fiscal year then ended. The Company reported a net loss of $404,885 on $89,825 of net revenues in fiscal 2012, compared with a net loss of $109,186 on $312 of net revenues in fiscal 2011. The Company's balance sheet at Sept. 30, 2012, showed $8.2 million in total assets, $1.1 million in total liabilities, and stockholders' equity of $7.1 million. A copy of the Form 10-K is available at http://is.gd/GuOoEg Schaumburg, Ill.-based ,Wellness Center USA, Inc., was incorporated in the State of Nevada on June 30, 2010. Since that date, it has been engaged in the development of an internet online store business to market customized vitamins and other nutritional supplement solutions and has expanded into additional businesses within the healthcare and medical sectors through two acquisitions, CNS-Wellness LLC, and Psoria-Shield Inc. CNS is a cognitive neuroscience company specializing in the treatment of brain-based behavioral health disorders including developmental, emotional and stress-related problems. PSI is a developer and manufacturer of Ultra Violet (UV) phototherapy devices for the treatment of skin diseases such as; psoriasis, eczema, vitiligo, and others. WEX INC: S&P Assigns 'BB' ICR; Rates $1.1BB Credit Facility 'BB' ---------------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its 'BB' long- term issuer credit rating, with a stable outlook, on South Portland, Maine-based WEX Inc. S&P also assigned a 'BB' rating on the company's existing $1.1 billion senior credit facility and proposed $350 million, fixed-rate, 10-year senior unsecured notes. "Our ratings on WEX, previously known as Wright Express Corp., reflect risks associated with the company's growth strategy, reliance on dividends and other payments from WEX Bank, WEX's exposure to volatility in fuel prices, and the competition in the fleet cards market," said Standard & Poor's credit analyst Igor Koyfman. "Offsetting factors include the company's strong market position in the fleet cards market, high margins, well- managed credit risk, and more diverse funding profile compared with other finance companies." "The stable outlook reflects our expectation that WEX will maintain its strong operating performance and continue to benefit from low-cost bank funding. We may lower the rating if competition leads to significant losses in market share or steep declines in pricing power. A sustained deterioration in debt protection metrics, with debt to adjusted EBITDA (excluding bank deposits) of more than 2.75x, could also lead to a downgrade. We consider it unlikely that we would raise the rating over the next 12 months. A higher rating would depend on the company's ability to diversify into businesses that are less capital intensive-- thereby lowering its dependence on bank funding--and to maintain strong margins," S&P added. WORLDCOM INC: 2nd Cir. Split on Allowing Untimely Appeal -------------------------------------------------------- The U.S. Court of Appeals for the Second Circuit ruled, 2-1, to deny a request by Communications Network International, Ltd., to take an appeal from an order in WorldCom Inc.'s bankruptcy case. CNI claimed that it never received notice under Federal Rule of Civil Procedure 77(d) and therefore failed to file a timely notice of appeal. Pursuant to Federal Rule of Appellate Procedure 4(a)(6), the U.S. Court for the Southern District of New York granted CNI's request to reopen the time within which to file an appeal. District Judge Lewis A. Kaplan, U.S. District Judge for the Southern District of New York, sitting by designation, said a district court's latitude to relieve litigants of the consequences of failures to file timely notices of appeal is not boundless. "We agree with the district court that CNI met the express preconditions of Rule 4(a)(6). Nevertheless, we hold that relief under that rule is discretionary and its grant in this case was inappropriate. The failure to receive Civil Rule 77(d) notice was entirely and indefensibly the fault of CNI's counsel. Granting relief in such circumstances was at odds with the purposes and structure of the procedural scheme. Accordingly, we reverse the order granting the motion to reopen and dismiss CNI's appeal as untimely," said Judge Kaplan, who penned the majority opinion. Circuit Judge Robert A. Katzmann also voted to dismiss CNI's appeal. Circuit Judge Gerard E. Lynch dissented, pointing out that Rule 4(a)(6) was designed to grant district courts the discretion to allow parties to file untimely notices of appeal under certain circumstances, notwithstanding neglect of their obligation to monitor court dockets to be aware of developments in their cases. According to Judge Lynch, the unwritten requirement the majority reads into Rule 4(a)(6) is at odds with the intended purpose of the Rule. The Rule was designed to allow judges to relieve litigants of a type of negligence: failure to monitor the docket. And in today's world, that means it allows judges to excuse failure to monitor the electronic docket. "In this case, appellant's counsel's first mistake was failing to check that docket on a regular basis. His second mistake was failing to update his attorney profile in the district court's electronic notification system on a regular basis. But this second mistake is simply a more specific example of the kind of negligence that, as the majority acknowledges, Rule 4(a)(6) is intended to excuse. . . . A rule that gives district courts discretion to excuse failure to use the electronic monitoring system at all is surely broad enough to excuse failure to use that system correctly," Judge Lynch said. "I am sure there are some cases in which granting leave to reopen the time to file an appeal would be an abuse of discretion. Notably, however, I am not aware of any cases, and the majority cites none, in which a court of appeals has found that a grant of this relief, where the Rule's conditions were satisfied, was such an abuse. This garden-variety case of attorney error hardly seems the place to start. Although the district court could have better stated its reasons for exercising its discretion in the way that it did, those reasons are not difficult to discern. There is no indication, for example, that the appellee was prejudiced in any way by the delayed filing of the notice of appeal, or that the appellant acted in a reckless or malicious way," continued Judge Lynch. "This is not even a case in which a member of the district court's bar, who regularly appears before the court, failed to comply with the requirement of keeping the court advised of his address; rather, counsel is an out-of-state lawyer, admitted pro hac vice, who carelessly (but perhaps understandably) either forgot that the e-mail address he provided in his only previous appearance in the district was now outdated, or believed that his motion for admission on this occasion, which provided his current e-mail address, was sufficient notice to the Clerk of Court of his new contact information. This was an error, but it does not seem to be one that should terminate his client's appellate rights, or preclude him and his client from taking advantage of a rule the entire point of which is to allow a district court to excuse errors of this very type." "I would defer to the good judgment of an experienced district judge in exercising a discretion granted to him by the rules, in a case in which that discretion cannot fairly be said to have been abused," said Judge Lynch. MCI WorldCom Communications, Inc., an affiliate of WorldCom, Inc., had sued CNI in U.S. Bankruptcy Court for the Southern District of New York, to recover for allegedly unpaid telecommunications services. CNI counterclaimed for fraud, intentional nondisclosure, breach of contract, and defamation and sought both compensatory and punitive damages. The appellate case is, COMMUNICATIONS NETWORK INTERNATIONAL, LTD., Defendant-Appellant-Cross Appellee, v. MCI WORLDCOM COMMUNICATIONS, INC., f/k/a WORLDCOM TECHNOLOGIES, INC., Plaintiff-Appellee-Cross Appellant, 11-0408(XAP) (2nd Cir.). A copy of the Second Circuit's Jan. 24 decision is available at http://is.gd/BqGHrIfrom Leagle.com. William Mark Mullineaux, Esq. -- mmullineaux@astorweiss.com -- at Astor Weiss Kaplan & Mandel, LLP, represents CNI. WorldCom, Inc., a Clinton, Mississippi-based global communications company, filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, WorldCom disclosed $103,803,000,000 in assets and $45,897,000,000 in debts. The Debtors were represented by Weil, Gotshal & Manges LLP. The Bankruptcy Court confirmed WorldCom's Plan on Oct. 31, 2003, and on Apr. 20, 2004, the Company formally emerged from Chapter 11 protection as MCI, Inc. On Jan. 6, 2006, MCI merged with Verizon Communications, Inc. MCI is now known as Verizon Business, a unit of Verizon Communications. ZINCO DO BRASIL: Incurs $1.7-Mil. Net Loss in Nov. 30 Quarter ------------------------------------------------------------- Zinco Do Brasil, Inc., formerly Turkower Corporation, filed its quarterly report on Form 10-Q, reporting a net loss of $1.7 million for the three months ended Nov. 30, 2012, compared with a net loss of $4.1 million for the three months ended Nov. 30, 2011. For the six months ended Nov. 30, 2012, the Company had a net loss of $3.9 million as compared to a net loss of $5.7 million for the six months ended Nov. 30, 2011. The Company's balance sheet at Nov. 30, 2012, showed $14.7 million in total assets, $5.2 million in total liabilities, and stockholders' equity of $9.5 million. The Company had a net loss of $3.9 million for the six months ended Nov. 30, 2012, and had a working capital deficit as of Nov. 30, 2012, of $5,232,600. "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/HfVP4I About Zinco Do Brasil New York based Zinco Do Brasil, Inc., formerly Turkpower Corporation, was incorporated in the State of Delaware on Nov. 4, 2004, as Global Ink Supply Company and was organized for the purpose of forming a vehicle to pursue a business combination. The Company has been a Turkish-American consulting and service operations firm and junior mining company whose operations in Turkey were discontinued in November 2011. On Aug. 14, 2012, the Company entered into a Binding Agreement with Ouro do Brasil Holdings Ltd. ("OBH") and IMS Engenharia Mineral Ltda. ("IMS") for the proposed acquisition of 99.9% of the capital stock of Zinco do Brasil Mineracao Ltda., a company to be formed under the laws of Brazil ("ZBM"), which will be owned by OBH and IMS. Pursuant to the Agreement, the Company will acquire 99.9% of the total capitalization of ZBM. On Sept. 28, 2012, an amendment was filed with the Secretary of State of Delaware to, among others, change the name of the Company to Zinco do Brasil, Inc. As of the date of the filing of the Company's quarterly report for the fiscal second quarter ended Nov. 30, 2012, ZBM has not been formed and the transaction has not been completed. * Dems Want Private Student Loan Discharges in Bankruptcies ----------------------------------------------------------- Evan Weinberger of BankruptcyLaw360 reported that Democratic senators said Wednesday that they planned to introduce legislation that would allow borrowers to discharge private student loans in bankruptcy, a move that comes as the industry receives heightened scrutiny from federal regulators. The Senate's number two Democrat, Sen. Dick Durbin of Illinois, said the measure was necessary as the total volume of student debt in the U.S. economy continues to balloon while the U.S. Consumer Financial Protection Bureau puts a spotlight on some of the private student lending industry's allegedly questionable practices, the report related. * Moody's Says JOBS Act's Investment Sector Implications Mixed -------------------------------------------------------------- The increased ability of private investment managers to solicit investors through public advertising will be credit positive for alternative asset managers but may create risks for inexperienced investors in private investments, says Moody's Investors Service in its new special comment "Impact of JOBS Act on Alternative Investment Managers." The US Securities and Exchange Commission (SEC) recent proposal that the 80-year old ban on public advertising for private investment funds be lifted is a byproduct of the JOBS Act signed into law in April, and has positive credit implications for alternative investment managers, says Moody's. The final ruling is expected sometime in 2013. "Alternative investment managers' wider communication with investors will boost capital raising, but may present investors with risk from misleading advertising and increased fraudulent activity," says Rory Callagy, a Moody's Vice President -- Senior Analyst and an author of the report. "Still, in a highly competitive market, advertising also provides investors with information that can help them differentiate previously opaque providers." But a large media blitz from alternative investment managers upon the SEC's approval of final rules is unlikely, says Moody's. The rating agency expects alternative investment managers to take a measured approach to advertising given their lack of experience communicating openly with investors and the broader public, as well as to ensure brand preservation and the related exclusivity of these products. "While the alternative investment industry appears to be a key beneficiary of the JOBS Act, many firms lack fully developed marketing and distribution capabilities," notes Ram Saravanapavaan, a Moody's analyst and co-author of the report. * Financial Market Turmoil in Europe Hits Banks' Credit Profiles ---------------------------------------------------------------- Recent financial market turmoil and subsequent sovereign crises across Europe took a heavy toll on many banks' credit profiles resulting in a substantial number of downgrades in 2012, but bank ratings are expected to be relatively stable during 2013, says Moody's Investors Service in its report, "Global Banking Outlook - - 2013." "While there has been strengthening in many banks' financial performance, there are a number of interconnected themes with material implications for bank credit that we will closely follow in 2013," said Moody's Global Banking Managing Director Greg Bauer. Moody's will monitor key themes in 2013 that include: 1. Continued weak global recovery and still-elevated sovereign risk for many European banking systems 2. Unprecedented low interest rates that dampen profitability and can encourage excessive risk-taking 3. Still-fragile investor confidence deriving from uncertainty over banks' risk profiles 4. Nascent regulatory reforms that impact risk-taking, capital, liquidity and the resolution of troubled banks The report also provides regional overviews of the key issues facing banks operating in Europe, North America, Asia, Emerging Europe and Latin America. * U.S. Auto ABS Losses End 2012 Higher, Fitch Reports ----------------------------------------------------- Seasonal patterns drove losses on both U.S. prime and subprime auto loan ABS higher last month, according to the latest index results from Fitch Ratings. Despite this, Fitch expects prime asset performance to remain strong in 2013. However, losses will normalize and increase off of record low rates recorded in 2012 throughout the course of the year. Prime losses closed out 2012 within historically low levels and 18% below the rate seen in December 2011. Fitch predicts cumulative net losses in the range of 0.50%-1.20% in 2013 (within range of the 2004-2005 vintages). Factors supporting performance in 2013 include healthy used vehicle values albeit at marginally lower values, and continued strong performance of the 2009-2012 vintage transactions. Fitch's 2013 outlook for ratings performance is positive. Fitch expects the number of positive rating actions to increase this year given the higher number of transactions coming up for review. Strong asset performance with lower-than-projected loss rates will also help spur upgrades and potentially outlook revisions. Prime 60+ day delinquencies rose 8.3% to 0.39% in December from 0.36% the previous month. Prime auto ABS delinquencies were still 22% improved year-over-year (YOY). Prime annualized net losses (ANL) rose 11.1% month-over-month (MOM) to 0.40% in December, still well below the rate in December 2011. Prime Cumulative Net Losses (CNL) remained flat month-over-month (MOM) at 0.29% in December, recording a solid 46.3% improvement over the same period in 2011. Subprime auto ABS displayed some weakness during the latter half of 2012. Subprime 60+ days delinquencies were up 3.1% MOM to 3.64% in December, and were 14.1% higher YOY. Subprime ANL rose to 6.92% in December (the seventh consecutive increase) and were 8.8% above December 2011. The December rate was the highest ANL rate in over a year (November 2011). Subprime losses, outside seasonal trends, are more prone to volatility due to the weaker credit metrics prevalent in this sector. Marginally weaker asset performance along with slightly looser underwriting in recently issued transactions contributed to higher loss rates. Despite the rise in subprime ANL in late 2012, overall loss rates in the 2009-2011 vintages are still well below the 2006-2008 vintage losses. Further, upcoming tax refunds will support obligors who typically use this income to pay down debts which supports performance in the coming spring months. Used vehicle values were healthy in late 2012 and consumer demand strong as sales levels remained elevated relative to 2011. The Manheim Used Vehicle Value Index, which tracks values of used vehicles at auction, ended the year at 124.1, up 1.2% from 122.6 in November. Inventory levels of new vehicles dropped in December over November, while incentives were low historically, supporting used vehicle values. Fitch's auto ABS indices comprise of $63.86 billion of outstanding notes issued from 117 transactions. Of this amount, 75% comprise prime auto loan ABS and the remaining 25% subprime ABS. * Mary Jo White Named Securities & Exchange Commission Chair ------------------------------------------------------------ Julie Pace and Marcy Gordon, writing for The Associated Press, reported that President Barack Obama sent his strongest signal yet Thursday that he wants the government to get tougher with Wall Street, appointing a former prosecutor to head the Securities and Exchange Commission for the first time in the agency's 79-year history. Mary Jo White, former U.S. attorney in Manhattan, has an extensive record of prosecuting white-collar crime, won convictions in the 1993 World Trade Center bombing and the 1998 terrorist attacks on two U.S. embassies in Africa and put crime boss John Gotti away, the report related. f confirmed, she will have the job of enforcing complicated regulations written in response to the worst financial crisis since the Depression, Reuters added. "You don't want to mess with Mary Jo," the president said at the White House with White at his side, Reuters cited. "As one former SEC chairman said, Mary Jo does not intimidate easily, and that's important because she's got a big job ahead of her." White would take over at the SEC from Elisse Walter, who has been interim chairwoman since Mary Schapiro resigned in December, according to Reuters. Obama also renominated Richard Cordray as head of the Consumer Financial Protection Bureau, created after the financial meltdown, according to the same report. The president used a recess appointment last year to circumvent Congress and install Cordray, the report noted. That appointment expires at the end of this year. Colleagues and politicians describe White as tough, no-nonsense and fiercely competitive, according to Reuters. * CAS Recognized as Best Attorneys in Foreclosure Defense --------------------------------------------------------- Homeowners in danger of losing their homes to foreclosure are often advised to seek legal consul. More often than not, these desperate individuals turn to their local Yellow Pages or the Internet, pick a Foreclosure Defense attorney at random, and hope for the best. Given this, a recent poll asked homeowners who beat foreclosure which attorneys they would turn to if once again faced with the prospect of losing their home. The answer given by the majority of participants was Consumer Attorney Services (CAS) and its network of Ohio based lawyers. Poll takers praised CAS's attorneys for the myriad of repayment and refinancing options it offers clients. Most people don't know that the average person in danger of going into foreclosure would be able to afford his or her mortgage if the monthly payment were only a small percentage less. Recognizing this, the CAS team offers clients several refinancing alternatives. Allowing homeowners to apply for a new loan that replaces their existing mortgage, or a repayment plan at a reduced monthly payment, these options have helped hundreds of CAS's clients save their homes. For those in more perilous situations, CAS advices its clients to consider more radical alternatives, such as forbearance. Effectively freeing clients from making payments for a period of time, forbearance affords clients the necessary time they so desperately need to get back on their feet. Even in the worst case scenario where clients are advised to leave their homes, attorneys in the CAS Ohio network can and will help clients avoid foreclosure. Poll participants also recognized CAS's Ohio attorneys as some of the most experienced in the field. Many of its members come from a long pedigree of attorneys, and almost all of them graduated at or near the top of their class. In addition, only lawyers who specialize in Consumer Law, Chapter 7 and 13 proceedings, Foreclosure Defense or a related field are permitted into the firm. Finally, lawyers were commended for their commitment to clients. As one former client eloquently stated, "Each individual case is examined very carefully, and the attorneys consult with you until a solution that is both reasonable and beneficial to your long term outlook is agreed upon." About Consumer Attorney Services Ohio Customer Attorney Services -- http://www.consumerattorneyservices.com/ohio-attorneys-- is a customer advocacy law firm with over 215 attorneys across the U.S. Its primary areas of practice include bankruptcy, foreclosure defense, debt settlement programs and contract disputes. * BOND PRICING -- For Week From Jan. 21 to 25, 2013 --------------------------------------------------- Company Coupon Maturity Bid Price ------- ------ -------- --------- 1ST BAP CHUR MEL 7.500 12/12/2014 5.000 AES EASTERN ENER 9.000 1/2/2017 1.750 AES EASTERN ENER 9.670 1/2/2029 4.125 AGY HOLDING COR 11.000 11/15/2014 49.500 AHERN RENTALS 9.250 8/15/2013 61.000 ALION SCIENCE 10.250 2/1/2015 50.125 ALLY-CALL02/13 6.375 8/1/2013 100.253 AMBAC INC 6.150 2/7/2087 8.090 ATP OIL & GAS 11.875 5/1/2015 7.125 ATP OIL & GAS 11.875 5/1/2015 7.125 ATP OIL & GAS 11.875 5/1/2015 7.125 BANK ONE CORP 5.250 1/30/2013 100.000 BUFFALO THUNDER 9.375 12/15/2014 34.125 CENTRAL EUROPEAN 3.000 3/15/2013 65.000 CHAMPION ENTERPR 2.750 11/1/2037 1.000 DELTA AIR 1992B2 10.125 3/11/2015 30.000 DOWNEY FINANCIAL 6.500 7/1/2014 64.250 DYN-RSTN/DNKM PT 7.670 11/8/2016 4.500 EASTMAN KODAK CO 7.000 4/1/2017 12.250 EASTMAN KODAK CO 7.250 11/15/2013 13.370 EASTMAN KODAK CO 9.200 6/1/2021 15.000 EASTMAN KODAK CO 9.950 7/1/2018 12.678 EDISON MISSION 7.500 6/15/2013 48.877 ELEC DATA SYSTEM 3.875 7/15/2023 95.000 ENTERPRISE PRODU 6.375 2/1/2013 100.032 FAIRPOINT COMMUN 13.125 4/1/2018 1.000 FAIRPOINT COMMUN 13.125 4/1/2018 1.000 FAIRPOINT COMMUN 13.125 4/2/2018 1.220 FIBERTOWER CORP 9.000 1/1/2016 28.000 GEN ELECTRIC CO 5.000 2/1/2013 100.000 GEOKINETICS HLDG 9.750 12/15/2014 57.000 GEOKINETICS HLDG 9.750 12/15/2014 56.400 GLB AVTN HLDG IN 14.000 8/15/2013 18.900 GLOBALSTAR INC 5.750 4/1/2028 61.938 GMX RESOURCES 4.500 5/1/2015 54.050 GMX RESOURCES 5.000 2/1/2013 99.750 HAWKER BEECHCRAF 8.500 4/1/2015 6.000 HAWKER BEECHCRAF 8.875 4/1/2015 16.000 HORIZON LINES 6.000 4/15/2017 30.000 HUTCHINSON TECH 8.500 1/15/2026 66.250 JAMES RIVER COAL 4.500 12/1/2015 42.200 JEHOVAH-JIREH 7.800 9/10/2015 10.000 KROGER CO/THE 5.500 2/1/2013 100.044 LBI MEDIA INC 8.500 8/1/2017 25.625 LEHMAN BROS HLDG 0.250 12/12/2013 21.125 LEHMAN BROS HLDG 0.250 1/26/2014 21.125 LEHMAN BROS HLDG 1.000 10/17/2013 21.125 LEHMAN BROS HLDG 1.000 3/29/2014 21.125 LEHMAN BROS HLDG 1.000 8/17/2014 21.125 LEHMAN BROS HLDG 1.000 8/17/2014 21.125 LEHMAN BROS HLDG 1.250 2/6/2014 21.125 MF GLOBAL LTD 9.000 6/20/2038 68.750 MOHEGAN GAMING 6.125 2/15/2013 96.040 ONCURE HOLDINGS 11.750 5/15/2017 43.000 OPENSL-CALL02/13 9.750 2/1/2015 90.125 OVERSEAS SHIPHLD 8.750 12/1/2013 36.770 PLATINUM ENERGY 14.250 3/1/2015 62.100 PLATINUM ENERGY 14.250 3/1/2015 #N/A N/A PMI CAPITAL I 8.309 2/1/2027 0.125 PMI GROUP INC 6.000 9/15/2016 30.500 POWERWAVE TECH 1.875 11/15/2024 3.500 POWERWAVE TECH 1.875 11/15/2024 3.500 POWERWAVE TECH 3.875 10/1/2027 3.500 POWERWAVE TECH 3.875 10/1/2027 3.500 RADISYS CORP 2.750 2/15/2013 100.000 RESIDENTIAL CAP 6.875 6/30/2015 29.500 REVEL AC INC 12.000 3/15/2018 5.750 SAVIENT PHARMA 4.750 2/1/2018 28.000 SCHOOL SPECIALTY 3.750 11/30/2026 31.500 TERRESTAR NETWOR 6.500 6/15/2014 10.000 TEXAS COMP/TCEH 10.250 11/1/2015 28.564 TEXAS COMP/TCEH 10.250 11/1/2015 28.375 TEXAS COMP/TCEH 10.250 11/1/2015 29.500 TEXAS COMP/TCEH 15.000 4/1/2021 35.000 TEXAS COMP/TCEH 15.000 4/1/2021 35.375 THQ INC 5.000 8/15/2014 34.000 TL ACQUISITIONS 10.500 1/15/2015 35.000 TL ACQUISITIONS 10.500 1/15/2015 34.250 TOUSA INC 7.500 1/15/2015 0.001 UAL 1991 TRUST 10.020 3/22/2014 11.250 USEC INC 3.000 10/1/2014 42.000 VERSO PAPER 11.375 8/1/2016 41.500 WCI COMMUNITIES 6.625 3/15/2015 0.875 WESTERN EXPRESS 12.500 4/15/2015 63.625 WESTERN EXPRESS 12.500 4/15/2015 63.625 ********* 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., Washington, D.C., 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 2013. 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 $975 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 Peter A. Chapman at 215-945-7000 or Nina Novak at 202-241-8200. *** End of Transmission ***