/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/130308.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, March 8, 2013, Vol. 17, No. 66 Headlines 1ST FINANCIAL: Swings to $1.3 Million Net Income in 2012 250 AZ: Hires RICORE's John Rickert as Asset Manager 250 AZ: Creditors Object to Use of Cash Collateral 501 GRANT STREET: U.S. Trustee Wants Case Dismissed 501 GRANT STREET: Says "Confirmable" Plan Should Move Forward 501 GRANT STREET: Can Employ Levene Neale as Bankruptcy Counsel A123 SYSTEMS: Michigan Seeks to Block Transfer $125MM Tax Credits ACCESS PHARMACEUTICALS: Ayer Equity Stake at 4% as of Dec. 31 ADVANCED LIVING: Nursing Home Auction Set for April 29 AEOLUS PHARMACEUTICALS: Delays Form 10-Q for Dec. 31 Quarter AEOLUS PHARMACEUTICALS: Extends Contract with CEO John McManus AMERICAN AIRLINES: US Airways Pilots Sue to Stop Merger Challenge AMERICAN AIRLINES: Offering $663MM of Equipment Certificates AMERICAN APPAREL: Incurs $37.3 Million Net Loss in 2012 ANTS SOFTWARE: Fletcher Asset Reports 8% Stake as of Dec. 31 APPLETON PAPERS: Incurs $37.1 Million Net Loss in Fourth Quarter APPLIED DNA: Stockholders Elect Six Directors to Board ARCHDIOCESE OF MILWAUKEE: Claim Junked After Judge Flips Order ATLANTIC & PACIFIC: Union Dispute Over $56M Store Sales Stays Put ATLANTIC COAST: Incurs $300,000 Net Loss in Fourth Quarter ATP OIL & GAS: Delays Sale Process for Deepwater Assets AVANTAIR INC: Post-Effective Amendment No. 4 to 7.4MM Offering BEALL CORPORATION: Plan Filing Period Extended Until April 5 BENADA ALUMINUM: Wins Approval of Bootstrap Chapter 11 Plan BERNARD L. MADOFF: Trustee Made Absurd Claims, Schneiderman Says BIOVEST INTERNATIONAL: Incurs $3.3 Million Loss in Dec. 31 Qtr. BOOMBERANG SYSTEMS: Cuts Authorized Capital Stock to 201 Million BRIER CREEK: Court Clarifies Arbitration Order in BofA Lawsuit C.H.I. OVERHEAD: Moody's Assigns 'B3' CFR; Outlook Stable CAPITOL BANCORP: Creditors Fail to Wrest Control CENTRAL EUROPEAN: A1, Kaufman to Back Pre-Arranged Chapter 11 CITRUS MEMORIAL: Moody's Lowers Rating on Outstanding Bonds to B3 COATES INTERNATIONAL: Cowan Gunteski Serves as New Accountants COMMONWEALTH BIOTECHNOLOGIES: Individual Can't Represent Claimant COMMUNICOM CORP: Owner of 4 Radio Stations in Chapter 11 COMPETITIVE TECHNOLOGIES: To Issue 100K Shares for Legal Services CONEXANT SYSTEMS: Section 341(a) Meeting Scheduled for April 9 COSMETICS PLUS: Dismissal of Malpractice Suit Upheld CPI CORP: Amended Forbearance Agreement with BofA Expires CRB PARTNERS: Texas Judge Rejects Partial "Dirt-For-Debt" Plan DEL MONTE: High Financial Leverage Cues Moody's to Cut CFR to B2 DENALI FAMILY: Case Summary & 20 Largest Unsecured Creditors DETROIT, MI: Council to Appeal Governor's Takeover Declaration DIAL GLOBAL: Co-CEO Quits for "Good Reason"; Filings Suspended DOMINICK PEBURN: Trustee Allowed to Recover $22,190 From Trinity DOUGLAS RHOADS: Can't Appeal to 9th Circuit Over Suit Dismissal DREAMS PLC: Sun Capital Saves Chunk From Bankruptcy DUMA ENERGY: C. Watts Holds 29.1% Equity Stake at Nov. 29 DUMA ENERGY: Jeremy Driver Holds 29.2% Equity Stake at Nov. 29 EDIETS.COM INC: Berke Bakay No Longer Owns Shares at Feb. 28 EDIETS.COM INC: Closes Merger with As Seen On TV EDUCATION HOLDINGS: Modifies Prepackaged Chapter 11 Plan ENDEAVOUR INT'L: Enters Into $22.5 Million Forward Sale Agreement EPAZZ INC: Board OKs Formation of Subsidiary Cooling Technology EPICEPT CORP: Incurs $6.1 Million Loss in 2012 FIRST MARINER: Annual Stockholders Meeting Set for May 14 FIRST STATE: Alston & Bird Can't Represent Chapter 7 Trustee FREESEAS INC: Issues Final 31,755 Settlement Shares to Hanover GAC STORAGE: Fails to Get Court Approval of 3rd Amended Plan GASCO ENERGY: Chapter 11 Among Options; Going Concern Doubt Raised GENCO SHIPPING: Bank Lenders Poised to Torpedo Bonds GENE CHARLES: U.S. Trustee Unable to Form Committee GOOD SAM: Suspending Filing of Reports with SEC GOOD SAMARITAN: Moody's Reviews Ba2 Rating for Possible Downgrade GOWANUS INN: Case Summary & 5 Largest Unsecured Creditors GRAY TELEVISION: Reports $28.1 Million Net Income in 2012 GREATHAND DEVELOPMENT: Voluntary Chapter 11 Case Summary GRUBB & ELLIS: Liquidation Plan Confirmed HMX ACQUISITION: Court OKs Zolfo Cooper as Committee Consultant HMX ACQUISITION: Hourly Rates of Leonard Street Corrected HOSTESS BRANDS: Sues Kroger for $2.8 Million in Delivered Goods HOWARD P HORTON: Voluntary Chapter 11 Case Summary IMH FINANCIAL: To Form JV to Acquire Multi-Family Portfolio INSPIREMD INC: Amends 11.1 Million Common Shares Prospectus INSPIREMD INC: Ayer Capital Stake at 8% at End of 2012 INSPIRATION BIOPHARMACEUTICALS: Taps McGladrey as Accountant INTERNATIONAL COMMERCIAL: To Settle Alleged Consumer Act Offense INTERNATIONAL LEASE: Fitch Assigns 'BB' Rating to Unsecured Notes INTERNATIONAL LEASE: Moody's Rates 2 Unsec. Notes Tranches 'Ba3' J & J EQUITIES: Case Summary & 2 Unsecured Creditors J.C. PENNEY: Vornado Realty Stake at 6.1% as of March 4 J2 GLOBAL: S&P Raises Corp. Credit Rating to 'BB'; Outlook Stable JEFFERSON COUNTY, AL: Societe Generale Exiting Bankruptcy Appeal JEFFERSON COUNTY, AL: Moody's Keeps B3 Rating on $747MM Warrants K-V PHARMACEUTICAL: $85-Mil. Default Risk Keeps Plan on Schedule LEHI ROLLER: Can Hire Parsons Kinghorn as Bankruptcy Counsel LEHMAN BROTHERS: First American Can't Duck Suit Over LehmanRE Loan LEHMAN BROTHERS: Barclays Need Not Pay Former Exec's Bonuses LEHMAN BROTHERS: Brokerage Trustee Files Final Barclays Brief LIGHTSQUARED INC: Amends Scope of Ernst & Young's Employment LIME ENERGY: NASDAQ Grants Request for Continued Listing LIQUIDMETAL TECHNOLOGIES: Hikes Authorized Shares to 500MM LUCID INC: Five Ten Capital Senior Advisor Appointed to Board LUXEYARD INC: Gets $1.3-Mil. Default Judgment From Former CEO MACCO PROPERTIES: Equity Security Holder Further Amends Plan MACROSOLVE INC: Incurs $1.7 Million Net Loss in 2012 MASTEC INC: Moody's Rates New Sr. Unsecured Notes Due 2023 'Ba3' MASTEC INC: S&P Rates $400MM Sr. Unsecured Notes Due 2023 'BB-' MC2 CAPITAL: Court Makes No Final Order on Amount of Shaw Claims MCGRAW-HILL GLOBAL: Fitch Assigns 'B+' Issuer Default Rating MDU COMMUNICATIONS: Fails to Consummate Merger with Multiband MEZZANINE INC: IRS Consents to Use of Cash Collateral METEX MFG: Charter Oak Okayed as Committee's Financial Advisor MF GLOBAL: Asks Court to Disallow 96 Claims, Reclassify 84 Claims MILLENNIUM PLAN: NJ Court Junks Claims vs. Plan Trustee MITEL NETWORKS: S&P Revises Outlook to Stable & Affirms 'B' CCR MORGANS HOTEL: Incurs $66.8 Million Net Loss in 2012 MTS LAND: U.S. Trustee Says Plan Outline Lacks Information NC12 INC: Bankruptcy Counsel Gets Court Nod for $92,435 in Fees NORTEL NETWORKS: After Mediation Fails, Court Fight Begins NORTH POINT: Case Summary & 7 Largest Unsecured Creditors OMEGA NAVIGATION: Sells Subsidiaries for $2 Million ORANGE COUNTY: S&P Reinstates 'B+' Rating & Negative Outlook ORCHARD SUPPLY: Updates on Efforts to Improve Capital Structure ORMET CORP: Proposes Stock Trading Restrictions to Preserve NOLs ORMET CORP: Has Short-Term Power Agreement With AEP Ohio ORMET CORP: Seeks to Pay Critical and Foreign Vendors OVERLAND STORAGE: Stephens Investment Has 3% Stake at Dec. 31 OVERSEAS SHIPHOLDING: Exclusivity Extended, Sale Process Okayed OVERSEAS SHIPHOLDING: Delays Form 10-K Amid Review of Financials OZELL NEELY: May File Amended Suit on Unjust Enrichment Claims PENSON WORLDWIDE: Incentive Plan Approval Sought PILGRIM'S PRIDE: S&P Affirms 'B' CCR & Revises Outlook to Positive PINNACLE AIRLINES: Crash Claimants Defer Objections PLATTE RIVER: Case Summary & Largest Unsecured Creditor POWERWAVE TECHNOLOGIES: To Auction Business on April 8 PRECISION ENGINEERED: Moody's Rates New $40MM Term Loan 'B1' PROTECTION ONE: Proposed Debt Add-on No Impact on Moody's B2 CFR PROTECTION ONE: S&P Affirms 'B' CCR & Rates $50MM Loan 'B+' RANCHER ENERGY: Board OKs Appointment of BF Borgers as Accountant READER'S DIGEST: Wants Authority to Employ Weil Gotshal as Counsel READER'S DIGEST: Hiring Cole Schotz as Conflicts Counsel READER'S DIGEST: DEMG Taps Dickstein Shapiro as Co-Counsel READER'S DIGEST: Seeks to Expand Scope of Epiq's Employment RESIDENTIAL CAPITAL: Examiner Seeks Changes to Protective Order RESIDENTIAL CAPITAL: 3rd Interim Order on FRB Advisors Entered RESIDENTIAL CAPITAL: MBIA Objection to Ocwen Sale Resolved RODEO CREEK: To Pay Prepetition Claims of Vendors, Shippers RODEO CREEK: Taps GCG Inc. as Claims and Noticing Agent ROTHSTEIN ROSENFELDT: Investors Want TD Bank Row in State Court SA NYU WA: Grand Canyon Skywalk Owner Seeks Bankruptcy SAN BERNARDINO, CA: Wrongly Transferred Assets, State Says SAN BERNARDINO, CA: Police Union Wants to Sue City in State Court SANUWAVE HEALTH: Issues $60,000 Convertible Notes to Chairman SHOPPES AT PRIME: Case Summary & Largest Unsecured Creditor SIAG AERISYN: Hires Accountant to Review Avoidance Claims SMART ONLINE: Avy Lugassy Has 40% Ownership at Feb. 7 SNO MOUNTAIN: Trustee Has Final OK to Borrow $498K from Lender SOUTHERN AIR: Ch. 11 Plan Could Shortchange Gov't, US Says SPENDSMART PAYMENTS: EisnerAmper Replaces BDO as Accountants SPILLMAN DEVELOPMENT: Credit Bid Discharges Liability on Guarantee SPIRIT REALTY: Incurs $76.2 Million Net Loss in 2012 SPRINT NEXTEL: Obtains $2.8-Bil. Revolving Facility From JPMorgan SPRINT NEXTEL: S&P Assigns 'BB-' Rating to $2.8-Bil. Facility STEREOTAXIS INC: Incurs $4.3 Million Net Loss in Fourth Quarter STORAGE ALLIANCE: Case Summary & 5 Unsecured Creditors STREAM GLOBAL: S&P Affirms 'B+' CCR & Revises Outlook to Negative SUN PRODUCTS: Moody's Assigns 'B1' Rating to $100MM Revolver SUN PRODUCTS: S&P Affirms 'B-' CCR & Revises Outlook to Stable SYMPHONYIRI GROUP: Moody's Rates New US$50MM Credit Facility 'B1' TAR HEEL: S&P Assigns 'B+' Rating to Series 2013-1 Notes TERRESTAR CORP: Swarts Claims Junked for Second Time TEXAS GRAND PRAIRIE: 5% Interest Rate Is OK for Cramdown THINES LLC: Case Summary & 5 Unsecured Creditors TIGER MEDIA: Steve Ye Named Chief Financial Officer TIGRENT INC: Lazarus Discloses 7% Ownership as of Feb. 5 TYRONE CROSSINGS: Case Summary & 8 Unsecured Creditors UNDERGROUND ENERGY: Files for Bankruptcy to Protect Lease UPWARDLY MOBILE: Voluntary Chapter 11 Case Summary VANGUARD HEALTH: Term Loan Increase No Impact on Moody's 'B2' CFR VITRO SAB: Bondholders Get 85.25% Plus Fees Under Settlement WADDINGTON NORTH: $250MM Debt Facility Gets Moody's 'B1' Rating WARNER MUSIC: Inks Supplemental Indentures with Wells Fargo WPCS INTERNATIONAL: Stockholders Elect Seven Directors to Board * 'Wild Card' Bankruptcy Exemption Applies to Cars: 9th Circ. * Loan Non-Dischargeable When Use of Proceeds Misrepresented * Judge Posner Writes Elegant Dicta on Complex UCC Issue * 10 Florida CDD Bond Ratings Lowered on Inadequate Debt Service * Fed Says Modest Growth Spurred by Housing in Survey * Fitch Reports on Impact of Industry Selection on Default Risk * Moody's Sees Continued Decline of Outstanding Balance of VRDBs * Moody's Sees Modest Growth for US For-Profit Hospital Sector * Moody's Reports Stable Outlook on Closed-end Fund Sector * White House Asks CFTC Chief to Stay for Another Term * Bankruptcy Filings Show Signs of Bottoming Out in February * Debt, Bankruptcy in Retirement Growing Trend in Canada * Banks Defeat Bid to Revive Auction-Rate Antitrust Case * House Votes to Avert Shutdown as Obama Looks for Big Deal * Stress Tests Seen Boosting U.S. Bank Shareholder Payouts * With Legal Reserves Low, Bank of America Faces a Big Lawsuit * Morgan Stanley Seeks Dismissal of MetLife Mortgage Suit * HSBC Sells U.S. Loan Portfolio for $3.2 Billion * Former Wells Fargo Broker Is Sentenced to Two Years * Ex-Kirkland Partner Pleads Guilty to $2-Mil. Tax Scheme * Judge Lyons Retiring From Bankruptcy Bench in Trenton, NJ * BOOK REVIEW: Stephanie Wickouski's Bankruptcy Crimes ********* 1ST FINANCIAL: Swings to $1.3 Million Net Income in 2012 -------------------------------------------------------- 1st Financial Services Corporation filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing net income of $1.27 million on $25.71 million of total interest income for the year ended Dec. 31, 2012, as compared with a net loss of $20.47 million on $28.02 million of total interest income during the prior year. The Company's balance sheet at Dec. 31, 2012, showed $710.43 million in total assets, $690.74 million in total liabilities, and $19.68 million in total stockholders' equity. Elliott Davis, PLLC, in Greenville, South Carolina, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has suffered recurring losses that have eroded regulatory capital ratios, and the Company's wholly owned subsidiary, Mountain 1st Bank & Trust Company, is under a regulatory Consent Order with the Federal Deposit Insurance Corporation and the North Carolina Commissioner of Banks that requires, among other provisions, capital ratios to be maintained at certain heightened levels. In addition, the Company is under a written agreement with the Federal Reserve Bank of Richmond that requires, among other provisions, the submission and implementation of a capital plan to improve the Company and the Bank's capital levels. As of Dec. 31, 2012, both the Bank and the Company are considered "significantly undercapitalized" based on their respective regulatory capital levels. These considerations raise substantial doubt about the Company's ability to continue as a going concern. A copy of the Form 10-K is available for free at: http://is.gd/sQgkol About 1st Financial Hendersonville, North Carolina-based 1st Financial Services Corporation is the bank holding company for Mountain 1st Bank & Trust Company. 1st Financial has essentially no other assets or liabilities other than its investment in the Bank. 1st Financial's business activity consists of directing the activities of the Bank. The Bank has a wholly owned subsidiary, Clear Focus Holdings LLC. The Bank was incorporated under the laws of the state of North Carolina on April 30, 2004, and opened for business on May 14, 2004, as a North Carolina chartered commercial bank. At Dec. 31, 2011, the Bank was engaged in general commercial banking primarily in nine western North Carolina counties: Buncombe, Catawba, Cleveland, Haywood, Henderson, McDowell, Polk, Rutherford, and Transylvania. The Bank operates under the banking laws of North Carolina and the rules and regulations of the Federal Deposit Insurance Corporation (the FDIC). As a North Carolina bank, the Bank is subject to examination and regulation by the FDIC and the North Carolina Commissioner of Banks. The Bank is further subject to certain regulations of the Federal Reserve governing reserve requirements to be maintained against deposits and other matters. The business and regulation of the Bank are also subject to legislative changes from time to time. The Bank's primary market area is southwestern North Carolina. Its main office and Hendersonville South office are located in Hendersonville, North Carolina. At Dec. 31, 2011, the Bank also had full service branch offices in Asheville, Brevard, Columbus, Etowah, Forest City, Fletcher, Hickory, Marion, Shelby, and Waynesville, North Carolina. The Bank's loans and deposits are primarily generated from within its local market area. 250 AZ: Hires RICORE's John Rickert as Asset Manager ---------------------------------------------------- 250 AZ, LLC, asks the U.S. Bankruptcy Court for permission to employ John C. Rickert at RICORE Investment Management, Inc., doing business as Sperry Van Ness, as asset manager. Mr. Rickert will replace Daymark Realty Advisors Inc. and act as the Debtor's asset manager to provide services for a building owned by the Debtor in Cincinnati. The Debtor terminated Daymark due to conflicts of interest as managing member of another owner of the property and as a creditor of the property. Rickert, as the asset manager, will: a. review existing leases and prepare a leasing strategy for lease expirations including renewal options, b. review proposals, LOI's and lease documents submitted by CBRE as Property Manager and leasing agent for new leasing and the impact this leasing has on the overall property income stream both in terms of the creditworthiness of the tenant as well as the quantity of income and the value and impact of options, and c. consistently monitor property receivables and provide guidance for resolution, negotiation, and/or litigation to ensure collections are maximized. The proposed asset manager will charge the Debtor a fee for his services of 0.75% of gross revenues. Expenses and time outside of the scope of the asset management agreement will be billed at the rate of $175 per hour. About 250 AZ 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. 250 AZ filed a Chapter 11 petition (Bankr. D. Ariz. Case No. 13-00851) on Jan. 22, 2013. The petition was signed by George Hoxie as manager. Judge Eileen W. Hollowell presides over the case. Breen Olson & Trenton, LLP, serves as the Debtor's counsel. The Debtor has scheduled assets of 25.07 million and scheduled liabilities of $70.75 million. 250 AZ: Creditors Object to Use of Cash Collateral -------------------------------------------------- Susan S. Courtney and Armed Forces Bank, N.A., secured lenders of 250 AZ, filed separate non-consent notices and objections to 250 AZ, LLC's request to use of cash collateral. Magee Cosmo Development LLC executed a note secured by Deed of Trust, payable to Ms. Courtney in the sum of $137,500 with interest at the rate of 8% per year. The Note was due and payable on April 30, 2013. As part of the same transaction to secure payment of the Note, Magee executed and delivered to Ms. Courtney as to a 1/2 interest, Sylvia Levkowitz, Trustee of the Administrative Trust for the Revocable Trust of Joe and Sylvia Levkowitz as to a 1/2 interest, a Deed of Trust, and encumbers real estate property known as 2292 W. Magee Road, Suite 220, Tucson, Arizona. Ms. Courtney filed a complaint in August 2012, seeking to foreclose the Deed of Trust encumbering the property. The suit is pending in the Pima County Superior Court. Meanwhile, Ina Business Center, LLC had obtained a Construction Loan Promissory Note dated June 8, 2007, in the original principal sum of $4,200,000 from Bank Midwest, N.A. As security for the payment of the Indebtedness to Bank Midwest, IBC and a commonly- owned entity, Magee Como Development Association, LLC granted to Bank Midwest a valid first priority mortgage lien and security interest. Armed Forces Bank became the successor to Bank Midwest by merger in December 2010. Magee and Armed Forces Bank modified and amended the Deed of Trust. IBC defaulted on the Indebtedness. Thereafter, Armed Forces Bank revoked the license granted to IBC to collect rents and served notice upon Quiktrip Corporation to commence payments of rent directly to Lender pursuant to the Assignment of Rents. Ms. Courtney says that the Debtor should be prohibited from using any rent or other proceeds received by the Debtor which are attributable to its collateral and those funds should be deposited in a segregated account. Armed Forces Bank also opposes the use of rent received from Quiktrip Corporation and other parties. It also wants the funds deposited in a segregated debtor-in-possession account. About 250 AZ 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. 250 AZ filed a Chapter 11 petition (Bankr. D. Ariz. Case No. 13-00851) on Jan. 22, 2013. The petition was signed by George Hoxie as manager. Judge Eileen W. Hollowell presides over the case. Breen Olson & Trenton, LLP, serves as the Debtor's counsel. The Debtor has scheduled assets of 25.07 million and scheduled liabilities of $70.75 million. 501 GRANT STREET: U.S. Trustee Wants Case Dismissed --------------------------------------------------- Unites States Trustee Peter C. Anderson asks the U.S. Bankruptcy Court for the Central District of California to dismiss the involuntary Chapter 11 case filed against alleged debtor 501 Grant Street Partners LLC with a 180-day bar pursuant to 11 U.S.C. Section 1112(b)(1), citing that the Debtor has failed to submit a complete seven-day package to the U.S. Trustee and is not in compliance with the UST requirements. Specifically, the U.S. Trustee says the Debtor has failed to: * File an executed list of the twenty largest creditors holding unsecured claims; * Provide sufficient evidence of closing of all pre-petition bank accounts; * Provide proof of the opening of debtor in possession bank accounts; * Provide a list of required certificates and licenses; * Provide a fully completed Real Property Questionnaire; * Provide tax returns for the two years preceding the petition date; * Provide fully completed monthly operating reports; and * Pay quarterly fees for the fourth quarter of 2012, estimated to be the sum of $650, which fees are now past due. About 501 Grant Street & Union Trust Building An involuntary Chapter 11 bankruptcy petition was filed against 501 Grant Street Partners LLC, based in Woodland Hills, California (Bankr. C.D. Calif. Case No. 12-20066) on Nov. 14, 2012. 501 Grant Street Partners owns the Union Trust Building in downtown Pittsburgh, Pennsylvania. It sought Chapter 11 protection (Bankr. W.D. Pa. Case No. 12-23890) on Aug. 3, 2012, to avert a sheriff sale of the building. The August petition estimated under $50,000 in both assets and debts. In November 2012, U.S. Bankruptcy Judge Judith K. Fitzgerald dismissed 501 Grant Street Partners' Chapter 11 petition, paving for the sheriff sale of the Union Trust Building on Jan. 7, 2013. SA Challenger Inc., which acquired interest in the building's mortgage by U.S. Bank, has sought to foreclose on the Debtor's property. SA Challenger is seeking to collect $41.4 million. Earlier in November, at the lender's request, Judge Ward appointed the real estate firm CBRE to serve as receiver for the building, overseeing its operation and management until the sheriff sale takes place. The bankruptcy judge approved an involuntary Chapter 11 petition for 501 Grant, entering an order for relief on Dec. 13, 2012. The petitioning creditors are Allied Barton Security Services LLC, owed $960 for security services; Cost Company LP, $5,900 owed for masonry work; and MSA Systems Integration Inc., owed $2,401 for unpaid invoice. Malhar S. Pagay, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the petitioning creditors. Attorneys at Levene, Neale, Bender, Yoo & Brill LLP represent the Debtor in the involuntary Chapter 11 proceeding. 501 GRANT STREET: Says "Confirmable" Plan Should Move Forward ------------------------------------------------------------- 501 Grant Street Partners LLC says it should proceed with its reorganization plan and wants the Court to deny lender SA Challenger, Inc.'s objections to the disclosure statement. The Debtor avers that: * The Disclosure Statement contains adequate information; * Although the Debtor's property is in a state of disrepair due to inactivity by prepetition receivers leading to significantly below market rates resulting in lack of rental revenue, there is no evidence that the Property is "rapidly deteriorating" as suggested by the Lender. * The Debtor's Plan proposes to invest a total of $18.13 million, of which more than $8 million will be used for necessary capital improvements, $4.5 million will be used for tenant improvements necessary to increase the occupancy rate and $800,000 in commissions payable to leasing brokers. These funds will enable the reorganized to Debtor to bring the Property back to stabilization in the short term, as demanded by current market conditions. * Through these stabilization efforts, the Debtor will be able to repay the Lender for the secured portion of its claim and provide a more valuable asset by which such loan will be secured. * The treatment of the secured portion of the Lender's claim is an issue to be considered at plan confirmation and does not make the plan described in the Disclosure Statement "patently unconfirmable." As reported in the TCR on Jan. 24, 2013, the Debtor's Plan provides that 100% of the equity in the Debtor will be sold to a special purpose entity to be formed by Clarity Realty Partners LLC, a third-party investor. The Investor has agreed to invest $18.13 million to be used to fund certain payments under the Plan, as well as a significant amount of capital expenditures and tenant improvements to significantly increase the value of the Property and the amount of rental revenue to be generated by the Property in the short term. Upon the confirmation of the Plan, the Debtor's membership interests will be transferred to the Investor. The Debtor's secured obligation to SA Challenger will be reduced to the current value of the Property, restructured and repaid over time at market terms. The Lender will receive approximately 10% of the amount of its deficiency claim payable in two annual payments to be paid on either the third and fourth anniversary of the Effective Date or on the date the amount of the deficiency claim is established and the first year thereafter, whichever is later. The Debtor's unsecured obligations to its unsecured creditors will receive approximately 10% of their claims payable in two annual payments after the Effective Date of the Plan. About 501 Grant Street & Union Trust Building An involuntary Chapter 11 bankruptcy petition was filed against 501 Grant Street Partners LLC, based in Woodland Hills, California (Bankr. C.D. Calif. Case No. 12-20066) on Nov. 14, 2012. 501 Grant Street Partners owns the Union Trust Building in downtown Pittsburgh, Pennsylvania. It sought Chapter 11 protection (Bankr. W.D. Pa. Case No. 12-23890) on Aug. 3, 2012, to avert a sheriff sale of the building. The August petition estimated under $50,000 in both assets and debts. In November 2012, U.S. Bankruptcy Judge Judith K. Fitzgerald dismissed 501 Grant Street Partners' Chapter 11 petition, paving for the sheriff sale of the Union Trust Building on Jan. 7, 2013. SA Challenger Inc., which acquired interest in the building's mortgage by U.S. Bank, has sought to foreclose on the Debtor's property. SA Challenger is seeking to collect $41.4 million. Earlier in November, at the lender's request, Judge Ward appointed the real estate firm CBRE to serve as receiver for the building, overseeing its operation and management until the sheriff sale takes place. The bankruptcy judge approved an involuntary Chapter 11 petition for 501 Grant, entering an order for relief on Dec. 13, 2012. The petitioning creditors are Allied Barton Security Services LLC, owed $960 for security services; Cost Company LP, $5,900 owed for masonry work; and MSA Systems Integration Inc., owed $2,401 for unpaid invoice. Malhar S. Pagay, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the petitioning creditors. Attorneys at Levene, Neale, Bender, Yoo & Brill LLP represent the Debtor in the involuntary Chapter 11 proceeding. 501 GRANT STREET: Can Employ Levene Neale as Bankruptcy Counsel --------------------------------------------------------------- The Bankruptcy Court authorized 501 Grant Street Partners LLC permission to employ Levene, Neale, Bender, Yoo & Brill LLP as bankruptcy counsel for the Debtor. LNBYB will perform these services, among others: * advising the Debtor with regard to the requirements of the Bankruptcy Court, Bankruptcy Code, Bankruptcy Rules and the Office of the United States Trustee as they pertain to the Debtor; * advising the Debtor with regard to certain rights and remedies of its bankruptcy estate and the rights, claims and interests of creditors * representing the Debtor in any proceeding or hearing in the Bankruptcy Court involving its estate unless the Debtor is represented in such proceeding or hearing by other special counsel; and * conducting examinations of witnesses, claimants or adverse parties and representing the Debtor in any adversary proceeding except to the extent that any such adversary proceeding is in an area outside of LNBYB's expertise or which is beyond LNBYB's staffing capabilities. To the best of LNBYB's knowledge, it does not hold or represent any interest materially adverse to the Debtor or its estate, and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. LNBYB will bill its time for its representation of the Debtor on an hourly basis in accordance with its standard hourly billing rates. About 501 Grant Street & Union Trust Building An involuntary Chapter 11 bankruptcy petition was filed against 501 Grant Street Partners LLC, based in Woodland Hills, California (Bankr. C.D. Calif. Case No. 12-20066) on Nov. 14, 2012. 501 Grant Street Partners owns the Union Trust Building in downtown Pittsburgh, Pennsylvania. It sought Chapter 11 protection (Bankr. W.D. Pa. Case No. 12-23890) on Aug. 3, 2012, to avert a sheriff sale of the building. The August petition estimated under $50,000 in both assets and debts. In November 2012, U.S. Bankruptcy Judge Judith K. Fitzgerald dismissed 501 Grant Street Partners' Chapter 11 petition, paving for the sheriff sale of the Union Trust Building on Jan. 7, 2013. SA Challenger Inc., which acquired interest in the building's mortgage by U.S. Bank, has sought to foreclose on the Debtor's property. SA Challenger is seeking to collect $41.4 million. Earlier in November, at the lender's request, Judge Ward appointed the real estate firm CBRE to serve as receiver for the building, overseeing its operation and management until the sheriff sale takes place. The bankruptcy judge approved an involuntary Chapter 11 petition for 501 Grant, entering an order for relief on Dec. 13, 2012. The petitioning creditors are Allied Barton Security Services LLC, owed $960 for security services; Cost Company LP, $5,900 owed for masonry work; and MSA Systems Integration Inc., owed $2,401 for unpaid invoice. Malhar S. Pagay, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the petitioning creditors. Attorneys at Levene, Neale, Bender, Yoo & Brill LLP represent the Debtor in the involuntary Chapter 11 proceeding. A123 SYSTEMS: Michigan Seeks to Block Transfer $125MM Tax Credits ----------------------------------------------------------------- Patrick Fitzgerald, writing for Dow Jones Newswires, reports that the state of Michigan said A123 Systems Inc. can't transfer more than $125 million in state tax credits to its new owner, a subsidiary of China's Wanxiang Group. According to the report, Michigan Attorney General Bill Schuette, in a bankruptcy court filing on Wednesday, asked the court to disallow A123's Systems's transfer of the tax credits to its new owner, Wanxiang America Corp., an Illinois-based subsidiary of the Chinese auto parts maker. "Under Michigan law none of the [tax credits] could be assigned to another company, including the purchaser Wanxiang America Corporation," said lawyers for Mr. Schuette in papers filed in U.S. Bankruptcy Court in Wilmington, Del., according to the Dow Jones report. The underlying business tax that the credits were based on was repealed last year, Michigan's lawyers also said. The report recounts A123, which was awarded nearly $250 million in grants from the Department of Energy, also received more than $125 million in tax credits from the state as an incentive to hire local residents at the company's two Michigan manufacturing factories. But those credits can't be transferred to Wanxiang, according to lawyers for the Michigan attorney general. Wanxiang paid $256.6 million for A123's automotive-battery business and related assets in December, topping a combined bid Johnson Controls Inc. and Japan's NEC Corp. in a bitterly contested auction. Dow Jones also says AG Schuette's office on Tuesday filed a $4.1 million claim against the A123 estate for the amount of the loan plus interest. Michigan also asked the bankruptcy court to abstain from ruling on the tax credits transfer, saying it is an issue for state courts. Dow Jones adds A123's bankruptcy lawyer declined to comment. About A123 Systems Based in Waltham, Massachusetts, A123 Systems Inc. designed, developed, manufactured and sold advanced rechargeable lithium-ion batteries and battery systems and provided research and development services to government agencies and commercial customers. A123 was the recipient of a $249 million federal grant from the Obama administration. A123 and U.S. affiliates, A123 Securities Corporation and Grid Storage Holdings LLC, sought Chapter 11 bankruptcy protection (Bankr. D. Del. Case Nos. 12-12859 to 12-12861) on Oct. 16, 2012. A123 disclosed assets of $459.8 million and liabilities totaling $376 million. Lawyers at Richards, Layton & Finger, P.A., and Latham & Watkins LLP serve as the Debtors' counsel. Lazard Freres & Co. LLC acts as the Debtors' financial advisors, while Alvarez & Marsal serves as restructuring advisors. Logan & Company Inc. serves as the Debtors' claims and noticing agent. Brown Rudnick LLP and Saul Ewing LLP serve as counsel to the Official Committee of Unsecured Creditors. Prior to the bankruptcy filing, A123 had an agreement to sell an 80% stake in the business to Chinese auto-parts maker Wanxiang Group Corp. U.S. lawmakers opposed the deal over concerns on the transfer of American taxpayer dollars and technology to China. When it filed for bankruptcy, the Debtors presented a deal to sell all assets to Johnson Controls Inc., subject to higher and better offers. At the auction in December 2012, most of the assets ended up being sold for $256.6 million to Wanxiang. Wanxiang America Corporation and Wanxiang Clean Energy USA Corp. are represented in the case by lawyers at Young Conaway Stargatt & Taylor, LLP, and Sidley Austin LLP. JCI is represented in the case by Josh Feltman, Esq., at Wachtell Lipton Rosen & Katz LLP. A123 has filed a liquidating Chapter 11 plan, and a hearing is slated for March 13, 2013, to consider approval of the disclosure statement explaining the plan. The plan is designed to give holders of $143.75 million in subordinated notes a recovery of about 65%. General unsecured creditors with $124 million in claims are to have the same recovery. The plan provides for holders of $35.7 million in senior note claims to be paid in full. ACCESS PHARMACEUTICALS: Ayer Equity Stake at 4% as of Dec. 31 ------------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Ayer Capital Management, LP, and its affiliates disclosed that for the calendar year 2012 they beneficially own 1,207,417 shares of common stock of Access Pharmaceuticals Inc. representing 4.99% of the shares outstanding. A copy of the filing is available at: http://is.gd/qgZI4S About Accentia Biopharmaceuticals Headquartered in Tampa, Florida, Accentia Biopharmaceuticals, Inc. (PINK: "ABPI") -- http://www.Accentia.net/-- is a biotechnology company that is developing Revimmune as a system of care for the treatment of autoimmune diseases. Through subsidiary, Biovest International, Inc., it is developing BiovaxID as a therapeutic cancer vaccine for treatment of follicular non-Hodgkin's lymphoma (FL) and mantle cell lymphoma (MCL). Through subsidiary, Analytica International, Inc., it conducts a health economics research and consulting business, which it market to the pharmaceutical and biotechnology industries, using its operating cash flow to support its corporate administration and product development activities. Accentia BioPharmaceuticals and nine affiliates filed for Chapter 11 protection (Bankr. M.D. Fla. Lead Case No. 08-17795) on Nov. 10, 2008. Accentia emerged from bankruptcy on Nov. 17, 2012, after receiving confirmation of a reorganization plan on Nov. 2, 2010. Accentia incurred a net loss of $9.18 million for the year ended Sept. 30, 2012, compared with a net loss of $15.65 million during the prior year. The Company's balance sheet at Sept. 30, 2012, showed $2.58 million in total assets, $82.32 million in total liabilities and a $79.73 million total stockholders' deficit. Cherry, Bekaert & Holland, L.L.P., issued a "going concern" qualification on the consolidated financial statements for the year ended Sept. 30, 2012. The independent auditors noted that the Company incurred cumulative net losses of approximately $24.8 million during the two years ended Sept. 30, 2012, and had a working capital deficiency of approximately $55.0 million at Sept. 30, 2012. On Nov. 17, 2012, approximately $14.1 million of the Company's debt matured and accordingly the Company is currently in default of these debt instruments. "These conditions raise substantial doubt about the Company's ability to continue as a going concern." Bankruptcy Warning "If, as or when required, the Company is unable to repay, refinance or restructure its indebtedness under the Company's secured or unsecured debt instruments, or amend the covenants contained therein, the lenders and/or holders under such secured or unsecured debt instruments could elect to terminate their commitments thereunder cease making further loans and institute foreclosure proceedings or other actions against the Company's assets. Under such circumstances, the Company could be forced into bankruptcy or liquidation. In addition, any event of default or declaration of acceleration under one of the Company's debt instruments could also result in an event of default under one or more of the Company's other debt instruments. The Company may have to seek protection under the U.S. Bankruptcy Code from the Matured Obligations. This would have a material adverse impact on the Company's liquidity, financial position and results of operations," the Company said in its annual report for the year ended Sept. 30, 2012. ADVANCED LIVING: Nursing Home Auction Set for April 29 ------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Advanced Living Technologies Inc. won approval to conduct an auction for six not-for-profit Texas nursing homes on April 29. Under procedures approved by the bankruptcy court in Austin, bids are due initially on April 24. A hearing to approve sale will take place May 9. About Advanced Living Technologies Advanced Living Technologies, Inc., owner of six skilled nursing facilities throughout Texas, filed a Chapter 11 petition (Bankr. W.D. Tex. Case No. 13-10313) on Feb. 20, 2013, with plans to sell substantially the facilities as a going-concern in two months. The Debtor previously sought Chapter 11 protection in January 2008 (Bankr. W.D. Tex. Case No. 08-50040) and exited bankruptcy in May 2008. In the new Chapter 11 case, the Debtor has tapped Hohmann, Taube & Summers, LLP, as counsel, CohnReznick LLP, as financial advisor, and RBC Capital Markets, LLC, as investment banker. As of the new Chapter 11 filing, the Debtor had total assets of $12 million and liabilities of $25 million. AEOLUS PHARMACEUTICALS: Delays Form 10-Q for Dec. 31 Quarter ------------------------------------------------------------ Aeolus Pharmaceuticals, Inc., was unable to file its quarterly report on Form 10-Q for the quarterly period ended Dec. 31, 2012, within the prescribed time period without unreasonable effort or expense due to unanticipated delays in preparing and compiling its financial statements and presenting all necessary disclosures required for a complete report. The Company will file the Form 10-Q on or before the fifth calendar day following the prescribed due date. About Aeolus Pharmaceuticals Mission Viejo, California-based Aeolus Pharmaceuticals, Inc., is a Southern California-based biopharmaceutical company leveraging significant government investment to develop a platform of novel compounds in oncology and biodefense. The platform consists of over 200 compounds licensed from Duke University and National Jewish Health. The Company's lead compound, AEOL 10150, is being developed as a medical countermeasure ("MCM") against the pulmonary sub-syndrome of acute radiation syndrome ("Pulmonary Acute Radiation Syndrome" or "Lung-ARS") as well as the gastrointestinal sub-syndrome of acute radiation syndrome ("GI-ARS"). Both syndromes are caused by acute exposure to high levels of radiation due to a radiological or nuclear event. It is also being developed for use as a MCM for exposure to chemical vesicants such as chlorine gas, sulfur mustard gas and nerve agents. Grant Thornton LLP, in San Diego, Calif., expressed substantial dobut about Aeolus Pharmaceuticals' ability continue as a going concern following the annual report for the fiscal year ended Sept. 30, 2012. The independent auditors noted that the Company has incurred recurring losses and negative cash flows from operations, and management believes the Company does not currently possess sufficient working capital to fund its operations through fiscal 2013. The Company reported net income of $1.7 million (including a non- cash gain for decreases in valuation of warrants of approximately $4.1 million) on $7.3 million of contract revenue in fiscal 2012, compared with net income of $299,000 (including a non-cash gain for decreases in valuation of warrants of $3.9 million) on $4.8 million of contract revenue in fiscal 2011. The Company's balance sheet at Sept. 30, 2012, showed $1.3 million in total assets, $21.6 million in total liabilities, and a stockholders' deficiency of $20.3 million. AEOLUS PHARMACEUTICALS: Extends Contract with CEO John McManus -------------------------------------------------------------- Aeolus Pharmaceuticals, Inc., entered into an Amended and Restated Employment Agreement with John L. McManus, the Company's President and Chief Executive Officer, which amends and restates the amended and restated employment agreement, dated July 30, 2010. Mr. McManus will continue to serve as President and Chief Executive Officer of the Company for a period of one year, subject to automatic renewal for additional one-year periods unless terminated by either party upon written notice to the other at least 90 days prior to the subsequent one-year term. Pursuant to the agreement, Mr. McManus' initial base salary will be $35,363 per month. Commencing with the fiscal year ending Sept. 30, 2014, and continuing each fiscal year thereafter, Mr. McManus will be entitled to receive an option to purchase at least 250,000 shares of the Company's common stock with an exercise price equal to the closing price of the Company's common stock on the date of grant. In addition, the Amended Employment Agreement provides that, on the date of the agreement, Mr. McManus will be granted an option to purchase 2,000,000 shares of the Company's common stock with an exercise price equal to the closing price of the Company's common stock on the date of grant. In each case, the options will vest at a monthly rate of 8.33% following the date of grant, subject to Mr. McManus remaining employed with the Company. The Amended Employment Agreement also provides that, upon a Change in Control of the Company, all of the stock options granted to Mr. McManus will fully vest and become immediately exercisable. On March 4, 2013, in accordance with the terms of the Amended Employment Agreement, the Company issued to Mr. McManus an option to purchase 2,000,000 shares of the Company's common stock with an exercise price of $0.40 per share, the closing price of the Company's common stock on March 4, 2013, as reported by the OTC Bulletin Board. Upon the earliest to occur of a Corporate Partnership and a Change in Control of the Company, Mr. McManus will be entitled to receive a bonus of at least $250,000. A copy of the Amended Employment Agreement is available at: http://is.gd/uI5vNy About Aeolus Pharmaceuticals Mission Viejo, California-based Aeolus Pharmaceuticals, Inc., is a Southern California-based biopharmaceutical company leveraging significant government investment to develop a platform of novel compounds in oncology and biodefense. The platform consists of over 200 compounds licensed from Duke University and National Jewish Health. The Company's lead compound, AEOL 10150, is being developed as a medical countermeasure ("MCM") against the pulmonary sub-syndrome of acute radiation syndrome ("Pulmonary Acute Radiation Syndrome" or "Lung-ARS") as well as the gastrointestinal sub-syndrome of acute radiation syndrome ("GI-ARS"). Both syndromes are caused by acute exposure to high levels of radiation due to a radiological or nuclear event. It is also being developed for use as a MCM for exposure to chemical vesicants such as chlorine gas, sulfur mustard gas and nerve agents. Grant Thornton LLP, in San Diego, Calif., expressed substantial dobut about Aeolus Pharmaceuticals' ability continue as a going concern following the fiscal 2012 annual results. The independent auditors noted that the Company has incurred recurring losses and negative cash flows from operations, and management believes the Company does not currently possess sufficient working capital to fund its operations through fiscal 2013. The Company's balance sheet at Sept. 30, 2012, showed $1.3 million in total assets, $21.6 million in total liabilities, and a stockholders' deficiency of $20.3 million. AMERICAN AIRLINES: US Airways Pilots Sue to Stop Merger Challenge ----------------------------------------------------------------- Jake Simpson of BankruptcyLaw360 reported that the US Airline Pilots Association filed an adversary complaint against a group representing the former pilots of America West Airlines Inc. in the AMR Corp. bankruptcy case in New York federal court Wednesday, seeking to preemptively scuttle a challenge to AMR's $11 billion merger with US Airways Group Inc. The report related that the America West pilots group, known as Leonidas LLC, sent the USAPA a letter on Feb. 19 claiming it was preparing litigation to block the merger because the terms unfairly benefit US Airways pilots. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. 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. AMR and US Airways Group, Inc., on Feb. 14, 2013 announced a definitive merger agreement under which the companies will combine to create a premier global carrier, which will have an implied combined equity value of approximately $11 billion. The deal is subject to clearance by U.S. and foreign regulators and by the bankruptcy judge overseeing AMR's bankruptcy case. 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: Offering $663MM of Equipment Certificates ------------------------------------------------------------ American Airlines, Inc., the principal operating subsidiary of AMR Corporation, announced the private offering of two tranches of enhanced equipment trust certificates in the aggregate face amount of $663,378,000. The Certificates will represent an interest in the assets of two separate pass through trusts, each of which will hold equipment notes expected to be issued by American. Those equipment notes are expected to be secured by eight currently owned Boeing 737-823 aircraft and one currently owned Boeing 777-223ER aircraft, each of which aircraft is either unencumbered or is subject to a private mortgage financing, and four new Boeing 777-323ER aircraft currently scheduled for delivery to American during the period from April 2013 to July 2013. The Certificates are being offered in the United States to qualified institutional buyers, as defined in, and in reliance on, Rule 144A under the Securities Act of 1933, as amended. The Certificates will not be registered under the Securities Act or applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state law. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. 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. AMR and US Airways Group, Inc., on Feb. 14, 2013 announced a definitive merger agreement under which the companies will combine to create a premier global carrier, which will have an implied combined equity value of approximately $11 billion. The deal is subject to clearance by U.S. and foreign regulators and by the bankruptcy judge overseeing AMR's bankruptcy case. 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 APPAREL: Incurs $37.3 Million Net Loss in 2012 ------------------------------------------------------- American Apparel, Inc., reported net income of $4.90 million on $173.02 million of net sales for the three months ended Dec. 31, 2012, as compared with a net loss of $11.16 million on $157.57 million of net sales for the same period during the prior year. For the 12 months ended Dec. 31, 2012, the Company incurred a net loss of $37.27 million on $617.31 million of net sales, as compared with a net loss of $39.31 million on $547.33 million of net sales during the prior year. The Company's balance sheet at Dec. 31, 2012, showed $328.21 million in total assets, $306.12 million in total liabilities and $22.08 million in total stockholders' equity. Dov Charney, Chairman and CEO of American Apparel, stated, "We are pleased with our fourth quarter results that again show solid growth and continuing momentum in all business segments and almost all major geographies. Significant sales growth, operating expense control and the acceleration of leverage of our fixed costs allowed us to increase EBITDA performance to $17.8 million for the fourth quarter of 2012 from $9.1 million for the fourth quarter of 2011. For the full year, EBITDA increased to $36.6 million from $14.5 million in the prior year. Although we are pleased with this growth, we are focused on continuing to improve our financial performance. During this past year, we have carefully invested in systems and infrastructure to facilitate future growth." The Company's balance sheet at Dec. 31, 2012, showed $328.21 million in total assets, $306.12 million in total liabilities, and $22.08 million in total stockholders' equity. A copy of the press release is available for free at: http://is.gd/ANVavD A copy of the Form 10-K is available for free at: http://is.gd/lGZWek Plans to Offer Senior Notes American Apparel currently intends, subject to market and other conditions, to offer senior secured notes in a private offering. The Notes, if offered, will be offered only to "qualified institutional buyers" in the United States in accordance with Rule 144A under the Securities Act of 1933, as amended, and to non-U.S. persons pursuant to Regulation S under the Securities Act. The Company intends to use the net proceeds of any such offering of the Notes to repay certain indebtedness and for general corporate purposes. The Company may at any time elect to no longer pursue a possible Notes offering. About American Apparel Los Angeles, Calif.-based American Apparel, Inc. (NYSE Amex: APP) -- http://www.americanapparel.com/-- is a vertically integrated manufacturer, distributor, and retailer of branded fashion basic apparel. As of September 2010, American Apparel employed over 10,000 people and operated 278 retail stores in 20 countries, including the United States, Canada, Mexico, Brazil, United Kingdom, Ireland, Austria, Belgium, France, Germany, Italy, the Netherlands, Spain, Sweden, Switzerland, Israel, Australia, Japan, South Korea and China. Amid liquidity problems and declining sales, American Apparel in early 2011 reportedly tapped law firm Skadden, Arps, Slate, Meagher & Flom and investment bank Rothschild Inc. for advice on a restructuring. In April 2011, American Apparel said it raised $14.9 million in rescue financing from a group of investors led by Canadian financier Michael Serruya and private equity firm Delavaco Capital Corp., allowing the casual clothing retailer to meet obligations to its lenders for the time being. Under the deal, the investors were buying 15.8 million shares of common stock at 90 cents apiece. The deal allows the investors to purchase additional 27.4 million shares at the same price. ANTS SOFTWARE: Fletcher Asset Reports 8% Stake as of Dec. 31 ------------------------------------------------------------ In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Fletcher Asset Management, Inc., and its affiliates disclosed that, as of Dec. 31, 2012, they beneficially own 13,935,877 shares of common stock of Ants Software, Inc., representing 8.4% of the shares outstanding. Fletcher Asset previously reported beneficial ownership of 13,935,877 common shares or a 9.6% equity stake at Dec. 31, 2011. A copy of the amended filing is available at http://is.gd/F8GovH About Ants Software ANTs Software inc (OTC BB: ANTS) -- http://www.ants.com/-- has developed a software solution, ACS, to help customers reduce IT costs by consolidating hardware and software infrastructure and eliminating cost inefficiencies. ACS is an innovative middleware solution that accelerates database consolidation between database vendors, enabling application portability. ANTs has not filed financial statements with the Securities and Exchange Commission since May 2011, when it disclosed that it had a net loss of $27.01 million in three months ended March 31, 2011, compared with a net loss of $20.7 million in the same period in 2010. The Company's balance sheet at March 31, 2011, showed $27.2 million in total assets, $52.3 million in total liabilities, and a stockholders' deficit of $25.1 million. As reported in the TCR on April 8, 2011, WeiserMazars LLP, in New York, expressed substantial doubt about ANTs software's ability to continue as a going concern, following the Company's 2010 results. The independent auditors noted that the Company has incurred significant recurring operating losses, decreasing liquidity, and negative cash flows from operations. The Company reported a net loss of $42.4 million for 2010, following a net loss of $23.3 million in 2009. APPLETON PAPERS: Incurs $37.1 Million Net Loss in Fourth Quarter ---------------------------------------------------------------- Appleton Papers Inc. reported a net loss of $37.13 million on $205.48 million of net sales for the three months ended Dec. 29, 2012, as compared with a net loss of $59.42 million on $205.62 million of net sales for the three months ended Dec. 31, 2011. For the year ended Dec. 29, 2012, the Company incurred a net loss of $148.45 million on $849.75 million of net sales, as compared with a net loss of $47.65 million on $857.32 million of net sales for the year ended Dec. 31, 2011. The Company's balance sheet at Dec. 29, 2012, showed $561.09 million in total assets, $913.98 million in total liabilities and a $352.89 million total deficit. "2012 was a strong year for Appleton, one marked by disciplined implementation of our strategy and ongoing transformation which will set the stage for the future," said Mark Richards, Appleton's chairman, president and chief executive officer. "The Company's decision to shed old, high-cost, non-integrated papermaking assets at its West Carrollton mill and have Domtar provide most of the base paper Appleton needs to produce its thermal, carbonless and other specialty paper products helped drive success in 2012 and better positioned the Company for future growth." A copy of the press release is available for free at: http://is.gd/goRSdL About Appleton Papers Appleton, Wisconsin-based Appleton Papers Inc. -- http://www.appletonideas.com/-- produces carbonless, thermal, security and performance packaging products. Appleton has manufacturing operations in Wisconsin, Ohio, Pennsylvania, and Massachusetts, employs approximately 2,200 people and is 100% employee-owned. Appleton Papers is a 100%-owned subsidiary of Paperweight Development Corp. * * * Appleton Papers carries a 'B' corporate credit rating, with stable outlook, from Standard & Poor's. IT has a 'B2/LD' probability of default rating from Moody's. APPLIED DNA: Stockholders Elect Six Directors to Board ------------------------------------------------------ Applied DNA Sciences, Inc., held its annual meeting of stockholders on March 1, 2013, at which the Company's stockholders elected six nominees to the board of directors consisting of James A. Hayward, John Bitzer, III, Karol Gray, Charles Ryan, Yacov Shamash, and Sanford R. Simon, each for a one-year term or until their successors are duly elected and qualified. The stockholders also approved an advisory vote on executive compensation and to hold to an advisory vote on future executive compensation every three years. The appointment of RBSM, LLP, as the Company's independent registered public accounting firm for the fiscal year ending Sept. 30, 2013, was ratified. About Applied DNA Stony Brook, N.Y.-based Applied DNA Sciences, Inc., is principally devoted to developing DNA embedded biotechnology security solutions in the United States. The Company's shares of common stock are quoted on the OTC Bulletin Board under the symbol "APDN." Applied DNA incurred a net loss of $7.15 million for the year ended Sept. 30, 2012, compared with a net loss of $10.51 million for the year ended Sept. 30, 2011. The Company's balance sheet at Dec. 31, 2012, showed $1.62 million in total assets, $8.32 million in total liabilities and a $6.69 million total stockholders' deficit. ARCHDIOCESE OF MILWAUKEE: Claim Junked After Judge Flips Order -------------------------------------------------------------- Bankruptcy Judge Susan V. Kelley corrected herself and reversed a November 2012 order allowing a clergy abuse claimant from submitting as evidence the communications made during a confidential pre-bankruptcy mediation session between the claimant and the Archdiocese of Milwaukee. The claimant is identified as A-282. "The Court will grant the Debtor's motion for reconsideration of the Mediation Order, and will not allow any statements made in the mediation to be considered in deciding the claim objection," Judge Kelley said. The judge added: "The Court sincerely regrets that this change of direction likely will cause Claimant A-282 consternation and anguish. With the exclusion of the mediation communications, the settlement and release results in disallowance of his proof of claim. But the Order disallowing Claimant A-282's claim will be immediately appealable. If the district court reverses and allows consideration of the mediation communications, then the Claimant can move forward to defend his claim using that evidence. However, if this Court's decision is affirmed, then the Claimant will not have endured the emotional turmoil of litigating the claim objection, only to see the result overturned on appeal because the Court's Mediation Order was reversed. The Court will issue an Order vacating the prior Order and disallowing Claimant A-282's claim." A copy of the Court's March 4, 2013 Memorandum Decision is available at http://is.gd/les53kfrom Leagle.com. 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. Wis. 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) ATLANTIC & PACIFIC: Union Dispute Over $56M Store Sales Stays Put ----------------------------------------------------------------- Brian Mahoney of BankruptcyLaw360 reported that a New York federal judge on Wednesday declined to remand to state court a dispute between The Great Atlantic and Pacific Tea Co. Inc. and a New York union over the $56 million sale and closure of two Food Emporium supermarkets arising from the company's Chapter 11 restructuring. The report related that in a bench order, U.S. District Judge Jesse Furman dismissed A&P's motion to send the suit back to state court to rule on the underlying issue in the case. About Great Atlantic & Pacific Founded in 1859, Montvale, New Jersey-based Great Atlantic & Pacific is a supermarket retailer, operating under a variety of well-known trade names, or "banners" across the mid-Atlantic and Northeastern United States. A&P and its affiliates filed Chapter 11 petitions (Bankr. S.D.N.Y. Case No. 10-24549) on Dec. 12, 2010, in White Plains, New York. Before filing for bankruptcy in 2010, A&P operated 429 stores in eight states and the District of Columbia under the following trade names: A&P, Waldbaum's, Pathmark, Pathmark Sav-a-Center, Best Cellars, The Food Emporium, Super Foodmart, Super Fresh and Food Basics. A&P had 41,000 employees prior to the bankruptcy filing. In its petition, A&P reported total assets of $2.5 billion and liabilities of $3.2 billion as of Sept. 11, 2010. Paul M. Basta, Esq., James H.M. Sprayregen, Esq., and Ray C. Schrock, Esq., at Kirkland & Ellis, LLP, in New York, and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, served as counsel to the Debtors. Kurtzman Carson Consultants LLC acted as the claims and notice agent. Lazard Freres & Co. LLC served as the financial advisor. Huron Consulting Group served as management consultant. Dennis F. Dunne, Esq., Matthew S. Barr, Esq., and Abhilash M. Raval, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represented the Official Committee of Unsecured Creditors. The Bankruptcy Court entered an order Feb. 27, 2012, confirming a First Amended Joint Plan of Reorganization filed Feb. 17, 2012. A&P consummated its financial restructuring and emerged from Chapter 11 as a privately held company in March 2012. A&P sold or closed stores during the bankruptcy proceedings. It emerged from bankruptcy with 320 supermarkets. Among others, A&P sold 12 Super-Fresh stores in the Baltimore-Washington area for $37.83 million, plus the value of inventory. Thirteen other locations didn't attract buyers at auction and were closed mid- July 2011. Mount Kellett Capital Management LP, The Yucaipa Companies LLC and investment funds managed by Goldman Sachs Asset Management, L.P., provided $490 million in debt and equity financing to sponsor A&P's reorganization plan and complete its balance sheet restructuring. JP Morgan and Credit Suisse arranged a $645 million exit financing facility. ATLANTIC COAST: Incurs $300,000 Net Loss in Fourth Quarter ---------------------------------------------------------- Atlantic Coast Financial Corporation reported a net loss of $293,000 on $7.91 million of interest income for the three months ended Dec. 31, 2012, as compared with a net loss of $3.98 million on $9.24 million of interest income for the same period during the prior year. For the year ended Dec. 31, 2012, the Company incurred a net loss of $6.66 million on $33.50 million of interest income, as compared with a net loss of $10.28 million on $38.28 million of interest income during the prior year. Commenting on the fourth quarter and full year results, G. Thomas Frankland, president and CEO, said, "We are pleased to report that our company continued to make progress in narrowing its net loss in the just completed fourth quarter. While our results indicate that the Company is moving in the right direction, we know that we have a pressing need for capital and continue to face ongoing economic and market challenges. This is one of the reasons why we are enthusiastic about the agreement we entered into last week to merge with Bond Street and become part of its attractive banking platform, Florida Community Bank. We believe this transaction represents the best overall solution for us by providing attractive and immediate value for our stockholders, positioning us to better serve our customers, and making our franchise more competitive in the marketplace." A copy of the press release is available for free at: http://is.gd/Op6nkd About Atlantic Coast Jacksonville, Florida-based Atlantic Coast Financial Corporation is the holding company for Atlantic Coast Bank, a federally chartered and insured stock savings bank. It is a community- oriented financial institution serving northeastern Florida and southeastern Georgia markets through 12 locations, with a focus on the Jacksonville metropolitan area. Consent Order With OCC On Aug. 10, 2012, the Company's Board of Directors of the Bank agreed to a Consent order (the Agreement) with its primary regulator, the OCC. Among other things the Agreement provides that by Dec. 31, 2012, the Bank must achieve and maintain total risk based capital of 13.00% of risk weighted assets and Tier 1 capital of 9.00% of adjusted total assets. As a result of entering into the Agreement to achieve and maintain specific capital levels, the Bank's capital classification under the Prompt Corrective Action (PCA) rules has been lowered to adequately capitalized, notwithstanding actual capital levels that otherwise would be deemed well capitalized under such rules. The Bank has satisfied all requirements under the Agreement to date. The Bank applied for and received OCC approval for an extension to Dec. 8, 2012, to file its Strategic Plan and Capital Plan. ATP OIL & GAS: Delays Sale Process for Deepwater Assets ------------------------------------------------------- Michael Bathon, substituting for Bloomberg bankruptcy columnist Bill Rochelle, reports that ATP Oil & Gas Corp. said in court papers that it will have to push back the deadline for seeking offers for its deep-water assets. According to the report, the bid deadline was tied to the first oil production from ATP's Clipper Well and would be set 16 days after that was achieved or no later than April 16, according to court documents. ATP said it failed to achieve production on March 3, according to a March 4 filing. The company had initially obtained court approval for a March 19 bid deadline, with a March 26 auction to be followed by a March 28 sale hearing. The report relates ATP said it will notify the court when first production is realized and the new schedule for bids, the auction and the sale hearing. Offers can be made for all or some of the assets, according to court documents. The company seeks to sell its leasehold and other working interests in 23 deepwater blocks, nine of which are producing, Houston-based ATP said in a filing. The properties are concentrated in the gulf. 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. 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. AVANTAIR INC: Post-Effective Amendment No. 4 to 7.4MM Offering -------------------------------------------------------------- Avantair, Inc., filed with the U.S. Securities and Exchange Commission an amendment no. 4 to the Form S-1 registration statement relating to the sale or other disposition of up to an aggregate of 7,403,949 shares of common stock of the Company by David Greenhouse, Special Situations Fund III QP, L.P., Jonathan Auerbach, et al. The Post-Effective Amendment No. 4 was filed to update and supplement the information contained in the Registration Statement, as originally declared effective by the SEC on March 12, 2010, to include the information contained in the Company's annual report on Form 10-K for the fiscal year ended June 30, 2012, that was filed with the SEC on Sept. 28, 2012 and, in some cases, to reflect disclosure as of and through a more recent practicable date. No additional securities are being registered under the Post-Effective Amendment. The Company's common stock is currently quoted on the Over-the- Counter Bulletin Board under the symbol "AAIR". On March 4, 2013, the last reported sale price of the Company's shares was $0.13 per share. A copy of the amended prospectus is available for free at: http://is.gd/ntXW0K About Avantair Inc. Headquartered in Clearwater, Fla., Avantair, Inc. (OTC BB: AAIR) -- http://www.avantair.com/-- sells fractional ownership interests in, and flight hour card usage of, professionally piloted aircraft for personal and business use, and the management of its aircraft fleet. According to AvData, Avantair is the fifth largest company in the North American fractional aircraft industry. Avantair also operates fixed flight based operations (FBO) in Camarillo, California and in Caldwell, New Jersey. Through these FBOs and its headquarters in Clearwater, Florida, Avantair provides aircraft maintenance, concierge and other services to its customers as well as to the Avantair fleet. The Company's balance sheet at Dec. 31, 2012, showed $81.56 million in total assets, $120.25 million in total liabilities, $14.84 million in series a convertible preferred stock, and a $53.53 million total stockholders' deficit. BEALL CORPORATION: Plan Filing Period Extended Until April 5 ------------------------------------------------------------ The Bankruptcy Court has extended Beall Corporation's exclusive period to file a plan and disclosure statement until April 5, 2013. The Debtor has previously said that it's working on a plan that will be uniformly submitted by creditors. The Debtor recently obtained approval to sell its bullet division to Aulick Leasing Corp., a Nebraska corporation, the winning bidder, for $2,000,000, subject to an upward adjustment of $300,000 upon the satisfaction of certain conditions. 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. Wabash National Corporation on Feb. 4 successfully closed on its acquisition of certain assets of the tank and trailer business of Beall for $15 million. 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. BENADA ALUMINUM: Wins Approval of Bootstrap Chapter 11 Plan ----------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Benada Aluminum Products LLC won approval last week of an old-fashioned Chapter 11 reorganization plan. Mr. Rochelle relates that in a throwback to olden times when there were no junk-bond investors eager to buy up sick companies, Benada is emerging from bankruptcy on its own resources in what's called a bootstrap plan. According to the report, the plan will pay unsecured creditors in full with 4% interest. Creditors will receive $20,000 a month and 40% of excess cash flow. Previously, Benada said there was $3.4 million owing to trade suppliers. Some $5 million in secured loans financing the reorganization will be rolled over and continue after emergence from Chapter 11. Wells Fargo Bank NA, owed $3 million, is one of the secured lenders. The other is FLT Capital LLC, a part owner of the business. FLT is owed $2 million on a secured obligation. FLT will continue owning Benada after bankruptcy. About Benada Benada Aluminum Products LLC was formed in 2011 to purchase assets of two aluminum products manufacturing companies. It purchased via 11 U.S.C. Sec. 363 the Sanford facility of Florida Extruders International (Case No. 08-07761). It also purchased the assets Miami, Florida-based Benada Aluminum of Florida Inc. The Debtor has since consolidated operations and operates only out of its location in Sanford. The Company filed for Chapter 11 protection on Aug. 1, 2012 (Bankr. M.D. Fla. Case No. 12-10518). Judge Karen S. Jennemann presides over the case. R. Scott Shuker, Esq., at Latham Shuker Eden & Beaudine LLP, represents the Debtor. The Debtor disclosed $22,009,272 in assets and $11,698,426 in liabilities as of the Chapter 11 filing. Wells Fargo is represented by Michael Demont, Esq., and Jay Smith, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida. FTL Capital is represented by Christopher J. Lawhorn, Esq., at Bryan Cave LLP in St. Louis, Missouri. Triton Capital Partners Ltd. serves as exclusive financial advisor and investment banker with respect to providing assistance with turnaround management. The Debtor was authorized by the bankruptcy judge at a Sept. 25, hearing to sell an aluminum extrusion press for $2.9 million to Tubelite Inc. BERNARD L. MADOFF: Trustee Made Absurd Claims, Schneiderman Says ---------------------------------------------------------------- Michael Bathon, substituting for Bloomberg bankruptcy columnist Bill Rochelle, reports that a lawyer for New York Attorney General Eric Schneiderman said the trustee for Bernard Madoff's bankrupt firm made "absurd" claims about money being withheld from the Ponzi scheme's victims while fighting to stop a $410 million settlement. The report recounts that trustee Irving Picard said last month that the settlement, negotiated by Mr. Schneiderman with former Madoff investor J. Ezra Merkin will allow Mr. Merkin to use money stolen from customers to help fend off Mr. Picard's lawsuits demanding $500 million. A lawyer for Mr. Picard called Mr. Merkin's $410 million agreement to compensate victims, sealed in federal court in Manhattan, "illusory." "That is absurd," David Ellenhorn, a lawyer for Mr. Schneiderman, told U.S. District Judge Jed Rakoff in a March 5 court filing, according to Bloomberg. While lawyers defending Mr. Merkin in other cases will be paid, and Mr. Schneiderman will recoup $5 million for three years of litigation against Mr. Merkin, most of the money will go to Ponzi victims, he said. "All of the remaining settlement funds, out of the $410 million, will be used to compensate victims of Merkin's wrongdoing," Mr. Ellenhorn said. "Not one penny will revert to Merkin." Separately, Mr. Merkin said Mr. Picard is "extremely unlikely" to win his own lawsuit against Merkin and his funds. Judge Rakoff shouldn't allow the trustee to block the settlement because "in the unlikely event" that Mr. Picard does win part of his suit, Mr. Merkin's funds would still be able to pay him, he said in a filing. The case is Picard v. Schneiderman, 12-cv-06733, U.S. District Court, Southern District of New York (Manhattan). About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. The District Court's Protective Order (i) appointed Irving H. Picard, Esq., as trustee for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and (iii) removed the SIPA Liquidation proceeding to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789) (Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims agent. On April 13, 2009, former BLMIS clients filed an involuntary Chapter 7 bankruptcy petition against Bernard Madoff (Bankr. S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The petitioning creditors -- Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert US$64 million in claims against Mr. Madoff based on the balances contained in the last statements they got from BLMIS. On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff Securities International Limited in London under bankruptcy protection pursuant to Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. 09-16751). The Chapter 15 case was later transferred to Manhattan. In June 2009, Judge Lifland approved the consolidation of the Madoff SIPA proceedings and the bankruptcy case. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors in United States v. Madoff, No. 09-CR-213 (S.D.N.Y.). BIOVEST INTERNATIONAL: Incurs $3.3 Million Loss in Dec. 31 Qtr. --------------------------------------------------------------- Biovest International, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $3.26 million on $549,000 of total revenue for the three months ended Dec. 31, 2012, as compared with a net loss of $1.48 million on $1.06 million of total revenue for the same period a year ago. The Company's balance sheet at Dec. 31, 2012, showed $4.95 million in total assets, $48.25 million in total liabilities and a $43.29 million total stockholders' deficit. The Company has not had the opportunity to complete its formatting for the requisite XBRL. Accordingly the Company was unable to complete and file its Form 10-Q quarterly report by the due date, but expects the XBRL formatting will be completed and the Form 10-Q finalized in order to file the report within the prescribed extension period. A copy of the Form 10-Q is available for free at: http://is.gd/kjRy3I About Biovest International Biovest International, Inc. -- http://www.biovest.com/-- is an emerging leader in the field of active personalized immunotherapies. In collaboration with the National Cancer Institute, Biovest has developed a patient-specific, cancer vaccine, BiovaxID(R), with three clinical trials completed, including a Phase III study, demonstrating evidence of safety and efficacy for the treatment of indolent follicular non-Hodgkin's lymphoma. Headquartered in Tampa, Florida, with its bio-manufacturing facility based in Minneapolis, Minnesota, Biovest is publicly- traded on the OTCQB(TM) Market with the stock-ticker symbol "BVTI", and is a majority-owned subsidiary of Accentia Biopharmaceuticals, Inc. (OTCQB: "ABPI"). Biovest, along with its subsidiaries, Biovax, Inc., AutovaxID, Inc., Biolender, LLC, and Biolender II, LLC, filed for Chapter 11 bankruptcy protection (Bankr. M.D. Fla. Case No. 08-17796) on Nov. 10, 2008. Biovest emerged from Chapter 11 protection, and its reorganization plan became effective, on Nov. 17, 2010. Biovest incurred a net loss of $11.75 million on $3.88 million of total revenue for the fiscal year ended Sept. 30, 2012, compared with a net loss of $15.28 million on $3.88 million of revenue during the prior year. Biovest's balance sheet at Sept. 30, 2012, showed $4.73 million in total assets, $44.85 million in total liabilities and a $40.11 million total stockholders' deficit. Cherry, Bekaert, & Holland L.L.P., issued a "going concern" qualification on the consolidated financial statements for the year ended Sept. 30, 2012. Bankruptcy Warning "If, as or when required, the Company is unable to repay, refinance or restructure its indebtedness under the Company's secured or unsecured debt instruments, or amend the covenants contained therein, the lenders and/or holders under such secured or unsecured debt instruments could elect to terminate their commitments thereunder cease making further loans and institute foreclosure proceedings or other actions against the Company's assets. Under such circumstances, the Company could be forced into bankruptcy or liquidation. In addition, any event of default or declaration of acceleration under one of the Company's debt instruments could also result in an event of default under one or more of the Company's other debt instruments. The Company may have to seek protection under the U.S. Bankruptcy Code from the Matured Obligations. This would have a material adverse impact on the Company's liquidity, financial position and results of operations," the Company said in its annual report for the period ended Sept. 30, 2012. BOOMBERANG SYSTEMS: Cuts Authorized Capital Stock to 201 Million ---------------------------------------------------------------- An amendment filed by Boomerang Systems, Inc., to its Certificate of Incorporation, as amended, with the Secretary of State of Delaware, went effective on March 1, 2013. The Amendment effected a decrease in the Company's authorized capital stock from 401,000,000 shares to 201,000,000 shares and the Company's authorized Common Stock from 400,000,000 shares to 200,000,000 shares. The Amendment did not change the number of outstanding shares of Common Stock or the par value of the Company's common stock, which remains at $0.001 per share. A copy of the Amendeded Certificate of Incorporation is available for free at http://is.gd/rgfugY About Boomerang Systems Headquartered in Morristown, New Jersey, Boomerang Systems, Inc. (Pink Sheets: BMER) through its wholly owned subsidiary, Boomerang Utah, is engaged in the design, development, and marketing of automated racking and retrieval systems for automobile parking and automated racking and retrieval of containerized self-storage units. Boomerang incurred a net loss of $17.42 million for the fiscal year ended Sept. 30, 2012, compared with a net loss of $19.10 million during the prior year. The Company's balance sheet at Dec. 31, 2012, showed $7.32 million in total assets, $22.96 million in total liabilities and a $15.63 million total stockholders' deficit. Bankruptcy Warning "Our operations may not generate sufficient cash to enable us to service our debt. If we were to fail to make any required payment under the notes and agreements governing our indebtedness or fail to comply with the covenants contained in the notes and agreements, we would be in default. Our debt holders would have the ability to require that we immediately pay all outstanding indebtedness. If the debt holders were to require immediate payment, we might not have sufficient assets to satisfy our obligations under the notes or our other indebtedness. In such event, we could be forced to seek protection under bankruptcy laws, which could have a material adverse effect on our existing contracts and our ability to procure new contracts as well as our ability to recruit and/or retain employees. Accordingly, a default could have a significant adverse effect on the market value and marketability of our common stock," the Company said in its annual report for the year ended Sept. 30, 2012. BRIER CREEK: Court Clarifies Arbitration Order in BofA Lawsuit -------------------------------------------------------------- Judge Stephani W. Humrickhouse clarified that Brier Creek Corporate Center Associates Limited Partnership, et al., should submit to arbitration its claim for constructive fraud against Bank of America, N.A.. The judge made the clarification in a Feb. 27 supplemental order to a Feb. 8 prior decision. As reported in the Feb. 14, 2013 edition of the Troubled Company Reporter, Judge Humrickhouse denied, on Feb. 8, Bank of America's request for the Court to abstain from hearing a lawsuit commenced by Brier Creek, et al., but compelled the parties to arbitration with respect to certain of the claims raised in the lawsuit. The parties' relationship stemmed from a $100+ million loan portfolio extended by Bank of America to Brier, and the lawsuit alleges 15 counts of contract and tort claims. Bank of America has also filed counterclaims in the suit. Also in her Feb. 27 ruling, Judge Humrickhouse specified that 10 counts of Bank of America's counterclaims for breach of contract (Claims 11 - 20) are also compelled for arbitration. The judge further held that the motion to compel as to Bank of America's Counterclaim 21 is allowed as to debtor AACCL and denied as to debtor CCLP. The case is styled as, BRIER CREEK CORPORATE CENTER ASSOCIATES LIMITED PARTNERSHIP, AAC RETAIL PROPERTY DEVELOPMENT AND ACQUISITION FUND, LLC, BRIER CREEK OFFICE #4, LLC, BRIER CREEK OFFICE #6, LLC, CARY CREEK LIMITED PARTNERSHIP, SERVICE RETAIL AT BRIER CREEK, LLC, SERVICE RETAIL AT WHITEHALL II LIMITED PARTNERSHIP, SHOPTON RIDGE BUSINESS PARK LIMITED PARTNERSHIP, SHOPTON RIDGE 30-C, LLC, WHITEHALL CORPORATE CENTER #5, LLC, WHITEHALL CORPORATE CENTER #6, LLC, AMERICAN ASSET CORPORATION COMPANIES, LTD., WHITEHALL CORPORATE CENTER #4, LLC Plaintiffs, v. BANK OF AMERICA, N.A. Defendant, Adv. Proc. No. 12-00121-8-SWH-AP (Bankr. E.D.N.C.). A copy of Judge Humrickhouse's Feb. 27 Supplemental Order is available at http://is.gd/6rfnEtfrom Leagle.com. About Brier Creek Corporate Brier Creek Corporate Center Associates Limited and eight other related entities affiliates filed for Chapter 11 protection (Bankr. E.D.N.C. Lead Case No. 12-01855) on March 9, 2012. The Debtors own real property located in Wake County, North Carolina and Mecklenburg County, North Carolina. In most instances, the real property owned by the Debtors consists of land upon which is constructed commercial or industrial buildings consisting of office, service or retail space. The other debtors are Brier Creek Office #4, LLC; Brier Creek Office #6, LLC; Service Retail at Brier Creek, LLC; Service Retail at Whitehall II Limited Partnership; Shopton Ridge 30-C, LLC; Whitehall Corporate Center #4, LLC; Whitehall Corporate Center #5, LLC; and Whitehall Corporate Center #6, LLC. Brier Creek is a 106-acre development that is to have 2.8 million square feet of commercial space. Whitehall has 146 acres and will have 4 million square feet on completion. Brier Creek Corporate scheduled assets of $19,713,147 and liabilities of $18,086,183. Judge Stephani W. Humrickhouse oversees the case. Northen Blue, LLP, serves as counsel to the Debtors. C. Richard Rayburn, Jr. and the firm Rayburn Cooper & Durham, P.A., serve as special counsel. Grant Thornton LLP is the accountant. Bidencope & Associates was hired as appraiser. The petitions were signed by Terry Bradshaw, vice president. Brier Creek's other affiliated entities are Cary Creek Limited Partnership; Shopton Ridge Business Park Limited Partnership; AAC Retail Property Development and Acquisition Fund, LLC; American Asset Corporation Companies Limited; and American Asset Corporation. Cary Creek Limited Partnership filed a voluntary petition on Jan. 3, 2013. By order entered Jan. 10, 2013, the bankruptcy case of Cary Creek Limited Partnership was consolidated with the other debtors's cases and all of the cases are now being jointly administered for procedural purposes only. C.H.I. OVERHEAD: Moody's Assigns 'B3' CFR; Outlook Stable --------------------------------------------------------- Moody's Investors Service assigned a first-time monitored B3 Corporate Family Rating and B3-PD Probability of Default Rating to C.H.I. Overhead Doors, Inc. Moody's also assigned a B3 rating to the company's 1st lien senior secured bank credit facility. The bank credit facility is comprised of a $20 million revolving credit facility due 2018 and a $180 million term loan due 2019. Proceeds from the 1st lien bank credit facility, along with a $68 million 2nd lien term loan due 2019 (unrated), will primarily be used to refinance the company's existing debt and to pay a dividend to affiliates of Friedman Fleischer & Lowe, LLC, the primary owner of CHI. The rating outlook is stable. The following ratings will be affected by this action: Corporate Family Rating assigned B3; Probability of Default Rating assigned B3-PD; 1st Lien Senior Secured Revolving Credit Facility due 2018 assigned B3 (LGD3, 49%); and, 1st Lien Senior Secured Term Loan due 2019 assigned B3 (LGD3, 49%). Ratings Rationale: CHI's B3 Corporate Family Rating reflects the company's elevated pro forma leverage following the proposed refinancing transaction. CHI's small size, its limited product offering and the highly fragmented nature of the garage door market were also taken into consideration, as these factors continue to constrain the rating. In addition, the company's reliance on only one manufacturing plant raises concerns, as a disruption at that facility could delay orders and have a negative impact on revenues. Including the currently proposed dividend, the affiliates of the Friedman Fleischer & Lowe, LLC will have returned close to 65% of their original equity investment since acquiring CHI in August 2011. Further, the aggregate amount of dividends is large relative to the company's free cash flow generation, representing multiple years of free cash flow. Moody's estimates, on a pro forma basis for the currently proposed transaction, interest coverage defined as EBITA-to-interest expense will be slightly below 1.75 times, and leverage will be above 6.5 times (all ratios incorporate Moody's standard adjustments). These credit metrics could remain high if the company cannot increase absolute levels of earnings. Also, the company has significant negative tangible net worth. Providing some offset to the weak credit metrics are the company's fundamental operations. Moody's recognizes CHI's ability to generate double-digit adjusted operating margins. The company should also benefit from future growth prospects in the repair and remodeling market, the primary driver of its revenues. Furthermore, the company's lack of near-term debt maturities and ample availability under its historically undrawn revolving credit facility bolster its liquidity profile to support growth initiatives as the repair and remodeling end market continues to recover. The stable rating outlook incorporates Moody's view that CHI's operating performance will continue to improve and free cash flow will be used for debt reduction, resulting in credit metrics that are more supportive of the current corporate family rating. The B3 rating assigned to the $200 million 1st lien senior secured bank credit facility, the same rating as the corporate family rating, reflects its position as the preponderance of secured bank debt in CHI's capital structure . The bank credit facility is comprised of a $20 million revolving credit facility, as well as a $180 million Term loan A that amortizes 1% per year with a bullet payment at maturity. The revolving credit facility and Term Loan A are pari passu in a recovery scenario. While these credit facilities do have a first priority security in substantially all of the company's assets, a collateral deficiency was applied to address the limited recovery value of the tangible assets comprising the first lien security. C.H.I. Doors Holding Corp., the parent company of C.H.I. Overhead Doors, Inc. and its significant domestic subsidiaries provide guarantees. The 1st lien bank credit facility also benefits from $68 million in more junior capital, which would absorb the first losses in a recovery scenario. Moody's does not expect positive rating actions for CHI over the near term primarily due to the company's elevated debt leverage. However, positive rating actions could ensue when CHI demonstrates an ability to generate higher operating earnings and free cash flow. Operating performance that results in EBITA-to-interest expense sustained near 2.5 and debt-to-EBITDA sustained below 5.5 times (all ratios incorporate Moody's standard adjustments), as well as an improved liquidity profile could have a positive impact on the company's credit ratings. Negative rating actions may occur if CHI's operating performance falls below Moody's expectations or if the company experiences a weakening in financial performance due to a decline in its end markets. EBITA-to-interest expense remaining below 2.0 times, debt-to-EBITDA sustained above 6.0 times (all ratios incorporate Moody's standard adjustments), or a deteriorating liquidity profile could pressure the ratings. The principal methodology used in this rating was the Global Manufacturing Industry Methodology published in December 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. C.H.I. Overhead Doors, Inc., headquartered in Arthur, IL, manufactures overhead doors for residential and commercial applications throughout the United States. Friedman Fleischer & Lowe, LLC, through its affiliates, is the primary owner of CHI. Revenues for the twelve months through September 30, 2012 totaled about $214 million. CAPITOL BANCORP: Creditors Fail to Wrest Control ------------------------------------------------ Marie Beaudette at Dow Jones' DBR Small Cap reports that Capitol Bancorp Ltd. will keep control over its Chapter 11 case for another two months over the complaints of its unsecured creditors, who argued that "hope is dwindling" that the bank holding company can find an investor to fund its exit from bankruptcy protection. As reported in the TCR on March 6, 2013, the Official Committee of Unsecured Creditors appointed in the Chapter 11 cases of Capitol Bancorp Ltd. and Financial Commerce Corporation opposed further extension of the Debtors' exclusive plan filing and solicitation period so that it can propose its own plan of reorganization. In papers filed in court, the Committee argued that further extension of the Debtors' exclusivity is not in the best interest of creditors and will not help bring the bankruptcy cases to a successful resolution. "It is almost impossible at this point to conceive of any possible harm to the estate and its creditors from opening up the plan process, and the Debtors' continued exclusive control of that process will only serve to prolong the Chapter 11 cases without any corresponding benefit to creditors," the Committee said. The Debtors sought: i) an extension of their exclusive periods to file the proposed Chapter 11 Plan until May 16, 2013, and solicit acceptances for that plan until July 15, 2013; and ii) postponement from March 5 to April 16, the combined hearing on approval of solicitation procedures, adequacy of the disclosure statement and confirmation of the Plan. Capitol Bancorp's bid for a quick bankruptcy exit hit a snag when Valstone Partners LLC backed out from a tentative deal to fund the reorganization by paying $50 million for common and preferred stock while buying $207 million in face amount of defaulted commercial and residential mortgages. The Debtors say they are still working with other potential investors and the Debtors remain optimistic that they will be able to consummate an equity infusion. About Capitol Bancorp Capitol Bancorp Ltd. and Financial Commerce Corporation filed voluntary Chapter 11 bankruptcy petitions (Bankr. E.D. Mich. Case Nos. 12-58409 and 12-58406) on Aug. 9, 2012. Capitol Bancorp -- http://www.capitolbancorp.com/-- is a community banking company with a network of individual banks and bank operations in 10 states and total consolidated assets of roughly $2.0 billion as of June 30, 2012. CBC owns roughly 97% of FCC, with a number of CBC affiliates owning the remainder. FCC, in turn, is the holding company for five of the banks in CBC's network. CBC is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended, 12 U.S.C. Sec. 1841, et seq., and trades on the OTCQB under the symbol "CBCR." Lawyers at Honigman Miller Schwartz and Cohn LLP represent the Debtors as counsel. John A. Simon, Esq., of Foley & Lardner LLP represents the Official Committee of Unsecured Creditors as counsel. In its petition, Capitol Bancorp scheduled $112,634,112 in total assets and $195,644,527 in total liabilities. The petitions were signed by Cristin K. Reid, corporate president. The Company's balance sheet at Sept. 30, 2012, showed $1.749 billion in total assets, $1.891 billion in total liabilities, and a stockholders' deficit of $141.8 million. The Debtor's plan would exchange debt and trust-preferred securities for equity. Holders of $6.8 million in senior notes would see a full recovery by receipt of new stock. Holders of $151.3 million in trust-preferred securities would take equity worth $50 million, for a one-third recovery. Holders of $5 million in preferred stock would have a 20% recovery from new equity, while common stockholders would take stock worth $15 million. CENTRAL EUROPEAN: A1, Kaufman to Back Pre-Arranged Chapter 11 ------------------------------------------------------------- Mark Kaufman and the A1 Investment Company have decided to join forces to sponsor a chapter 11 plan of reorganization for the restructuring of Central European Distribution Corporation. In a letter to members of the Board of CEDC, A1 and Dr. Kaufman proposed to invest up to US$225 million in the restructuring of CEDC in exchange for 85% of the equity of the reorganized CEDC. The Plan would be implemented through pre-arranged cases under chapter 11 of title 11 of the United States Code. Before commencement of the Chapter 11 cases, the Company, the Consortium and a sufficient majority of holders of the 2016 Notes would execute a plan support agreement to provide a stable and swift path towards confirmation of the Plan. The Consortium believes that its proposal substantially improves on the term sheet dated Feb. 28, 2013, between Roust Trading Limited and certain holders of the 2016 Notes represented by the Steering Committee. The main terms of the Plan are: Consideration for 2016 note holders * US$175 million of cash investment, the proceeds of which will be used exclusively by the Company to make available a cash out option * All remaining 2016 Notes that do not elect the cash out option will receive, on a pro rata basis, US$660 million consideration comprising: () US$50 million in cash paid on a rata basis () New senior secured notes due 2018 (US$410 million) () New convertible junior secured notes due 2018 (US$200 million) Consideration for unsecured debt holders and current shareholders * Unsecured debt holders will include holders of convertible senior notes due 2013, RTL's US$50 million credit facility, RTL's outstanding notes due 2013 and all other unsecured claims * These unsecured debt holders and current shareholders will receive no more than 15% of the reorganized equity, subject to dilution, including by a management incentive plan Consideration for the Consortium * No less than 85% of the reorganized equity, subject to dilution, including by a management incentive plan "For more than two years, CEDC has faced a severe crisis that can be overcome only through a substantial financial and managerial commitment," the letter states. "The Consortium is prepared, and has the resources necessary, to make such a commitment and restore CEDC to a leading position in Russia and other key markets." A copy of the March 5 Letter is available for free at: http://is.gd/tOZ6U3 A copy of the Term Sheet reflecting the terms of the Plan is available for free at http://is.gd/kXJFGM A1 is an investment company of the Alfa Group, which is one of the largest privately-owned financial and industrial conglomerates in Russia with approximately US$60 billion of assets. Dr. Kaufman is an entrepreneur and executive with over 20 years of international experience in the wines and spirits sector. Dr. Kaufman was the Chairman, President and Chief Executive Officer of the Whitehall Group, a leading Russian importer and distributor of premium wines and spirits, which he founded in 1992 and sold to Central European Distribution Corporation in several transactions between May 2008 and February 2011. Mr. Kaufman and W & L Enterprises Ltd. together beneficially own 7,417,549 shares of the Company's common stock, representing approximately 9.4% of the Company's common shares, as reported by the TCR on Jan. 30, 2013. About CEDC Mt. Laurel, New Jersey-based Central European Distribution Corporation is one of the world's largest vodka producers and Central and Eastern Europe's largest integrated spirit beverages business with its primary operations in Poland, Russia and Hungary. Ernst & Young Audit sp. z.o.o., in Warsaw, Poland, expressed substantial doubt about Central European'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 certain of the Company's credit and factoring facilities are coming due in 2012 and will need to be renewed to manage its working capital needs. The Company's balance sheet at Sept. 30, 2012, showed $1.98 billion in total assets, $1.73 billion in total liabilities, $29.44 million in temporary equity, and $210.78 million in total stockholders' equity. Liquidity The Company's Convertible Senior Notes are due on March 15, 2013. The Company has said its current cash on hand, estimated cash from operations and available credit facilities will not be sufficient to make the repayment of principal on the Convertible Notes and, unless the transaction with Russian Standard Corporation is completed the Company may default on them. The Company's cash flow forecasts include the assumption that certain credit and factoring facilities coming due in 2012 would be renewed to manage working capital needs. Moreover, the Company had a net loss and significant impairment charges in 2011 and current liabilities exceed current assets at June 30, 2012. These conditions, the Company said, raise substantial doubt about its ability to continue as a going concern. * * * As reported by the TCR on Aug. 10, 2012, Standard & Poor's Ratings Services kept on CreditWatch with negative implications its 'CCC+' long-term corporate credit rating on U.S.-based Central European Distribution Corp. (CEDC), the parent company of Poland-based vodka manufacturer CEDC International sp. z o.o. "The CreditWatch status reflects our view that uncertainties remain related to CEDC's ongoing accounting review and that CEDC's liquidity could further and substantially weaken if there was a breach of covenants which could lead to the acceleration of the payment of the 2016 notes, upon receipt of a written notice of 25% or more of the noteholders," S&P said. As reported by the TCR on Jan. 16, 2013, Moody's Investors Service has downgraded the corporate family rating (CFR) and probability of default rating (PDR) of Central European Distribution Corporation (CEDC) to Caa3 from Caa2. "The downgrade follows CEDC announcement on the 28 of December that it had agreed with Russian Standard a revised transaction to repay its $310 million of convertible notes due March 2013 which, in Moody's view, has increased the risk of potential loss for existing bondholders", says Paolo Leschiutta, a Moody's Vice President - Senior Credit Officer and lead analyst for CEDC. CITRUS MEMORIAL: Moody's Lowers Rating on Outstanding Bonds to B3 ----------------------------------------------------------------- Moody's Investors Service downgraded Citrus Memorial Hospital's (d.b.a Citrus Memorial Health System, FL) bond rating to B3 from Ba3 affecting $38.5 million of outstanding bonds issued by the Citrus County Hospital Board, FL. The outlook remains negative. Ratings Rationale: The downgrade to B3 from Ba3 reflects Citrus' material decline in liquidity as of January 31, 2013 following problems stemming from the hospital's information technology system and physician billing system; very weak operating performance in FY 2012 and ongoing legal dispute regarding hospital governance that continues to consume management's time and resources. The negative outlook reflects the upcoming March 31, 2013 test date for the liquidity covenant on the bank notes and the current level of days cash on hand which is below the 65 day covenant. Challenges: - Decline in absolute liquidity to a very weak $20.3 million as of January 31, 2013, down from $30.0 million at the end of FY 2012 (September 30, 2012); cash to debt is 38.2% as of January 31, 2013, down from 52.5% at the end of FY 2012. - Upcoming liquidity covenant measurement date on March 31, 2013 with 65 days required under the two non-rated bank qualified loans; Citrus currently reports 49 days as of January 31, 2013 and is endeavoring to meet the covenant. - Continued conflict between the governmental Citrus County Hospital Board (CCHB) and the 501c3 Citrus Memorial Health Foundation (CMHF) Board regarding control over day-to-day operations, allocation of tax revenues and influence in implementing long-term strategies remains a credit concern and has consumed CMHF's resources. - Poor operating performance in fiscal year (FY) 2012 (-6.3% operating margin and 0.8% operating cash flow margin), down from -2.1% and 3.5%, respectively, in FY 2011; performance remains weak with -0.9% and 5.7% margins, respectively, through January 31, 2013 although ahead of the prior year period. - High and growing exposure to Medicare (70% of revenues at FY 2012, compared to Ba median of 45%) continues to constrain the ability of the organization to enhance profitability and reduce reliance on tax revenues. - Growth in pension liability, to $30.6 million in FY 2012 from $23.2 million in FY 2011; plan was closed to new participants in 2008 and in December 2010 all accruals of future benefits were frozen; employer contributions declined to $800,000 from $1.6 million. - Market share declined from 44% in FY 2006 to 33% in FY 2011 (most recent management-provided data available). Strengths: - Inpatient admissions grew 4.2% in FY 2012 over FY 2011 and 3.9% through January 31, 2013 compared to the prior year period, in part due to increased demand in the region and management's effort to properly classify patients as outpatient or inpatient. - Despite poor operational performance in FY 2012, management has implemented cost controls, with margin showing some improvement through four months FY 2013. - Management maintains a very liquid asset allocation of unrestricted cash. - Debt service reserve fund remains untouched and intact. Outlook: The negative outlook reflects the decline in liquidity ($20.3 million or 49 days cash as of January 31, 2013) and the upcoming 65 days cash covenant measured on March 31, 2013 pursuant to the two non-rated bank loans. The negative outlook also reflects Moody's concerns that governance issues between the CMHF board and CCHB will continue to pressure hospital performance. What Could Make The Rating Go Up Favorable resolution of the governance issues with CCHB; increase in liquidity and greater cushion against debt coverage ratios; improved financial performance and market share. What Could Make The Rating Go Down Continued decline in absolute liquidity; continued downturn in financial performance and inability to resolve litigation and legal disputes regarding governance The principal methodology used in this rating was Not-For-Profit Healthcare Rating Methodology published in March 2012. COATES INTERNATIONAL: Cowan Gunteski Serves as New Accountants -------------------------------------------------------------- Coates International, LTD, was informed by its independent registered public accounting firm, Meyler & Company, LLC, that it has combined its practice with Cowan, Gunteski & Company, P.A. As a result of the combination and upon notice by Meyler to the Company on March 1, 2013, Meyler in effect has resigned as the Company's independent registered public accounting firm and Cowan, Gunteski & Company, P.A., became the Company's independent registered public accounting firm. The engagement of Cowan, Gunteski & Company, P.A., as the Company's independent registered public accounting firm was ratified and approved by the Board of Directors of the Company on March 4, 2013. The audit reports of "Meyler" on the consolidated financial statements of the Company as of and for the years ended Dec. 31, 2011, and 2010 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles, except as to its ability to continue as a going concern. During the Company's two most recent fiscal years ended Dec. 31, 2012, and 2011 and through March 1, 2013, the Company did not consult with Cowan, Gunteski & Co. P.A. on (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that may be rendered on the Company's consolidated financial statements, and Cowan, Gunteski & Co., P.A., did not provide either a written report or oral advice to the Company that Cowan, Gunteski & Co., P.A., concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue; or (ii) the subject of any disagreement, as defined in Item 304(a)(1)(iv) of Regulation S-K. In connection with the audits of the Company's consolidated financial statements for each of the fiscal years ended Dec. 31, 2012, and 2011 and through March 4, 2013, there were no disagreements between the Company and "Meyler" on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of "Meyler", would have caused "Meyler" to make reference to the subject matter of the disagreement in their reports on the Company's consolidated financial statements for such years. About Coates International Based in Wall Township, N.J., Coates International, Ltd. (OTC BB: COTE) -- http://www.coatesengine.com/-- was incorporated on August 31, 1988, for the purpose of researching, patenting and manufacturing technology associated with a spherical rotary valve system for internal combustion engines. This technology was developed over a period of 15 years by Mr. George J. Coates, who is the President and Chairman of the Board of the Company. The Coates Spherical Rotary Valve System (CSRV) represents a revolutionary departure from the conventional poppet valve. It changes the means of delivering the air and fuel mixture to the firing chamber of an internal combustion engine and of expelling the exhaust produced when the mixture ignites. In the auditors' report accompanying the consolidated financial statements for the year ended Dec. 31, 2011, Meyler & Company, LLC, in Middletown, New Jersey, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company continues to have negative cash flows from operations, recurring losses from operations, and a stockholders' deficiency. The Company's balance sheet at Sept. 30, 2012, showed $2.69 million in total assets, $4.51 million in total liabilities and a $1.82 million total stockholders' deficiency. COMMONWEALTH BIOTECHNOLOGIES: Individual Can't Represent Claimant ----------------------------------------------------------------- Bankruptcy Judge Kevin R. Huennekens for the nth time denied a request lodged by Andrew Chien to substitute Fornova Pharmworld, Inc., as defendant in a lawsuit filed by debtor Commonwealth Biotechnologies, Inc. On May 16, 2011, Fornova timely filed a claim, Claim Number 18-1, in CBI's bankruptcy case. The claim in the amount of $622,167 was based on an alleged promissory note between CBI and Fornova. CBI commenced an adversary proceeding in February 2012 against Fornova objecting to Fornova's Claim. The Complaint alleged that Fornova's Claim was unfounded under 11 U.S.C. Sections 105(a) and 5022 and Rules 3001, 3007, and 7001(8) of the Federal Rules of Bankruptcy Procedure. On March 15, 2012, Mr. Chien, purportedly acting as "trustee" for Fornova, filed a responsive pleading in the adversary proceeding on behalf of Fornova. As Mr. Chien is not an attorney, he is not authorized to act on behalf of a corporate defendant. The Bankruptcy Court advised Mr. Chien about Local Bankruptcy Rule 9010-1 at a pretrial conference and directed Mr. Chien to retain counsel on behalf of Fornova. Mr. Chien ignored the Bankruptcy Court's instruction and continued to file, on behalf of Fornova, pleadings with the Court, including a motion to intervene in the case, a memorandum to reconstitute the Unsecured Creditor Committee, and proposed that he be appointed to the Committee. The Bankruptcy Court eventually levied sanctions against Mr. Chien and barred him from appearing before or filing pleadings with the Court on behalf of Fornova except through counsel duly authorized to practice before the U.S. Bankruptcy Court for the Eastern District of Virginia. In August 2012, at the behest of the Plaintiff, the Clerk entered default against Fornova, and in October 2012, the Court entered an Order granting judgment by default, and disallowing and expunging Fornova's Claim. Mr. Chien -- once again improperly acting on behalf of Fornova -- filed a Notice of Appeal before the U.S. District Court for the Eastern District of Virginia. He also filed with the Bankruptcy Court the "Motion to Approve Andrew Chien as the Substitution Party for Fornova as Defendant in this Case" on Jan. 29, 2013. According to Judge Huennekens, Mr. Chien's Motion is just another attempt to circumvent the Court's prior rulings and the Local Bankruptcy Rules. The Court has repeatedly informed Mr. Chien that corporations, such as Fornova, must be represented by counsel permitted to appear before the Court under Local Bankruptcy Rule 2090-1. Despite the Court's instructions and its prior rulings, Mr. Chien has continued to attempt to represent the Defendant. The Court finds that Mr. Chien's attempt to substitute himself for Fornova is an unjust attempt to pursue collection of the Fornova Note on behalf of Fornova without the requirement of legal representation. The case is, COMMONWEALTH BIOTECHNOLOGIES, INC., Plaintiff, v. FORNOVA PHARMWORLD, INC., Defendant, Adv. Proc. No. 12-03038 (Bankr. E.D. Va.). A copy of the Court's March 4, 2013 Memorandum Opinion is available at http://is.gd/DIuleffrom Leagle.com. About Commonwealth Biotechnologies Based in Midlothian, Virginia, Commonwealth Biotechnologies, Inc., was a specialized life sciences outsourcing business that offered cutting-edge expertise and a complete array of Peptide-based discovery chemistry and biology products and services through its wholly owned subsidiary Mimotopes Pty Limited. Commonwealth Biotechnologies Inc. filed for Chapter 11 bankruptcy protection (Bankr. E.D. Va. Case No. 11-30381) on Jan. 20, 2011. Judge Kevin R. Huennekens presides over the case. Paula S. Beran, Esq., at Tavenner & Beran, PLC, represents the Debtor. The Debtor estimated both assets and debts of between $1 million and $10 million. On April 7, 2011, the Bankruptcy Court approved the private sale of Mimotopes for a gross sales price of $850,000. The sale closed on April 29, 2011. Mimotopes was deconsolidated during the second quarter of 2011. In the auditors' report accompanying the consolidated financial statements for the year ended Dec. 31, 2011, Witt Mares, PLC, in Richmond, Virginia, noted that the Company's recurring losses from operations and inability to generate sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern. The Company's balance sheet at June 30, 2012, showed $1.20 million in total assets, $1.79 million in total liabilities, and a $598,484 total stockholders' deficit. COMMUNICOM CORP: Owner of 4 Radio Stations in Chapter 11 -------------------------------------------------------- Communicom Corp. of America LLC, the owner and operator of four radio stations, sought bankruptcy protection from creditors (Bankr. D. Colo. Case No. 13-12694) on Feb. 27, without citing a reason. Michael Bathon, substituting for Bloomberg bankruptcy columnist Bill Rochelle, reports that Communicom Corp. of America and four- debtor affiliates collectively own and operate AM radio stations in Detroit, New Orleans and Phoenix. The company, based in Denver, estimated debt of more than $10 million and assets of less than $10 million. The station assets secure about $10.8 million in debt owed to First Citizens Bank & Trust Co., the company's largest creditor. According to the docket, the Chapter 11 plan and disclosure statement are due June 27, 2013. The case summary for Communicom Corp was published in the March 5, 2013 edition of the Troubled Company Reporter. COMPETITIVE TECHNOLOGIES: To Issue 100K Shares for Legal Services ----------------------------------------------------------------- Competitive Technologies, Inc., filed with the U.S. Securities and Exchange Commission a Form S-8 registration statement to register 100,000 shares of common stock issuable under a legal services agreement. The proposed maximum aggregate offering price is $43,000. A copy of the prospectus is available at: http://is.gd/PlSUJZ About Competitive Technologies Fairfield, Conn.-based Competitive Technologies, Inc. (OTC QX: CTTC) -- http://www.competitivetech.net/-- was established in 1968. The Company provides distribution, patent and technology transfer, sales and licensing services focused on the needs of its customers and matching those requirements with commercially viable product or technology solutions. Sales of the Company's Calmare(R) pain therapy medical device continue to be the major source of revenue for the Company. After auditing the 2011 results, Mayer Hoffman McCann CPAs, in New York, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred operating losses since fiscal year 2006. The Company reported a net loss of $3.59 million in 2011. The Company reported a net loss of $2.40 million on $163,993 of product sales for the five months ended Dec. 31, 2010. The Company's balance sheet at Sept. 30, 2012, showed $4.70 million in total assets, $8.06 million in total liabilities and a $3.35 million total shareholders' deficit. "The Company incurred operating losses for the past six quarters, having produced marginal net income in the first quarter of 2011, after having incurred operating losses each quarter since fiscal 2006. The Company has taken steps to significantly reduce its operating expenses going forward and expects revenue from sales of Calmare medical devices to grow. However, even at the reduced spending levels, should the anticipated increase in revenue from sales of Calmare devices not occur the Company may not have sufficient cash flow to fund operating expenses beyond the first quarter of calendar 2013. These conditions raise substantial doubt about the Company's ability to continue as a going concern," the Company said in its quarterly report for the period ended Sept. 30, 2012. CONEXANT SYSTEMS: Section 341(a) Meeting Scheduled for April 9 -------------------------------------------------------------- A meeting of creditors in the bankruptcy case of Conexant Systems, Inc., will be held on April 9, 2013, at 1:00 p.m., at J. Caleb Boggs Federal Building, 844 King Street, Wilmington, DE 19801, 5th Floor, Room 5209. 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 Conexant Newport Beach, California-based Conexant Systems, Inc. (NASDAQ: CNXT) -- http://www.conexant.com/-- is a fabless semiconductor company. Conexant's comprehensive portfolio of innovative semiconductor solutions includes products for imaging, audio, embedded-modem, and video applications. Outside the United States, the Company has subsidiaries in Northern Ireland, China, Barbados, Korea, Mauritius, Hong Kong, France, Germany, the United Kingdom, Iceland, India, Israel, Japan, Netherlands, Singapore, and Israel. Conexant Systems, Inc. filed a Chapter 11 petition (Bankr. D. Del. Case No. 13-10367) on Feb. 28, 2013, with an agreement for a balance sheet restructuring with equity sponsors and sole secured lender, QP SFM Capital Holdings Limited, an entity managed by Soros Fund Management LLC. The Debtor estimated assets and debts of at least $100 million. Sailesh Chittipeddi signed the petition as president and chief executive officer. Judge Mary F. Walrath presides over the case. Kirkland & Ellis LLP and Klehr Harrison Harvey Branzburg LLP are serving as legal counsel and Alvarez & Marsal is acting as restructuring advisor to Conexant. Akin Gump Strauss Hauer & Feld LLP and Pepper Hamilton LLP are serving as legal counsel and Blackstone Advisory Partners L.P. as restructuring advisor to the secured lender. COSMETICS PLUS: Dismissal of Malpractice Suit Upheld ---------------------------------------------------- The Appellate Division of the Supreme Court of New York, First Department, affirmed a Sept. 30, 2011 order dismissing a legal malpractice action against Traub, Bonaquist & Fox, LLP filed by Cosmetics Plus Group, Ltd., et al. A copy of the Appellate Division's Feb. 28, 2013 order is available at available at http://is.gd/GoGlxlfrom Leagle.com. Cosmetics Plus retained TBF in 2001 to commence a Chapter 11 bankruptcy proceeding in New York. When Cosmetics Plus obtained a $350,000 deal with its insurers in 2008, the settlement amount was placed in escrow with TBF professionals, namely Traub and Fox, who by then had moved their practice to Drier LLP. However, Drier was soon known to be involved in a Ponzi scheme and filed for bankruptcy in December 2008, which cause delay of the release of the escrowed funds. In its action, plaintiffs asserted causes of action for negligence and legal malpractice, breach of fiduciary duty, breach of Judiciary Law Sec. 487 and violations of partnership law. Plaintiffs alleged that, among other things, TBF should have acted more diligently in ensuring release of the funds. The Appellate Division concurred with the Sept. 30, 2011 order entered by Judge Judith J. Gische of the Supreme Court of New York County which held that the defendants' failure to comply strictly with the time deadlines was not malpractice, as the delays were not attributable to any neglect by defendants. The appeals case is COSMETICS PLUS GROUP, LTD., ET AL., Plaintiffs-Appellants, v. PAUL TRAUB, ET AL., Defendants- Respondents, 8641. CPI CORP: Amended Forbearance Agreement with BofA Expires --------------------------------------------------------- CPI Corp. and its subsidiaries that are guarantors under the Guarantee and Collateral Agreement dated as of Aug. 30, 2010, entered into Amendment Number One to Third Forbearance Agreement with Bank of America, N.A., as Administrative Agent for the various financial institution parties identified as lenders in the Credit Agreement dated as of Aug. 30, 2010, as amended several times. Pursuant to the Loan Agreement, as of Feb. 26, 2013, the Company owes amounts totaling $98.3 million, which consists of unpaid principal of $76.2 million, accrued and unpaid interest of $186,000, accrued and unpaid PIK Obligations of $8.0 million, letter of credit fees of $119,000 and Letters of Credit totaling $13.8 million. The Third Forbearance Agreement identified certain Events of Default that existed under the Loan Documents as of the date of Third Forbearance Agreement. As of the date of the Amendment, the Existing Defaults are continuing and have not been cured and the "Forbearance Period" has expired. As a result of the defaults, the Agent has the right to exercise its rights and remedies under the Credit Agreement, as amended. Those remedies include, but are not limited to, the right to enforce its security interest in the Company's collateral and to pursue collection from the Company and other guarantors. Under the Amendment, the Agent, on behalf of itself and for the benefit of each Lender, agrees to forebear from exercising its rights and remedies under the Credit Agreement through March 6, 2013. The Amendment did not amend nor increase the amount of the revolving commitment, nor did it cure or waive the existing defaults. Upon termination of the forbearance period for any reason, the Agent is able to exercise all rights and remedies granted to it under the Credit Agreement, as amended. The Amendment also amended the termination date of the Credit Agreement to the earlier of March 6, 2013, or the termination date of the Amendment. Several Letters of Credit have been issued and are outstanding under the terms of the Credit Agreement. The Letters of Credit expiring within the next six months are outlined in the Amendment. The Borrower Parties have requested the Lenders to renew the Expiring Letters of Credit. Although the Administrative Agent is under no obligation to do so, the Administrative Agent, subject to its sole and absolute discretion, may renew each of the Expiring Letters of Credit for up to one year from their current expiration date regardless of whether or not the Extended Forbearance Period Termination Date has or has not passed. A copy of the Amended Forbearance Agreement is available at: http://is.gd/fU9G4Q About CPI Corp. Headquartered in St. Louis, Missouri, CPI Corp. provides portrait photography services at more than 2,500 locations in the United States, Canada, Mexico and Puerto Rico and provides on location wedding photography and videography services through an extensive network of contract photographers and videographers. The Company reported a net loss of $39.9 million on $123.2 million of net sales for the 24 weeks ended July 21, 2012, compared with a net loss of $5.6 million on $159.5 million of net sales for the 24 weeks ended July 23, 2011. The Company's balance sheet at July 21, 2012, showed $61 million in total assets, $159.6 million in total liabilities, and a stockholders' deficit of $98.6 million. CRB PARTNERS: Texas Judge Rejects Partial "Dirt-For-Debt" Plan -------------------------------------------------------------- Bankruptcy Judge Craig A. Gargotta declined to confirm the partial "dirt-for-debt" Chapter 11 plan, as amended, proposed by CRB Partners, LLC and Russell Drive, LLC. Among others, Judge Gargotta said the Plan cannot be confirmed because the secured creditor, First National Bank, is not receiving "fair and equitable" treatment as required by 11 U.S.C. Sec. 1129. The Plan does not provide FNB the "indubitable equivalent" of its secured claim. In addition, the Debtors have not shown that the Plan is feasible. A copy of the Court's March 1, 2013 Memorandum Opinion and Order is available at http://is.gd/a7IFj5from Leagle.com. CRB Partners and Russell Drive filed bankruptcy petitions to halt foreclosure proceedings initiated by First National Bank. CRB Partners LLC filed a voluntary Chapter 11 petition (Bankr. W.D. Tex. Case No. 11-11924) on Aug. 1, 2011, in Austin. CRB owns and operates real property in Texas. Judge Craig A. Gargotta oversees the case. C. Daniel Roberts & Associates, P.C., serves as CRB's counsel. In its petition, CRB estimated $1 million to $10 million in assets, and under $1 million in debts. A list of CRB's eight largest unsecured creditors is available for free at http://bankrupt.com/misc/txwb11-11924.pdf The petition was signed by Charles E. Howard, manager. On the same day, Russell Drive, LLC, also filed a Chapter 11 petition for bankruptcy (Bankr. W.D. Tex. Case No. 11-11915). Russell Drive owns two separate properties in Travis County, Texas, along with other properties owned with CRB. According to its petition, John W. Alvis, Attorney at Law, serves as counsel to Russell Drive. In its petition, Russell Drive estimated $500,001 to $1 million in assets, and $1 million to $10 million in debts. A list of Russell Drive's three largest unsecured creditors is available for free at http://bankrupt.com/misc/txwb11-11915.pdf The petition also was signed by Mr. Howard, as president and manager. Russell Drive and CRB are "affiliates" pursuant to 11 U.S.C. Sec. 101(2)(B). The single largest creditor of Russell Drive and CRB is FNB. The debt owed to FNB is secured by real estate owned by CRB, as well as real estate owned by Russell Drive. The Court granted the motion for joint administration on Aug. 26, 2011. Two properties comprise substantially all of the assets of CRB and Russell Drive. One property, the "Travis County property", consists of an office building on Russell Drive in Austin, Texas, with a small adjacent tract fronting Ben White Boulevard. The other property, the "Cameron County property", consists of (1) 43 residential lots; (2) "Cottonwood Creek Subdivision No. 1" on which is located a clubhouse, swimming pool, Jacuzzi, tennis courts, and shuffle board area and; (3) approximately 67.329 acres of land comprised of (i) 23.72 acres of a yet-to-be-developed subdivision consisting of 130 lots; (ii) Development Reserve II of 19.08 acres and; (iii) nine-hole golf course constructed, maintained, and operated on approximately 24.5 acres. The Court has determined that the value of the Cameron County Property is $1,340,000, including a deduction for ad valorem taxes. FNB has liens on both properties. The Debtors first filed a Chapter 11 plan on Feb. 3, 2011. FNB, Cottonwood Creek Property Owners, Inc., and the IRS filed objections to disclosure statement. In late July 2012, following the valuation hearing, the Debtors filed an Amended Disclosure Statement and an Amended Chapter 11 Plan. The Amended Plan proposes to pay both CRB and Russell Drive's creditors through a single bank account, the "Liquidating Fund." Under the Plan, CRB and Russell Drive would contribute its cash on deposit to the Liquidating Fund. CRB would further contribute the proceeds from the sale of its personal property. The Plan also notes that equity holders of both Debtors will contribute additional money into the Liquidating Fund, but does not specify which equity holders will contribute or the amount of their contributions. At the confirmation hearing, CRB equity holder, Don Speers, testified that he would contribute as much as $100,000 to the Liquidating Fund. The Plan proposes to convey to FNB, in full satisfaction of its claim, a portion of the property securing the debt and states that principal, interest at the non-default rate, and reasonable attorneys' fees owed to FNB exceeding the value of the property will be paid from the Liquidating Fund. It provides that CRB's General Unsecured Creditors (Class VIII) will be paid 10% of their claims, while CCPO and "Homeowners in Cottonwood Creek Owed by CRB" (Class VII) will receive a pro rata distribution of the funds on deposit with the 199th Judicial District Court, unless the court determines by final non-appealable judgment that the funds should be paid to CRB. In that case, the funds will be paid into the Liquidating Fund. FNB and CCPO filed objections to the Plan. On Sept. 14, 2012, the Court approved the Debtors' Disclosure Statement and set a confirmation hearing for Nov. 5, 2012. The confirmation hearing on the Plan was then continued to Nov. 28. Ballot Summaries for both Debtors indicate that FNB and CCPO are the only voting creditors to vote against the plan. FNB's objection to the plan addresses multiple reasons for denying confirmation. FNB's primary objection; however, lies in the "dirt-for-debt" nature of FNB's treatment under the plan. FNB asserts that the Cameron County property does not have sufficient value to allow FNB to recover the full amount of its claim and, therefore, FNB is not receiving the "indubitable equivalent" of its claim as required by 11 U.S.C. Sec. 1129(b)(3)(B)(iii). CCPO lodged numerous objections to the Plan. The bases for these objections include allegations that the Plan improperly grants the debtor a discharge in a liquidating case, the plan proposes to improperly release third parties from legal claims, and the plan proposes to grant an injunction without compliance with applicable law. At hearing on Nov. 5, 2012, and on record, attorneys for CRB agreed to remove such language from the plan. However, an amended plan reflecting the change was never received by the Court. Assuming these provisions will severed from the plan, some of CCPO's major remaining objections are that (1) the Plan improperly creates separate classes of unsecured claims in order to gerrymander acceptance of the Plan; (2) the Plan is not feasible; (3) the Plan improperly utilizes assessment funds in violation of the Covenants and; (4) the Plan violates the absolute priority rule. CCPO filed proofs of claim against CRB in the amounts of $280,560, $4,786, and $65,884. CRB filed objections to all proofs of claim. Objections to proofs of claim in the amounts of $280,560 and $4,786 were granted. Due to multiple continuances, a hearing has not been held on the $65,884 claim. On March 26, 2012, CCPO filed an adversary proceeding (Case No. 12-01055-CAG) alleging that it owned the common areas of the community, or in the alternative that the common areas were held in trust for CCPO and that FNB did not have a valid lien on the common areas. FNB filed a motion for summary judgment, with CRB joined therein, and the Court held a hearing on August 30, 2012. The Court determined that CCPO did not own the common areas, that the common areas were not held in trust for CCPO, and that the lien of FNB was valid. Additionally, CCPO filed a Motion for Allowance of Administrative Expense Claim in the amount of $1,600 on June 11, 2012, asserting that CRB was required to remit $1.00 per property per month to CCPO. After a hearing on the matter, the Court determined that CCPO is not entitled to collect monthly dues from CRB and is not entitled to an administrative expense claim. On Nov. 4, 2012, CCPO filed its Motion for Temporary Allowance of Claim for Purposes of Voting. CCPO requested that the Court temporarily allow its claim in the amount of $65,844 for the purposes of voting on plan confirmation pursuant to Bankruptcy Rule 3018(a). The Court granted CCPO a temporary claim for the purposes of voting in the amount of $1.00. Further, throughout the proceedings the Court received multiple letters from property owners professing dissatisfaction with CRB's management of the Cottonwood Creek XXI subdivision common areas, unhappiness with increases in assessment fees, and concern that CRB's mismanagement will impact the value of the property in the subdivision. Many of the property owners initially filed proofs of claim in this proceeding for "wrongful lien filed on home" or for the return of monthly dues. The Debtors filed objections to those claims, stating that any funds the debtor(s) might be entitled to receive would be paid out of the registry, and would be dependent upon the determination of underlying state court litigation. The Court granted Debtors' objections to roughly 40 proofs of claim. Any other proofs of claim filed by property owners were withdrawn. DEL MONTE: High Financial Leverage Cues Moody's to Cut CFR to B2 ---------------------------------------------------------------- Moody's Investors Service downgraded Del Monte Corporation's Corporate Family Rating to B2 from B1 and Probability of Default Rating to B2-PD from B1-PD. Concurrently, Moody's lowered the ratings of the company's $2.7 billion senior secured term loan to B1 from Ba3 and $1.3 billion senior unsecured notes to Caa1 from B3. Moody's affirmed the SGL-2 Speculative Grade Liquidity rating. The rating outlook is stable. The B2 Corporate Family Rating reflects Del Monte's high financial leverage that has persisted since its 2011 leveraged buyout, and recent soft earnings performance in both its pet foods and consumer foods businesses. The rating also reflects the company's positive free cash flows, growing pet food franchise, and improving product mix. The SGL-2 Speculative Grade Liquidity rating reflects strong internal cash flow and external liquidity, abundant covenant cushion under the "covenant-lite" senior secured bank facility, and the mostly-encumbered asset base. Del Monte has struggled with rising input costs and increased promotional activity in its key categories since the company was acquired in March 2011 for $5.3 billion in a leveraged buyout led by Kohlberg Kravis Roberts & Co. L.P. ("KKR"). As a result, profit margins have deteriorated and the company has been slow to reduce its debt balances, which have caused financial leverage to rise rather than to decline as originally planned. "Since the LBO, Del Monte has repaid only $111 million of its four billion dollar debt load and recently reborrowed $100 million through a bank amendment that lowered pricing and expanded the size of the term loan," said Brian Weddington, a Moody's analyst. Del Monte's EBITDA and EBITDA margin declined from approximately $630 million and 17% as of January 2011 to $544 million and 15% as of October 2012, respectively, which drove leverage higher. Proforma debt to EBITDA, after giving effect to the February bank amendment, is approximately 7.7 times (including Moody's accounting adjustments) compared to 6.8 times at the time of the LBO, which is aggressive even for the B2 rating category. Over the next year, Moody's expects Del Monte's operating performance to improve along with the recently more stable cost environment, and leverage will likely decline, but only gradually. "While we expect future operating performance to benefit from ongoing productivity initiatives, improved product mix and from the relaunch of the Del Monte brand, we believe that the pace of delevering will remain too slow to support the previous B1 rating," added Weddington. Including $100 million raised through the term loan expansion, Moody's estimates that Del Monte's cash balances could reach $500 million by its April fiscal year end, which could be used for acquisitions or debt reduction. However, the company's annual requirement to reduce bank debt is only by 50% of defined excess cash flow or about $91 million last fiscal year. Ratings downgraded: Del Monte Corporation: Corporate Family Rating to B2 from B1; Probability of Default Rating to B2-PD from B1-PD; Del Monte Foods Company: Backed $2.7 billion senior secured term loan due March 2018 to B1 (LGD 3, 41%) from Ba3 (LGD 3, 34%); Backed $1.3 billion of senior unsecured notes due February 2019 to Caa1 (LGD 5, 87%) from B3 (LGD 5, 87%). Rating Affirmed: Del Monte Corporation: Speculative Grade Liquidity Rating at SGL-2. The ratings outlook is stable. The senior secured term loan is secured by a first priority lien on substantially all the assets of Del Monte Corporation (excluding collateral pledged to an undrawn $750 million asset- based facility), and each guarantor; and a second priority lien on the $750 million asset-based facility collateral. The debt of Del Monte Corporation (assumed from Del Monte Foods Company in 2011 as part of the LBO transaction) is guaranteed by all direct and indirect subsidiaries. What Could Change the Rating A rating downgrade could occur if Del Monte is not likely to reduce debt to EBITDA to near 7.0 times within the next 18 months, or if either interest coverage or free cash flow deteriorates. Alternatively, Del Monte's ratings could be considered for an upgrade if the company improves operating performance such that debt to EBITDA approaches 5.5 times and retained cash flow to net debt is above 10%. The principal methodology used in this rating was the Global Packaged Goods published in December 2012. Other methodologies used include Loss Given Default for Speculative-Grade Non- Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in San Francisco, California, Del Monte Corporation is one of the largest producers, distributors and marketers of premium quality branded food and pet products for the U.S. retail market. Revenues for the last twelve months ended October 28, 2012 were approximately $3.7 billion. DENALI FAMILY: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Denali Family Services 6411 A Street Anchorage, AK 99518 Bankruptcy Case No.: 13-00114 Chapter 11 Petition Date: March 3, 2013 Court: United States Bankruptcy Court Alaska (Anchorage) Debtor's Counsel: David H. Bundy, Esq. DAVID H. BUNDY, PC 310 K Street, Suite 200 Anchorage, AK 99501 Tel: (907) 248-8431 Fax: (907) 248-8434 E-mail: dhb@alaska.net Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/akb13-00114.pdf The petition was signed by Allen Blair, interim chief executive officer. DETROIT, MI: Council to Appeal Governor's Takeover Declaration -------------------------------------------------------------- Michael Bathon, substituting for Bloomberg bankruptcy columnist Bill Rochelle, reports that the Detroit City Council voted March 6 to appeal Michigan Governor Rick Snyder's declaration that would let him install an emergency financial manager, an aide to President Pro Tem Gary Brown said. The appeal will be heard in Lansing at 10 a.m. March 12, Marcel Hurt, Mr. Brown's policy director, said in a telephone interview with Bloomberg. According to the report, Mayor Dave Bing said in a statement that while he agrees with the council that the city has a plan to stabilize its finances, an emergency manager will probably be named. "The fighting must stop now," Mayor Bing said in the e-mailed statement. "We need to end the drama and infighting and understand that whether we like it or not, an emergency financial manager is coming to Detroit." Governor's Decision Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Governor Rick Snyder said he will appoint an emergency financial manager to take over Detroit, making it the sixth Michigan city under state control. No cities in the state have filed for municipal bankruptcy under Chapter 9. The report notes that Detroit has a deficit of about $327 million and more than $14 billion in long-term obligations. Were it file for protection in Chapter 9, it would become the largest municipal bankruptcy in U.S. history, surpassing Jefferson County, Alabama. The manager would have power to sell city assets, restructure services, and reorder finances. The city has the right to appeal appointment of a manager. Some Detroit community leaders are opposed to the takeover. About Detroit, Michigan Detroit is the most populous city in Michigan and is known as the world's traditional automotive center as it's the hometown to General Motors Co. and Ford Motor Company. Michigan Governor Rick Snyder on March 1, 2013, officially declared Detroit in a fiscal emergency, noting that Detroit has a $327 million budget deficit and faces more than $14 billion in long term debt. The declaration by the Republican governor sets the stage for the state to name a manager to take over the city's financial management and ultimately the possibility of the largest municipal bankruptcy in U.S. history. Detroit would join municipalities including Flint, Pontiac and Allen Park that have surrendered control to appointed officials. No Michigan localities have sought bankruptcy protection under Chapter 9 of the Bankruptcy Code. DIAL GLOBAL: Co-CEO Quits for "Good Reason"; Filings Suspended -------------------------------------------------------------- David Landau elected to terminate his employment agreement for "good reason" in accordance with the change in the executive management of Dial Global, Inc., to a single-CEO structure. Mr. Landau was co-Chief Executive Officer of the Company. As part of his employment agreement, Mr. Landau will continue to receive his contractual base salary $600,000 in equal installments over two years and benefits at the Company's expense provided Mr. Landau executes the general release attached to his employment agreement in connection therewith and does not breach or revoke it or certain provisions of his employment agreement. As part of the executive management change, Ken Williams, also previously a co-Chief Executive Officer of the Company, became the Company's President. Mr. Williams will report to Mr. Brown who became the Company's sole Chief Executive Officer effective Feb. 8, 2013. Dial Global, on Feb. 15, 2013, filed a Form 15 with the U.S. Securities and Exchange Commission to voluntarily terminate registration of its Class A common stock and suspend its reporting obligations with the SEC. As of Feb. 15, 2013, there were 259 holders of the Company's common shares. About Dial Global Dial Global, Inc., headquartered in New York City, is an independent, full-service network radio company that distributes, produces, or syndicates programming and services to more than 8,500 radio stations nationwide. The Company produces and distributes over 200 news, sports, music, talk and entertainment radio programs, services and digital applications, as well as audio content from live events, turn-key music formats (the 24/7 Radio Formats), prep services, jingles and imaging. In addition, the Company is the largest sales representative for independent third party providers of audio content. The Company has no operations outside the United States, but sells to customers outside of the United States. The Company's balance sheet at Sept. 30, 2012, showed $380.9 million in total assets, $385.2 million in total liabilities, $10.5 million of Series A Preferred Stock, and a stockholders' deficit of $14.8 million. "...[I]f an event of default under the Credit Facilities occurs and results in an acceleration of the Credit Facilities, a material adverse effect on us and our results of operations would likely result or we may be forced to (1) attempt to restructure our indebtedness, (2) cease our operations or (3) seek protection under applicable state or federal laws, including but not limited to, bankruptcy laws. If one or more of foregoing events were to occur, this would raise substantial doubt about the Company's ability to continue as a going concern," the Company said in its quarterly report for the period ended Sept. 30, 2012. DOMINICK PEBURN: Trustee Allowed to Recover $22,190 From Trinity ---------------------------------------------------------------- Ronald I. Chorches, as Chapter 7 Trustee of the bankruptcy estate of Dominick T. Peburn, won a Connecticut court judgment to recover $22,190 from defendant Trinity Lutheran Church, New Milford, Connecticut, Inc. A Connecticut district court entered the ruling in the adversary complaint captioned RONALD I. CHORCHES, CHAPTER TRUSTEE, PLAINTIFF, v. TRINITY LUTHERAN CHURCH, NEW MILFORD, CONNECTICUT, INC., DEFENDANT, Case No. 06-30835 (A SD), Adv. Proc. No. 10-03022 (D. Conn.). In his 2010 complaint, the Trustee originally sought to recovery $46,000 from Trinity pursuant to an unconsummated real estate purchase agreement. Judge Albert S. Dabrowski, in a Feb. 26, 2013 order, found that only $24,500 of the $40,000 Trinity received and is holding as liquidated damages pursuant to the Agreement is presumptively reasonable entitling the Trustee to recover the difference of $15,500. In addition, as unjust enrichment, the Trustee has established entitlement to the additional $15,000 Trinity received as a result of the property sale to Mr. Bhudiper Singh, offset however by Trinity's additional and actual damages of $8,310, the judge held. A copy of Judge Dabrowski's Feb. 26, 2013 memorandum of decision is available at http://is.gd/IK8CZlfrom Leagle.com. Dominick Peburn is a real estate developer, project contractor, and home builder, who commenced a voluntary Chapter 11 petition in June 2006. The case was subsequently converted into a Chapter 7 proceeding. The Trustee is represented by: Peter J. Royer, Esq. David S. Hoopes, Esq. MAYO CROWE LLC CityPlace II 185 Asylum St. Hartford, CT 06103-3426 Tel: (860) 275-6800 Fax: (860) 275-6819 Email: proyer@mayocrowe.com dhoopes@mayocrowe.com DOUGLAS RHOADS: Can't Appeal to 9th Circuit Over Suit Dismissal --------------------------------------------------------------- Douglas and Shannon Rhoads failed to get approval from an Arizona district court for a direct appeal to the Ninth Circuit Court of Appeals of a Jan. 12, 2013 bankruptcy court order dismissing their adversary complaint against JPMorgan Chase, N.A. In his Feb. 26 order, District Judge David Campbell said he does not find that deciding the issues on appeal requires resolution of any unresolved questions of law. The parties' dispute stemmed from a $2.4 million mortgage loan the Rhoadses obtained from Washington Mutual Bank in 2004 for a house in Scottsdale, Arizona. JPMorgan got rights over the loan when it acquired WaMu in 2008. In June 2010, the Rhoadses filed for Chapter 11 bankruptcy protection (Bankr. D. Ariz. 10-17533), and JPMorgan filed a $2.8 million claim against the Rhoadses. By April 2011, JPMorgan sought to a foreclosure sale of the Scottsdale property. In October 2011, the Rhoadses filed an adversary proceeding challenging JPMorgan's claim. Then, in November 2011, the Rhoadses filed an adversary action seeking modification of JPMorgan's lien to the actual sale price of the property, approval of a proferred short sale contract, and placement of any sales proceeds into the court pending resolution of the action. "The Rhoadses' appeal is a poorly-organized, rambling recitation of purported legal standards and authorities on foreclosure," Judge Campbell opined. The District Court also found that there was no legal error in the bankruptcy court ordering award of reasonable attorneys' fees to JPMorgan. JPMorgan sought an order for attorneys' fees totaling $8,410. Lastly, the District Court remanded the action to the bankruptcy court for further consideration of award of attorneys' fees against Ronald Ryan, the Rhoadses' counsel. Judge Campbell cited that the bankruptcy court did not explain its legal basis for awarding fees against Mr. Ryan. The appellate case is styled as Douglas Rhoads & Shannon Rhoads, and Ronald Ryan, Appellants, v. JPMorgan Chase, N.A. Appellee, No. CV-12-0508-PHX-DGC (D. Ariz.). A copy of the District Court's Feb. 26, 2013 order is available at http://is.gd/2mq221from Leagle.com. DREAMS PLC: Sun Capital Saves Chunk From Bankruptcy --------------------------------------------------- Karlee Weinmann of BankruptcyLaw360 reported that the European affiliate of Sun Capital Partners Inc. has scooped up the bulk of flagging British bed retailer Dreams PLC, snagging 171 of the chain's 276 stores to give it a boost as it wades through insolvency proceedings, administrators from Ernst & Young said Wednesday. According to the report, financial terms of the deal were not disclosed, but several U.K. outlets pegged the purchase price at �35 million -- a price drastically lower than when the company's founder sold it to Exponent Private Equity for upwards of EUR200 million. Dreams is Britain's biggest beds retailer. DUMA ENERGY: C. Watts Holds 29.1% Equity Stake at Nov. 29 --------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Christopher Watts and his affiliates disclosed that, as of Nov. 29, 2012, they beneficially own 3,870,832 shares of common stock of Duma Energy Corp. representing 29.1% of the shares oustanding. A copy of the regulatory filing is available for free at http://is.gd/Kmit89 About Duma Energy Corpus Christi, Tex.-based Duma Energy Corp. -- http://www.duma.com/-- formerly Strategic American Oil Corporation, is a growth stage oil and natural gas exploration and production company with operations in Texas, Louisiana, and Illinois. The Company's team of geologists, engineers, and executives leverage 3D seismic data and other proven exploration and production technologies to locate and produce oil and natural gas in new and underexplored areas. Duma Energy incurred a net loss of $4.57 million for the year ended July 31, 2012, compared with a net loss of $10.28 million during the prior fiscal year. The Company's balance sheet at Oct. 31, 2012, showed $27.69 million in total assets, $16.64 million in total liabilities and $11.04 million in total stockholders' equity. DUMA ENERGY: Jeremy Driver Holds 29.2% Equity Stake at Nov. 29 -------------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Jeremy Driver disclosed that, as of Nov. 29, 2012, he beneficially owns 3,871,832 shares of common stock of Duma Energy Corp. representing 29.2% of the shares outstanding. K.W. Navigation, Inc., beneficially owns 1,935,416 common shares as of that date. Kara Driver, the wife of Jeremy Driver, holds a 50% ownership interest in K.W. Navigation Inc. A copy of the filing is available for free at http://is.gd/60UcIh About Duma Energy Corpus Christi, Tex.-based Duma Energy Corp. -- http://www.duma.com/-- formerly Strategic American Oil Corporation, is a growth stage oil and natural gas exploration and production company with operations in Texas, Louisiana, and Illinois. The Company's team of geologists, engineers, and executives leverage 3D seismic data and other proven exploration and production technologies to locate and produce oil and natural gas in new and underexplored areas. Duma Energy incurred a net loss of $4.57 million for the year ended July 31, 2012, compared with a net loss of $10.28 million during the prior fiscal year. The Company's balance sheet at Oct. 31, 2012, showed $27.69 million in total assets, $16.64 million in total liabilities and $11.04 million in total stockholders' equity. EDIETS.COM INC: Berke Bakay No Longer Owns Shares at Feb. 28 ------------------------------------------------------------ In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Berke Bakay and his affiliates disclosed that, as of Feb. 28, 2013, they do not beneficially own shares of common stock of eDiets.com, Inc. The Reporting Persons filed the amendment as a result of their deemed sale of all of their shares of Common Stock and any warrants and options exercisable into shares of Common Stock in connection with the merger of a subsidiary of As Seen On TV, Inc., with and into the Company. In consideration of the Merger, the Reporting Persons received shares of common stock, par value $0.0001 per share, of the New Parent. Mr. Bakay resigned as a director of the Company as of the effective time of the Merger and will not be a director of the New Parent. Mr. Bakay previously reported beneficial ownership of 1,439,958 shares of common stock of eDiets.com representing 10% of the shares outstanding as of Nov. 29, 2011. A copy of the amended regulatory filing is available at: http://is.gd/q5t4ky About eDiets eDiets.com, Inc. is a leading provider of personalized nutrition, fitness and weight-loss programs. eDiets currently features its award-winning, fresh-prepared diet meal delivery service as one of the more than 20 popular diet plans sold directly to members on its flagship site, http://www.eDiets.com Following the 2011 financial results, Ernst & Young LLP, in Boca Raton, Florida, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred recurring operating losses, was not able to meet its debt obligations in the current year and has a working capital deficiency. The Company's balance sheet at Sept. 30, 2012, showed $1.76 million in total assets, $5.23 million in total liabilities and a $3.46 million total stockholders' deficit. Bankruptcy Warning On Oct. 31, 2012, the Company entered into an Agreement and Plan of Merger with ASTV, eDiets Acquisition Company, a Delaware corporation and a wholly owned subsidiary of ASTV ("Merger Sub"), and certain other individuals named therein. Pursuant to the Merger Agreement, Merger Sub will merge with and into the Company, and the Company will continue as the surviving corporation and a wholly-owned subsidiary of ASTV. "Both before and after consummation of the transactions, and if the Merger is never consummated, the continuation of the Company's business is dependent upon raising additional financial support. In light of the Company's results of continuing operations, management has and intends to continue to evaluate various possibilities. These possibilities include: raising additional capital through the issuance of common or preferred stock, securities convertible into common stock, or secured or unsecured debt, selling one or more lines of business, or all or a portion of the Company's assets, entering into a business combination, reducing or eliminating operations, liquidating assets, or seeking relief through a filing under the U.S. Bankruptcy Code," the Company said in its quarterly report for the period ended Sept. 30, 2012. EDIETS.COM INC: Closes Merger with As Seen On TV ------------------------------------------------ As Seen On TV, Inc., and eDiets.com, Inc., announced the closing of their merger effective Feb. 28, 2013. As previously disclosed, under the terms of the merger agreement, As Seen On TV issued 19,077,252 shares of its common stock in exchange for all of the issues and outstanding shares of eDiets.com common stock. eDiets.com has now become a 100% wholly- owned subsidiary of As Seen On TV. The transaction is expected to be tax free to eDiets' shareholders and is being done on a stock- for-stock basis. Shares of eDiets common stock, which previously traded under the symbol "DIET," will now cease trading. Steve Rogai, CEO of As Seen On TV, Inc., stated, "We are pleased to announce the closing of the merger with eDiets and remain excited about the combined synergies of our two companies. There are tremendous combined savings and growth potential for both companies using our unique direct response and live shopping channel experience." Kevin Richardson, Chairman of eDiets, stated, "We are excited about the combined growth opportunities of our two companies as we leverage each other's strengths." Merger Highlights * The merger enhances As Seen On TV's ability to achieve its strategic objective of becoming one of the top providers of direct response marketing; * The merger will enable As Seen On TV to expand and diversify its product offering to its customers; * The merger will enable opportunities for increased growth through the expansion of channels of distribution for existing products and services; * Anticipated synergies from the merger, including operating a larger entity with greater critical mass of direct response marketing which could reduce the media buying pricing for the combined company and lower expenses due to an elimination in certain duplicate administrative costs (finance departments, legal, marketing and public company expenses); * The merger will enable opportunities for increased growth through the ability to cross-sell existing products and services. On Feb. 28, 2013, in connection with the closing of the Merger, Berke Bakay, Robert Doretti, Lee Isgur, Ronald Luks and Pedro Ortega-Dardet resigned from the Company's board of directors. Following these actions, the Company's board of directors is now comprised of Kevin A. Richardson, II. The board of directors expects a second and third director to be appointed in the near future. About As Seen On TV, Inc. As Seen On TV, Inc., is a direct response marketing company and owner of AsSeenOnTV.com. The Company identifies, develops and markets consumer products for global distribution via TV, Internet and retail channels. As Seen On TV, Inc., was established by Kevin Harrington, a pioneer of direct response television. For more information go to www.AsSeenOnTV.com and www.TVGoodsInc.com. About eDiets eDiets.com, Inc. is a leading provider of personalized nutrition, fitness and weight-loss programs. eDiets currently features its award-winning, fresh-prepared diet meal delivery service as one of the more than 20 popular diet plans sold directly to members on its flagship site, http://www.eDiets.com Following the 2011 financial results, Ernst & Young LLP, in Boca Raton, Florida, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred recurring operating losses, was not able to meet its debt obligations in the current year and has a working capital deficiency. The Company's balance sheet at Sept. 30, 2012, showed $1.76 million in total assets, $5.23 million in total liabilities and a $3.46 million total stockholders' deficit. Bankruptcy Warning On Oct. 31, 2012, the Company entered into an Agreement and Plan of Merger with ASTV, eDiets Acquisition Company, a Delaware corporation and a wholly owned subsidiary of ASTV ("Merger Sub"), and certain other individuals named therein. Pursuant to the Merger Agreement, Merger Sub will merge with and into the Company, and the Company will continue as the surviving corporation and a wholly-owned subsidiary of ASTV. "Both before and after consummation of the transactions, and if the Merger is never consummated, the continuation of the Company's business is dependent upon raising additional financial support. In light of the Company's results of continuing operations, management has and intends to continue to evaluate various possibilities. These possibilities include: raising additional capital through the issuance of common or preferred stock, securities convertible into common stock, or secured or unsecured debt, selling one or more lines of business, or all or a portion of the Company's assets, entering into a business combination, reducing or eliminating operations, liquidating assets, or seeking relief through a filing under the U.S. Bankruptcy Code," the Company said in its quarterly report for the period ended Sept. 30, 2012. EDUCATION HOLDINGS: Modifies Prepackaged Chapter 11 Plan -------------------------------------------------------- Education Holdings 1, Inc., modified its prepackaged plan of reorganization to name as exculpated parties the Debtor, the current officers and directors of the Debtor, and its financial advisors, restructuring advisors, accountants, investment bankers, consultants, employees, partners, and representatives. The modifications were submitted two days ahead of the March 7 hearing on the disclosure statement explaining the Modified Prepackaged Plan. The Modified Prepackaged Plan also provides that the Senior Secured Credit Agreement will be amended and restated in its entirety by the Exit Facility Agreement and each holder of an allowed senior secured claim will receive its pro rata share of the principal amount of the exit term loan and cash in the amount of no less than $62,000. The Exit Facility is a $43,500,000 senior secured credit loan, composed of $7,500,000 in revolving loans and $36,000,000 in term loan, with General Electric Capital Corporation, as administrative agent. A full-text copy of the Modified Prepackaged Plan, delivered to the U.S. Bankruptcy Court for the District of Delaware on March 5, 2013, is available for free at http://bankrupt.com/misc/EH1plan0305.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. ENDEAVOUR INT'L: Enters Into $22.5 Million Forward Sale Agreement ----------------------------------------------------------------- Endeavour International Corporation entered into a forward sale agreement with one of its established purchasers for a payment of approximately $22.5 million, which was received on March 1, in return for a specified volume of crude oil in excess of 200,000 barrels to be delivered over a six month delivery period from its UK North Sea production. About Endeavour International Houston-based Endeavour International Corporation (NYSE: END) (LSE: ENDV) is an oil and gas exploration and production company focused on the acquisition, exploration and development of energy reserves in the North Sea and the United States. * * * As reported by the TCR on March 5, 2013, Moody's Investors Service downgraded Endeavour International Corporation's Corporate Family Rating to Caa3 from Caa1. Endeavour's Caa3 CFR reflects its weak liquidity, small production and proved reserve scale, geographic concentration and the uncertainties regarding its future performance given the inherent execution risks related to its offshore North Sea operations for a company of its size. In the Feb. 22, 2013, edition of the TCR, Standard & Poor's Ratings Services lowered its corporate credit rating on Houston, Texas-based Endeavour International Corp. (Endeavour) to 'CCC+' from 'B-'. The rating action reflects S&P's expectation that Endeavour could have insufficient liquidity to meet its needs due to the delay in production from its Rochelle development. EPAZZ INC: Board OKs Formation of Subsidiary Cooling Technology --------------------------------------------------------------- The Board of Directors of Epazz, Inc., consisting solely of Shaun Passley, the Company's majority shareholder, approved the formation of a new wholly-owned subsidiary of the Company named Cooling Technology Solutions, Inc. The Company plans to file a non-provisional patent application for its Project Flex product in the name of Cooling Technology Solutions, Inc. About EPAZZ Inc. Chicago, Ill.-based EPAZZ, Inc., was incorporated in the State of Illinois on March 23, 2000, to create software to help college students organize their college information and resources. The idea behind the Company was that if the information and resources provided by colleges and universities was better organized and targeted toward each individual, the students would encounter a personal experience with the college or university that could lead to a lifetime relationship with the institution. This concept is already used by business software designed to retain relationships with clients, employees, vendors and partners. In its report on the financial statements for 2011, Lake & Associates CPA's LLC, in Schaumburg, Illinois, expressed substantial doubt as to the Company's ability to continue as a going concern. The independent auditors noted that the Company has a significant accumulated deficit and continues to incur losses. The Company's viability is dependent upon its ability to obtain future financing and the success of its future operations. The Company reported a net loss of $336,862 in 2011, compared with net income of $120,785 in 2010. The Company's balance sheet at Sept. 30, 2012, showed $1.42 million in total assets, $1.98 million in total liabilities and a $561,200 total stockholders' deficit. Bankruptcy Warning The Company said in its 2011 annual report that it cannot be certain that any financing will be available on acceptable terms, or at all, and the Company's failure to raise capital when needed could limit its ability to continue and expand its business. The Company intends to overcome the circumstances that impact its ability to remain a going concern through a combination of the commencement of additional revenues, of which there can be no assurance, with interim cash flow deficiencies being addressed through additional equity and debt financing. The Company's ability to obtain additional funding for the remainder of the 2012 year and thereafter will determine its ability to continue as a going concern. There can be no assurances that these plans for additional financing will be successful. Failure to secure additional financing in a timely manner to repay the Company's obligations and supply the Company sufficient funds to continue its business operations and on favorable terms if and when needed in the future could have a material adverse effect on its financial performance, results of operations and stock price and require the Company to implement cost reduction initiatives and curtail operations. Furthermore, additional equity financing may be dilutive to the holders of the Company's common stock, and debt financing, if available, may involve restrictive covenants, and strategic relationships, if necessary to raise additional funds, and may require that the Company relinquish valuable rights. In the event that the Company is unable to repay its current and long-term obligations as they come due, the Company could be forced to curtail or abandon its business operations, or file for bankruptcy protection; the result of which would likely be that the Company's securities would decline in value or become worthless. EPICEPT CORP: Incurs $6.1 Million Loss in 2012 ---------------------------------------------- EpiCept Corporation filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a loss attributable to common stockholders of $6.12 million on $7.80 million of total revenue for the year ended Dec. 31, 2012, as compared with a loss attributable to common stockholders of $15.65 million on $944,000 of total revenue during the prior year. The Company's balance sheet at Dec. 31, 2012, showed $1.32 million in total assets, $15.29 million in total liabilities and a $13.96 million total stockholders' deficit. Deloitte & Touche LLP, in Parsippany, New Jersey, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012, citing recurring losses from operations and stockholders' deficit which raise substantial doubt about the Company's ability to continue as a going concern. A copy of the Form 10-K is available for free at: http://is.gd/IdK5ct About EpiCept Corporation Tarrytown, N.Y.-based EpiCept Corporation (Nasdaq and Nasdaq OMX Stockholm Exchange: EPCT) -- http://www.epicept.com/-- is focused on the development and commercialization of pharmaceutical products for the treatment of cancer and pain. The Company's lead product is Ceplene(R), approved in the European Union for the remission maintenance and prevention of relapse in adult patients with Acute Myeloid Leukemia (AML) in first remission. In the United States, a pivotal trial is scheduled to commence in 2011. The Company has two other oncology drug candidates currently in clinical development that were discovered using in-house technology and have been shown to act as vascular disruption agents in a variety of solid tumors. The Company's pain portfolio includes EpiCept(TM) NP-1, a prescription topical analgesic cream in late-stage clinical development designed to provide effective long-term relief of pain associated with peripheral neuropathies. FIRST MARINER: Annual Stockholders Meeting Set for May 14 --------------------------------------------------------- 1st Mariner Bancorp's Annual Meeting of Stockholders will be held on May 14, 2013, at 9:00 a.m. at First Mariner Bank, 3301 Boston Street, 2nd Floor, Baltimore, MD. The Company expects to mail its definitive proxy statement to all stockholders of record no later than April 10, 2013. The date of the 2013 Annual Meeting has been changed by more than 30 days from the date of the 2012 Annual Meeting. As a result, the Company has set the following deadlines for the receipt of any stockholder proposals. Stockholder proposals submitted pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, for inclusion in the Company's proxy materials for the 2013 Annual Meeting must be received at the Company's principal executive offices, 1501 South Clinton Street, Baltimore, Maryland 21224, attention Secretary, no later than the close of business on March 15, 2013, which the Company considers a reasonable time before it begins to print and send its proxy materials. Those proposals will need to comply with the rules of the Securities and Exchange Commission regarding the inclusion of stockholder proposals in the Company's proxy materials, and may be omitted if not in compliance with applicable requirements. Stockholders wishing to submit proposals or nominations to be presented directly at the annual meeting instead of for inclusion in the Company's proxy statement must follow the submission criteria and deadlines set forth in the Company's Amended and Restated Bylaws. To be timely in connection with the 2013 Annual Meeting, a stockholder proposal must be received by the Company's Secretary at its principal executive offices not later than the close of business on March 11, 2013. About First Mariner Headquartered in Baltimore, Maryland, First Mariner Bancorp -- http://www.1stmarinerbancorp.com/-- is a bank holding company whose business is conducted primarily through its wholly owned operating subsidiary, First Mariner Bank, which is engaged in the general general commercial banking business. First Mariner was established in 1995 and has total assets in excess of $1.3 billion as of Dec. 31, 2010. "Quantitative measures established by regulation to ensure capital adequacy require the [First Mariner] Bank to maintain minimum amounts and ratios of total and Tier I capital to risk-weighted assets, and of Tier I capital to average quarterly assets," the Company said in the filing. "As of March 31, 2011, the Bank was "under-capitalized" under the regulatory framework for prompt corrective action." For the year ended Dec. 31, 2011, Stegman & Company, in Baltimore, Maryland, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company continued to incur significant net losses in 2011, primarily from loan losses and costs associated with real estate acquired through foreclosure. The Company has insufficient capital per regulatory guidelines and has failed to reach capital levels required in the Cease and Desist Order issued by the Federal Deposit Insurance Corporation in September 2009. The Company's balance sheet at Sept. 30, 2012, showed $1.29 billion in total assets, $1.30 billion in total liabilities, and a $8.76 million total stockholders' deficit. Bankruptcy Warning As of Dec. 31, 2011, the Bank's and the Company's capital levels were not sufficient to achieve compliance with the higher capital requirements the Company was required to have met by June 30, 2010. The failure to meet and maintain these capital requirements could result in further action by the Company's regulators. In the September Order, the FDIC and the Commissioner directed the Bank to raise its leverage and total risk-based capital ratios to 6.5% and 10%, respectively, by March 31, 2010 and to 7.5% and 11%, respectively, by June 30, 2010. The Company did not meet these requirements. The Company has been in regular communication with the staffs of the FDIC and the Commissioner regarding efforts to satisfy the higher capital requirements. First Mariner currently does not have any material amounts of capital available to invest in the Bank and any further increases to the Company's allowance for loan losses and operating losses would negatively impact the Company's capital levels and make it more difficult to achieve the capital levels directed by the FDIC and the Commissioner. Because the Company has not met all of the capital requirements set forth in the September Order within the prescribed timeframes, the FDIC and the Commissioner could take additional enforcement action against the Company, including the imposition of monetary penalties, as well as further operating restrictions. The FDIC or the Commissioner could direct us to seek a merger partner or possibly place the Bank in receivership. If the Bank is placed into receivership, the Company would cease operations and liquidate or seek bankruptcy protection. If the Company were to liquidate or seek bankruptcy protection, First Mariner does not believe that there would be assets available to holders of the capital stock of the Company. FIRST STATE: Alston & Bird Can't Represent Chapter 7 Trustee ------------------------------------------------------------ Bankruptcy Judge Robert H. Jacobvitz in New Mexico said the Chapter 7 trustee for First State Bancorporation cannot employ Alston & Bird LLP as special litigation counsel due to a conflict of interest. Alston & Bird currently represents Wilmington Trust Company in its capacity as indenture trustee in the bankruptcy case. The Chapter 7 Trustee wanted to hire Alston & Bird to (1) to advise the Chapter 7 Trustee regarding the claim of the Federal Deposit Insurance Corporation, as Receiver for First Community Bank, against the estate and to litigate the priority status of FDIC-R's claim; and (2) to evaluate the viability of a potential claim of the bankruptcy estate to recover a tax refund from the Internal Revenue Service and prosecute the claim as necessary. FDIC-R objected to the engagement, citing the conflict of interest. Wilmington-IT has filed seven proofs of claim in the bankruptcy case. Wilmington-IT asserts non-priority unsecured claims in excess of $100 million. FDIC-R filed a proof of claim and an amended proof of claim in the case. The total amount of FDIC-R's claim, based on its claim for breach of the Debtor's guarantee of the Bank's obligations under a capital maintenance agreement, exceeds $63 million. The only other party to file a proof of claim in the bankruptcy case is the New Mexico Taxation and Revenue Department. NMTR filed a priority unsecured claim in the amount of $4,547. A copy of the Court's March 6, 2013 Memorandum Opinion is available at http://is.gd/SfXduWfrom Leagle.com. First State Bancorporation filed for Chapter 7 bankruptcy Bankr. D.N.M. Case No. 11-11916) on April 27, 2011, following the closure of First Community Bank of Taos by the New Mexico Financial Institutions Division. The Federal Deposit Insurance Corporation was appointed receiver for the Bank. The Debtor is the Bank's holding company. Linda S. Bloom is the duly appointed Chapter 7 Trustee for the Debtor's estate. The Chapter 7 Trustee is represented by Chris W. Pierce, Esq., at Hunt & Davis, P.C. The FDIC is represented by Joshua David Wayser, Esq. -- joshua.wayser@kattenlaw.com -- at Katten Muchin Roseman LLP. FREESEAS INC: Issues Final 31,755 Settlement Shares to Hanover -------------------------------------------------------------- The Supreme Court of the State of New York, County of New York, on Feb. 13, 2013, entered an order approving, among other things, the fairness of the terms and conditions of an exchange pursuant to Section 3(a)(10) of the Securities Act of 1933, as amended, in accordance with a stipulation of settlement between FreeSeas Inc., and Hanover Holdings I, LLC, in the matter entitled Hanover Holdings I, LLC v. FreeSeas Inc., Case No. 150802/2013. Hanover commenced the Action against the Company on Jan. 28, 2013, to recover an aggregate of $740,651 of past-due accounts payable of the Company, plus fees and costs. The Settlement Agreement became effective and binding upon the Company and Hanover upon execution of the Order by the Court on Feb. 13, 2013. As previously reported, pursuant to the terms of the Settlement Agreement approved by the Order, on Feb. 13, 2013, the Company issued and delivered to Hanover 185,000 shares of the Company's common stock, $0.001 par value. The Settlement Agreement provides that the Initial Settlement Shares will be subject to adjustment on the trading day immediately following the "Calculation Period" to reflect the intention of the parties that the total number of shares of Common Stock to be issued to Hanover pursuant to the Settlement Agreement be based upon a specified discount to the trading volume weighted average price of the Common Stock for a specified period of time subsequent to the Court's entry of the Order. As previously reported, the Company issued and delivered to Hanover 90,000 Additional Settlement Shares, on Feb. 25, 2013, the Company issued and delivered to Hanover another 90,000 Additional Settlement Shares, on Feb. 26, 2013 the Company issued and delivered to Hanover another 90,000 Additional Settlement Shares, on Feb. 27, 2013, the Company issued and delivered to Hanover another 100,000 Additional Settlement Shares, on Feb. 28, 2013, the Company issued and delivered to Hanover another 100,000 Additional Settlement Shares, and on March 4, 2013, the Company issued and delivered to Hanover another 100,000 Additional Settlement Shares. The Calculation Period expired on March 5, 2013. Based on the adjustment formula, Hanover was entitled to receive an aggregate of 786,755 VWAP Shares. Accordingly, since Hanover had received an aggregate of only 755,000 Initial Settlement Shares and Additional Settlement Shares, on March 6, 2013, the Company issued and delivered to Hanover 31,755 additional shares of Common Stock pursuant to the terms of the Settlement Agreement approved by the Order. No additional shares of Common Stock are issuable to Hanover pursuant to the Settlement Agreement. About FreeSeas Inc. Headquartered in Athens, Greece, FreeSeas Inc., formerly known as Adventure Holdings S.A., was incorporated in the Marshall Islands on April 23, 2004, for the purpose of being the ultimate holding company of ship-owning companies. The management of FreeSeas' vessels is performed by Free Bulkers S.A., a Marshall Islands company that is controlled by Ion G. Varouxakis, the Company's Chairman, President and CEO, and one of the Company's principal shareholders. The Company's fleet consists of six Handysize vessels and one Handymax vessel that carry a variety of drybulk commodities, including iron ore, grain and coal, which are referred to as "major bulks," as well as bauxite, phosphate, fertilizers, steel products, cement, sugar and rice, or "minor bulks." As of Oct. 12, 2012, the aggregate dwt of the Company's operational fleet is approximately 197,200 dwt and the average age of its fleet is 15 years. As reported in the Troubled Company Reporter on July 18, 2012, Ernst & Young (Hellas) Certified Auditors Accountants S.A., in Athens, Greece, expressed substantial doubt about FreeSeas' ability to continue as a going concern, following its audit of the Company's financial statements for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has incurred recurring operating losses and has a working capital deficiency. "In addition, the Company has failed to meet scheduled payment obligations under its loan facilities and has not complied with certain covenants included in its loan agreements with banks." The Company's balance sheet at June 30, 2012, showed US$120.8 million in total assets, US$104.1 million in total current liabilities, and shareholders' equity of US$16.7 million. GAC STORAGE: Fails to Get Court Approval of 3rd Amended Plan ------------------------------------------------------------ Bankruptcy Judge Jacqueline Cox denied confirmation of a third amended plan of reorganization in the bankruptcy case of GAC Storage Lansing, LLC. In a Feb. 27, 2013 memorandum opinion available at http://is.gd/U02XqQfrom Leagle.com, Judge Cox found that the Debtor has not established by a preponderance of the evidence that its Plan is feasible. The Debtor presented no credible evidence to support its contention that the Debtor will be able to finance the nearly $8.2 million balloon payment to Wells Fargo Bank, N.A., at the end of the 7-year plan, the Court held. The Plan relies on highly speculative revenue projections, the achievement of which are not supported by the evidence, Judge Cox said. The Court also found that the Debtor's cash flow projections, which govern the rental payments under the Master Lease, are overly aggressive and highly speculative. "According to the Bank's feasibility expert, if the Property fails to meet its forecasted cash flow by 10%, it will lead to a substantial deficiency throughout the Plan term. . . . The evidence also establishes that at the conclusion of the confirmation hearing, the Debtor's sole tenant under the Master Lease Agreement, SE El Monte, had yet to be capitalized." The Court also found that the Debtor has failed to prove the reasonable possibility of a successful reorganization within a reasonable period of time. "The Debtor's Bankruptcy Case has been pending for over a year and the Debtor has been unable to propose a confirmable plan of reorganization. Notwithstanding the length of time since the Petition Date, the Debtor has yet to obtain a letter of credit or make the cash deposit required by the Master Lease," the Court narrated. Finally, the Court found that the Debtor has failed to establish that there is equity in the Property. The parties do not dispute the $8.1 million value of the Property, or the Bank's $12.4 million claim amount. At that value level, and a claim amount of $12.4 million, the Court determined that there is no equity in the Property. About GAC Storage & Makena Great American Anza Co. GAC Storage Lansing LLC -- which owns and operates a warehouse and storage facility with 522 storage units, generally located at 2556 Bernice Road, Lansing, Illinois -- filed for Chapter 11 bankruptcy (Bankr. N.D. Ill. Case No. 11-40944) on Oct. 7, 2011. Jay S. Geller, Esq., D. Sam Anderson, Esq., and Halliday Moncure, Esq., at Bernstein, Shur, Sawyer & Nelson, P.A., represents the Debtor as counsel. Robert M, Fishman, Esq., and Gordon E. Gouveia, Esq., at Shaw Gussis Fishman Glantz Wolfson, & Towbin LLC, in Chicago, represents the Debtor as local counsel. It estimated $1 million to $10 million in assets and debts. The petition was signed by Noam Schwartz, secretary and treasurer of EBM Mgmt Servs, Inc., manager of GAC Storage, LLC. The Makena Great American Anza Company LLC -- http://www.makenacapital.net/-- a commercial shopping center developers in Southern California, filed a Chapter 11 petition (Bankr. N.D. Ill. Case No. 11-48549) on Dec. 1, 2011, in Chicago. Anza leads the way in the acquisition and development of "A-Location" small commercial shopping centers and corner properties in Southern California. Lawyers at Shaw Gussis Fishman Glantz Wolfson & Towbin, LLC, in Chicago, and Bernstein, Shur, Sawyer & Nelson, P.A., in Portland, Maine, serve as counsel to the Debtor. Makena disclosed $13,938,161 in assets and $17,723,488 in liabilities. Other affiliates that sought bankruptcy protection are GAC Storage Copley Place LLC, GAC Storage El Monte LLC, and San Tan Plaza LLC. The cases are being jointly administered under lead case no. 11-40944. At the behest of lender Bank of America, N.A., the Bankruptcy Court dismissed the Chapter 11 case of San Tan Plaza, as reported by the Troubled Company Reporter on July 17, 2012. GASCO ENERGY: Chapter 11 Among Options; Going Concern Doubt Raised ------------------------------------------------------------------ Gasco Energy, Inc. on March 6 reported financial and operating results for the fourth quarter and full-year periods ended December 31, 2012 and disclosed estimated 2012 proved reserves quantities. Gasco disclosed that due to the significant extended decline in the natural gas market and sustained low natural gas prices caused by excess production and stagnant demand for natural gas, the Company has not been able to recover its exploration and development costs as anticipated. As such, there is substantial doubt regarding the Company's ability to generate sufficient cash flows from operations to fund its ongoing operations, and it currently anticipates that cash on hand and forecasted cash flows from operations will only be sufficient to fund cash requirements for working capital, including debt payment obligations, through the second quarter of 2013. There can be no assurance that the Company will be able to adequately finance its operations or execute its existing short-term and long-term business plans, and its liquidity and results of operations are likely to be materially adversely affected if it is unable to generate sufficient operating cash flows, secure additional capital or otherwise pursue a strategic restructuring, refinancing or other transaction to provide additional liquidity. The Company has engaged a financial advisor to assist it in evaluating such potential strategic alternatives. It is possible these strategic alternatives will require the Company to make a pre-packaged, pre- arranged or other type of filing for protection under Chapter 11 of the U.S. Bankruptcy Code (or an involuntary petition for bankruptcy may be filed against the Company). These factors raise substantial doubt about the Company's ability to continue as a going concern. The disclosure was made in Gasco's earnings release for the three months ended Dec. 31, 2012, a copy of which is available for free at http://is.gd/BPLNWj About Gasco Energy Denver-based Gasco Energy, Inc. -- http://www.gascoenergy.com-- is a natural gas and petroleum exploitation, development and production company engaged in locating and developing hydrocarbon resources, primarily in the Rocky Mountain region and in California's San Joaquin Basin. Gasco's principal business is the acquisition of leasehold interests in petroleum and natural gas rights, either directly or indirectly, and the exploitation and development of properties subject to these leases. Gasco focuses its drilling efforts in the Riverbend Project located in the Uinta Basin of northeastern Utah, targeting the oil-bearing Green River Formation and the natural gas-prone Wasatch, Mesaverde, Blackhawk, Mancos, Dakota and Morrison formations. GENCO SHIPPING: Bank Lenders Poised to Torpedo Bonds ---------------------------------------------------- Michael Bathon, substituting for Bloomberg bankruptcy columnist Bill Rochelle, reports that notes issued by Genco Shipping & Trading Ltd. are indicating bank lenders will force the most indebted U.S.-listed carrier of maritime freight to restructure its finances at the expense of the bondholders. According to the report, convertible bonds of the operator of 53 dry-bulk cargo ships, whose customers include agricultural trader Cargill Inc. and mining company BHP Billiton Ltd., have dropped more than half their value over the past year and trade at 38 cents on the dollar, while the loans are quoted at 77.8 cents. Genco, which lost $158 million last year, is forecast to be unprofitable past the December 2013 expiration of covenant waivers on $1.4 billion of debt from bank lenders with the industry mired in a supply glut that has driven Overseas Shipholding Group Inc. and General Maritime Corp. to bankruptcy. According to Mr. Bathon, the difference in price between the bonds and loans indicates investors expect banks to refuse to extend the loosened borrowing terms past the August 2015 maturity of the 5% convertibles. With Genco's cash already at less than the $125 million face value of the bonds, and the firm's fleet, which serves as collateral, valued at less than the loans, few assets will be left for unsecured creditors in a restructuring. "In a case like this, when the value of the collateral does not cover the loans, the bondholders' recovery will be minimal," Roger King, an analyst at CreditSights Inc., said in a phone interview. "Lenders would have to put more good money behind the bad to extend the loans." GENE CHARLES: U.S. Trustee Unable to Form Committee --------------------------------------------------- The United States Trustee said that an official committee under 11 U.S.C. Sec. 1102 has not been appointed in the bankruptcy case of Gene Charles Valentine Trust. The United States Trustee has attempted to solicit creditors interested in serving on the Unsecured Creditors' Committee from the 20 largest unsecured creditors. After excluding governmental units, secured creditors and insiders, the U.S. Trustee has been unable to solicit sufficient interest in serving on the Committee, in order to appoint a proper Committee. The U.S. Trustee reserves the right to appoint such a committee should interest developed among the creditors. About Gene Charles Valentine Trust A business trust created by investment advisor and broker-dealer agent Gene Charles Valentine sought Chapter 11 bankruptcy protection (Bankr. N.D. W.Va. Case No. 12-01078) in Wheeling, West Virginia on Aug. 9, 2012. The Gene Charles Valentine Trust owns commercial and real estate properties in West Virginia, the Financial West Group, the Peace Point Equestrian Center and the Aspen Manor. The Trust also has extensive subsurface oil, gas and mineral rights underneath numerous parcels of its property near Aspen Manor and the Peace Point Equestrian Center. The value of such subsurface assets is unknown at this time but is substantial. The Debtor disclosed in its schedules $34,101,393 in total assets and $22,623,554 in total liabilities. Financial West Investment Group, Inc., doing business as Financial West Group -- http://www.fwg.com/-- is a firm with more than 340 registered representatives supervised by 44 Offices of Supervisory Jurisdiction throughout the United States. Financial West Group is a FINRA, and SIPC member and SEC Registered Investment Advisor (over $1 billion under control) that offers a full range of financial products and services. Its corporate office 32 member staff is dedicated to providing registered representatives quality service and technology to allow them to focus on best servicing their investors needs. Aspen Manor -- http://www.aspenmanorresort-- is a resort that claims to be the "The Jewel of the Ohio Valley." Along with its architectural artistry, including hand-carved ceilings, the Manor is filled will original art, statues, historic furniture and artifacts. Bankruptcy Judge Patrick M. Flatley oversees the case. The Trust hired MazurKraemer Business Law as lead and local counsel, and Weir & Partners LLP as co-counsel. Gene Charles Valentine Trust filed a Chapter 11 Plan dated Feb. 8, 2013. The Plan provides for the auction of the leasing rights of, or ownership rights to, certain of the Debtor's subsurface assets located underneath the Debtor's Peace Point Farms Equestrian Facility and its surrounding parcels. An outline and summary of the Plan was published in the Feb. 15 edition of the Troubled Company Reporter. A hearing to consider approval of the disclosure statement explaining the Plan is set for March 25. GOOD SAM: Suspending Filing of Reports with SEC ----------------------------------------------- Good Sam Enterprises, LLC, filed a Form 15 with the U.S. Securities and Exchange Commission to terminate the registration of its 11.5% Senior Secured Notes Due 2016. As of March 4, 2013, there were only 24 holders of the Senior Notes. As a result of the Form 15 filing, the Company is suspending its obligations to file reports under Sections 13 and 15(d) of the Securities Exchange Act of 1934. About Good Sam Ventura, Calif.-based Affinity Group Holding, Inc., now known as Good Sam Enterprises, LLC, is a holding company and the direct parent of Affinity Group, Inc. The Company is an indirect wholly- owned subsidiary of AGI Holding Corp, a privately-owned corporation. The Company is a member-based direct marketing organization targeting North American recreational vehicle owners and outdoor enthusiasts. The Company operates through three principal lines of business, consisting of (i) club memberships and related products and services, (ii) subscription magazines and other publications including directories, and (iii) specialty merchandise sold primarily through its 78 Camping World retail stores, mail order catalogs and the Internet. The Company's balance sheet at March 31, 2012, showed $232.60 million in total assets, $486.69 million in total liabilities, and a $254.09 million total members' deficit. * * * Affinity Group Inc. carries 'B3' long term corporate family and probability of default ratings, with 'stable' outlook, from Moody's Investors Service. As reported in the Troubled Company Reporter on November 9, 2010, Standard & Poor's Ratings Services assigned Affinity Group Inc.'s proposed $325 million senior secured notes due 2016 its preliminary 'B-' issue-level rating. Following the close of the proposed transaction, S&P expects to assign a 'B-' corporate credit rating to Affinity Group Inc., and withdraw S&P's current 'D' corporate credit rating on Affinity Group Holding Inc. A portion of the proceeds of the new notes will be used, in conjunction with cash contributions from Holding's parent, to repay in full $88 million of senior notes that are currently outstanding at Holding. S&P said the expected 'B-' corporate credit rating on Affinity Group reflects S&P's expectation that, following the proposed refinancing transaction, adjusted debt leverage will be reduced by about 1x, the company will not have any meaningful near-term debt maturities, and the company will generate some discretionary cash flow (albeit minimal). Still, credit measures will remain relatively weak, as adjusted debt leverage will remain above 6.0x (S&P's operating lease adjustment adds about a turn to leverage), and S&P expects interest coverage to remain in the low- to mid- 1.0x area over the intermediate term. GOOD SAMARITAN: Moody's Reviews Ba2 Rating for Possible Downgrade ----------------------------------------------------------------- Moody's Investors Service placed Good Samaritan Hospital's (PA) Ba2 long-term rating under review for possible downgrade. This action affects the Series 2002 and 2004 Bonds (approximately $64.5 million outstanding) issued through Lebanon County Health Facilities Authority, Pennsylvania. The action follows continued admission declines in FY 2013, continued operational losses and stagnant operating cash flow through seven months FY 2013. Moody's expect to conclude the review within 90 days. The principal methodology used in this rating was Not-For-Profit Healthcare Rating Methodology published in March 2012. GOWANUS INN: Case Summary & 5 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Gowanus Inn Inc. 311 West Broadway - Apt. 8C New York, NY 10013 Bankruptcy Case No.: 13-10658 Chapter 11 Petition Date: March 5, 2013 Court: United States Bankruptcy Court Southern District of New York (Manhattan) Judge: James M. Peck Debtor's Counsel: David H. Leventhal, Esq. LAW OFFICE OF DAVID H. LEVENTHAL 188 Ludlow St., Suite 3G New York, NY 10002 Tel: (212) 729-3179 Fax: (253) 423-3179 E-mail: david@dhllawfirm.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 five unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/nysb13-10658.pdf The petition was signed by James McGowan, president. GRAY TELEVISION: Reports $28.1 Million Net Income in 2012 --------------------------------------------------------- Gray Television, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing net income of $28.12 million on $404.83 million of revenue for the year ended Dec. 31, 2012, as compared with net income of $9.03 million on $307.13 million of revenue during the prior year. The Company posted net income of $23.16 million in 2010. The Company's balance sheet at Dec. 31, 2012, showed $1.24 billion in total assets, $1.10 billion in total liabilities, and $143.93 million in total stockholders' equity. A copy of the Form 10-K is available for free at: http://is.gd/UnfZKF About Gray Television Formerly known as Gray Communications System, Atlanta, Georgia- based Gray Television, Inc., is a television broadcast company. Gray currently operates 36 television stations serving 30 markets. Each of the stations are affiliated with either CBS (17 stations), NBC (10 stations), ABC (8 stations) or FOX (1 station). In addition, Gray currently operates 38 digital second channels including 1 ABC, 4 Fox, 7 CW, 16 MyNetworkTV and 1 Universal Sports Network affiliates plus 8 local news/weather channels and 1 "independent" channel in certain of its existing markets. * * * As reported by the TCR on Sept. 26, 2012, Moody's Investors Service upgraded Gray Television, Inc.'s Corporate Family Rating (CFR) and Probability of Default Rating (PDR) each to B3 from Caa1. The upgrades reflect Moody's expectations for the company to benefit from strong political revenue demand through November 2012 resulting in improved credit metrics combined with management's commitment to reduce leverage. In the April 9, 2012, edition of the TCR, Standard & Poor's Ratings Services raised its corporate credit rating on Atlanta, Ga.-based TV broadcaster Gray Television Inc. to 'B' from 'B-'. "The 'B' rating reflects company's still-high debt leverage and weak discretionary cash flow, as well as our expectation that the company will maintain adequate headroom with its financial covenants in the absence of any further tightening of covenant thresholds. The stable rating outlook reflects our expectation that Gray will maintain lease-adjusted debt to average trailing- eight-quarter EBITDA below 7.5x. We also expect the company to generate modest positive discretionary cash flow in 2012," S&P said. * * * This concludes the Troubled Company Reporter's coverage of Gray Television until facts and circumstances, if any, emerge that demonstrate financial or operational strain or difficulty at a level sufficient to warrant renewed coverage. GREATHAND DEVELOPMENT: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: Greathand Development Inc. 2933 Pleasant Hill Road Duluth, GA 30096 Bankruptcy Case No.: 13-54568 Chapter 11 Petition Date: March 3, 2013 Court: United States Bankruptcy Court Northern District of Georgia (Atlanta) Debtor's Counsel: Michael L. Rothenberg, Esq. MICHAEL ROTHENBERG PLLC 1875 Old Alabama Road, Suite 710 Roswell, GA 30076 Tel: (404) 954-0902 Fax: (678) 669-1720 E-mail: mroth@lawyer.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. The petition was signed by Wie Lie Xu, member. GRUBB & ELLIS: Liquidation Plan Confirmed ----------------------------------------- BankruptcyData reported that the U.S. Bankruptcy Court confirmed Grubb and Ellis' Joint Chapter 11 Plan of Liquidation. According to documents filed with the Court, "the Plan provides that on and after the Effective Date, all assets and liabilities of the Debtors shall be treated as though they were merged into one for all Plan purposes, including voting, Confirmation and distribution pursuant to the Plan. Multiple facts support consolidation of the Debtors for Plan purposes. Prior to the Petition Date, the Debtors shared a centralized cash management system and also shared common upper-level management and directors....After the Petition Date, the Debtors assets were sold, in total, to BGC. There was no allocation of the purchase price to individual Debtor entities. Moreover, the $10,000,000 component of the purchase price attributable to an advance on a sharing of potential litigation proceeds cannot be allocated among individual Debtors' estates," the BankruptcyData report said. About Grubb & Ellis Grubb & Ellis Company -- http://www.grubb-ellis.com/-- is a commercial real estate services and property management company with more than 3,000 employees conducting throughout the United States and the world. It is one of the oldest and most recognized brands in the industry. Grubb & Ellis and 16 affiliates filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Lead Case No. 12-10685) on Feb. 21, 2012, to sell almost all its assets to BGC Partners Inc. The Santa Ana, California-based company disclosed $150.16 million in assets and $167.2 million in liabilities as of Dec. 31, 2011. Judge Martin Glenn presides over the case. The Debtors have engaged Togut, Segal & Segal, LLP as general bankruptcy counsel, Zuckerman Gore Brandeis & Crossman, LLP, as general corporate counsel, and Alvarez & Marsal Holdings, LLC, as financial advisor in the Chapter 11 case. Kurtzman Carson Consultants is the claims and notice agent. BGC Partners, Inc., and its affiliate, BGC Note Acquisition Co., L.P., the DIP lender and Prepetition Secured Lender, are represented in the case by Emanuel C. Grillo, Esq., at Goodwin Procter LLP. On March 27, 2012, the Court approved the sale to BCG. An auction was cancelled after no rival bids were submitted. Pursuant to the term sheet signed by the parties, BGC would acquire the assets for $30.02 million, consisting of a credit bid the full principal amount outstanding under the (i) $30 million credit agreement dated April 15, 2011, with BGC Note, (ii) the amounts drawn under the $4.8 million facility, and (iii) the cure amounts due to counterparties. BGC would also pay $16 million in cash because the sale was approved by the March 27 deadline. Otherwise, the cash component would have been $14 million. Approval of the sale was simplified when BGC settled with unsecured creditors by increasing their recovery. Grubb & Ellis Co. was renamed Newmark Grubb Knight Frank following the sale. As reported by the TCR on Nov. 20, 2012, Grubb & Ellis filed a liquidating Chapter 11 plan which gives unsecured creditors an expected recovery between 1.7% and 4.7%. The Court approved the explanatory disclosure materials in January 2013. The confirmation hearing for approval of the Plan was held on March 6. HMX ACQUISITION: Court OKs Zolfo Cooper as Committee Consultant --------------------------------------------------------------- The Official Committee of Unsecured Creditors of HMX Acquisition Corp. et al., obtained approval from the U.S. Bankruptcy Court to retain Zolfo Cooper, LLC as bankruptcy consultants and financial advisors. Zolfo Cooper will be paid a flat fee of $290,000, plus expenses, for the period Nov. 16, 2012 through Feb. 6, 2013 (the date of the order); and thereafter, will be paid on an hourly basis at Zolfo Cooper's standard hourly rates in effect at the time services are rendered. About HMX Acquisition HMX Acquisition Corp. and HMX Poland Sp. z o. o. filed for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case Nos. 12-14300 and 12-14301) on Oct. 19, 2012. On Oct. 21, 2012, affiliates HMX, LLC, Quartet Real Estate, LLC, and HMX, DTC Co. also filed for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Cases Nos. 12-14327 to 12-14329). Judge Allan L. Gropper presides over the cases. The Debtors are seeking to have their cases jointly administered for procedural purposes under Case No. 12-14300, which is the case number assigned to HMX Acquisition Corp. The Debtors' principal place of business is located at 125 Park Avenue, in New York. The Debtors are leading American designers, manufacturers, licensors, and licensees of men's and women's business and leisure apparel focused primarily on the luxury, bridge, and better price points. The Debtors are the largest manufacturer and marketer of U.S.-made men's tailored clothing, with an attractive portfolio of owned and licensed brands sold primarily through upscale department stores, specialty stores, and boutiques. As of Oct. 12, 2012, the Debtors had consolidated assets of $153.6 million and total liabilities of $119.5 million. Jared D. Zajac, Esq., at Proskauer Rose LLP, in New York; and Mark K. Thomas, Esq., and Peter J. Young, Esq., in Proskauer Rose LLP, in Chicago, represent the Debtors as counsel. The Debtors' investment banker is William Blair & Company, L.L.C. CDG Group, LLC, is the Debtors' financial advisor. Epiq Bankruptcy Solutions, LLC is the Debtors' claims agent. Tracy Hope Davis, the U.S. Trustee for Region 2, appointed five members to the official committee of unsecured creditors. Leonard, Street and Deinard Professional Association, in Minneapolis, Minnesota, represents the Committee as lead counsel. ASK LLP, in New York, represents the Committee as local counsel. On Dec. 20, 2012, the Bankruptcy Court approved the sale of substantially all of the Debtors' assets to Authentic Brands Group LLC. The sale closed the following day. As of that date, the Debtors ceased all operations and terminated all of their remaining employees. The remaining assets of the Debtors' estates are comprised of (1) the remaining proceeds from the sale in the amount of $10,376,839.18, after the pay down of the DIP Facility, indebtedness owed to the Prepetition Lender, and certain other parties in accordance with the Sale Order, and (2) Causes of Action. HMX ACQUISITION: Hourly Rates of Leonard Street Corrected --------------------------------------------------------- The Official Committee of Unsecured Creditors of HMX Acquisition Corp. et al. sought and obtained approval for a limited amendment to the order authorizing its retention of Leonard, Street and Deinard Professional Association as counsel. The original application was amended to contain the hourly rates of Leonard Street professionals. The original application, as a result of a drafting error, cited a professional fee structure relating to Leonard Street's services different from the one actually agreed upon by the Committee and Leonard Street. The revised application clarifies that the Committee expressly agreed to pay Leonard Street's professionals these hourly rates: Attorney/Paralegal Rate ------------------ ---- Robert T. Kugler $525/hr Edwin H. Caldie $360/hr Lara O. Glaesman $405/hr Amanda K. Schlitz $325/hr Phillip J. Ashfield $325/hr In a separate ruling, the Creditors Committee obtained approval to retain ASK LLP as local counsel. About HMX Acquisition HMX Acquisition Corp. and HMX Poland Sp. z o. o. filed for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case Nos. 12-14300 and 12-14301) on Oct. 19, 2012. On Oct. 21, 2012, affiliates HMX, LLC, Quartet Real Estate, LLC, and HMX, DTC Co. also filed for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Cases Nos. 12-14327 to 12-14329). Judge Allan L. Gropper presides over the cases. The Debtors are seeking to have their cases jointly administered for procedural purposes under Case No. 12-14300, which is the case number assigned to HMX Acquisition Corp. The Debtors' principal place of business is located at 125 Park Avenue, in New York. The Debtors are leading American designers, manufacturers, licensors, and licensees of men's and women's business and leisure apparel focused primarily on the luxury, bridge, and better price points. The Debtors are the largest manufacturer and marketer of U.S.-made men's tailored clothing, with an attractive portfolio of owned and licensed brands sold primarily through upscale department stores, specialty stores, and boutiques. As of Oct. 12, 2012, the Debtors had consolidated assets of $153.6 million and total liabilities of $119.5 million. Jared D. Zajac, Esq., at Proskauer Rose LLP, in New York; and Mark K. Thomas, Esq., and Peter J. Young, Esq., in Proskauer Rose LLP, in Chicago, represent the Debtors as counsel. The Debtors' investment banker is William Blair & Company, L.L.C. CDG Group, LLC, is the Debtors' financial advisor. Epiq Bankruptcy Solutions, LLC is the Debtors' claims agent. Tracy Hope Davis, the U.S. Trustee for Region 2, appointed five members to the official committee of unsecured creditors. Leonard, Street and Deinard Professional Association, in Minneapolis, Minnesota, represents the Committee as lead counsel. ASK LLP, in New York, represents the Committee as local counsel. On Dec. 20, 2012, the Bankruptcy Court approved the sale of substantially all of the Debtors' assets to Authentic Brands Group LLC. The sale closed on Dec. 21, 2012. As of that date, the Debtors ceased all operations and terminated all of their remaining employees. The remaining assets of the Debtors' estates are comprised of (1) the remaining proceeds from the sale in the amount of $10,376,839.18, after the pay down of the DIP Facility, indebtedness owed to the Prepetition Lender, and certain other parties in accordance with the Sale Order, and (2) Causes of Action. HOSTESS BRANDS: Sues Kroger for $2.8 Million in Delivered Goods --------------------------------------------------------------- Hostess Brands Inc. sued Kroger Co. and affiliates claiming the supermarket operator owes it about $2.8 million for goods it delivered months ago before it stopped making products. Michael Bathon, substituting for Bloomberg bankruptcy columnist Bill Rochelle, reports that Hostess, which is liquidating after failing to reach an agreement on concessions with striking bakers, said Cincinnati, Ohio-based Kroger, the largest U.S. grocery-store chain, has invoices that haven't been paid in more than 60 days after repeated requests. PriceRite, a unit of Wakefern Food Corp., was also named in the lawsuit. "Since July 2012 and continuing through January 2013, defendants have failed to timely remit payment for deliveries of Hostess products," the company said in the complaint filed March 1. According to Reuters, in addition to turning over $2.84 million in funds, Hostess is asking a bankruptcy judge to disallow at least two legal claims levied by Kroger against Hostess until the company pays what it owes. The adversary proceeding is Hostess Brand Inc. v. The Kroger Co., 13-08209, U.S. Bankruptcy Court, Southern District of New York (White Plains). The cases are In re Hostess Brands Inc and Hostess Brands Inc v. The Kroger Co, U.S. Bankruptcy Court, Southern District of New York, Nos. 12-22052 and 13-8209. 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. Hostess 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 2012 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 was expected to be completed in one year. At an auction Feb. 28, 2013, Flowers Foods Inc. won the majority of Hostess's bread-making business, including its Wonder brand, when no offers surfaced to challenge a $360 million bid. Mexico City-based Grupo Bimbo topped Flowers' $30 million opening offer for the Beefsteak rye-bread brand, with a winning offer of $31.9 million. March 13 will be the auction for the snack cake business where the opening bid of $410 million cash will come from affiliates of Apollo Global Management LLC and C. Dean Metropoulos & Co. The major sales will close out on March 15 with an auction to learn if $56.35 million is the most to be earned from selling some of the remaining bread businesses and the Drakes cakes operation. HOWARD P HORTON: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: The Howard P. Horton Whitfield Apartment Revocable Trust dated April 12, 1996 4127 Bee Ridge Road Sarasota, FL 34233 Bankruptcy Case No.: 13-02855 Chapter 11 Petition Date: March 5, 2013 Court: United States Bankruptcy Court Middle District of Florida (Tampa) Debtor's Counsel: David S. Jennis, Esq. JENNIS & BOWEN PL 400 North Ashley Drive Suite 2540 Tampa, FL 33602 Tel: (813) 229-1700 Fax: (813) 229-1707 E-mail: ecf@jennisbowen.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. The petition was signed by Rex S. Horton, trustee. IMH FINANCIAL: To Form JV to Acquire Multi-Family Portfolio ----------------------------------------------------------- IMH Financial Corp., through its wholly-owned subsidiaries, Royal Multifamily Ventures 2013-1, LLC and Royal Multifamily Promote 2013-1, LLC, entered into a limited liability agreement to form a joint venture with other unrelated parties for the purpose of acquiring a multi-family portfolio comprised of 14 apartment communities across six states, which will be managed by a third party, national firm, specializing in multi-family assets. The multi-family portfolio was acquired out of receivership for $142 million, with third party financing of $120 million and the balance contributed by the members of the joint venture. Representing an aggregate of 3,709 units, these properties are located in Nevada, Texas, Florida, South Carolina, Maryland, and Virginia. All of the properties are located in large metropolitan markets or are in close proximity to either universities or major employers. The apartments underlying this investment are approximately 93% physically occupied; however, the intention of the joint venture is not to simply buy and hold. Rather, the joint venture will seek to implement various value creation strategies in order to further improve economies. Under the terms of the limited liability agreement, RMV contributed $15 million and holds the status of a preferred member whose interest is guaranteed by the other non-IMHFC members, and the equity interests of those non-IMHFC members serve as collateral for the repayment of RMV's investment. RMP contributed no capital, but serves as a limited guarantor member on the senior indebtedness of the joint venture that is secured by the acquired operating properties. No other capital contributions are required of RMV or RMP. A non-IMHFC member will serve as the managing member of the joint venture. Based on the terms of the limited liability agreement, the joint venture is required to redeem RMV's preferred membership interest for the redemption price on or before the second anniversary of the closing date, or the redemption date may be extended for one additional year for a fee of $300,000. Also, under the terms of the agreement, RMV is entitled to a 15% annualized return on its $15 million preferred equity investment, and is further entitled to an exit fee equal to 1.5% of the fair market value of the portfolio assets at the two year preferred equity redemption date. Additionally, as part of the joint venture agreement, RMP will retain a 15% carried interest in the profits of the entire investment portfolio, after payment of the preferred returns of RMV and similar preferred returns of non-IMHFC members. In addition, RMV is entitled to effectively receive all cash flow of the joint venture until it receives the entirety of its preferred equity investment and any accrued and unpaid preferred return amounts. The non-IMHFC members are obligated to fund any shortfalls in the RMV's preferred return. As a result of the passive nature of the investment by the Company, the mandatory redemption feature of the investment, the defined preferred return and other repayment features of the investment, the investment will be treated as a debt security investment on the Company's books. The Company believes this investment is consistent with the its new investment strategy. In addition, management believes that this transaction is demonstrative of IMHFC's ability to make opportunistic investments in the current market environment and it is representative of IMHFC's overarching strategy to generally reposition its portfolio toward income producing assets. About IMH Financial Scottsdale, Ariz.-based IMH Financial Corporation was formed from the conversion of IMH Secured Loan Fund, LLC, or the Fund, a Delaware limited liability company, on June 18, 2010. The conversion was effected following a consent solicitation process pursuant to which approval was obtained from a majority of the members of the Fund to effect the Conversion Transactions and involved (i) the conversion of the Fund from a Delaware limited liability company into a Delaware corporation named IMH Financial Corporation, and (ii) the acquisition by the Company of all of the outstanding shares of the manager of the Fund Investors Mortgage Holdings Inc., or the Manager, as well as all of the outstanding membership interests of a related entity, IMH Holdings LLC, or Holdings on June 18, 2010. The Company is a commercial real estate lender based in the southwest United States with over 12 years of experience in many facets of the real estate investment process, including origination, underwriting, documentation, servicing, construction, enforcement, development, marketing, and disposition. The Company focuses on a niche segment of the real estate market that it believes is underserved by community, regional and national banks: high yield, short-term, senior secured real estate mortgage loans. The intense level of underwriting analysis required in this segment necessitates personnel and expertise that many community banks lack, yet the requisite localized market knowledge of the underwriting process and the size of the loans the Company seeks often precludes the regional and community banks from efficiently entering this market. The Company reported a net loss of $35.19 million in 2011, a net loss of $117.04 million in 2010, and a net loss of $74.47 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $228.93 million in total assets, $86.63 million in total liabilities and $142.30 million in total stockholders' equity. INSPIREMD INC: Amends 11.1 Million Common Shares Prospectus ----------------------------------------------------------- InspireMD, Inc., filed with the U.S. Securities and Exchange Commission an amendment no. 3 to the Form S-1 registration statement relating to the offering of 11,111,111 shares of the Company's common stock. The Company's common stock is quoted on the OTC Bulletin Board under the symbol "NSPR." On Feb. 28, 2013, the last reported sale price of the Company's common stock was $2.70 per share. The Company has applied to list its shares of common stock on the NYSE MKT under the symbol "NSPR." A copy of the amended prospectus is available for free at: http://is.gd/v6yiEn About InspireMD InspireMD, Inc., was organized in the State of Delaware on Feb. 29, 2008, as Saguaro Resources, Inc., to engage in the acquisition, exploration and development of natural resource properties. On March 28, 2011, the Company changed its name from "Saguaro Resources, Inc." to "InspireMD, Inc." Headquartered in Tel Aviv, Israel, InspireMD, Inc., is a medical device company focusing on the development and commercialization of its proprietary stent platform technology, Mguard. MGuard provides embolic protection in stenting procedures by placing a micron mesh sleeve over a stent. The Company's initial products are marketed for use mainly in patients with acute coronary syndromes, notably acute myocardial infarction (heart attack) and saphenous vein graft coronary interventions (bypass surgery). The Company's balance sheet at Sept. 30, 2012, showed $13.6 million in total assets, $14.4 million in total liabilities, and a stockholders' deficit of $756,000. InspireMD reported a net loss of US$17.59 million on US$5.35 million of revenue for the year ended June 30, 2012, compared with a net loss of US$6.17 million on US$4.67 million of revenue during the prior year. Kesselman & Kesselman, in Tel Aviv, Israel, issued a "going concern" qualification on the consolidated financial statements for the year ended June 30, 2012. The independent auditors noted that the Company has had recurring losses, negative cash flows from operating activities and has significant future commitments that raise substantial doubt about its ability to continue as a going concern. The Company said the following statement in its quarterly report for the period ended Dec. 31, 2012: "The Company has had recurring losses and negative cash flows from operating activities and has significant future commitments. For the six months ended December 31, 2012, the Company had losses of approximately $9.4 million and negative cash flows from operating activities of approximately $5.8 million. The Company's management believes that its financial resources as of December 31, 2012 should enable it to continue funding the negative cash flows from operating activities through the three months ended September 30, 2013. Furthermore, commencing October 2013, the Company's senior secured convertible debentures (the "2012 Convertible Debentures") are subject to a non-contingent redemption option that could require the Company to make a payment of $13.3 million, including accrued interest. Since the Company expects to continue incurring negative cash flows from operations and in light of the cash requirement in connection with the 2012 Convertible Debentures, there is substantial doubt about the Company's ability to continue operating as a going concern. These financial statements include no adjustments of the values of assets and liabilities and the classification thereof, if any, that will apply if the Company is unable to continue operating as a going concern." The Company's balance sheet at Dec. 31, 2012, showed US$11.59 million in total assets, US$11.39 million in total liabilities and a US$204,000 in total equity. INSPIREMD INC: Ayer Capital Stake at 8% at End of 2012 ------------------------------------------------------ In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Ayer Capital Management, LP, and its affiliates disclosed that for the calendar year 2012, they beneficially own 1,587,442 shares of common stock of InspireMD, Inc., representing 8.53% of the shares outstanding. A copy of the amended filing is available for free at http://is.gd/ZAbqro About InspireMD InspireMD, Inc., was organized in the State of Delaware on Feb. 29, 2008, as Saguaro Resources, Inc., to engage in the acquisition, exploration and development of natural resource properties. On March 28, 2011, the Company changed its name from "Saguaro Resources, Inc." to "InspireMD, Inc." Headquartered in Tel Aviv, Israel, InspireMD, Inc., is a medical device company focusing on the development and commercialization of its proprietary stent platform technology, Mguard. MGuard provides embolic protection in stenting procedures by placing a micron mesh sleeve over a stent. The Company's initial products are marketed for use mainly in patients with acute coronary syndromes, notably acute myocardial infarction (heart attack) and saphenous vein graft coronary interventions (bypass surgery). The Company's balance sheet at Sept. 30, 2012, showed $13.6 million in total assets, $14.4 million in total liabilities, and a stockholders' deficit of $756,000. InspireMD reported a net loss of US$17.59 million on US$5.35 million of revenue for the year ended June 30, 2012, compared with a net loss of US$6.17 million on US$4.67 million of revenue during the prior year. Kesselman & Kesselman, in Tel Aviv, Israel, issued a "going concern" qualification on the consolidated financial statements for the year ended June 30, 2012. The independent auditors noted that the Company has had recurring losses, negative cash flows from operating activities and has significant future commitments that raise substantial doubt about its ability to continue as a going concern. The Company said the following statement in its quarterly report for the period ended Dec. 31, 2012: "The Company has had recurring losses and negative cash flows from operating activities and has significant future commitments. For the six months ended December 31, 2012, the Company had losses of approximately $9.4 million and negative cash flows from operating activities of approximately $5.8 million. The Company's management believes that its financial resources as of December 31, 2012 should enable it to continue funding the negative cash flows from operating activities through the three months ended September 30, 2013. Furthermore, commencing October 2013, the Company's senior secured convertible debentures (the "2012 Convertible Debentures") are subject to a non-contingent redemption option that could require the Company to make a payment of $13.3 million, including accrued interest. Since the Company expects to continue incurring negative cash flows from operations and in light of the cash requirement in connection with the 2012 Convertible Debentures, there is substantial doubt about the Company's ability to continue operating as a going concern. These financial statements include no adjustments of the values of assets and liabilities and the classification thereof, if any, that will apply if the Company is unable to continue operating as a going concern." The Company's balance sheet at Dec. 31, 2012, showed US$11.59 million in total assets, US$11.39 million in total liabilities and a US$204,000 in total equity. INSPIRATION BIOPHARMACEUTICALS: Taps McGladrey as Accountant ------------------------------------------------------------ Inspiration BioPharmaceuticals, Inc., seeks authority from the U.S. Bankruptcy Court for the District of Massachusetts, Eastern Division, to employ McGladrey LLP to provide advisory services related to analyses and calculation of available net operating losses resulting from any changes of ownership under Section 382 of Title 26 of the U.S. Code. McGladrey will be paid $25,000 to $30,000 for Phase I of the project and up to $7,500 for Phase II of the project. About Inspiration Biopharmaceuticals Inspiration Biopharmaceuticals Inc. develops recombinant blood coagulation factor products for the treatment of hemophilia. Inspiration, based in Cambridge, Massachusetts, has two products in what the company calls "advanced clinical development." Two other products are in "pre-clinical development." None of the products can be marketed as yet. Inspiration filed for voluntary Chapter 11 reorganization (Bankr. D. Mass. Case No. 12-18687) on Oct. 30, 2012, in Boston. Bankruptcy Judge William C. Hillman oversees the case. Mark Weinstein and Michael Nolan, at FTI Consulting, Inc., serve as the Debtor's Chief Restructuring Officers. The Debtor is represented by Harold B. Murphy of Murphy & King. The petition shows assets and debt both exceed $100 million. Assets include patents, trademarks and the products in development. Liabilities include $195 million owing to Ipsen Pharma SAS, which is also a 15.5% shareholder. Ipsen -- http://www.ipsen.com/-- is also owed $19.4 million in unsecured debt. There is another $12 million in unsecured claims. Ipsen is pledged to provide $18.3 million in financing. The Debtor disclosed $20,383,300 in assets and $241,049,859 in liabilities. Ipsen is represented in the case by J. Eric Ivester, Esq., at Skadden Arps. The Official Committee of Unsecured Creditors tapped Jeffrey D. Sternklar and Duane Morris LLP as its counsel, and The Hawthorne Consulting Group, LLC as its financial advisor. INTERNATIONAL COMMERCIAL: To Settle Alleged Consumer Act Offense ---------------------------------------------------------------- International Commercial Television Inc. received a letter from a California law firm alleging certain violations of the California Consumer Legal Remedies Act in connection with the Company's advertising and marketing of its DermaWandTM product. The law firm purported to represent a class of plaintiffs and invited the Company to contact them in order to amicably resolve the matter. The Company has consulted with counsel and has presented to the California law firm the substantiation for its advertising and marketing claims. While they have acknowledged a good portion of the Company's substantiation, the law firm continues to press for a settlement under threat of litigation. The Company believes it would prevail if the California law firm were to bring suit. However, while the cost of settling the matter would likely be material, the Company also believes that the cost of litigation may exceed the amount for which the matter can be settled. Therefore, while it may take substantial time, the Company is continuing settlement negotiations. About International Commercial Wayne, Pa.-based International Commercial Television Inc. sells various consumer products. The products are primarily marketed and sold throughout the United States and internationally via infomercials. EisnerAmper, LLP, in Edison, New Jersey, expressed substantial douobt about International Commercial Television's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that of the Company's recurring losses from operations and negative cash flows from operations. The Company's balance sheet at Sept. 30, 2012, showed $2.77 million in total assets, $3.02 million in total liabilities and a $246,914 total shareholders' deficit. Bankruptcy Warning "There is no guarantee that the Company will be successful in launching new product lines. If the Company is unsuccessful in achieving this goal, the Company will be required to raise additional capital to meet its working capital needs or be forced to delay future product lines due to insufficient cash flows. If the Company is unsuccessful in completing additional financings, it will not be able to meet its working capital needs or execute its business plan. In such 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." INTERNATIONAL LEASE: Fitch Assigns 'BB' Rating to Unsecured Notes ----------------------------------------------------------------- Fitch Ratings expects to assign a rating of 'BB' to International Lease Finance Corp.'s benchmark size senior unsecured notes issuance under its shelf registration. The proposed notes are being issues in two tranches, with maturities in 2018 and 2021. KEY RATING DRIVERS The expected debt issuance does not affect ILFC's existing long- term Issuer Default Rating (IDR) of 'BB' or debt ratings. The Rating Outlook for ILFC remains Stable. For further information on ILFC's existing ratings, please refer to Fitch's press release 'Fitch Affirms International Lease Finance Corp's Ratings on Potential Sale' dated Dec. 10, 2012. Fitch notes that the proposed issuance is consistent with ILFC's overall financing plans to repay near-term maturing debt obligations and for general corporate purposes. The notes are expected to rank equally in right of payment with existing senior unsecured debt. Covenants are expected to be consistent with previously issued senior unsecured debt including a limitation restricting ILFC's ability to incur liens to secure indebtedness in excess of 12.5% of ILFC's consolidated net tangible assets (excluding secured debt issued by certain non- restricted subsidiaries of ILFC). RATING SENSITIVITIES In December 2012, ILFC's parent, American International Group, entered into an agreement to sell a majority stake in ILFC to a consortium of Chinese firms. Many details of the proposed transaction have yet to be finalized and Fitch will continue to assess the potential changes to ILFC's corporate governance and long-term strategy. A meaningful change in ILFC's growth plans may influence Fitch's long-term view of the ratings. Furthermore, any adverse impact on the company's current funding facilities or future availability of credit may have a negative impact on its ratings. ILFC's ratings are constrained by the company's lack of profitability over the past two fiscal years, which has been caused by significant impairment charges on older aircraft, as well as the weighted average age of its fleet, which is older than other Fitch-rated peers. In addition to the factors outlined above, negative momentum for the ratings and/or Outlook could result from inability to access capital markets to fund debt maturities or purchase commitments, deterioration in operating cash flow or a permanent increase in balance sheet leverage. While positive rating momentum is not likely in the near term, over a longer-term time horizon, positive drivers would include consistent profitability, demonstrated funding flexibility, commitment to reduced leverage levels and a robust corporate governance structure. ILFC is a market leader in the leasing and remarketing of commercial jet aircraft to airlines around the world. As of Dec. 31, 2012, ILFC owned an aircraft portfolio with a net book value of approximately $35 billion, consisting of 919 jet aircraft, on lease to approximately 200 customers in over 80 countries. Fitch expects to assign these ratings: -- Proposed benchmark size senior unsecured notes due 2018 at 'BB'. -- Proposed benchmark size senior unsecured notes due 2021 at 'BB'. Fitch currently rates ILFC and its related subsidiaries as follows: International Lease Finance Corp. -- Long-term IDR 'BB'; Outlook Stable; -- $3.9 billion senior secured notes 'BBB-'; -- Senior unsecured debt 'BB'; -- Preferred stock 'B'. Delos Aircraft Inc. -- Senior secured debt 'BB'. Flying Fortress Inc. -- Senior secured debt 'BB'. ILFC E-Capital Trust I -- Preferred stock 'B'. ILFC E-Capital Trust II -- Preferred stock 'B'. INTERNATIONAL LEASE: Moody's Rates 2 Unsec. Notes Tranches 'Ba3' ---------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to International Lease Finance Corporation's two tranche issuance of senior unsecured notes maturing March 2018 and March 2021, respectively. ILFC's Ba3 Corporate Family rating and positive outlook are unchanged. Ratings Rationale: The Notes have terms consistent with ILFC's existing unsecured debt issuance, including a pari passu ranking with ILFC's other unsecured debt. The Ba3 rating assigned to the Notes reflects ILFC's credit attributes and the position of the Notes in the firm's capital structure. ILFC's Ba3 corporate family rating is based on its leading global franchise positioning, diversity of geographic, aircraft, and customer risk exposures and resilient operating cash flow. The rating also recognizes the significant progress ILFC has made in restructuring its liabilities, building liquidity and reducing leverage since the beginning of 2010. As credit constraints, ILFC faces challenges relating to sustaining lease margin improvements and generating attractive returns on equity. A key concern relates to the effect of weak economic conditions, particularly in Europe, on air travel volumes, aircraft demand and lease rates, and airline credit quality. In addition, fuel price volatility and higher new aircraft production rates could add to lease rate pressures. Other credit challenges include the monoline and cyclical nature of ILFC's business, its exposure to aircraft residual value risks, and its reliance on confidence-sensitive wholesale funding. ILFC's parent American International Group, Inc. (AIG; Baa1 issuer rating) has announced the sale of ILFC to a consortium of investors based primarily in China. The transaction could help stabilize ILFC's ownership, increase its business opportunities in Asia, and potentially expand its funding sources. However, the extent to which ILFC's credit profile will benefit from the sale depends on the consortium members' strategic and financial objectives and their influence on ILFC's growth rate, portfolio concentrations and financial leverage. ILFC's rating does not incorporate any assumption of support from its parent. The rating outlook is positive, reflecting the potential that the sale of ILFC to the new investor group will stabilize its ownership, lead to new business opportunities, and increase its access to funding. The principal methodology used in this rating was the Finance Company Global Rating Methodology published March 2012. International Lease Finance Corporation, headquartered in Los Angeles, California, is a major owner-lessor of commercial aircraft. J & J EQUITIES: Case Summary & 2 Unsecured Creditors ---------------------------------------------------- Debtor: J & J Equities, LLC 3512 SW Fairlawn Road Suite 400 Topeka, KS 66614 Bankruptcy Case No.: 13-20465 Chapter 11 Petition Date: March 5, 2013 Court: United States Bankruptcy Court District of Kansas (Kansas City) Judge: Dale L. Somers Debtor's Counsel: David P. Eron, Esq. ERON LAW, P.A. 229 E. William, Suite 100 Wichita, KS 67202 Tel: (316) 262-5500 Fax: (316) 262-5559 E-mail: david@eronlaw.net Scheduled Assets: $0 Scheduled Liabilities: $4,590,446 A copy of the Company's list of its two unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/ksb13-20465.pdf The petition was signed by John E. Brown, managing member. Affiliate that filed separate Chapter 11 petition: Petition Debtor Case No. Date ------ -------- ---- Tri States Utility, Inc. 13-20358 02/20/2013 J.C. PENNEY: Vornado Realty Stake at 6.1% as of March 4 ------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Vornado Realty Trust and its affiliates disclosed that, as of March 4, 2013, they beneficially own 13,400,000 shares of common stock of J.C. Penney Company, Inc., representing 6.1% of the shares outstanding. A copy of the filing is available for free at http://is.gd/DjvbLo Plano, Texas-based J.C. Penney Company, Inc. is one of the U.S.'s largest department store operators with about 1,100 locations in the United States and Puerto Rico. Revenues are about $14 billion. The Company carries Moody's Investors Service's B3 Corporate Family Rating with negative outlook. Early in March 2013, Standard & Poor's Ratings Services lowered its corporate credit rating on Penney to 'CCC+' from 'B-'. The outlook is negative. At the same time, S&P lowered the issue- level rating on the company's unsecured debt to 'CCC+' from 'B-' and maintained its '3' recovery rating on this debt, indicating S&P's expectation of meaningful (50% to 70%) recovery for debtholders in the event of a payment default. "The downgrade reflects the performance erosion that has accelerated throughout the previous year and seems likely to persist over the next 12 months," explained Standard & Poor's credit analyst David Kuntz. At the same time, Fitch Ratings downgraded the Company's Issuer Default Ratings to 'B-' from 'B'. The Rating Outlook is Negative. The rating downgrades reflect Fitch's concerns that there is a lack of visibility in terms of the Company's ability to stabilize its business in 2013 and beyond after a precipitous decline in revenues leading to negative EBITDA of $270 million in 2012. Penney, Fitch said, will need to tap into additional funding to cover a projected FCF shortfall of $1.3 billion to $1.5 billion in 2013, which could begin to strain its existing sources of liquidity. In February 2013, Penney received a notice of default from a law firm representing more than 50% of its 7.4% Debentures due 2037. The Company has filed a lawsuit in Delaware Chancery Court seeking to block efforts by the bondholder group to declare a default on the 2037 bonds. Penney also asked lawyers at Brown Rudnick LLP to identify the investors they represent. J2 GLOBAL: S&P Raises Corp. Credit Rating to 'BB'; Outlook Stable ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit and issue-level ratings on Los Angeles-based j2 Global Inc. to 'BB' from 'BB-'. The outlook is stable. The recovery rating on the unsecured notes remains '3', indicating S&P's expectation for meaningful (50% to 70%) recovery in the event of a payment default. The upgrade reflects the company's improved, albeit still "weak," business risk profile position following its addition of another segment in 2012 while it maintained its "intermediate" financial risk profile. The stable outlook reflects the steady and growing revenue base and good cash flow generation. The ratings on j2 reflect S&P's assessment of the company's business risk profile as "weak" and its financial risk profile as "intermediate." S&P bases these assessments on j2's position in a fairly narrow segment of the cloud-based services market, its heavy reliance on one product for a significant portion of its revenues, and its exposure to technology risks. The company acquired digital media company Ziff Davis in late 2012, which added another business segment and helped diversify its business. In early 2013 it acquired IGN from News Corp., further increasing their presence in the market. In addition, the company has a stable and growing revenue base, strong cash flow generation capabilities, and low leverage for the rating. S&P's base case assumes mid-single-digit growth rates, and j2 maintaining EBITDA margins somewhat above the 50% level. S&P's base case results in leverage in the low- to mid-1x area, with the ratio of funds from operations (FFO) to total debt staying in the 50% area. The company can use free cash flow for acquisitions. The company provides cloud-based enhanced communication and messaging services, primarily to small and midsize businesses (SMBs). Core services include online fax services, virtual voice products, hosted email, email marketing, online backup, and unified communications. The company has approximately 2 million paying subscription customers in 49 countries, although it derives approximately 60% of revenues from U.S. business. Its products are aimed mainly at SMBs, but large enterprise customers constitute an increasingly significant portion of the business, especially as j2's suite of products grows. The company has added customers, products, and services, and moved into new markets, both through internal development and acquisitions, having made more than 40 since 2000. Most have been small ones to add customers and were under $40 million. The 2010 acquisition of Protus for $233 million was the company's largest and helped establish j2 as the leading electronic fax provider in Canada. JEFFERSON COUNTY, AL: Societe Generale Exiting Bankruptcy Appeal ---------------------------------------------------------------- Edvard Pettersson, writing for Bloomberg News, reported that Societe Generale SA (GLE) asked a federal court to be dismissed from an appeal by Jefferson County, Alabama, because it no longer has a financial stake in the bankrupt county's sewer bonds. "Societe Generale has transferred all of its rights, title and interest in and to those certain Jefferson County Sewer Revenue Refunding Warrants issued by Jefferson County and accordingly is no longer interested in pursuing the claims that are the subject of the appeal," the bank said in a March 1 filing in the U.S. Court of Appeals in Atlanta, the Bloomberg report cited. Bloomberg said Jefferson County is appealing a bankruptcy judge's ruling last year that limited the expenses the county can deduct before turning sewer revenue over to holders of the bonds, which included Paris-based Societe Generale. The case is In re Jefferson County, 11-05736, U.S. Bankruptcy Court, Northern District of Alabama (Birmingham). The appellate case is Jefferson County, Alabama v. Bank of Nova Scotia (BNS) New York, 13-10348, U.S. Court of Appeals for the Eleventh Circuit (Atlanta). About Jefferson County Jefferson County has its seat in Birmingham, Alabama. It has a population of 660,000. Jefferson County filed a bankruptcy petition under Chapter 9 (Bankr. N.D. Ala. Case No. 11-05736) on Nov. 9, 2011, after an agreement among elected officials and investors to refinance $3.1 billion in sewer bonds fell apart. John S. Young Jr. LLC was appointed as receiver by Alabama Circuit Court Judge Albert Johnson in September 2010. Jefferson County's bankruptcy represents the largest municipal debt adjustment of all time. The county said that long-term debt is $4.23 billion, including about $3.1 billion in defaulted sewer bonds where the debt holders can look only to the sewer system for payment. The county said it would use the bankruptcy court to put a value on the sewer system, in the process fixing the amount bondholders should be paid through Chapter 9. Judge Thomas B. Bennett presides over the Chapter 9 case. Lawyers at Bradley Arant Boult Cummings LLP and Klee, Tuchin, Bogdanoff & Stern LLP, led by Kenneth Klee, represent the Debtor as counsel. Kurtzman Carson Consultants LLC serves as claims and noticing agent. Jefferson estimated more than $1 billion in assets. The petition was signed by David Carrington, president. The bankruptcy judge in January 2012 ruled that the state court- appointed receiver for the sewer system largely lost control as a result of the bankruptcy. Before deciding whether Jefferson County is eligible for Chapter 9, the bankruptcy judge will allow the Alabama Supreme Court to decide whether sewer warrants are the equivalent of "funding or refunding bonds" required under state law before a municipality can be in bankruptcy. U.S. District Judge Thomas B. Bennett ruled in March 2012 that Jefferson County is eligible under state law to pursue a debt restructuring under Chapter 9. Holders of more than $3 billion in defaulted sewer debt had challenged the county's right to be in Chapter 9. JEFFERSON COUNTY, AL: Moody's Keeps B3 Rating on $747MM Warrants ---------------------------------------------------------------- Moody's Investors Service has affirmed the B3 rating on Jefferson County's (AL) $747 million in outstanding Limited Obligation School Warrants; the outlook remains negative. The Series 2004-A and 2005-A&B warrants are secured by a dedicated 1% education sales and use tax. The county filed for bankruptcy protection in November 2011. Ratings Rationale: Affirmation of the B3 rating reflects Moody's current analysis of expected loss for the limited obligation school warrants, following an agreement with Depfa Bank PLC that Moody's views as a default on the bonds. The recovery to bondholders under the Depfa agreement is consistent with the current B3 rating. The ultimate determination of loss through the bankruptcy proceedings and related litigation is likely to occur over a protracted period of time. The negative outlook reflects the possibility that ultimate recovery levels for warrantholders once bankruptcy proceedings conclude, could fall below 95%. Strengths - Dedicated sales tax receipts remain sufficient to pay debt service. Challenges - Uncertain timing and extent of ultimate recovery to warrantholders. - Lack of fiscal 2011 audit Outlook The negative outlook reflects the possibility that ultimate recovery to warrantholders could decline further. What Could Make The Rating Go Up Actions by involved parties that would cause recovery to increase above current levels. What Could Make The Rating Go Down Actions by involved parties that would cause recovery to decrease below 95%. The principal methodology used in this rating was US Public Finance Special Tax Methodology published in March 2012. K-V PHARMACEUTICAL: $85-Mil. Default Risk Keeps Plan on Schedule ---------------------------------------------------------------- A bankruptcy judge denied a bid by creditors to slow down K-V Pharmaceuticals Co.'s bankruptcy exit plan by 90 days. Maria Chutchian of BankruptcyLaw360 reported that the bankruptcy judge on Wednesday agreed with contentions by the DIP lenders and K-V Pharmaceutical that delaying the plan would unnecessarily risk K-V's default of an outstanding $85 million loan. The report related that K-V's creditors argued that Silver Point Capital LP, the largest senior lender, is trying to speed up the confirmation process to take advantage of increased sales of the company's prenatal drug Makena after competitors were tied to a meningitis outbreak. The creditors had sought to delay hearings for the proposed Chapter 11 plan. BankruptcyData related the D.I.P. lenders and ad hoc senior noteholders' group, however, opposed the bid, saying, "The Committee's request is not only unjustified and improper, it is wholly unnecessary. If the Committee members truly believe that the Debtors have the value that the Committee claims, then the Committee does not need any extra time to obtain financing because its investor members can commit now to fund their alternative chapter 11 plan. The fact that those Committee members that have more historical familiarity with and knowledge of the Debtors than any new potential investors are unwilling to sponsor their own plan completely undermines their claims about the Debtors' increasing value. The Committee does not need more time, but rather a more realistic view of the value of the Debtors' estates." About K-V Pharmaceutical K-V Pharmaceutical Company (NYSE: KVa/KVb) -- http://www.kvpharmaceutical.com/-- is a fully integrated specialty pharmaceutical company that develops, manufactures, markets, and acquires technology-distinguished branded and generic/non-branded prescription pharmaceutical products. The Company markets its technology distinguished products through ETHEX Corporation, a subsidiary that competes with branded products, and Ther-Rx Corporation, the company's branded drug subsidiary. K-V Pharmaceutical Company and certain domestic subsidiaries on Aug. 4, 2012, filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-13346, under K-V Discovery Solutions Inc.) to restructure their financial obligations. K-V employed Willkie Farr & Gallagher LLP as bankruptcy counsel, Williams & Connolly LLP as special litigation counsel, and SNR Denton as special litigation counsel. In addition, K-V tapped Jefferies & Co., Inc., as financial advisor and investment banker. Epiq Bankruptcy Solutions LLC is the claims and notice agent. The U.S. Trustee appointed five members to serve in the Official Committee of Unsecured Creditors. Kristopher M. Hansen, Esq., Erez E. Gilad, Esq., and Matthew G. Garofalo, Esq., at Stroock & Stroock & Lavan LLP, represent the Creditors Committee. Weil, Gotshal & Manges LLP's Robert J. Lemons, Esq., and Lori R. Fife, Esq., represent an Ad Hoc Senior Noteholders Group. The Plan provides that in full satisfaction, settlement, release. LEHI ROLLER: Can Hire Parsons Kinghorn as Bankruptcy Counsel ------------------------------------------------------------ Lehi Roller Mills Co., Inc., sought and obtained approval from the Bankruptcy Court to employ George B. Hofmann, Esq., and the law firm Parsons Kinghorn Harris, P.C., as general bankruptcy counsel. Parsons Kinghorn attests it is a disinterested person; and does not hold or represent an interest adverse to the Debtor or its bankruptcy estate. The Debtor has paid Parsons Kinghorn $60,000 as an initial retainer from capital contributions that were earmarked solely for payment of the retainer. A copy of the Court's March 6, 2013 Order is available at http://is.gd/FVerAbfrom Leagle.com. Lehi Roller Mills Co., Inc., filed for Chapter 11 bankruptcy (Bankr. D. Utah Case No. 12-35291) on Dec. 6, 2012, estimating under $50,000 in both assets and liabilities. Judge R. Kimball Mosier oversees the case. Lehi Roller Mills sells a variety of retail products. But the majority of the company's sales of wheat and flour are to commercial customers. LEHMAN BROTHERS: First American Can't Duck Suit Over LehmanRE Loan ------------------------------------------------------------------ Juan Carlos Rodriguez of BankruptcyLaw360 reported that a California federal judge on Tuesday said First American Title Insurance Co. can't dodge Fidelity National Title Insurance Co.'s attempt to draw it into a $15 million coverage battle with a Lehman Brothers Holdings Inc. subsidiary over a busted real estate deal. The report related that U.S. District Judge Josephine S. Tucker declined to dismiss Fidelity's December amended third-party complaint, saying Fidelity has adequately stated its case that First American should be connected to the Lehman Commercial Paper Inc. allegations. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012 and a second payment of $10.2 billion on Oct. 1. A third distribution is set for around March 30, 2013. The brokerage is yet to make a first distribution to non-customers. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. LEHMAN BROTHERS: Barclays Need Not Pay Former Exec's Bonuses ------------------------------------------------------------ An appeals court ruled that Barclays Plc, which bought defunct Lehman Brothers Holdings Inc.'s North American businesses in 2008, needn't pay $19.6 million in bonuses demanded by ex-Lehman executive Maximilian Coreth. Max Stendahl of BankruptcyLaw360 reported that the Second Circuit ruled Wednesday, affirming a bankruptcy court ruling, that Barclays Capital Inc. does not owe $19.6 million in alleged severance pay to a former Lehman Brothers managing director who joined Barclays when it bought part of the failing firm in 2008. The report related that a three-judge panel refused to revive the suit by Maximilian Coreth, who joined Lehman in April 2008 and was fired shortly after Barclays bought a major Lehman unit in September 2008. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012 and a second payment of $10.2 billion on Oct. 1. A third distribution is set for around March 30, 2013. The brokerage is yet to make a first distribution to non-customers. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. LEHMAN BROTHERS: Brokerage Trustee Files Final Barclays Brief ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the trustee liquidating the brokerage subsidiary of Lehman Brothers Holdings Inc. filed his final brief attempting to overturn a ruling from June by U.S. District Judge Katherine B. Forrest, who concluded that the bankruptcy judge was wrong in requiring Barclays Plc to pay $1.5 billion to the trustee. James W. Giddens, the Lehman brokerage trustee, was responding to the brief Barclays filed in December in the U.S. Court of Appeals for the Second Circuit in Manhattan. Barclays had laid out the case supporting Judge Forrest and explaining why it was entitled to retain cash held as margin. Mr. Giddens wants the circuit court to reinstate a ruling from the bankruptcy judge giving him $1.5 billion. The London-based bank believes it's entitled to keep the $1.5 billion and recover even more from the Lehman trustee. The report relates that as framed by Mr. Giddens, the appeal comes down to whether the bankruptcy judge approved a sale of the Lehman broker and in the process gave the parties "pre-approval" to modify the contract without notice to the court or interested parties. Mr. Giddens says allowing a bankrupt to modify an approved sale agreement "would pose a grave danger" to bankruptcy sales. The Securities Investor Protection Corp. filed a brief of its own supporting Mr. Giddens. The centerpiece of the appeal is a so-called clarification letter that wasn't even written when the bankruptcy judge approved sale of Lehman's North American brokerage business to Barclays in September 2008. Barclays says it paid $50 billion for the Lehman brokerage "amidst a worldwide financial crisis." The Barclay appeal in the court of appeals is Giddens v. Barclays Capital Inc. (In re Lehman Brothers Holdings Inc.), 12- bk-02328, 2nd U.S. Circuit Court of Appeals (Manhattan). The Barclay appeal in district court was Barclays Capital Inc. v. Giddens (In re Lehman Brothers Inc.), 11-bk-06052, U.S. District Court, Southern District of New York (Manhattan). About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012 and a second payment of $10.2 billion on Oct. 1. A third distribution is set for around March 30, 2013. The brokerage is yet to make a first distribution to non-customers. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. LIGHTSQUARED INC: Amends Scope of Ernst & Young's Employment ------------------------------------------------------------ LightSquared Inc. has entered into a new statement of work for 2013 property tax services, which expanded the scope of Ernst & Young LLP's services. The new SOW can be accessed for free at http://is.gd/4IT5Fy LightSquared also has entered into an amendment to the statements of work regarding the company's and LightSquared LP's tax compliance for the year ended December 31, 2012. The amended statement contains changes to Ernst & Young's employment terms as of March 5, 2013, with respect to the provisions governing payment of fees to the firm. The document can be accessed for free at http://is.gd/4ahvKO About LightSquared Inc. LightSquared Inc. and 19 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on May 14, 2012, to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network. LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements. LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties. Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to the Debtors. Alvarez & Marsal North America, LLC, is the financial advisor. Kurtzman Carson Consultants LLC serves as claims and notice agent. LIME ENERGY: NASDAQ Grants Request for Continued Listing -------------------------------------------------------- Lime Energy Co. disclosed that, on March 6, 2013, it received a letter from The NASDAQ Stock Market LLC notifying the Company that a NASDAQ Listing Qualifications Panel granted the Company's request for continued listing of its common stock on The NASDAQ Capital. The Company's continued listing is subject to the following conditions: -- On or before June 30, 2013, the Company shall have restated financial statements for fiscal 2008, 2009, 2010 and 2011 on file with the Securities and Exchange Commission; -- On or before July 31, 2013, the Company shall file its Form 10- Q for the quarters ended March 31, June 30 and September 31, 2012; and -- On or before August 9, 2013, the Company shall file its Form 10-K for the year ended December 31, 2012 and its Form 10-Q for the quarter ended March 31, 2013. As previously disclosed, the Company received a notice from the NASDAQ Listing Qualifications Staff on January 9, 2013 regarding the Company's failure to satisfy NASDAQ Listing Rule 5250(c)(1) because the Company had not filed its Quarterly Reports on Form 10-Q for the periods ended June 30, and September 30, 2012, and that as a result the Company's common stock was subject to delisting from NASDAQ. The Company requested a hearing before the Panel to review the listing determination and to request that the Panel grant the Company additional time to regain compliance. The hearing was held on February 21, 2013. The Company is required to provide prompt notification to NASDAQ of any significant events during the exception period, including any events that may call into question the Company's historical financial information or that may impact the Company's ability to maintain compliance with any NASDAQ listing requirement or exception deadline. During the exception period, the Company must be able to demonstrate compliance with all requirements for continued listing on NASDAQ. In the event the Company is unable to do so, its securities may be delisted from NASDAQ. Lime Energy Co. -- http://www.lime-energy.com-- is engaged in planning and delivering clean energy solutions that assist its clients in their energy efficiency and renewable energy goals. The Company's solutions include energy efficient lighting upgrades, energy efficient mechanical and electrical retrofit and upgrade services, water conservation, building weatherization, on- site generation and renewable energy project development and implementation. The Company provides energy solutions across a range of facilities, from high-rise office buildings, distribution facilities, manufacturing plants, retail sites, multi-tenant residential buildings, mixed use complexes, hospitals, colleges and universities, government sites to small, single tenant facilities. LIQUIDMETAL TECHNOLOGIES: Hikes Authorized Shares to 500MM ---------------------------------------------------------- According to a March 5 regulatory filing, the stockholders of Liquidmetal Technologies, Inc., approved an amendment to the Certificate of Incorporation of the Company increasing the number of authorized shares of common stock from 400 million shares to 500 million shares. About Liquidmetal Technologies Based in Rancho Santa Margarita, Cal., Liquidmetal Technologies, Inc., and its subsidiaries are in the business of developing, manufacturing, and marketing products made from amorphous alloys. Liquidmetal Technologies markets and sells Liquidmetal(R) alloy industrial coatings and also manufactures, markets and sells products and components from bulk Liquidmetal alloys that can be incorporated into the finished goods of its customers across a variety of industries. The Company also partners with third- party licensees and distributors to develop and commercialize Liquidmetal alloy products. Liquidmetal incurred a net loss of $14.02 in 2012, as compared with net income of $6.15 million in 2011. The Company's balance sheet at Dec. 31, 2012, showed $8.97 million in total assets, $10.54 million in total liabilities and a $1.57 million total shareholders' deficit. SingerLewak LLP, in Los Angeles, California, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has suffered recurring losses from operations and has an accumulated deficit, which raises substantial doubt about the Company's ability to continue as a going concern. LUCID INC: Five Ten Capital Senior Advisor Appointed to Board ------------------------------------------------------------- The Board of Directors of Lucid, Inc., appointed Kevin Cronin as director increasing the number of Board Members from five to six. The Board has determined that Mr. Cronin qualifies as an independent director in accordance with the rules set forth by the standards set forth in Rule 10A-3(b) of the Securities Exchange Act of 1934, as amended. Kevin Cronin, 51, currently is a Principal and Senior Advisor at Five Ten Capital Management, an investment management company. From 2009 through 2011, he was a Principal at Ocean Gate Capital Management, an investment management company. From 1997 through 2008, Mr. Cronin served in a number of positions including Senior Vice President, Managing Director, Chief Investment Officer, and Senior Managing Director for Putnam Investments, an investment and financial services company. Mr. Cronin has a BA from Wesleyan University and an MBA from Boston College. The Company believes that Mr. Cronin's experience, including his years of experience in the financial services industry, enables him to be a valuable contributor to the Company's Board. About Lucid Inc. Rochester, N.Y.-based Lucid, Inc., is a medical device company that designs, manufactures and sells non-invasive cellular imaging devices that assist physicians in the early detection of disease. The Company's VivaScope(R) platform produces rapid noninvasive, high-resolution cellular images for subsequent diagnostic review by physicians, pathologists and other diagnostic readers. The Company's balance sheet at Sept. 30, 2012, showed $2.80 million in total assets, $10.13 million in total liabilities, and a $7.32 million total stockholders' deficit. As reported in the TCR on April 9, 2012, Deloitte & Touche LLP, in Rochester, New York, expressed substantial doubt about Lucid's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that of the Company's recurring losses from operations, deficit in equity, and projected need to raise additional capital to fund operations. LUXEYARD INC: Gets $1.3-Mil. Default Judgment From Former CEO ------------------------------------------------------------- LuxeYard, Inc., was awarded $1,299,512 in connection with a default judgment ordered by the District Court of Houston County, Texas 127th Judicial District, pursuant to a lawsuit (Cause No: 2012-67100) filed by the Company, and its wholly owned subsidiary, LY Retail, LLC, against former CEO Braden Richter. About Luxeyard, Inc. Los Angeles, California-based Luxeyard, Inc., a Delaware Corporation, is an internet company selling luxury goods on a flash Web site. Luxeyard, Inc., is the parent company of the wholly owned subsidiaries, LY Retail, LLC, incorporated under the laws of the State of Texas on April 20, 2011, and LY Retail, LLC, incorporated in the State of California on Nov. 8, 2011. The Company's balance sheet at Sept. 30, 2012, showed $1.5 million in total assets, $5.8 million in total liabilities, and a stockholders' deficit of $4.3 million. "As of Sept. 30, 2012, we have generated minimal revenues since inception. We expect to finance our operations primarily through our existing cash, our operations and any future financing. However, there exists substantial doubt about our ability to continue as a going concern because we will be required to obtain additional capital in the future to continue our operations and there is no assurance that we will be able to obtain such capital, through equity or debt financing, or any combination thereof, or on satisfactory terms or at all. Additionally, no assurance can be given that any such financing, if obtained, will be adequate to meet our capital needs. If adequate capital cannot be obtained on a timely basis and on satisfactory terms, our operations would be materially negatively impacted. Therefore, there is substantial doubt as to our ability to continue as a going concern." An Involuntary Petition for bankruptcy, entitled In re Luxeyard, Inc. (Case No. 12-bk-51986-BR), was filed against LuxeYard, Inc., by three creditors of the Company. The petition was filed in the United States Bankruptcy Court, Central District of California. The date that jurisdiction was assumed was Dec. 27, 2012. The Petitioners have claimed that they have debts totaling $66,220. MACCO PROPERTIES: Equity Security Holder Further Amends Plan ------------------------------------------------------------ Jennifer Price, an equity holder for debtor Macco Properties, Inc., made another modification to her Fifth Amended Plan of Reorganization for the Debtor, this time hoping that it will address objections by the U.S. Trustee and unsecured creditors. The U.S. Trustee had objected to the prior version, saying that Ms. Price's fifth attempt on a disclosure statement still fails. "Price and McGinnis are no different today than they were at the commencement of this case. Recent events continue to provide examples of their improper conduct." According to the latest iteration of the Disclosure Statement, which was dated Jan. 17, 2012, the Plan provides for (i) payment in full, with applicable interest, of all Administrative Expense Claims and Tax Claims; (ii) payment in full, with interest, of all non-guaranty or indemnification Claims against the Debtor; (iii) payment in full, implementation of agreed treatment, or a waiver of discharge with respect to guaranty and indemnification Claims; and (iv) retention of equity Interests by the holder thereof. The Plan further provides that the property of the Debtor's Estate will re-vest in the Reorganized Debtor. This re-vested property, plus draws, as necessary, under committed lines/letters of credit providing supplemental liquidity of $20.0 million, will be used to satisfy all Claims entitled to present payment under the Plan and any ongoing obligations of the Reorganized Debtor. On the Effective Date, the following prepetition date directors and officers of Macco will be retained as directors and officers of Reorganized Debtor, and will continue to serve in the following capacities until such time as they may resign, be removed or be replaced in accordance with its internal corporate governance principles and applicable non-bankruptcy law: 1. Lew McGinnis as director and president; and 2. Jennifer Price as director, treasurer and secretary; Mr. McGinnis and Ms. Price will each draw a $5,000/month salary for their services to the Reorganized Debtor. The payments under the Plan will be funded from: a) the liquid assets of the Debtor and its Estate, which include, among other things, funds held in one or more deposit accounts presently controlled by the Chapter 11 Trustee (the "Estate Funds"): and b) $20 million to be advanced by Edward Snyder. Repayment of the Snyder Advance will not be secured by any of the assets of the Reorganized Debtor or of any entity in which it holds an interest. A copy of the Disclosure Statement is available for free at http://is.gd/z6DpHi About Macco Properties Oklahoma City, Oklahoma-based Macco Properties, Inc., is a property management company that is the sole or controlling member and/or manager of numerous multi-family residential rental units in Oklahoma City, Oklahoma, Wichita, Kansas, and Dallas, Texas, and several and commercial business properties in Oklahoma City, Oklahoma, and Holbrook, Arizona. The Company filed for Chapter 11 bankruptcy protection (Bankr. W.D. Okla. Case No. 10-16682) on Nov. 2, 2010. The Debtor disclosed $50,823,581 in total assets, and $4,323,034 in total liabilities. Receivership Services Corp., a division of the Martens Cos., serves as property manager for the six Wichita apartment complexes caught up in the bankruptcy of Macco Properties of Oklahoma City. Michael E. Deeba, the Chapter 11 trustee, is represented by Christopher T. Stein, of counsel to the firm of Bellingham & Loyd, P.C. Grubb & Ellis/Martens Commercial Group LLC, to act as the Chapter 11 Trustee's exclusive listing broker/realtor for properties. The trustee wants to real estate holdings wants to sell some of the property off, including a luxury high-rise condominium in Dallas valued at more than $2.5 million and several run-down apartment complexes in the metro area. The Official Unsecured Creditors' Committee is represented by Ruston C. Welch, at Welch Law Firm, P.C., in Oklahoma City, Oklahoma. MACROSOLVE INC: Incurs $1.7 Million Net Loss in 2012 ---------------------------------------------------- Macrosolve, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $1.77 million on $2.98 million of net revenues for the year ended Dec. 31, 2012, as compared with a net loss of $2.53 million on $1.40 million of net revenues during the prior year. For the quarter ended Dec. 31, 2012, the Company reported net income of $389,295 on $982,376 of net revenues, as compared with a net loss of $689,641 on $636,677 of net revenues for the same period during the prior year. The Company's balance sheet at Dec. 31, 2012, showed $1.89 million in total assets, $1.49 million in total liabilities and $408,067 in total stockholders' equity. "The Company incurred a net loss of $1,776,045 in 2012 which increased the accumulated deficit to $14,450,239 at December 31, 2012. Although there was a loss in 2012, the audit report did not contain a qualified opinion or modification regarding the Company's ability to continue as a going concern. Management believes that the divestiture of Illume Mobile and the resulting return to cash-flow positive operations in the fourth quarter of 2012, the improvement in its financial ratios and the cash balance at year end has removed prior years' substantial doubt of continuing operations. The Company expects to generate sufficient working capital through operations to support its requirements without additional debt or equity financing." In its report on the Company's 2011 financial results, Hood Sutton Robinson & Freeman CPAs, P.C., in Tulsa, Oklahoma, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has suffered recurring losses from operations and has a net capital deficiency. "During fiscal 2012, we made a strategic decision to sell the Illume Mobile business unit and implement a strategy towards debt elimination and profitability. As anticipated, we achieved positive cash flow and profitability in the fourth quarter. Our experienced management team is leveraging our unique position in the mobile app intellectual property space by providing advisory services to a portfolio of clients, including mobile app developers, fortified by intellectual property, which in combination can create substantial passive revenues and equity holdings for our shareholders." stated MacroSolve CEO and President, Jim McGill. A copy of the Form 10-K is available for free at: http://is.gd/XTsccN About MacroSolve, Inc. Tulsa, Okla.-based MacroSolve, Inc. (OTC BB: MCVE) -- http://www.macrosolve.com/-- is a technology and services company that develops mobile solutions for businesses and government. A mobile solution is typically the combination of mobile handheld devices, wireless connectivity, and software that streamlines business operations resulting in improved efficiencies and cost savings. MASTEC INC: Moody's Rates New Sr. Unsecured Notes Due 2023 'Ba3' ---------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to MasTec, Inc.'s proposed senior unsecured notes due 2023. Note proceeds will be used to fund the proposed redemption of MasTec's 7.625% senior notes, to repay outstanding balances under the revolving credit facility and for other general corporate purposes. In addition, Moody's assigned a (P) Ba3 rating to MasTec's senior unsecured shelf. The rating outlook is stable. "The proposed issuance of $400 million of senior notes will extend the maturity profile of MasTec's debt, at a more competitive coupon, and provide incremental liquidity to the company in the form of excess balance sheet cash and increased availability under its revolver to fund future convertible debt maturities and/or business acquisitions," commented Harman Saggu, Moody's Analyst. Ratings assigned: Proposed $400 million Senior Unsecured Notes due 2023 at Ba3 (LGD5, 70%) Senior Unsecured Shelf at (P) Ba3 Ratings Unchanged: Corporate Family Rating at Ba2 Probability of Default Rating at Ba2-PD Speculative grade liquidity rating at SGL-2 $150 million 7.625% senior unsecured notes due 2017 at Ba3 (LGD5, 76%) Ratings Rationale: The Ba2 corporate family rating reflects MasTec's established position as a relatively large-sized specialty contractor, moderate financial leverage, a significant proportion of revenues derived from repetitive/contractual work, relatively healthy operating margins and diversified segment/industry exposure. The rating also benefits from the company's demonstrated ability to drive strong organic growth supported by favorable, long term- demand fundamentals within many of its end-markets. The rating also incorporates expectations of continued focus on operational and financial discipline as strategic pricing and growth initiatives are implemented. Notwithstanding these favorable characteristics, the rating also considers relevant business risks, including the company's material concentration of sales from two customers, exposure to volatile construction-oriented activities, as well as ongoing though somewhat diminished acquisition risk. The Ba3 rating for the $400 million senior unsecured notes reflects both the overall probability of default for MasTec, to which Moody's rates Ba2-PD and a loss given default assessment of LGD5. The rating of the senior unsecured notes (Ba3) one notch below the corporate family rating reflect the magnitude of structural subordination to the secured revolving credit facility and other secured obligations. The borrower is MasTec, Inc. and the notes are guaranteed by substantially all domestic subsidiaries. The stable outlook incorporates expectations for sustained organic growth, positive free cash flow, improved operating margins and good liquidity while maintaining a conservative financial policy. Moody's could upgrade MasTec's ratings if it maintains organic growth trends and improves its operating margins while avoiding large-scale debt financed acquisitions such that debt to EBITDA approaches 2.0 times on a sustained basis and EBITA to interest approaches 4.0 times. The ratings could be downgraded if MasTec experiences end-market weakness, loss of a key customer or pursues a debt-financed acquisition that leads to debt to EBITDA above 3.5 times or EBITA coverage of interest expense below 2.5 times on a sustained basis. The principal methodology used in this rating was the Global Construction Methodology published in November 2010. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. MasTec, Inc., headquartered in Coral Gables, Florida, is a leading infrastructure construction company operating mainly throughout North America across a range of industries. The company reported revenues of approximately $3.7 billion for the twelve month period ended December 31, 2012. MASTEC INC: S&P Rates $400MM Sr. Unsecured Notes Due 2023 'BB-' --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' issue-level rating and '5' recovery rating to MasTec Inc.'s proposed public offering of $400 million of senior unsecured notes due 2023. The '5' recovery rating indicates S&P's expectation for a modest (10%- 30%) recovery in the event of a default. The company plans to use proceeds from the offering to repay its $150 million senior unsecured notes due 2017 and the $134 million outstanding balance under its revolving credit facility. Pro forma for the transaction S&P expects MasTec would have more than $479 million of undrawn borrowing capacity under the credit facility at Dec. 31, 2012. The proposed notes will rank equal in right of payment with all existing and future unsubordinated unsecured debt. The 'BB' corporate credit rating on Florida-based specialty engineering and construction contractor MasTec Inc. reflects the company's "significant" financial risk profile and its "weak" business risk profile. In S&P's view, despite higher debt following this transaction, MasTec's credit measures should remain consistent with S&P's expectations for the rating, with free operating cash flow to total debt greater than 20% and total debt to EBITDA of about 3x or less, over the business cycle. S&P's base case assumes redeployment of excess cash flow to complement organic growth with midsized acquisitions and potentially for share repurchase activity, as opposed to debt-reduction. S&P's stable outlook incorporates a financial policy that supports improving credit measures as some of its end markets continue to recover over the next 12 months. RATINGS LIST MasTec Inc. Corporate Credit Rating BB/Stable/-- New Ratings MasTec Inc. $400 mil sr notes due 2023 BB- Recovery Rating 5 MC2 CAPITAL: Court Makes No Final Order on Amount of Shaw Claims ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California entered an amended memorandum related to a Feb. 14, 2013 order to a summary judgment motion filed by the Official Committee of Unsecured Creditors in the bankruptcy case of MC2 Capital Partners, LLC. The Feb. 14 order provides that the Bankruptcy Court held that Shaw Capital Partners, LLC, as assignee of certain vendor claims against MC2, "may be allowed claims at most in the amount" Shaw paid to the vendor transferor. The Committee objected to the Shaw claims and filed a motion for summary judgment. In his amended memorandum dated Feb. 27, Judge Alan Jaroslovsky clarified that the court does not decide at the present time on the merits of the Committee's position that the allowed amount of the claims must be reduced to the amounts actually paid; it now only decides that the upper limit of Shaw's recovery is the amount actually paid. A copy of Judge Jaroslovsky's Feb. 27, 2013 Amended Memorandum is available at http://is.gd/RNXFbxfrom Leagle.com. About MC2 Capital Partners MC2 Capital Partners, LLC, is a single purpose entity formed to build and develop an 82-unit multi-family residential project in San Rafael, California. MC2 filed for Chapter 11 bankruptcy (Bankr. N.D. Calif. Case No. 11-14366) on Dec. 1, 2011. Judge Alan Jaroslovsky presides over the case. In its petition, the Debtor estimated $10 million to $50 million in assets and $50 million to $100 million in debts. The Debtor's manager is Monahan Pacific Corporation. Thomas Monahan -- an officer and director of Monahan Pacific Corporation and the holder of 95% of the LLC equity interests in the Debtor -- signed the petition. He has been appointed as responsible individual for the Debtor. MCGRAW-HILL GLOBAL: Fitch Assigns 'B+' Issuer Default Rating ------------------------------------------------------------ Fitch Ratings has assigned an initial Issuer Default Rating (IDR) of 'B+' for McGraw-Hill Global Education Holding LLC and McGraw- Hill Global Education Finance, Inc (co-issuer of the secured debt). Fitch has also assigned a 'BB/RR2' rating to the proposed senior secured credit facility (term loans and revolver). The Rating Outlook is Stable. Transaction Apollo Group will be acquiring the McGraw-Hill Education unit for $2.4 billion. Apollo intends to finance the acquisition with $1.05 billion of senior secured notes, $560 million in senior secured term loans, a $240 million revolver (for liquidity purposes and will not be drawn on to fund the transaction), and $950 million in cash from Apollo. The credit facility and the notes will be pari passu with one another and benefit from a first priority lien on all material assets, including a pledge of all the equity interests of MHGE held by MHGE's parent and a pledge of the equity of domestic guarantor subsidiaries and 65% of the voting equity interest of first-tier foreign subsidiaries, subject to certain exceptions. Both the bank facility and the notes will be guaranteed by existing and future wholly-owned domestic subsidiaries of MHGE (subject to certain exceptions) and MHGE's parent (McGraw-Hill Global Education Intermediate Holding LLC; MHGE Holdings) and MHE US Holdings, LLC (MHGE Holdings' parent; which also holds the equity of the McGraw-Hill School Education Group). None of the funding provided by this rated transaction will be used/attributed to the funding of the acquisition of McGraw-Hill's School Education Group (SEG; K-12 education unit). The SEG assets will be separated from MHGE. EBITDA was negative for the SEG segment for the year ended 2012. SEG will not provide any guarantee or support to MHGE or MHGE's rated instruments. In addition, MHGE will not provide any guarantee to support the SEG segment. Covenants for the credit facility are expected to include a net first lien leverage maximum of 7 times (x), if more than 20% of the revolver is drawn. Also, there are mandatory credit facility repayments including a 1% per annum term loan amortization and a 50% excess cash flow sweep (as defined) stepping down to 25% and 0% when the first lien leverage ratio reaches 1.5x and 0.75x respectively. LIQUIDITY; FCF AND LEVERAGE Based on MHGE's reported 2012 year end results, Fitch calculates post plate EBITDA of $334 million, resulting in pro forma leverage of 4.8x. Fitch post plate EBITDA does not add back certain adjustments made by the company, including adjusting for deferred revenue and cost savings expected in 2013. Based on Fitch's base case model, with revenues flat to down in the low single digits, Fitch expects leverage to remain near 5x in 2013 and decline in 2014 driven by absolute debt repayment and EBITDA growth. The ratings reflect the strong FCF metrics of MHGE. Fitch estimates 2012 FCF of approximately $170 million. FCF to debt (pro forma for the transaction) in 2012 is estimated at 10%; Fitch projects approximately 9% in 2013. EBITDA to FCF conversion metrics expected to be 45% over the next few years, this is in part driven by the cost reduction initiatives, however absent these initiatives, Fitch would expect FCF conversion to be around 40% or better. The ratings reflect Fitch's expectation that FCF will be dedicated towards debt reduction and acquisitions. Fitch believes most acquisitions will be small tuck in acquisitions. While management has not stated a leverage target, Fitch believes that the private equity ownership is incentivized to reduce leverage in order to improve the prospects of an exit from its investment. Post the transaction, Fitch expects liquidity to be supported by the company's proposed $240 million revolver due 2018 and pro forma cash balance of approximately $90 million. KEY RATING DRIVERS The ratings reflect MHGE's business profile - 61% of revenues from higher education publishing/solutions, 10% of revenues from professional education content and services, and 29% from international sales of higher education and professional education materials. The higher education publishing market is dominated primarily by Pearson, Cengage and MHGE. Collectively these three publishers make up 75% (according to Monument Information Resources; provided by the company), with MHGE holding a 17% market share. This scale provides meaningful advantages to these three publishers and creates barriers to entry for new publishers. According to the National Center for Education Statistics U.S. student enrollment in higher education has grown nearly every year, for the last 50 years. There have been seven years where enrollment declined (including 2011), each time in the low single digits. Most recently, 2011 enrollment declined slightly, 0.1%. This has been driven by an approximately 3.1% decline in for- profit university enrollment and 0.2% declines in public universities. Non-profit private universities were up 1.9%. Fitch believes enrollment for 2012 was down in the low single digits. Fitch believes that there could be some near term enrollment pressures due to continued enrollment declines at for-profit universities and the potential for federal student aid cuts. Long- term, Fitch believes enrollment will continue to grow in the low single digits, as higher education degrees continue to be a necessity for many employers. MHGE and its peers have continued to demonstrate pricing power over their products. Fitch believes this will continue, albeit at lower levels than historically. Textbook pricing increases are expected to materially slow down and will likely be in the low single digits. Revenue growth will primarily come from the continued growth in volume of digital solution products sold and pricing increases associated with these digital products as they gain traction with professors. The transition from physical education materials to digital products has been advancing at a materially faster pace relative to K-12 education level. Fitch believes that the transition will lead to a net benefit for the publishers over time. Publishers will have the opportunity to dis-intermediate used/rental text book sellers, recapturing market share from these segments. Fitch expects print/digital margins to remain roughly the same, as the both the discount of the digital textbook (relative to the print textbook) and the investments made in the interactive user experience offset the elimination of the cost associated with manufacturing, warehousing, and shipping printed textbooks. Fitch recognizes the risk of digital piracy, given the age demographic of higher education, the current data speeds available on the internet and the relative ease of finding a pirated text book. A mitigant to piracy risk is the development and selling of digital education solutions. The digital solutions incorporate homework and other supplemental materials that require a user's authentication. The company's strategy is to 'sell' these products to the professors, who then adopt this as required material for the course. Students then purchase the digital solution. This strategy has also been adopted by MHGE's peers. It will be vital for the industry to steer professors towards these digital solutions rather than a stand-alone eBook in order to defend against piracy. Fitch believes that this strategy is sound and can be successful. Fitch notes that adoption will be slow due to the slow to change nature of many professors. Fitch expects traditional print revenues to continue to decline due to growth in eBooks, near term cyclical pressures in enrollment, and delays by professors in adopting new editions. Under Fitch base case model, Fitch expects the growth in digital solutions, custom publishing and eBooks to offset the traditional print revenue declines within the next two to three years. The ratings reflect cost savings identified by MHGE, approximately $86 million through 2015. Cost reductions include corporate and IT costs driven by headcount reductions and outsourcing. Fitch believes this is achievable given the historical ownership of MHGE within a conglomerate. MHGE did not provide audited financial statements. Audited combined financial statements for McGraw-Hill Education LLC were provided, which combined MHGE and McGraw-Hill's School Education Group. Unaudited break out of these two divisions were provided by management and used by Fitch to assign ratings. RATING SENSITIVITIES Continued growth in digital revenues coupled with leverage of 4x or less (on Fitch-calculated basis) would likely lead to positive rating actions. Mid to high-single digit revenue declines, which may be driven by declines or no growth in digital products (caused by a lack of execution or adoption by professors) would pressure ratings. Fitch assigns these ratings: MHGE -- Long-term IDR 'B+'; -- Proposed credit facility (term loan and revolver) at 'BB/RR2'. MHGE Finance -- Long-term IDR 'B+'. -- Proposed credit facility (term loan and revolver) at 'BB/RR2' (co-issuer to MHGE's credit facility noted above). The Rating Outlook is Stable. MDU COMMUNICATIONS: Fails to Consummate Merger with Multiband ------------------------------------------------------------- MDU Communications International, Inc., entered into an acquisition agreement with Multiband Corporation, whereby the Company will merge with and into a wholly owned subsidiary of Multiband. The deadline for completing the transaction was Dec. 31, 2012. On Dec. 18, 2012, the parties reached an agreement to extend the deadline for completing the transaction to Feb. 28, 2013. As of March 5, 2013, the transaction has not been completed and although the Company cannot represent any ultimate outcome to the transaction, all parties remain committed to the transaction and continue to discuss the terms of its completion, subject to the satisfaction of certain previously disclosed conditions precedent. About MDU Communications Totowa, New Jersey-based MDU Communications International, Inc., is a national provider of digital satellite television, high-speed Internet, digital phone and other information and communication services to residents living in the United States multi-dwelling unit market -- estimated to include 32 million residences. The Company reported a net loss of $6.4 million on $27.3 million of revenue for 2012, compared with a net loss of $7.4 million on $27.9 million of revenue for 2011. CohnReznick LLP, in Roseland, New Jersey, expressed substantial doubt about MDU's ability to continue as a going concern following the financial results for the year ended Sept. 30, 2012. The independent auditors noted that the Company has incurred significant recurring losses, has a working capital deficit, and an accumulated deficit of $75 million at Sept. 30, 2012. They also noted that the Company's $30 million Credit Facility matures on June 30, 2013. The Company's balance sheet at Dec. 31, 2012, showed $18.09 million in total assets, $30.87 million in total liabilities and a $12.77 million total stockholders' deficiency. MEZZANINE INC: IRS Consents to Use of Cash Collateral ----------------------------------------------------- Utah Bankruptcy Judge R. Kimball Mosier gave his stamp of approval on a stipulation between Mezzanine, Inc., dba Normandie Cafe & Bakery, and the Internal Revenue Service that allows the Debtor to use cash collateral and other real and personal property securing federal tax liens. Prior to the filing of the Debtor's bankruptcy petition, a duly authorized delegate of the Secretary of the Treasury filed a notice or notices of federal tax lien for tax liabilities of the debtor. The liens encumbered all property or rights to property belonging to the debtor and secured unpaid taxes, penalties and interest owed by the debtor. Among the property securing the claims of the IRS are cash or cash equivalents, inventory, accounts receivable, and proceeds of the accounts receivable or inventory. Such proceeds and cash constitute "cash collateral" within the meaning of 11 U.S.C. Sec. 363(a). The Debtor said it needs to use cash collateral to pay current operating expenses including payroll. It needs to use other real and personal property to continue in business. Pursuant to the stipulation, the Debtor will make a minimum monthly payment on the secured pre-petition tax debt of $1,600 per month. The Debtor also agrees that no salaries or other compensation or draws will be paid to insiders of the Debtor other than Janet Andrew at $5,000 per month. The stipulation also requires the Debtor to file a plan and disclosure statement on or before April 1, 2013, and have the plan confirmed by July 1, 2013. A copy of the Court's March 6, 2013 Order is available at http://is.gd/MxRHkpfrom Leagle.com. Mezzanine, Inc., dba Normandie Cafe & Bakery, filed for Chapter 11 bankruptcy (Bankr. D. Utah Case No. 12-34490) on Nov. 15, 2012, listing under $1 million in both assets and debts. The Law Office of Paul Toscano, P.C. -- ptoscano@expresslaw.com -- serves as the Debtor's counsel. METEX MFG: Charter Oak Okayed as Committee's Financial Advisor -------------------------------------------------------------- The Official Committee of Unsecured Creditors of Metex Mfg. Corporation sought and obtained approval from the U.S. Bankruptcy Court to retain Charter Oak Financial Consultants, LLC, as financial advisor. Charter Oak will, among other things: a) assist the Committee in fulfilling its responsibility to monitor the Debtor's financial affairs; b) review, interpret, and analyze financial materials, including accounting, tax, statistical, financial, and economic data concerning the Debtor; and c) analyze and advise the Committee on accounting, financial, valuation, and related issues that may arise in the course of this bankruptcy case. The hourly rates of Charter Oak's personnel are: Senior Managing Directors $680 Director $505 Assistant Director $437 Associates $375 According to the order, if Charter Oak engages an independent contractor to work on matters or projects assigned to Charter Oak, nothing precludes the contractor from filing with the Court, as may be appropriate, a verified statement disclosing (a) such contractor's connections with all parties in interest in the case; (b) whether such contractor has any fee-sharing agreements in connection with the case; (c) the amount(s) that Charter Oak will bill the estate for the such contractor's services; and (d) any other relevant information bearing on the retention of such contractor. About Metex Mfg. Great Neck, New York-based Metex Mfg. Corporation, formerly known as Kentile Floors, Inc., started business in the late 1800's as a manufacturer of cork tile, and thereafter progressed to making composite tile for commercial and residential use. The Company filed for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No. 12-14554) on Nov. 9, 2012. The petition was signed by Anthony J. Miceli, president. The Debtor estimated its assets and debts at $100 million to $500 million. Judge Burton R. Lifland presides over the case. Kentile Floors, Inc., was a debtor in a Chapter 11 case (Bankr. S.D.N.Y. Case No. 92-46466) filed Nov. 20, 1992. MF GLOBAL: Asks Court to Disallow 96 Claims, Reclassify 84 Claims ----------------------------------------------------------------- Louis Freeh, the trustee of MF Global Holdings Ltd., asked the U.S. Bankruptcy Court for the Southern District of New York to disallow 96 duplicate claims. The claims are listed at: http://bankrupt.com/misc/MFGlobal_7thOO_30Claims.pdf http://bankrupt.com/misc/MFGlobal_9thOO_66Claims.pdf Meanwhile, the trustee proposed the subordination and reclassification of 84 equity claims as Class 9A Common Interests under the company's proposed liquidation plan. The claims are listed at http://is.gd/wrJIza About MF Global New York-based MF Global (NYSE: MF) -- http://www.mfglobal.com/-- is one of the world's leading brokers of commodities and listed derivatives. MF Global provides access to more than 70 exchanges around the world. The firm is also one of 22 primary dealers authorized to trade U.S. government securities with the Federal Reserve Bank of New York. MF Global's roots go back nearly 230 years to a sugar brokerage on the banks of the Thames River in London. MF Global Holdings Ltd. and MF Global Finance USA Inc. filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15059 and 11-5058) on Oct. 31, 2011, after a planned sale to Interactive Brokers Group collapsed. As of Sept. 30, 2011, MF Global had $41,046,594,000 in total assets and $39,683,915,000 in total liabilities. It is easily the largest bankruptcy filing so far this year. Judge Honorable Martin Glenn presides over the Chapter 11 case. J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve as bankruptcy counsel. The Garden City Group, Inc., serves as claims and noticing agent. The petition was signed by Bradley I. Abelow, Executive Vice President and Chief Executive Officer of MF Global Finance USA Inc. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. U.S. regulators are investigating about $633 million missing from MF Global customer accounts, a person briefed on the matter said on Nov. 3 last year, according to Bloomberg News. MILLENNIUM PLAN: NJ Court Junks Claims vs. Plan Trustee ------------------------------------------------------- Republic Bank & Trust, as trustee of the employee benefit plan known as the "Millennium Plan", obtained dismissal of claims lodged against it in the complaint styled as Zion Chen, Plaintiff, v. David Cline, et al. Defendants, Civ. No. 12-3051 (JAP)(D.N.J.). The complaint accuses the defendants of fraud, negligent misrepresentation, breach of fiduciary duty as well as other common law and statutory causes of action for their role in marketing and selling the "Millenium Plan." Plaintiff alleges that the Millenium Plan was a life insurance sales "scheme" that was "disguised" as a multiple employer benefit plan under 26 U.S.C. Sec. 419A(f)(6). The Plaintiff said David Cline was the one who introduced him to the Plan. In a Feb. 27, 2013 opinion, District Judge Joel A. Pisano found that the Complaint fails to state a claim against Republic as to any of the causes of action. In the same order, Judge Pisano granted defendant Aviva Life and Annuity Company's request for a stay of the New Jersey proceedings pending certain decisions in a March 2011 adversary proceeding pending in the U.S. Bankrutpcy Court for the Western District of Oklahoma. The Oklahoma adversary action was initiated by Millenium against Aviva, seeking the turn over of cash value of all Aviva life insurance policies insuring the lives of plaintiffs, including Mr. Chen. "Given that the decision in the Oklahoma action may bar Plaintiff from continuing to pursue his claims in this case, the [District] Court finds that the interests of judicial efficiency, economy and fairness to the parties would be promoted by staying this matter pending that decision," Judge Pisano opined. In 2010, the Millenium Plan filed a voluntary Chapter 11 petition (Bankr. W.D. Okla. Case No. 10-13528). The plan's liquidation plan was confirmed by the Bankruptcy Court on June 16, 2011. A copy of Judge Pisano's Feb. 27, 2013 Opinion is available at http://is.gd/ndxGIEfrom Leagle.com. MITEL NETWORKS: S&P Revises Outlook to Stable & Affirms 'B' CCR --------------------------------------------------------------- Standard & Poor's Ratings Services said it revised its outlook on Ottawa-based telephony equipment and software provider Mitel Networks Corp. to stable from negative. At the same time, S&P affirmed its 'B' long-term corporate credit rating on Mitel. S&P also affirmed its 'B+' issue-level rating, with a '2' recovery rating, on the company's US$200 million term loan B due 2019 and US$40 million revolving credit facility due 2018, and S&P's 'CCC+' issue-level rating, with a '6' recovery rating, on Mitel's US$80 million second-lien term loan due 2020. The '2' and '6' recovery ratings reflect S&P's expectation of substantial (70%-90%) and negligible (0%-10%) recovery, respectively, in the event of default. "We base our outlook revision on Mitel's refinancing of its credit facilities," said Standard & Poor's credit analyst David Fisher. This refinancing comprises a new US$200 million first-lien term loan B, a US$40 million first-lien revolver, and a US$80 second- lien term loan. In conjunction with the refinancing, the company repaid approximately US$35 million from excess cash on hand (approximately US$24 million debt reduction after fees and expenses). "In our view, the transaction alleviates the near-term risk of a covenant breach, improves Mitel's debt maturity profile and liquidity position, modestly reduces the company's debt, and enhances its financial flexibility," Mr. Fisher added. These factors, in conjunction with third-quarter (ended January 2013) EBITDA generation that exceeded S&P's expectations, bolster its view that Mitel should be able to maintain an "adequate" liquidity position and credit metrics consistent with an "aggressive" financial risk profile in the near term. Mitel is a supplier of hardware and software-based IP telephony platforms, including IP PBX systems; desktop devices (handsets and peripherals); a suite of unified communications and collaboration applications that integrate voice, video, and data communications with business applications; and hosted voice services. The stable outlook reflects S&P's expectation that Mitel will manage its business under challenging industry conditions, which should enable it to maintain adequate liquidity and credit metrics that correspond with an aggressive financial risk profile in the near term. S&P could lower the ratings if the company's adjusted debt-to- EBITDA increases to above 5x, which could occur if competitive losses or operational challenges caused further revenue declines. Given S&P's expectation of challenging market conditions in the near-to-medium term, it is not likely to consider raising the ratings unless adjusted debt-to-EBITDA were to decline below 3.5x due to EBITDA growth and commensurate revenue improvement. MORGANS HOTEL: Incurs $66.8 Million Net Loss in 2012 ---------------------------------------------------- Morgans Hotel Group Co. filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss attributable to common stockholders of $66.81 million on $189.91 million of total revenues for the year ended Dec. 31, 2012, as compared with a net loss attributable to common stockholders of $95.34 million on $207.33 million of total revenues during the prior year. The Company incurred a $89.96 million net loss attributable to common stockholders in 2010. The Company's balance sheet at Dec. 31, 2012, showed $591.15 million in total assets, $728.47 million in total liabilities, $6.05 million in redeemable noncontrolling interest, and a $143.37 million total deficit. A copy of the Form 10-K is available for free at: http://is.gd/QXwkV6 About Morgans Hotel Group Based in New York, Morgans Hotel Group Co. (Nasdaq: MHGC) -- http://www.morganshotelgroup.com/-- is widely credited as the creator of the first "boutique" hotel and a continuing leader of the hotel industry's boutique sector. Morgans Hotel Group operates and owns, or has an ownership interest in, Morgans, Royalton and Hudson in New York, Delano and Shore Club in South Beach, Mondrian in Los Angeles and South Beach, Clift in San Francisco, Ames in Boston, and Sanderson and St Martins Lane in London. Morgans Hotel Group and an equity partner also own the Hard Rock Hotel & Casino in Las Vegas and related assets. Morgans Hotel Group also manages hotels in Isla Verde, Puerto Rico and Playa del Carmen, Mexico. Morgans Hotel Group has other property transactions in various stages of completion, including projects in SoHo, New York and Palm Springs, California. MTS LAND: U.S. Trustee Says Plan Outline Lacks Information ---------------------------------------------------------- The U.S. Trustee's has problems with MTS Land, LLC, and MTS Golf, LLC's Chapter 11 plan that proposes to return 100% to unsecured creditors and lets existing owners to maintain control of the company. Ilene J. Lashinsky, U.S. Trustee for Region 14, says approval of the disclosure statement explaining the Plan should be denied because it fails to include, among other things, an adequate explanation of the events leading to the bankruptcy filing, and it fails to identify the individuals who prepared the document. U.S. Bank National Association earlier claimed that that the Debtors' Chapter 11 plan is unconfirmable as a matter of law, and this fundamental flaw compels the Court to grant U.S. Bank's stay relief motion. The Plan As reported in the Troubled Company Reporter on Feb. 19, 2013, according to the Disclosure Statement in support of their First Amended Chapter 11 Plan of Reorganization that was filed mid- January, debtors MTS Land, LLC, and MTS Golf, LLC, have a 100% payment plan notwithstanding that the plan impairs certain classes of creditors. All creditors with Allowed Claims will be paid the amount of their allowed claims in full through the Plan. A copy of the Disclosure Statement filed Jan. 14, 2013, is available at http://bankrupt.com/misc/mtsland.doc428.pdf About MTS Land MTS Land, LLC, and MTS Golf, LLC, own and operate the now dormant Mountain Shadows Golf Club. They filed separate Chapter 11 petitions (Bankr. D. Ariz. Case Nos. 12-16257 and 12-16257) in Phoenix on July 19, 2012. Mountain Shadows Golf Club -- http://www.mountainshadowsgolfclub.com/-- is an 18 hole, par 56 course located at Paradise Valley. Nestled in the foothills of Camelback Mountain, the 3,081-yard Executive course claims to be one of the most scenic golf courses in Arizona. MTS Land and MTS Golf are affiliates of Irvine, Calif.-based Crown Realty & Development Inc. MTS Land and MTS Golf each estimated assets and debts of $10 million to $50 million. Judge Charles G. Case II oversees the Debtors' cases. Lawyers at Gordon Silver serve as the Debtors' counsel. The petition was signed by Robert A. Flaxman, administrative agent. Lender U.S. Bank is represented by Steven D. Jerome, Esq., and Evans O'Brien, Esq., at Snell & Wilmer L.L.P. The U.S. Trustee for Region 14 advised the Court that an official committee of unsecured creditors has not been appointed because an insufficient number of persons holding unsecured claims against the Debtors have expressed interest in serving on a committee. The U.S. Trustee reserves the right to appoint a committee if interest develop among the creditors. According to the disclosure statement in support of their First Amended Chapter 11 Plan of Reorganization that was filed mid- January, debtors MTS Land, LLC, and MTS Golf, LLC, have a 100% payment plan notwithstanding that the plan impairs certain classes of creditors. NC12 INC: Bankruptcy Counsel Gets Court Nod for $92,435 in Fees --------------------------------------------------------------- J. Craig Cowgill & Associates, P.C. has been granted $92,435 as final compensation for services rendered as counsel of NC12, Inc. in its Chapter 7 case. The allowed amount is on account of $80,750 in professional fees and reimbursement for $11,685 in expenses. The U.S. Bankruptcy Court for the Southern District of Texas agrees that Cowgil provided some material, tangible benefit to NC12's estate. A copy of the Court's Feb. 27, 2013 Memorandum Opinion is available for free at http://is.gd/Vt9D5Cfrom Leagle.com. About NC12, Inc. NC12, Inc. filed a voluntary Chapter 11 petition on Oct. 18, 2011 (Bankr. S.D. Tex. Case No. 11-38794). The case was converted into a Chapter 7 proceeding on March 27, 2012. The Hon. Marvin Isgur presides over the case. The Debtor engages in the production of electricity, steam, hydrogen, synthetic fuels, methane, transportation fuels, and chemical feedstock from biomass, coal, and waste products. It is also involved in the commercialization of liquid metal catalytic technology for the gasification of hydrocarbons into electricity, synthetic fuels, and chemicals. It has strategic partnerships with Quantum Catalytics, LLC. The Company was formerly known as Texas Syngas, Inc. NC12, Inc. was incorporated in 2006 and is based in Houston, Texas. NORTEL NETWORKS: After Mediation Fails, Court Fight Begins ---------------------------------------------------------- Tom Hals, writing for Reuters, reported that two judges, one in Wilmington, Delaware, and the other in Toronto, will jointly hear arguments on Thursday that will ultimately decide how, and when, to carve up $9 billion in cash that is the last remaining asset of former telecoms equipment giant Nortel Networks. The outcome will determine how much will be available for tens of thousands of retirees, governments and hedge funds investors, Reuters said. "The issues which remain for decision are imposing," U.S. Bankruptcy Court Judge Kevin Gross of Delaware wrote on Feb. 14 in an order scheduling the hearing, Reuters related. The hearing was preceded in January by a third failed attempt to resolve the dispute through mediation. Warren Winkler, the chief justice of Ontario who oversaw those talks, said further attempts at mediation were no longer worthwhile, Reuters said. Reuters added that the Ontario justice had warned before the final mediation that failure to reach an agreement could tie the disputes up in the courts for years, burning through Nortel's cash to pay the army of lawyers and advisers working on the case. 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. NORTH POINT: Case Summary & 7 Largest Unsecured Creditors --------------------------------------------------------- Debtor: North Point Baptist Church of Carrollton, Inc. 1400 Cedar Street Carrollton, GA 30117 Bankruptcy Case No.: 13-10579 Chapter 11 Petition Date: March 5, 2013 Court: United States Bankruptcy Court Northern District of Georgia (Newnan) Debtor's Counsel: J. Nevin Smith, Esq. SMITH CONERLY LLP 402 Newnan Street Carrollton, GA 30117 Tel: (770) 834-1160 Fax: (770) 834-1190 E-mail: cstembridge@smithconerly.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its seven unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/ganb13-10579.pdf The petition was signed by Rodney A. Agan, president. OMEGA NAVIGATION: Sells Subsidiaries for $2 Million --------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that ship owner Omega Navigation Enterprises Inc. was authorized last week by the bankruptcy judge in Houston to sell three nonbankrupt subsidiaries for a combined price of about $2 million. According to the report, Omega Investments Ltd. will be sold for $1.25 million to Delos Megacore LLC. The price is effectively $750,000 higher by expenses the buyer will take over. The other two subsidiaries brought in $60,000 on a joint bid from Oxygen Maritime Inc. and One Investments Inc. The report recounts that in January, the bankruptcy court in Houston authorized Omega to give ownership of the eight vessels to secured lenders. At the same January hearing, the judge refused to approve a separate settlement where the company's owner George Kassiotis would have become owner of the subsidiaries. Under a settlement accompanying the sale to the lenders, the secured creditors waived claims and agreed to pay most professional expenses while providing $500,000 for distribution to unsecured creditors. About Omega Navigation Athens, Greece-based Omega Navigation Enterprises Inc. and affiliates, owner and operator of tankers carrying refined petroleum products, filed for Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 11-35926) on July 8, 2011, in Houston, Texas in the United States. Omega is an international provider of marine transportation services focusing on seaborne transportation of refined petroleum products. The Debtors disclosed assets of US$527.6 million and debt totaling US$359.5 million. Together, the Debtors wholly own a fleet of eight high-specification product tankers, with each vessel owned by a separate debtor entity. HSH Nordbank AG, as the senior lenders' agent, has first liens on vessels to secure a US$242.7 million loan. The lenders include Bank of Scotland and Dresdner Bank AG. The ships are encumbered with US$36.2 million in second mortgages with NIBC Bank NV as agent. Before bankruptcy, Omega sued the senior bank lenders in Greece contending they violated an agreement to grant a three year extension on a loan that otherwise matured in April 2011. An affiliate of Omega that manages the vessels didn't file, nor did affiliates with partial ownership interests in other vessels. Judge Karen K. Brown presides over the case. Bracewell & Giuliani LLP serves as counsel to the Debtors. Jefferies & Company, Inc., is the financial advisor and investment banker. The Official Committee of Unsecured Creditors has tapped Winston & Strawn as local counsel; Jager Smith as lead counsel; and First International as financial advisor. ORANGE COUNTY: S&P Reinstates 'B+' Rating & Negative Outlook ------------------------------------------------------------ Standard & Poor's Ratings Services reinstated its 'B+' long-term rating and negative outlook on Orange County Housing Finance Authority, Fla.'s (Housing & Neighborhood Development Services Inc. [HANDS]) series 1998C multifamily housing revenue bonds (the Green Gables Apartments project). Standard & Poor's suspended the rating on Jan. 25, 2013, due to a lack of timely and satisfactory information from the issuer, in accordance with its policy. This information has since been received, enabling Standard & Poor's to reinstate the rating. "The negative outlook reflects coverage levels that remain below 1x and the apartments' low occupancy rate," said Standard & Poor's credit analyst Renee Berson. "Any significant improvement in operating performance, coverage, and occupancy could lead to a positive rating change. Conversely, a rise in expenses or a continued decline in occupancy could warrant a negative rating action." The rating reflects Standard & Poor's opinion of the project's: Weak debt service coverage of 0.81x maximum annual debt service, based on audited financials for fiscal year-end Sept. 30, 2012; High loan-to-value ratio; and Low occupancy rates. However, Standard & Poor's believes these weaknesses are somewhat offset by, what it considers, the project's: -- Strong, experienced ownership and management (HANDS); and -- Debt service reserve fund of 13 months' maximum annual debt service. Green Gables Apartments, formerly Alhambra Trance, is a 95-unit affordable housing project in Orlando. The property was built in 1986 and renovated in 1999. The property consists of 64 one- bedroom, 21 efficiency, and 10 three-bedroom and two-bath apartments. HANDS, which owns the property, was formed in 1989 to build, renovate, own, and provide affordable, multifamily housing in the Orlando area. HANDS owns 11 such developments (812 units) in central Florida, and it has a record of effectively managing its projects. HANDS is a 501(c)(3) corporation. ORCHARD SUPPLY: Updates on Efforts to Improve Capital Structure --------------------------------------------------------------- Orchard Supply Hardware Stores Corporation provided an update on the Company's efforts to refinance or modify its Term Loan debt and otherwise work to improve its capital structure. Additionally, Orchard provided an update on select preliminary fourth quarter fiscal 2012 financial performance and reiterated the Company's commitment to its repositioning strategy, including opening new and renovating existing stores. The Company's updates include the following: * On Feb. 11, 2013, the Company expanded its existing Senior Secured Credit Facility with Wells Fargo Capital Finance and Bank of America, N.A., increasing total borrowing capacity to $145 million through the addition of a $17.5 million last-in- last-out supplemental term loan tranche. * As of Feb. 12, 2013, the Company had cash and available credit of $40 million, including $32 million available to borrow on the Senior Secured Credit Facility. This liquidity will be used for general working capital purposes, including paying vendors in the ordinary course of business as part of the Company's customary spring inventory build-up. * On Feb. 14, 2013, the Company obtained a waiver from its current Term Loan lenders related to compliance with the leverage ratio covenant for the fiscal quarter ended Feb. 2, 2013, and the fiscal quarter ending May 4, 2013, which means that the next applicable measurement date for the leverage covenant is Aug. 3, 2013, subject to the Company's continued compliance with the terms and conditions set forth in the waiver. * The Company continues to work with Moelis & Co. toward the refinancing or modification of its Senior Secured Term Loan to achieve an outcome that is in the best interests of the Company and all of its stakeholders. In addition to seeking an agreement with its Term Loan holders to refinance or modify the Senior Secured Term Loan, the Company continues to explore several actions designed to restructure its balance sheet for a sustainable capital structure, including seeking new long term debt or equity. * As previously reported, since October 2011, the Company has generated proceeds and secured tenant improvement allowances through multiple sale-leaseback transactions and have reduced term loan debt by more than $90 million. * Preliminary net sales for the fourth quarter ended Feb. 2, 2013 (14 weeks) were $153.4 million compared to net sales of $141.6 million in the fourth quarter of fiscal 2011 (13 weeks), and preliminary net sales for fiscal 2012 (53 weeks) were $657.6 million compared to net sales of $660.5 million in fiscal 2011 (52 weeks). The additional week in the fiscal 2012 periods contributed net sales of approximately $9.5 million. Comparable store sales(1) for the fourth quarter of fiscal 2012 increased 1.6% on a 13-week to 13-week basis, and for fiscal 2012 were essentially flat, decreasing 0.2%, on a 52-week to 52-week basis. Sales growth at the Company's newly remodeled locations continued to outpace the balance of its stores. While the Company continued to experience merchandise margin pressure in the fourth quarter, merchandise margin improved sequentially over the course of the quarter. The Company expects to report final fiscal 2012 financial results in late April. Mark Baker, president and chief executive officer, stated, "As we begin 2013, we remain committed to our repositioning strategy. We have taken a number of steps in the past year to drive long-term improvement in Orchard's operating results and to strengthen our financial position. We are very pleased to have expanded our credit facility, as planned, and improved our financial flexibility, both of which provide additional liquidity as we enter our peak spring selling season. We are gratified by the ongoing support of our lenders as we continue our work with Moelis & Co. and our financial partners to achieve a sustainable capital structure that will best position the Company for long-term success." Mr. Baker continued, "We have made significant strides in transforming the Orchard brand and our business since December 2011 when we became an independent public company. At the same time, we recognize that we did not achieve all of our objectives of the past year and that we continue to face challenges ahead. Our team remains highly focused on our five strategic priorities, with particular emphasis on the execution of our merchandising, marketing and store operations initiatives during the important spring season. We currently have 10 stores in our more productive neighborhood format and we are pleased with the sales growth we have seen to date at these stores, including results in the fourth quarter which were improved from earlier in the year. We look forward to bringing our new format to another 10 stores in fiscal 2013 through remodels and new store openings. Importantly, we believe we have established the right business strategy to deliver long-term improved sales and profitability." Additional information can be found at http://is.gd/rRvUv2 About Orchard Supply San Jose, Calif.-based Orchard Supply Hardware Stores Corporation operates neighborhood hardware and garden stores focused on paint, repair and the backyard. As of Oct. 27, 2012, the Company had 89 stores in California. * * * As reported by the Troubled Company Reporter on December 13, 2012, Standard & Poor's Ratings Services lowered its corporate credit rating on San Jose, Calif.-based home and garden retailer Orchard Supply Hardware LLC to 'CCC' from 'B-'. The outlook is negative. "We are also lowering our rating on the company's term loan to 'CCC' from 'B-' in conjunction with the downgrade. The recovery rating remains '4' recovery rating, indicating our expectation for average (30% to 50%) recovery in the event of a payment default," S&P said. "The ratings on Orchard Supply reflects Standard & Poor's Ratings Services' assessment of its financial risk profile as 'highly leveraged,' which incorporates near-term potential for noncompliance with financial covenants and significant debt refinancing risks. Our view of its business risk profile as 'vulnerable' considers the company's small size relative to the highly competitive home improvement segment of the retail industry and its exposure to housing market conditions in California," S&P said. ORMET CORP: Proposes Stock Trading Restrictions to Preserve NOLs ---------------------------------------------------------------- Ormet Corporation and its affiliates filed with the bankruptcy court a motion for an order limiting and establishing procedures for certain transfers of common stock. The Debtors have had significant net operating losses in the recent past. The Debtors' NOLs are currently estimated to be approximately $100,000,000, which, based on the 35% federal corporate tax rate now in effect, are worth approximately $35,000,000 in potential future federal income tax savings. Additional state tax savings may also be available by utilizing the Debtors' NOLs. Sections 382 and 383 of the Tax Code limit a corporation's use of its NOLs and certain other tax attributes to offset future income or tax after the corporation experiences an "ownership change." An "ownership change" occurs if the percentage of the corporation's stock (measured by value) held by one or more shareholders owning 5% or more of the stock of the corporation increases by 50 percentage points or more during a "testing period" ending on the date of the ownership change. In addition, an ownership change may be deemed to occur on the last day of the tax year in which a "50-percent shareholder" declares its stock in the debtor corporation to be worthless for federal or state tax purposes. Thus, unrestricted transfers of Ormet stock or the taking of the worthless stock deduction by a 50% shareholder could hinder the Debtors' reorganization efforts by significantly limiting their ability to use NOLs to offset future taxable income. Under the proposed rules, persons who own (or would own as a result of a proposed transfer) at least 839,802 shares of Ormet Stock (i.e., approximately 4.5% of the outstanding shares of Ormet Stock) are required to provide notice of their status "substantial equityholders". At least 20 days prior to the proposed date of any transfer of equity securities that would result in an entity becoming a substantial equity holder (owner of 4.50% of the total outstanding shares), the entity must file with the Court a notice of intent to purchase shares. Substantial equity holders intending to dispose of shares that would result in a person or entity ceasing to be a substantial equity holder, the entity must file a notice of intent to sell 20 days before the proposed date of the transaction. Any "Potential 50-Percent Shareholder" -- any person or entity that, at any time since January 1, 2010, has had beneficial ownership of 50% or more of the Ormet stock -- prior to filing any federal or state tax return, or any amendment to such a return, claiming any deduction for worthlessness of the Ormet stock, must file with the Court and serve the Debtors a notice of intent for a worthless stock deduction claim. The Debtors would not prohibit such deductions entirely, but would merely require them to be postponed until after the Debtor emerges from bankruptcy protection. About Ormet Corp. Aluminum producer Ormet Corporation, along with affiliates, filed for Chapter 11 protection (Bankr. D. Del. Case No. 13-10334) on Feb. 25, 2013, with a deal to sell the business to a portfolio company owned by private investment funds managed by Wayzata Investment Partners LLC. Headquartered in Wheeling, West Virginia, Ormet -- http://www.ormet.com/-- is a fully integrated aluminum manufacturer, providing primary metal, extrusion and thixotropic billet, foil and flat rolled sheet and other products. Ormet disclosed assets of $406.8 million and liabilities totaling $416 million. Secured debt of about $180 million includes $139.5 million on a secured term loan and $39.3 million on a revolving credit. Attorneys at Dinsmore & Shohl LLP and Morris, Nichols, Arsht & Tunnell LLP serve as counsel to the Debtors. Kurtzman Carson Consultants is the claims and notice agent. Evercore's Lloyd Sprung and Paul Billyard serve as investment bankers to the Debtor. ORMET CORP: Has Short-Term Power Agreement With AEP Ohio -------------------------------------------------------- Ormet Corporation and its affiliates obtain their power from the Ohio Power Company and Columbus Southern Company, both subsidiaries of American Electric Power Corp. who have now merged and do business as AEP Ohio. The Power Agreement, which was originally entered into on Sept. 16, 2009, provides for discounts to the Debtors to help offset their power expense. The Debtors received discounts of $60 million in 2010 and 2011 and $54 million in 2012. Looking ahead, the Debtors are authorized to receive a maximum discount of $44 million in 2013, $34 million in 2014, $24 million in 2015, $14 million in 2016, and $4 million in 2017. In October 2012, the Debtors sought a deferral of their November and December power payments. The State of Ohio, through the Public Utility Commission of Ohio, which has jurisdiction over arrangements between Ormet and AEP Ohio, granted the deferral. In evaluating the long-term prospects for a successful restructuring and in discussions with the lead bidder for the Debtors' assets, the Debtors identified that finding a short term improvement in the price paid for electricity is an important step in maximizing the value of the Debtors and their estates. Accordingly, the Debtors engaged in discussions with Jobs Ohio, a private/public enterprise that pursues economic development activity for the benefit of the State of Ohio, and AEP with respect to supporting further modifications to the Power Agreement. The primary objective of the discussions and the Modification is to accelerate the timeframe to take the $120 million in remaining discounts, from 5 years to a 27 month period commencing January 2013. To operate under the terms of the Modification, the Debtors must first execute the Modification with AEP and thereafter, file a proposal with the PUCO seeking approval of the Modification. The PUCO will then set the proposal for a public hearing, which may be up to 90-120 days from filing of the proposal. After the hearing, the PUCO may approve the Modification, and then the Modification becomes effective against the Debtors and AEP. There are several steps and substantial time necessary to move from entry into the Modification to the effective date. Accordingly, the Debtors ask the Bankruptcy Court, to the extent necessary, to enter an interim order authorizing them to (i) finalize and execute the Modification to the Power Agreement with AEP; and (ii) file the Modification with the PUCO. The Debtors also ask the Court for a final order authorizing them, upon entry of an order by the PUCO approving the Modification, to perform under the terms of the Modification. About Ormet Corp. Aluminum producer Ormet Corporation, along with affiliates, filed for Chapter 11 protection (Bankr. D. Del. Case No. 13-10334) on Feb. 25, 2013, with a deal to sell the business to a portfolio company owned by private investment funds managed by Wayzata Investment Partners LLC. Headquartered in Wheeling, West Virginia, Ormet -- http://www.ormet.com/-- is a fully integrated aluminum manufacturer, providing primary metal, extrusion and thixotropic billet, foil and flat rolled sheet and other products. Ormet disclosed assets of $406.8 million and liabilities totaling $416 million. Secured debt of about $180 million includes $139.5 million on a secured term loan and $39.3 million on a revolving credit. Attorneys at Dinsmore & Shohl LLP and Morris, Nichols, Arsht & Tunnell LLP serve as counsel to the Debtors. Kurtzman Carson Consultants is the claims and notice agent. Evercore's Lloyd Sprung and Paul Billyard serve as investment bankers to the Debtor. ORMET CORP: Seeks to Pay Critical and Foreign Vendors ----------------------------------------------------- Ormet Corp. and its affiliates propose to pay the prepetition claims of certain critical vendors as well as certain foreign vendors. The Debtors have identified as critical vendors those entities that have claims for providing (i) essential goods to the Debtors that were received before the Petition Date, or (ii) essential services that were rendered to, or on behalf of, the Debtors before the Petition Date. The Debtors seek to pay certain prepetition claims of the critical vendors in an aggregate amount not to exceed $2.5 million. The Debtors filed a separate motion to pay certain prepetition obligations to foreign vendors. The Debtors seek authority to pay prepetition claims in the amount of $9,500,000 of foreign entities that provide raw materials. The Debtors have obtained interim approval of the motions. During the interim period, payments to critical vendors must not exceed $1 million and payments for prepetition foreign vendor claims will not exceed $7.5 million. A final hearing is scheduled for March 20. Objections are due March 13. About Ormet Corp. Aluminum producer Ormet Corporation, along with affiliates, filed for Chapter 11 protection (Bankr. D. Del. Case No. 13-10334) on Feb. 25, 2013, with a deal to sell the business to a portfolio company owned by private investment funds managed by Wayzata Investment Partners LLC. Headquartered in Wheeling, West Virginia, Ormet -- http://www.ormet.com/-- is a fully integrated aluminum manufacturer, providing primary metal, extrusion and thixotropic billet, foil and flat rolled sheet and other products. Ormet disclosed assets of $406.8 million and liabilities totaling $416 million. Secured debt of about $180 million includes $139.5 million on a secured term loan and $39.3 million on a revolving credit. Attorneys at Dinsmore & Shohl LLP and Morris, Nichols, Arsht & Tunnell LLP serve as counsel to the Debtors. Kurtzman Carson Consultants is the claims and notice agent. Evercore's Lloyd Sprung and Paul Billyard serve as investment bankers to the Debtor. OVERLAND STORAGE: Stephens Investment Has 3% Stake at Dec. 31 ------------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Stephens Investment Management, LLC, and its affiliates disclosed that, as of Dec. 31, 2012, they beneficially own 877,531 shares of common stock of Overland Storage, Inc., representing 3.09% of the shares outstanding. A copy of the filing is available for free at http://is.gd/w0Z9ZU About Overland Storage San Diego, Calif.-based Overland Storage, Inc. (Nasdaq: OVRL) -- http://www.overlandstorage.com/-- is a global provider of unified data management and data protection solutions designed to enable small and medium enterprises (SMEs), corporate departments and small and medium businesses (SMBs) to anticipate and respond to change. The Company incurred a net loss of $16.16 million for the fiscal year 2012, compared with a net loss of $14.49 million for the fiscal year 2011. Moss Adams LLP, in San Diego, California, issued a "going concern" qualification on the consolidated financial statements for the year ended June 30, 2012. The independent auditors noted that the Company's recurring losses and negative operating cash flows raise substantial doubt about the Company's ability to continue as a going concern. The Company's balance sheet at Dec. 31, 2012, showed $28.31 million in total assets, $31.23 million in total liabilities and a $2.92 million total sharehodlers' deficit. OVERSEAS SHIPHOLDING: Exclusivity Extended, Sale Process Okayed --------------------------------------------------------------- Michael Bathon, substituting for Bloomberg bankruptcy columnist Bill Rochelle, reports that Overseas Shipholding Group Inc. won court approval of its request to be the sole party allowed to offer a reorganization plan, having its exclusivity period extended to Aug. 2. According to the report, the New York-based company also obtained permission from U.S. Bankruptcy Judge Peter J. Walsh in Wilmington, Delaware of procedures that will govern the sale of some of its unit's assets. The company's First Union Tanker Corp., Majestic Tankers Corp. and Maremar Tanker LLC intend to sell three vessels: Overseas Equatorial, Overseas Sovereign and Overseas Maremar, according to court papers. A March 21 deadline has been set for potential buyers to submit a bid. Offers can be for some or all of the assets. The report relates that if the companies determine that any offers are qualified bids, it will consult with its advisers and its committee of unsecured creditors to negotiate a marked up agreement, followed by a deposit, according to court documents. They also have the right to withdraw from any of the sales, extend certain deadlines, and make further attempts to solicit better offers or re-market the assets at a later time. If the units select more than one successful bid, they will notify the court on April 11, according to court filings. An April 25 hearing has been scheduled to seek court approval of the sales. About Overseas Shipholding Overseas Shipholding Group, Inc., headquartered in New York, is one of the largest publicly traded tanker companies in the world, engaged primarily in the ocean transportation of crude oil and petroleum products. OSG owns or operates 111 vessels that transport oil and petroleum products throughout the world. Overseas Shipholding Group and 180 affiliates filed voluntary Chapter 11 petitions (Bankr. D. Del. Lead Case No. 12-20000) on Nov. 14, 2012, disclosing $4.15 billion in assets and $2.67 billion in liabilities. Greylock Partners LLC Chief Executive John Ray serves as chief reorganization officer. Cleary Gottlieb Steen & Hamilton LLP serves as OSG's Chapter 11 counsel, while Chilmark Partners LLC serves as financial adviser. Kurtzman Carson Consultants LLC is the claims and notice agent. The Export-Import Bank of China, owed $312 million used for the construction of five tankers, is represented by Louis R. Strubeck, Jr., Esq., and Kristian W. Gluck, Esq., at Fulbright & Jaworski LLP in Dallas; David L. Barrack, Esq., and Beret Flom, Esq., at Fulbright & Jaworski in New York; and John Knight, Esq., and Christopher Samis, Esq., at Richards Layton & Finger PA. Chilmark Partners, LLC serves as financial and restructuring advisor. Akin Gump Strauss Hauer & Feld LLP, and Pepper Hamilton LLP, serve as co-counsel to the official committee of unsecured creditors. FTI Consulting, Inc., is the financial advisor and Houlihan Lokey Capital, Inc., is the investment banker. OVERSEAS SHIPHOLDING: Delays Form 10-K Amid Review of Financials ---------------------------------------------------------------- Overseas Shipholding Group, Inc., notified the U.S. Securities and Exchange Commission that it will be delayed in filing its annual report on Form 10-K for the period ended Dec. 31, 2012. The Audit Committee of the Board of Directors of Overseas Shipholding on the recommendation of management, has concluded that the Company's previously issued financial statements for at least the three years ended Dec. 31, 2011, and associated interim periods, and for the fiscal quarters ended March 31 and June 30, 2012, should no longer be relied upon. The Company is continuing its review processes, including determining whether a restatement of those financial statements may be required, and the nature and amount of any potential restatement. The time frame for completing this review is not currently known. However, it is anticipated to be beyond the March 18, 2013, permitted extension of the prescribed due date for the Form 10-K. About Overseas Shipholding Overseas Shipholding Group, Inc., headquartered in New York, is one of the largest publicly traded tanker companies in the world, engaged primarily in the ocean transportation of crude oil and petroleum products. OSG owns or operates 111 vessels that transport oil and petroleum products throughout the world. Overseas Shipholding Group and 180 affiliates filed voluntary Chapter 11 petitions (Bankr. D. Del. Lead Case No. 12-20000) on Nov. 14, 2012, disclosing $4.15 billion in assets and $2.67 billion in liabilities. Greylock Partners LLC Chief Executive John Ray serves as chief reorganization officer. Cleary Gottlieb Steen & Hamilton LLP serves as OSG's Chapter 11 counsel, while Chilmark Partners LLC serves as financial adviser. Kurtzman Carson Consultants LLC is the claims and notice agent. The Export-Import Bank of China, owed $312 million used for the construction of five tankers, is represented by Louis R. Strubeck, Jr., Esq., and Kristian W. Gluck, Esq., at Fulbright & Jaworski LLP in Dallas; David L. Barrack, Esq., and Beret Flom, Esq., at Fulbright & Jaworski in New York; and John Knight, Esq., and Christopher Samis, Esq., at Richards Layton & Finger PA. Chilmark Partners, LLC serves as financial and restructuring advisor. Akin Gump Strauss Hauer & Feld LLP, and Pepper Hamilton LLP, serve as co-counsel to the official committee of unsecured creditors. FTI Consulting, Inc., is the financial advisor and Houlihan Lokey Capital, Inc., is the investment banker. OZELL NEELY: May File Amended Suit on Unjust Enrichment Claims -------------------------------------------------------------- District Judge Joanna Seybert dismissed two claims -- negligence claims and breach of fiduciary duty charges -- in Ozell Neely's complaint against RMS Residential Mortgage Solution, L.L.C., et al., alleging improper mortgage assignment, negligence regarding loan transactions, and fraudulent activity. The District Court, however, has denied the dismissal of an unjust enrichment claim against RMS and conversion claims against the RMS defendants. Mr. Neely has withdrawn his claims for interstate transportation of stolen goods and conspiracy. The lawsuit is styled as OZELL NEELY, Plaintiff, v. RMS RESIDENTIAL MORTGAGE SOLUTION, L.L.C.; DAVID SKLAR; DUY DUONG; WEI LI; BETHANY HOOD; FIS FORECLOSURE SOLUTIONS; RESIDENTIAL MORTGAGE SOLUTION, L.L.C.; BANK OF SCOTLAND, P.L.C.; LLYODS BANKING GROUP; MORTGAGE ELECTRONIC REGISTRATION SYSTEM, INC.; SPECIALIZED LOAN SERVICING, L.L.C.; FIRST AMERICAN EQUITY LOAN SERVICES; FIRST AMERICAN FINANCIAL CORPORATION; FIRST AMERICAN TITLE; and JOHN and JANE DOES 1-10, Defendants, Case No. No. 12-CV-1523(JS)(AKT), (E.D.N.Y.). The dispute involved the mortage of a Baldwin, New York real property owned by Mr. Neely. Three motions to dismiss were filed in the Complaint. In response, the plaintiff sought to amend the Complaint. "The [prosposed amended complaint], while it differs from the original complaint in certain respects, essentially fleshes out the plaintiff's claims and provides more thorough allegations," Judge Seybert said. Thus, the plaintiff is allowed to file an amended complaint with respect to his unjust enrichment and conversion claims, but is disallowed as to his fraud and quiet title claims, the District Court ruled. A copy of Judge Seybert's Feb. 26, 2013 memorandum and order is available at http://is.gd/KSQ8bNfrom Leagle.com. Ozell Neely filed a voluntary Chapter 11 petition (Bankr. E.D.N.Y. Case No. 09-74877) on June 30, 2009. The case was converted into a Chapter 7 proceeding on Oct. 23, 2009. PENSON WORLDWIDE: Incentive Plan Approval Sought ------------------------------------------------ BankruptcyData reported that Penson Worldwide filed with the U.S. Bankruptcy Court a motion for an order authorizing payments under the Nexa Technologies sale incentive plan. Under the plan, the president of Nexa Technologies is eligible for up to $300,000 in incentive payments, depending on the outcome of the sale of Nexa Technologies, the BankruptcyData report said. The Court scheduled a March 26, 2013 hearing on the matter. About Penson Worldwide Plano, Texas-based Penson Worldwide Inc. and its affiliates filed for Chapter 11 bankruptcy (Bankr. D. Del. Lead Case No. 13-10061) on Jan. 11, 2013. Founded in 1995, Penson Worldwide is provider of a range of critical securities and futures processing infrastructure products and services to the global financial services industry. The company's products and services include securities and futures clearing and execution, financing and cash management technology and other related offerings, and it provides tools and services to support trading in multiple markets, asset classes and currencies. Penson was one of the top two clearing brokers overall in the United States. Its foreign-based subsidiaries were some of the largest independent clearing brokers in Canada and Australia and the second largest independent clearing broker in the United Kingdom as of Dec. 31, 2010. In 2012, the company sold its futures division to Knight Capital Group Inc. and its broker-deal subsidiary to Apex Clearing Corp. But the company was unable to successfully streamline is business after the asset sales. Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Young, Conaway, Stargatt & Taylor serve as counsel to the Debtors. Kurtzman Carson Consultants LLC is the claims and notice agent. The U.S. Trustee for Region 3 appointed three members to the Official Committee of Unsecured Creditors: (i) Schonfeld Group Holdings LLC; (ii) SunGard Financial Systems LLC; and (iii) Wells Fargo Bank, N.A., as Indenture Trustee. The Committee selected Hahn & Hessen LLP and Cousins Chipman & Brown, LLP to serve as its co-counsel, and Capstone Advisory Group, LLC, as its financial advisor. Kurtzman Carson Consultants LLC serves as its information agent. The company estimated $100 million to $500 million in assets and liabilities in its Chapter 11 petition. The last publicly filed financial statements as of June 30 showed assets of $1.17 billion and liabilities totaling $1.227 billion. PILGRIM'S PRIDE: S&P Affirms 'B' CCR & Revises Outlook to Positive ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Greeley, Colo.-based Pilgrim's Pride Corp., and revised the outlook to positive from negative. S&P also revised the recovery ratings on the company's $500 million senior unsecured notes due 2018 to '4' from '5' and raised the issue level ratings on this debt to 'B' (the same as the corporate credit rating) from 'B-', reflecting S&P's belief that lenders would receive average recovery (30%-50%) in the event of a payment default. "We took these rating actions because an upcoming mandatory cash flow sweep will reduce term loan B balances by $141 million, which in our opinion meaningfully lowers the amount of projected senior secured debt at default, thereby improving the recovery prospects for the senior unsecured noteholders," said Standard & Poor's credit analyst Chris Johnson. Pilgrim's Pride had about $1.2 billion of reported debt outstanding as of Dec. 30, 2012. The outlook revision to positive reflects Standard & Poor's belief that the company will at least sustain its improved operating performance over the next year, which should result in continued strengthening of credit measures. "We believe recent improvements in poultry pricing and ongoing operating efficiency improvements will allow Pilgrim's Pride to modestly grow EBITDA in 2013 and pay down additional debt with free cash flow," said Mr. Johnson. "This should result in further improvement to the company's credit measures." PINNACLE AIRLINES: Crash Claimants Defer Objections --------------------------------------------------- A group of claimants dropped its objection to the adequacy of the disclosure statement, saying it has been resolved by the amendments proposed by Pinnacle Airlines Corp. The claimants, however, reserve their right to object to the confirmation of Pinnacle's Chapter 11 plan. As reported on March 6 by the TCR, the claimants objected to the disclosure statement for lack of information about the subordination of the group's punitive damage claims. The claimants also questioned the "broad powers" granted to a trustee to estimate claims as well as the breath of the injunction proposed in the plan which, they said, enjoins all claims against Pinnacle. The claimants sued Pinnacle and Colgan Inc. in behalf of the victims who died when Continental Airlines Flight 3407 crashed into a residential neighborhood near Clarence Center, New York, in 2009. The group seeks to recover more than $900 million, of which a sizable portion is attributable to punitive damage claims. About Pinnacle Airlines Pinnacle Airlines Corp. (NASDAQ: PNCL) -- http://www.pncl.com/-- a $1 billion airline holding company with 7,800 employees, is the parent company of Pinnacle Airlines, Inc.; Mesaba Aviation, Inc.; and Colgan Air, Inc. Flying as Delta Connection, United Express and US Airways Express, Pinnacle Airlines Corp. operating subsidiaries operate 199 regional jets and 80 turboprops on more than 1,540 daily flights to 188 cities and towns in the United States, Canada, Mexico and Belize. Corporate offices are located in Memphis, Tenn., and hub operations are located at 11 major U.S. airports. Pinnacle Airlines Inc. and its affiliates, including Colgan Air, Mesaba Aviation Inc., Pinnacle Airlines Corp., and Pinnacle East Coast Operations Inc. filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Lead Case No. 12-11343) on April 1, 2012. Judge Robert E. Gerber presides over the case. Lawyers at Davis Polk & Wardwell LLP, and Akin Gump Strauss Hauer & Feld LLP serve as the Debtors' counsel. Barclays Capital and Seabury Group LLC serve as the Debtors' financial advisors. Epiq Systems Bankruptcy Solutions serves as the claims and noticing agent. The petition was signed by John Spanjers, executive vice president and chief operating officer. As of Oct. 31, 2012, the Company had total assets of $800.33 million, total liabilities of $912.77 million, and total stockholders' deficit of $112.44 million. Delta Air Lines, Inc., the Debtors' major customer and post- petition lender, is represented by David R. Seligman, Esq., at Kirkland & Ellis LLP. The official committee of unsecured creditors tapped Morrison & Foerster LLP as its counsel, and Imperial Capital, LLC, as financial advisors. The U.S. Bankruptcy Court in New York will hold a hearing March 7 for approval of the explanatory disclosure statement in connection with the reorganization plan of Pinnacle Airlines Corp. PLATTE RIVER: Case Summary & Largest Unsecured Creditor ------------------------------------------------------- Debtor: Platte River Bottom, LLC 16529 Wcr 70 Greeley, CO 80631 Bankruptcy Case No.: 13-13098 Chapter 11 Petition Date: March 5, 2013 Court: United States Bankruptcy Court District of Colorado (Denver) Judge: Howard R. Tallman Debtor's Counsel: Jeffrey Weinman, Esq. WEINMAN & ASSOCIATES, P.C. 730 17th St., Ste. 240 Denver, CO 80202 Tel: (303) 572-1010 E-mail: jweinman@epitrustee.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 In its list of 20 largest unsecured creditors, the Company placed only one entry: Entity Nature of Claim Claim Amount ------ --------------- ------------ DeTienne, Marlyn And Viola $1,331,500 34180 Wcr 19 Windsor, CO 80550 The petition was signed by Nolan Ulmer, manager/member of Ulmer Holdings, LLC. POWERWAVE TECHNOLOGIES: To Auction Business on April 8 ------------------------------------------------------ Powerwave Technologies, Inc., won permission from the U.S. Bankruptcy Court to conduct a competitive bidding process for substantially all of its assets through a competitive bidding process. No buyer is under contract. Michael Bathon, substituting for Bloomberg bankruptcy columnist Bill Rochelle, reports tha the Debtors won approval to conduct an auction on April 8, with the last date for submission of bids to be set on April 4. There will be an April 10 hearing for approval of the sale. The report notes that Powerwave has the right by March 12 to bestow so-called stalking-horse status on the prospective buyer first signing a contract. The stalking horse will receive a breakup fee and expense reimbursement if outbid at auction. The Debtor's assets are broken down into antenna systems, base station subsystems, and coverage systems. The assets include the Debtor's comprehensive patent portfolio consisting of approximately 243 U.S. and foreign patents as well as approximately 50 pending U.S. applications and 178 pending foreign applications, manufacturing facilities and associated machinery and equipment, and working capital assets. The assets, according to the Debtor, are all relevant to the field of wireless infrastructure equipment. About Powerwave Technologies Powerwave Technologies Inc. (NASDAQ: PWAV) filed for Chapter 11 bankruptcy (Bankr. D. Del. Case No. 13-10134) on Jan. 28, 2013. Powerwave Technologies, headquartered in Santa Ana, Calif., is a global supplier of end-to-end wireless solutions for wireless communications networks. The Company has historically sold the majority of its product solutions to the commercial wireless infrastructure industry. The Company's balance sheet at Sept. 30, 2012, showed $213.45 million in total assets, $396.05 million in total liabilities and a $182.59 million total shareholders' deficit. Aside from a $35 million secured debt to P-Wave Holdings LLC, the Debtor owes $150 million in principal under 3.875% convertible subordinated notes and $106 million in principal under 2.5% convertible senior subordinated notes where Deutsche Bank Trust Company Americas is the indenture trustee. In addition, as of the Petition Date, the Debtor estimates that between $15 and $25 million is outstanding to its vendors. The Debtor is represented by attorneys at Proskauer Rose LLP and Potter Anderson & Corroon LLP. PRECISION ENGINEERED: Moody's Rates New $40MM Term Loan 'B1' ------------------------------------------------------------ Moody's Investors Service assigned a B1 rating to Precision Engineered Products LLC's new $40 million Incremental Term Loan and affirmed the company's Corporate Family and Probability of Default Ratings at B1 and B2-PD, respectively. The ratings on its existing $30 million revolving credit facility and $139 million Term Loan remain at B1. The rating outlook is stable. Proceeds from the incremental term loan and cash from the balance sheet will be used to fund an approximately $ 70 million dividend to PEP's sponsors the Resolute Fund II, L.P. and Nautic Partners VI L.P. The following ratings have been affirmed: Probability of Default Rating, Affirmed B2-PD; Corporate Family Rating (CFR), Affirmed B1; $30 million Senior Secured Revolver, Affirmed a B1, LGD3 - 35%; and $139 million Senior Secured Term Loan, Affirmed a B1, LGD3 - 35%. The following rating has been assigned: $40 million Senior Secured Incremental Term Loan, Assigned a B1, LGD3 - 35% Ratings Rationale: The affirmation of PEP's CFR reflects the recent consistency of its operating margins, solid cash generation and debt reduction prior to this dividend. Further, the affirmation reflects Moody's expectation for continued mid-20% EBITDA margin performance, despite sales declines in its smart meter business driven by reduced end-user demand for meters produced by its second largest customer, and a return to its focus on reducing leverage, which will rise to roughly 3.5x proforma for the dividend from under 3.0x. The B1 CFR continues to reflect PEP's modest revenue base, low tangible assets, private equity ownership and modest customer concentration, balanced against moderate financial leverage, good interest coverage and strong operating margins. PEP's rating benefits from the company's entrenched market position across its primary end markets (Medical / Surgical, Smart Energy Management, and Transportation). Its products require significant customer collaboration as they are generally custom-made to customer specifications. These component products are typically inexpensive relative to the cost of the overall product that PEP is helping its customers construct. The Stable outlook is supported by Moody's expectation that PEP continues to experience margin stability and strong credit metrics. The company's rating could come under pressure if leverage were to rise to 5 times or higher as a result of additional debt issuance to fund dividends or acquisitions. PEP's rating could achieve positive rating traction if it were able to meaningfully expand its scale without a commensurate increase in leverage, or if the company were able to mitigate its customer concentration risk through future diversification efforts. The principal methodology used in this rating was the Global Manufacturing Industry Methodology published in December 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. PEP is a holding company that resides above its respective operating companies. Its parent company, Precision Engineered Products Holdings, Inc., is expected by Moody's to have generated $200 million in revenues in 2012. PEP is headquartered in Attleboro, MA and designs and manufactures high value added specialty components for the Medical/Surgical, Smart Energy Management, and Transportation sectors. PROTECTION ONE: Proposed Debt Add-on No Impact on Moody's B2 CFR ---------------------------------------------------------------- Moody's Investor Service said that Protection One, Inc.'s plan to raise an incremental $50 million term loan is credit negative, but does not impact its B2 Corporate Family Rating, the B1 rating on the first lien credit facilities, or stable ratings outlook. Headquartered in Romeoville, Illinois, Protection One, Inc. provides security alarm monitoring services for residential and business customers. PROTECTION ONE: S&P Affirms 'B' CCR & Rates $50MM Loan 'B+' ----------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Romeoville, Ill.-based Protection One Inc. The outlook is stable. At the same time, S&P assigned the company's proposed $50 million first-lien term loan an issue-level rating of 'B+', with a recovery rating of '2', indicating S&P's expectation for substantial (70% to 90%) recovery for lenders in the event of a payment default. In addition, S&P affirmed its 'B+' issue-level rating with a recovery rating of '2' on the company's existing $541 million term loan and revolving credit facility. As part of this transaction, the company intends to re-price and increase its existing revolver to $40 million from $25 million and re-price its existing term loan. The revolving credit facility is expected to be unfunded at closing. The rating on Protection One Inc. reflects the company's "weak" business risk profile, characterized by its second-tier position in a highly fragmented market with low barriers to entry, as well as its "highly leveraged" financial risk profile. These factors are partly offset by the company's highly recurring and growing revenue base, as well as improved attrition rates. Protection One provides electronic security alarm monitoring services, mainly to residential and commercial customers, but also to independent alarm dealers. It is one of the larger second-tier alarm monitoring companies, alongside Monitronics and Vivint, but its revenue base is approximately 9x smaller than industry leader ADT. The company uses the internal generation/direct sales model to create its security accounts, which allows it to have lower customer creation costs and higher free cash flow than competitors who purchase accounts from dealers. Protection One benefits from a highly recurring revenue base of approximately 84%, as well as from multiyear contracts that support revenue visibility. It also has a diversified customer base of residential, commercial, and multifamily subscribers. The company's revenues as of Dec. 31, 2012, were about $372 million, an increase of 7.6% over the prior-year period. Revenue growth was mainly related to higher revenues resulting from an increase in national accounts. S&P expects continuing revenue growth in 2013, reflecting additional growth in national accounts, as well as an increase in recurring monthly revenue (RMR) resulting from sales of various interactive services and home automation products. In addition, S&P believes that the new summer sales channel that the company plans to implement this year will contribute to residential revenue growth in the second half of 2013 and into 2014. S&P also believes that an increase in multisite national accounts, which generally experience lower turnover than other commercial and residential accounts, combined with better customer service, will improve Protection One's attrition rate going forward. The expected lower attrition rates and higher recurring monthly revenue (RMR) on new accounts should contribute to better EBITDA margins in 2013 and beyond. Protection One maintains a highly leveraged financial risk profile. Although, the company's pro-forma lease-adjusted debt- to-EBITDA ratio will increase to about 7.6x from 7.1x, it is still acceptable for the rating level. S&P expects the company's pro forma adjusted leverage to decline modestly over the next year, resulting from improvement in adjusted EBITDA. S&P adjusts EBITDA to reflect the costs that the company has to incur to achieve "steady-state" growth, i.e. to offset attrition. RANCHER ENERGY: Board OKs Appointment of BF Borgers as Accountant ----------------------------------------------------------------- Rancher Energy Corporation's Board of Directors dismissed the firm of Borgers & Cutler CPA's PLLC, as its independent registered public accountant. On Feb. 27, 2012, the Company's Board of Directors approved the appointment of BF Borgers CPA PC, as the Company's independent registered public accountant. The action to engage new auditors was approved by the audit committee. In connection with the audit of the fiscal year ended March 31, 2012, and through Feb. 27, 2013, no disagreements exist with Borgers & Cutler CPA's PLLC on any matter of accounting principles or practices, financial statement disclosure, internal control assessment, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Borgers & Cutler CPA's PLLC have caused them to make reference in connection with their report to the subject of the disagreements. The audit report from Borgers & Cutler CPA's PLLC for the fiscal year ended March 31, 2012, contained an opinion which included a paragraph discussing uncertainties related to the continuation of the Company as a going concern, but did not include a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. The Company has authorized the partner of Borgers & Cutler CPA's PLLC to respond fully to any inquiries of any new auditors hired by the Company relating to their engagement as the Company's independent accountant. About Rancher Energy Denver, Colorado-based Rancher Energy Corp. (OTC BB: RNCHQ) -- http://www.rancherenergy.com/-- is an independent energy company that explores for and develops produces, and markets oil and gas in North America. Through March 2011, the Company operated four oil fields in the Powder River Basin, Wyoming. Effective March 1, 2011, the Company sold all of its oil and gas properties, which has allowed it to eliminate the majority of its debt and also provide financial resources during its continuing reorganization. The Company was formerly known as Metalex Resources, Inc., and changed its name to Rancher Energy Corp. in 2006. Rancher Energy Corp. was incorporated in the State of Nevada on Feb. 4, 2004. Rancher Energy filed for Chapter 11 bankruptcy protection (Bankr. D. Colo. Case No. 09-32943) on Oct. 28, 2009. In its petition, the Company estimated assets and debts of between $10 million and $50 million each. The Debtor is represented by lawyers at Onsager, Staelin & Guyerson, LLC. The Company sold substantially all of its assets effective March 1, 2011, to Linc Energy Petroleum (Wyoming), Inc. in exchange for cash of $20 million plus other potential future consideration up to $825,000, and subject to other adjustments. The deal was approved Feb. 24, 2011. As reported in the Troubled Company Reporter on March 25, 2011, the Company delivered to the Bankruptcy Court a first amended Chapter 11 plan of reorganization, and first amended disclosure statement explaining that plan. The Bankruptcy Court approved the Second Amended Plan of Reorganization and accompanying Disclosure Statement of Rancher Energy Corporation on Sept. 10, 2012. The Plan became effective on Oct. 10, 2012. The Company's balance sheet at Dec. 31, 2012, showed $2.65 million in total assets, $109,760 in total liabilities and $2.54 million in total stockholders' equity. READER'S DIGEST: Wants Authority to Employ Weil Gotshal as Counsel ------------------------------------------------------------------ RDA Holdng Co. and its affiliates ask the Bankruptcy Court for authority to employ Weil, Gotshal & Manges LLP, as attorneys for the Debtors, nunc pro tunc to the Petition Date, under a general retainer, and in accordance with its normal hourly rates and disbursement policies in effect from time to time. Weil is expected to provide these services: a. Prepare on behalf of the Debtors, as debtors in possession, all necessary motions, applications, answers, orders, reports, and other papers in connection with the administration of the Debtors' estates; b. Take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on the Debtors' behalf, the defense of any actions commenced against the Debtors, the negotiation of disputes in which the Debtors are involved, and the preparation of objections to claims filed against the Debtors' estates; c. Take all necessary actions in connection with chapter 11 plans and related disclosure statement(s), and all related documents, and such further actions as may be required in connection with the administration of the Debtors' estates; and d. Perform all other necessary legal services in connection with the prosecution of these chapter 11 cases. Weil received a $227,000 retainer and an advance against expenses for all services to be performed as of the Petition Date. Weil intends to apply the retainer to any outstanding amounts relating to the period prior to the Petition Date and to retain the balance for rendered and expenses incurred subsequent to the Petition Date. Weil's current customary U.S. hourly rates, subject to change from time to time, are: Members and Counsel $800 to $1,075 Associates $450 to $795 Paraprofessionals $185 to $335 To the best of the Debtors' knowledge, Weil Gotshal & Manges is a "disinterested person," as that phrase is defined in Bankruptcy Code Sec. 101(14), as modified by Bankruptcy Code Sec. 1107(b), and does not hold or represent an interest adverse to the estates. About Reader's Digest Reader's Digest is a global media and direct marketing company that educates, entertains and connects consumers around the world with products and services from trusted brands. For more than 90 years, the flagship brand and the world's most read magazine, Reader's Digest, has simplified and enriched consumers' lives by discovering and expertly selecting the most interesting ideas, stories, experiences and products in health, home, family, food, finance and humor. RDA Holding Co. and 30 affiliates (Bankr. S.D.N.Y. Lead Case No. 13-22233) filed for Chapter 11 protection on Feb. 17, 2013 with an agreement with major stakeholders for a pre-negotiated chapter 11 restructuring. Under the plan, the Debtor will issue the new stock to holders of senior secured notes. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Evercore Group LLC is the investment banker. Epiq Bankruptcy Solutions LLC is the claims and notice agent. Reader's Digest, together with its 47 affiliates, first sought Chapter 11 protection (Bankr. S.D.N.Y. Case No. 09-23529) Aug. 24, 2009, and exited bankruptcy Feb. 19, 2010. READER'S DIGEST: Hiring Cole Schotz as Conflicts Counsel -------------------------------------------------------- RDA Holding Co. and its affiliates seek entry of an order permitting them to employ Cole, Schotz, Meisel, Forman & Leonard, P.A. as conflicts counsel for the Debtors, nunc pro tunc to the Petition Date. The Debtors have filed an application to employ Weil, Gotshal & Manges LLP as their lead counsel. However, it is possible that during the course of the Chapter 11 Case, Weil Gotshal may become aware of certain actual or potential conflicts of interest that it may have in connection with its representation of the Debtors. Accordingly, the Debtors seek to employ Cole Schotz to handle matters that are not appropriately handled by Weil Gotshal because of actual or potential conflict of interest issues. Cole Schotz will render professional services to the Debtors for certain discrete matters in connection with matters where Weil Gotshal may not be able to act as a result of an actual or potential conflict of interest, including: a. advise the Debtors with respect to their powers and duties as debtors-in-possession in the continued management and operation of their businesses and properties; b. attend meetings and negotiate with representatives of creditors and other parties-in-interest; c. take necessary action to protect and preserve the Debtors' estates, including prosecuting actions on the Debtors' behalf, defending any action commenced against the Debtors and representing the Debtors' interests in negotiations concerning litigation in which the Debtors are involved, including objections to claims filed against the estates; d. prepare motions, applications, answers, orders, appeals, reports and papers necessary to the administration of the Debtors' estates; e. take any necessary action on behalf of the Debtors to obtain approval of a disclosure statement and confirmation of one or more Chapter 11 plans; f. represent the Debtors in connection with obtaining postpetition financing, including use of cash collateral; g. represent the Debtors in connection with any potential sale of assets; h. appear before the Court, any appellate courts and the U.S. Trustee, and protect the interests of the Debtors' estates before those Courts and the U.S. Trustee; and i. perform all other legal services for the Debtors in connection with these Chapter 11 cases as requested by the Debtors or Weil Gotshal. Cole Schotz intends to apply for compensation for professional services on an hourly basis, plus reimbursement of actual, necessary expenses and other charges that Cole Schotz incurs on the Debtors' behalf. The current hourly rates charged by Cole Schotz are: Partners $350 to $785 Counsel $365 to $500 Associates $210 to $400 Paraprofessionals $165 to $245 Support personnel $100 to $250 The hourly rates of the attorneys currently assigned to this matter are: Michael D. Sirota $785 Ilana Volkov $595 Jill B. Bienstock $295 To the best of the Debtors' knowledge, Cole Schotz is a "disinterested person," as that phrase is defined in Bankruptcy Code Sec. 101(14), as modified by Bankruptcy Code Sec. 1107(b), and does not hold or represent an interest adverse to the estates. About Reader's Digest Reader's Digest is a global media and direct marketing company that educates, entertains and connects consumers around the world with products and services from trusted brands. For more than 90 years, the flagship brand and the world's most read magazine, Reader's Digest, has simplified and enriched consumers' lives by discovering and expertly selecting the most interesting ideas, stories, experiences and products in health, home, family, food, finance and humor. RDA Holding Co. and 30 affiliates (Bankr. S.D.N.Y. Lead Case No. 13-22233) filed for Chapter 11 protection on Feb. 17, 2013 with an agreement with major stakeholders for a pre-negotiated chapter 11 restructuring. Under the plan, the Debtor will issue the new stock to holders of senior secured notes. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Evercore Group LLC is the investment banker. Epiq Bankruptcy Solutions LLC is the claims and notice agent. Reader's Digest, together with its 47 affiliates, first sought Chapter 11 protection (Bankr. S.D.N.Y. Case No. 09-23529) Aug. 24, 2009 and exited bankruptcy Feb. 19, 2010. READER'S DIGEST: DEMG Taps Dickstein Shapiro as Co-Counsel ---------------------------------------------------------- Reader's Digest affiliate, Direct Entertainment Media Group, Inc., asks the Bankruptcy Court for authority to employ Dickstein Shapiro LLP as co-counsel nunc pro tunc to the Petition Date. The Debtors filed their chapter 11 cases after extensive negotiations with many of their principal creditors regarding an acceptable restructuring of the Debtors financial obligations. As prepetition negotiations continued, it became clear to the Debtors that certain potential conflicts may exist in the future between DEMG and the other jointly administered Debtors. In order to ensure that DEMG and its directors and officers received legal advice free from any potential conflicts, DEMG concluded that it required separate counsel from Weil Gotshal to address all matters arising in the restructuring process where DEMG's interest might conflict with the interests of the other Debtors. Dickstein will represent DEMG in connection with: a) all matters as to which DEMG's interests are or may be adverse to the interests of its corporate affiliates, b) the negotiation, drafting, and prosecution of a chapter 11 plan for DEMG, and c) such other matters as Weil is unable, or otherwise declines, to represent DEMG, or as to which DEMG may request the Firm's representation. The professional services that Dickstein will render to DEMG include, but shall not be limited to, providing legal advice, preparing legal papers, appearing in Court, and all such other legal services for DEMG that may be necessary and proper in connection with the Retained Services. Dickstein received a retainer for all services to be performed in the amount of $100,000 from which it applied $3,500 as payment in full for all prepetition services Dickstein rendered. Dickstein intends to charge DEMG its regularly established hourly rates for attorneys and paraprofessionals. Dickstein's hourly rates as charged to bankruptcy and nonbankruptcy clients are: Partners $590 to $1,250 Counsel $315 to $1,000 Associates $310 to $600 Paralegals $185 to $325 To the best of the Debtors' knowledge, Dickstein is a "disinterested person," as that phrase is defined in Bankruptcy Code Sec. 101(14), as modified by Bankruptcy Code Sec. 1107(b), and does not hold or represent an interest adverse to the estates. About Reader's Digest Reader's Digest is a global media and direct marketing company that educates, entertains and connects consumers around the world with products and services from trusted brands. For more than 90 years, the flagship brand and the world's most read magazine, Reader's Digest, has simplified and enriched consumers' lives by discovering and expertly selecting the most interesting ideas, stories, experiences and products in health, home, family, food, finance and humor. RDA Holding Co. and 30 affiliates (Bankr. S.D.N.Y. Lead Case No. 13-22233) filed for Chapter 11 protection on Feb. 17, 2013 with an agreement with major stakeholders for a pre-negotiated chapter 11 restructuring. Under the plan, the Debtor will issue the new stock to holders of senior secured notes. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Evercore Group LLC is the investment banker. Epiq Bankruptcy Solutions LLC is the claims and notice agent. Reader's Digest, together with its 47 affiliates, first sought Chapter 11 protection (Bankr. S.D.N.Y. Case No. 09-23529) Aug. 24, 2009 and exited bankruptcy Feb. 19, 2010. READER'S DIGEST: Seeks to Expand Scope of Epiq's Employment ----------------------------------------------------------- RDA Holding Co. and its affiliates have previously filed an application to appoint Epiq Bankruptcy Solutions, LLC, as claims and noticing agent. The Debtors believe that administration of these chapter 11 cases will require Epiq to perform duties outside the scope requested. Accordingly, the Debtors seek the Court's authority to employ Epiq as administrative advisor, nunc pro tunc to the Petition Date, to provide these bankruptcy administrative services: a. Assisting with, among other things, solicitation, balloting and tabulation and calculation of votes, as well as preparing any appropriate reports, as required in furtherance of confirmation of plan(s) of reorganization; b. Generating an official ballot certification and testifying, if necessary, in support of the ballot tabulation results; c. Gathering data in conjunction with, and assisting in the preparation of, the Debtors' schedules of assets and liabilities and statements of financial affairs; d. Generating, providing and assisting with claims reports, claims objections, exhibits, claims reconciliation, and related matters; e. Managing any distributions pursuant to a confirmed plan of reorganization; and f. Providing such other claims processing, noticing, solicitation, balloting and other administrative services and data preservation and litigation services described in the Services Agreement but not included in the Section 156(c) Application, as may be requested from time to time by the Debtors, the Court or the Clerk. To the best of the Debtors' knowledge, Epiq is a "disinterested person," as that phrase is defined in Bankruptcy Code Sec. 101(14), as modified by Bankruptcy Code Sec. 1107(b), and does not hold or represent an interest adverse to the estates. About Reader's Digest Reader's Digest is a global media and direct marketing company that educates, entertains and connects consumers around the world with products and services from trusted brands. For more than 90 years, the flagship brand and the world's most read magazine, Reader's Digest, has simplified and enriched consumers' lives by discovering and expertly selecting the most interesting ideas, stories, experiences and products in health, home, family, food, finance and humor. RDA Holding Co. and 30 affiliates (Bankr. S.D.N.Y. Lead Case No. 13-22233) filed for Chapter 11 protection on Feb. 17, 2013 with an agreement with major stakeholders for a pre-negotiated chapter 11 restructuring. Under the plan, the Debtor will issue the new stock to holders of senior secured notes. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Evercore Group LLC is the investment banker. Epiq Bankruptcy Solutions LLC is the claims and notice agent. Reader's Digest, together with its 47 affiliates, first sought Chapter 11 protection (Bankr. S.D.N.Y. Case No. 09-23529) Aug. 24, 2009 and exited bankruptcy Feb. 19, 2010. RESIDENTIAL CAPITAL: Examiner Seeks Changes to Protective Order --------------------------------------------------------------- The Hon. Arthur J. Gonzalez, the Court-appointed examiner for Residential Capital, LLC, and its affiliated debtors, seeks authority from the Bankruptcy Court to modify certain provisions of the Uniform Protective Order for Examiner Discovery to impose deadlines with respect to the issuance of "clawback" requests. According to the Examiner, as of March 4, more than 1.1 million documents, amounting to more than 8 million pages, have been produced to the Examiner as part of his investigation. The Examiner relates that since the beginning of the year, he has received from various parties numerous clawback requests, which covered more than a thousand documents. Many of these Clawback Requests, he adds, have been based on the so-called "bank examination privilege" and on the attorney-client privilege and/or the work product doctrine. The Examiner tells the Court that the impact of the Clawback Requests on his investigation and report preparation process has been significant, because many of the documents that have been the subject of the Clawback Requests have become deeply embedded in the work streams of his professionals since the time of their production. He says responding to the Clawback Requests requires surveying all the various teams involved in his investigation to determine if those documents are being used by them in their work product, and then taking necessary steps to modify or adjust their work product in light of the Clawback Requests. He adds that as he moves toward completion of the investigation and issuance of his report, the receipt of further Clawback Requests -- particularly given the volume of requests received -- creates the risk of greater complication and potential disruption to the orderly completion of his task. Accordingly, the Examiner proposes to set March 22, 2013, as the deadline for all parties to make a Clawback Request for documents produced before March 15, 2013. For any document produced after March 15, no Disclosing Party will make a Clawback Request to the Examiner more than 14 days after the production of that document. The Examiner says counsel for Ally Financial, Inc., has advised that Ally opposes the Examiner's proposed order 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). RESIDENTIAL CAPITAL: 3rd Interim Order on FRB Advisors Entered -------------------------------------------------------------- The Bankruptcy Court entered a third interim order authorizing Residential Capital LLC and its affiliates to compensate PricewaterhouseCoopers LLP for services it rendered in connection with the FRB foreclosure review. The Court also entered third interim orders authorizing the Debtors to employ Hudson Cook, LLP, as their special counsel and Pepper Hamilton LLP as special foreclosure review counsel. A final hearing to consider the employment applications is set for March 21, 2013. As reported in the Sept. 14, 2012 edition of the Troubled Company Reporter, in connection with the agreement with ResCap, Ally Financial Inc. and Ally Bank to develop and implement risk management and corporate governance procedures in order to ensure prospective compliance with applicable foreclosure-related regulations and laws, Debtor GMAC Mortgage LLC agreed to pay for an extensive, independent file review regarding certain residential foreclosure actions and foreclosure sales prosecuted by the Debtors. Pursuant to the FRB Foreclosure Review requirement, the Debtors hired PricewaterhouseCoopers, LLP, as independent consultant. PwC has been tasked with (i) working to plan and develop procedures for conducting the FRB Foreclosure Review; (ii) identifying loan populations for review; (iii) monitoring a borrower outreach complaint process; (iv) reviewing a sample of more than 5,000 loan files, as well as more than 12,000 borrower outreach complaints, for missing documentation or other issues; and (v) developing a recommended remediation in the event that PwC identifies errors. Since June 2011, Hudson Cook has been representing debtor GMAC Mortgage, LLC, and Ally Financial Inc. in connection with a review of foreclosure and loan files in June 2011, focusing on four operational Foreclosure Review "workstreams." Pepper Hamilton partner Gary Apfel, Esq., began representing GMAC and Ally Financial in connection with the Foreclosure Review in October 2011. The Debtors have sought permission from the Bankruptcy Court to employ Hudson and Pepper Hamilton, nunc pro tunc to May 14, 2012, for the firms to continue their Foreclosure Review services. 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). RESIDENTIAL CAPITAL: MBIA Objection to Ocwen Sale Resolved ---------------------------------------------------------- Residential Capital LLC and its affiliates entered into an court- approved amended stipulation, agreeing that the letter agreement, dated Jan. 31, 2013, they entered into with MBIA Insurance Corporation resolves MBIA's objection to the sale of the Debtors' assets to Ocwen Loan Servicing, LLC. The parties agreed that nothing in the Letter Agreement will affect or alter MBIA's right to be reimbursed for any unreimbursed policy amounts arising under its agreements with the Debtors or the policies it issued to the Debtors. As already reported by the Troubled Company Reporter, ResCap in February completed the sale of the servicing platform assets to Ocwen Loan Servicing, LLC, the mortgage servicing arm of Ocwen Financial Corporation. The Bankruptcy Court in Manhattan had approved the sale of the assets in November. 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). RODEO CREEK: To Pay Prepetition Claims of Vendors, Shippers ----------------------------------------------------------- Rodeo Creek Gold Inc. and its affiliates filed a motion to pay prepetition claims of "essential vendors", as well as prepetition amounts owing to shippers and lien claimants, insurance program providers, and taxing authorities. The Court approved the request, on an interim basis, pending a final hearing and allowed the Debtors to make payments during the interim period. The final hearing is scheduled for March 28, 2013, at 1:00 p.m. Objections are due March 13. The Debtors also won a 16-day extension -- for a total of 30 days from the Petition Date -- of the deadline to file their schedules of assets and liabilities and statement of financial affairs. The Debtors said in court papers they are not seeking to be able to make any and all outstanding prepetition payments but are simply seeking authority to pay "limited amounts" that are essential to the continued uninterrupted operations at the outset of the Chapter 11 cases. The Debtors explained that the "essential vendors" are those that may have claims against the Debtors for providing (i) essential goods to the Debtors that were received before the Petition Date and/or (ii) essential services that were rendered to, or on behalf of, the Debtors before the Petition Date. The Debtors propose to pay and discharge the claims of essential vendors an aggregate amount not to exceed $1 million during the interim period, and not to exceed $1.5 million for the balance of the Chapter 11 cases. As for shipper and lien claimants, the Debtors propose to pay and discharge the claims of shippers and lien claimants in an aggregate amount not to exceed $2.2 million during the interim period, and not to exceed $3.5 million for the balance of the Chapter 11 cases. For insurance providers, the Debtors seek to pay $186,006 during the interim period, and not to exceed $800,000 for the balance of the chapter 11 cases. Payment to taxing authorities would be $100,000 during the interim period, and not to exceed $170,000 for the balance of the Chapter 11 cases. About Rodeo Creek and Great Basin Canada-based The Great Basin Gold Ltd and its subsidiaries are engaged in the exploration, development, and operation of high- quality gold properties. The GBG Group's primary projects are a trial mine and a recently constructed start-up mine, both of which are located in rich gold-producing regions: the Hollister trial mine in Nevada and the Burnstone start-up mine in South Africa. The GBG Group also holds interests in early-stage mineral prospects located in Canada and Mozambique. On Sept. 18, 2012, the GBG Group's primary South African operating subsidiary and owner of the Burnstone Start-up Mine, Southgold Exploration (Pty) Ltd., commenced business rescue proceedings under chapter 6 of the South African Companies Act, 2008. On Sept. 19, 2012, Great Basin Gold Ltd., the ultimate parent company, applied for protection from its creditors in Canada pursuant to the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36 in the Supreme Court of British Columbia Vancouver Registry. GBG arranged -- and the U.S. debtors cross-guaranteed -- DIP financing from Credit Suisse and Standard Chartered Bank in the amount of $51 million, of which $10 million was made available to the U.S. subsidiaries and $25 million for South Africa. On Feb. 25, 2013, Rodeo Creek Gold Inc., which operates and owns the Hollister Trial-Mine, along with other U.S. subsidiaries of Great Basin, filed petitions for Chapter 11 protection (Bankr. D. Nev. Case No. 13-50301), in Reno, Nevada, as cash ran out before they could complete the sale of the mine. Rodeo Creek estimated assets worth less than $100 million and debt in excess of $100 million. Credit Suisse is the agent under the Debtors' secured prepetition credit facilities: (i) the Existing Hollister Credit Facility, under which the Debtors had $52.5 million outstanding at the end of 2012 and (ii) the Canadian DIP Facility, under which the Debtors had guaranteed $35 million outstanding as of the Petition Date. The Debtors also had $13.5 million in outstanding trade debt, in addition to certain intercompany obligations. RODEO CREEK: Taps GCG Inc. as Claims and Noticing Agent ------------------------------------------------------- Rodeo Creek Gold Inc., and its affiliates sought and obtained bankruptcy court approval to hire GCG, Inc., as claims, noticing agent and balloting agent, nunc pro tunc to the Petition Date. GCG will relieve the Clerk's office of all noticing under any applicable Bankruptcy Rules and processing of claims. GCG is one of the country's leading Chapter 11 administrators with expertise in noticing, claims processing, balloting administration and distribution. The Debtors agreed to pay GCG in accordance with their agreed pricing schedule and reimburse the firm for all out-of-pocket expenses; and provide a $10,000 retainer. As part of the overall compensation, the Debtors have agreed to certain limitations of liability and indemnification obligations. Emily S. Gottlieb, assistant vice president of GCG, says the firm is a disinterested person as that term is defined in 11 U.S.C. Sec. 101(14). GCG disclosed that Paul Kinealy, a director at GCG, was formerly employed by the Debtors' financial advisor, Alvarez & Marsal. About Rodeo Creek and Great Basin Canada-based The Great Basin Gold Ltd and its subsidiaries are engaged in the exploration, development, and operation of high- quality gold properties. The GBG Group's primary projects are a trial mine and a recently constructed start-up mine, both of which are located in rich gold-producing regions: the Hollister trial mine in Nevada and the Burnstone start-up mine in South Africa. The GBG Group also holds interests in early-stage mineral prospects located in Canada and Mozambique. On Sept. 18, 2012, the GBG Group's primary South African operating subsidiary and owner of the Burnstone Start-up Mine, Southgold Exploration (Pty) Ltd., commenced business rescue proceedings under chapter 6 of the South African Companies Act, 2008. On Sept. 19, 2012, Great Basin Gold Ltd., the ultimate parent company, applied for protection from its creditors in Canada pursuant to the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36 in the Supreme Court of British Columbia Vancouver Registry. GBG arranged -- and the U.S. debtors cross-guaranteed -- DIP financing from Credit Suisse and Standard Chartered Bank in the amount of $51 million, of which $10 million was made available to the U.S. subsidiaries and $25 million for South Africa. On Feb. 25, 2013, Rodeo Creek Gold Inc., which operates and owns the Hollister Trial-Mine, along with other U.S. subsidiaries of Great Basin, filed petitions for Chapter 11 protection (Bankr. D. Nev. Case No. 13-50301), in Reno, Nevada, as cash ran out before they could complete the sale of the mine. Rodeo Creek estimated assets worth less than $100 million and debt in excess of $100 million. Credit Suisse is the agent under the Debtors' secured prepetition credit facilities: (i) the Existing Hollister Credit Facility, under which the Debtors had $52.5 million outstanding at the end of 2012 and (ii) the Canadian DIP Facility, under which the Debtors had guaranteed $35 million outstanding as of the Petition Date. The Debtors also had $13.5 million in outstanding trade debt, in addition to certain intercompany obligations. ROTHSTEIN ROSENFELDT: Investors Want TD Bank Row in State Court --------------------------------------------------------------- Carolina Bolado of BankruptcyLaw360 reported that the battle between investors in Scott Rothstein's Ponzi scheme and TD Bank NA continued Wednesday as the investors urged a Florida bankruptcy judge to send their suit against the bank -- accused of aiding the $1.2 billion scheme -- back to state court. The report related that a group of 38 investors led by lead plaintiff Don Beverly asked U.S. Bankruptcy Judge Raymond Ray to remand their suit against the bank to state court, arguing that the action involves no debtors or creditors in the Rothstein Rosenfeldt Adler PA bankruptcy case. About Rothstein Rosenfeldt Scott Rothstein, co-founder of law firm Rothstein Rosenfeldt Adler PA -- http://www.rra-law.com/-- has been suspected of running a $1.2 billion Ponzi scheme. U.S. authorities claimed in a civil forfeiture lawsuit filed November 9, 2009, that Mr. Rothstein, the firm's former chief executive officer, sold investments in non- existent legal settlements. Mr. Rothstein pleaded guilty to five counts of conspiracy and wire fraud on January 27, 2010. Creditors of Rothstein Rosenfeldt Adler signed a petition sending the Florida law firm to bankruptcy (Bankr. S.D. Fla. Case No. 09-34791). The petitioners include Bonnie Barnett, who says she lost $500,000 in legal settlement investments; Aran Development, Inc., which said it lost $345,000 in investments; and trade creditor Universal Legal, identified as a recruitment firm, which said it is owed $7,800. The creditors alleged being owed money invested in lawsuit settlements. Herbert M. Stettin, the state-court appointed receiver for Rothstein Rosenfeldt, was officially carried over as the Chapter 11 trustee in the involuntary bankruptcy case. On June 10, 2010, Mr. Rothstein was sentenced to 50 years in prison. The official committee of unsecured creditors appointed in the case filed a bankruptcy plan and disclosure statement on Aug. 17. The plan was filed and signed by the Committee attorney, Michael Goldberg of Akerman Senterfitt, and not by the court-appointed trustee Herbert Stettin. The plan calls for the creation of a liquidating trust and four classes of claimants. A date for confirmation of the plan was left blank. SA NYU WA: Grand Canyon Skywalk Owner Seeks Bankruptcy ------------------------------------------------------ 'SA' NYU WA, Inc., the owner of the glass-bottomed Grand Canyon Skywalk, is in Chapter 11. The Grand Canyon Skywalk is a transparent horseshoe-shaped cantilever bridge and tourist attraction in Arizona near the Colorado River on the edge of a side canyon in the Grand Canyon West area of the main canyon. 'SA' NYU is wholly owned by the Hualapai Indian Tribe and a tribally chartered corporation. In its bankruptcy petition, Sa Nyu Wa estimated total assets of $1 million to $10 million and debt of $10 million to $50 million. Michael Bathon, substituting for Bloomberg bankruptcy columnist Bill Rochelle, citing court papers, reports that SNW was founded in 2003 for the purpose of developing and operating the Skywalk, which is located on Hualapai lands. The tribal company contracted Grand Canyon Skywalk Development LLC for the construction, development, operation and management of the Skywalk, which opened in 2007. According to the report, after opening, disputes arose with both parties claiming the other breached their duties and obligations to the other. The developer initiated an arbitration proceeding against SNW in 2011, which on Aug. 16, 2012, resulted in a $28 million award against SNW, court documents show. The award was affirmed by the Arizona federal court in February. The Hualapai Tribe says the arbitration ruling clearly states the award can only be recovered from SNW and not the Tribe or other entities. The report discloses that SNW filed an appeal of the ruling on Feb. 27, saying it "intends to prosecute its appeal and obtain a reversal and vacatur of the arbitration rulings." The Hualapai Tribe notified SNW that in light of the developer's attempts to seize assets it has terminated all of SNW's operational responsibilities relating to the Skywalk, and has designated another, separate tribal entity to take its place. "To move its case along efficiently, SNW intends to file a proposed Chapter 11 plan and disclosure statement promptly" after it completes an analysis of its books and records, and assets and liabilities, the company said in court papers. 'SA' NYU WA, Inc., filed a Chapter 11 petition (Bankr. D. Ariz. Case No. 13-02972) in Yuma, Arizona, on March 4, 2013. Kelly Singer, Esq., at Quarles & Brady, LLP, in Phoenix, serves as counsel. The case summary and list of creditors of the Debtor was published in the March 7 edition of the Troubled Company. SAN BERNARDINO, CA: Wrongly Transferred Assets, State Says ---------------------------------------------------------- California state Controller John Chiang said in a report that San Bernardino improperly transferred $108.4 million in cash and other assets from its redevelopment agency to an entity run in part by the city's mayor and some council members as the agency faced extinction. Michael Bathon, substituting for Bloomberg bankruptcy columnist Bill Rochelle, reports that the inland Southern California city's redevelopment authority, one of about 400 eliminated last year by a law intended to shore up California's finances, shouldn't have handed over its assets to the nonprofit San Bernardino Economic Development Corporation, Mr. Chiang's review concluded. According to Reuters, Chiang said that San Bernardino, which declared bankruptcy on Aug. 1, should not have transferred assets from its RDA to the non-profit San Bernardino Economic Development Corporation (EDC) when the city's RDA was dissolved. Chiang, in his report, said the transfer was illegal because the city controls the EDC. According to the EDC's website, its seven- member board of directors includes San Bernardino's mayor, and a current and former council member, Reuters noted. "I'm working to make sure redevelopment assets go where they belong: to retiring RDA debt and paying for critical services at the local level," Mr. Chiang said in an e-mailed statement accompanying his review, to Bloomberg News's James Nash. According to the report, the Democratic controller also identified $420.5 million in redevelopment assets that haven't been transferred to any agency. Those should be delivered to a successor agency that repays redevelopment bonds, the review concluded. According to Bloomberg, in the city's response to Mr. Chiang's review, the then-acting city manager, Andrea Travis-Miller, wrote that the transfer of redevelopment assets was legal. In any case, she wrote, the city can't force the nonprofit to return the funds. Ms. Travis-Miller also wrote that the $420.5 million in redevelopment assets already have been transferred to the city's successor agency. Ms. Travis-Miller resigned from her San Bernardino job in January. About San Bernardino San Bernardino, California, filed an emergency petition for municipal bankruptcy under Chapter 9 of the U.S. Bankruptcy Code (Bankr. C.D. Calif. Case No. 12-28006) on Aug. 1, 2012. San Bernardino, a city of about 210,000 residents roughly 65 miles (104 km) east of Los Angeles, estimated assets and debts of more than $1 billion in the bare-bones bankruptcy petition. The city council voted on July 10, 2012, to file for bankruptcy. The move lets San Bernardino bypass state-required mediation with creditors and proceed directly to U.S. Bankruptcy Court. The city is represented that Paul R. Glassman, Esq., at Stradling Yocca Carlson & Rauth. San Bernardino joined two other California cities in bankruptcy: Stockton, an agricultural center of 292,000 east of San Francisco, and Mammoth Lakes, a mountain resort town of 8,200 south of Yosemite National Park. In February 2013,, San Bernardino named Allen J. Parker as city manager after its acting city manager, Andrea Travis-Miller, quit. Parker, who twice declared personal bankruptcy, has an annual salary of almost $222,000 as city manager. SAN BERNARDINO, CA: Police Union Wants to Sue City in State Court ----------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the San Bernardino, California, police officer's union is the second municipal labor representative taking the city to court asking the bankruptcy judge for permission to sue in state court for violation of California labor law. The report recounts that previously, the San Bernardino Public Employees Association, representing 54 mid-level city managers, contended in substance that the city refused to negotiate and unilaterally imposed lower wages. Last week, the San Bernardino Police Officers Association filed papers to the same effect. The managers' motion will come to the bankruptcy judge at a hearing currently set for March 27. The new motion by police is currently set for April 4. About San Bernardino San Bernardino, California, filed an emergency petition for municipal bankruptcy under Chapter 9 of the U.S. Bankruptcy Code (Bankr. C.D. Calif. Case No. 12-28006) on Aug. 1, 2012. San Bernardino, a city of about 210,000 residents roughly 65 miles (104 km) east of Los Angeles, estimated assets and debts of more than $1 billion in the bare-bones bankruptcy petition. The city council voted on July 10, 2012, to file for bankruptcy. The move lets San Bernardino bypass state-required mediation with creditors and proceed directly to U.S. Bankruptcy Court. The city is represented that Paul R. Glassman, Esq., at Stradling Yocca Carlson & Rauth. San Bernardino joined two other California cities in bankruptcy: Stockton, an agricultural center of 292,000 east of San Francisco, and Mammoth Lakes, a mountain resort town of 8,200 south of Yosemite National Park. In February 2013,, San Bernardino named Allen J. Parker as city manager after its acting city manager, Andrea Travis-Miller, quit. Parker, who twice declared personal bankruptcy, has an annual salary of almost $222,000 as city manager. SANUWAVE HEALTH: Issues $60,000 Convertible Notes to Chairman ------------------------------------------------------------- SANUWAVE Health, Inc., on Feb. 22, 2013, closed on the initial sale of its 18% Senior Secured Convertible Promissory Notes to select accredited investors. Up to $2,000,000 aggregate principal amount of Notes are being offered by the Company. On March 1, 2013, the Company issued and sold to Kevin A. Richardson, II, the chairman of the board of directors of the Company, three Notes, as part of the Offering, in the aggregate principal amount of $60,000. About SANUWAVE Health Alpharetta, Ga.-based SANUWAVE Health, Inc., is an emerging global regenerative medicine company focused on the development and commercialization of noninvasive, biological response activating devices for the repair and regeneration of tissue, musculoskeletal and vascular structures. BDO USA, LLP, in Atlanta, Georgia, expressed substantial doubt about SANUWAVE's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has suffered recurring losses from operations and is economically dependent upon future issuances of equity or other financing to fund ongoing operations. For the nine months ended Sept. 30, 2012, the Company reported a net loss of $4.70 million on $627,153 of revenue, compared with a net loss of $7.82 million on $577,180 of revenue for the same period a year ago. The Company's balance sheet at Sept. 30, 2012, showed $2.28 million in total assets, $7.80 million in total liabilities and a $5.52 million total stockholders' deficit. Bankruptcy Warning "The continuation of our business is dependent upon raising additional capital. We expect to devote substantial resources to continue our research and development efforts, including clinical trials. Because of the significant time it will take for our products to complete the clinical trial process, and for us to obtain approval from regulatory authorities and successfully commercialize our products, we will require substantial additional capital. We incurred a net loss of $4,707,212 for the nine months ended September 30, 2012 and a net loss of $10,238,797 for the year ended December 31, 2011. These operating losses create uncertainty about our ability to continue as a going concern. As of September 30, 2012, we had cash and cash equivalents of $361,263. We are working with select accredited investors to raise up to $1.25 million in capital in a private placement. The accredited investors will receive a convertible promissory note that will convert, at the Company's option, at the completion of a larger funding which is expected to close no later than the first quarter of 2013. If these efforts are unsuccessful, we may be forced to seek relief through a filing under the U.S. Bankruptcy Code," the Company said in its quarterly report for the period ended Sept. 30, 2012. SHOPPES AT PRIME: Case Summary & Largest Unsecured Creditor ----------------------------------------------------------- Debtor: The Shoppes at Prime Village LLC 1444 E. Algonquin Road Schaumburg, IL 60173 Bankruptcy Case No.: 13-08738 Chapter 11 Petition Date: March 5, 2013 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: A. Benjamin Goldgar Debtor's Counsel: Mohammed O. Badwan, Esq. SULAIMAN LAW GROUP, LTD 900 Jorie Blvd Ste 150 Oak Brook, IL 60523 Tel: (630) 575-8181 E-mail: mbadwan@sulaimanlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $10,000,001 to $50,000,000 In its list of 20 largest unsecured creditors, the Company wrote only one entry: Entity Nature of Claim Claim Amount ------ --------------- ------------ BCL Capital Funding, LLC $12,000,000 c/o Levenfeld Pearlstein, LLC 2 N. LaSalle, Suite 1300 Chicago, IL 60602 The petition was signed by George Kalkounos. SIAG AERISYN: Hires Accountant to Review Avoidance Claims --------------------------------------------------------- SIAG Aerisyn LLC, also known as Aerisyn LLC, asks the U.S. Bankruptcy Court for permission to employ Jack London of Henderson, Hutcherson, McCullough PLLC as accountant. The Debtor withdrew its Chapter 11 plan and is in the process of seeking a sale of its assets with an auction to be conducted on April 5, 2013. The Debtor said there are numerous potential preferential transfers that have occurred. To date the Debtor has conducted an informal preference analysis but is in need of a more detailed preference analysis and to have experienced bankruptcy accountants to be in a position to testify concerning the books and records of the Debtor with regard to transfers and all defenses that may be raised to such transfer actions and to possibly perform other general accounting duties if necessary including taking possession of the relevant books and records prior to the sale of the Debtor's assets. The Debtor said Jack London and his firm are experienced certified public accountants with special expertise in handling of bankruptcy matters including avoidance actions. The Debtor believes that the employment of Mr. London and the firm is in the best interest of the estate and is necessary for the completion of the administration of the estate and collection of the assets of the estate. All fees will be incurred at the normal hourly rates and any fee requests will be made upon application after notice and hearing. About SIAG Aerisyn SIAG Aerisyn LLC, aka Aerisyn LLC, filed a Chapter 11 petition (Bankr. E.D. Tenn. Case No. 12-11705) on April 2, 2012 in its hometown in Chattanooga, Tennessee. The Debtor manufactures wind towers essential for wind turbines as alternative energy sources. The plant is located in Chattanooga, employing roughly 84 persons. Judge Shelley D. Rucker presides over the case. Samples, Jennings, Ray & Clem, PLLC, serves as the Debtor's Chapter 11 counsel. Wormser, Kiely, Galef & Jacobs, LLP, serves as special counsel. Jerome Luggen of Cincinnati Industrial Auctioneers, Inc., was tapped as appraiser of the Debtor's equipment. The Debtor estimated up to $50 million in assets and debts. In its schedules, the Debtor disclosed $18,728,994 in total assets and $24,261,855 in total liabilities. SMART ONLINE: Avy Lugassy Has 40% Ownership at Feb. 7 ----------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Avy Lugassy disclosed that as of Feb 7, 2013, he beneficially owns 7,330,269 shares of common stock of Smart Online, Inc., representing 40% of the shares outstanding. A copy of the filing is available for free at http://is.gd/tZquI3 About Smart Online Durham, North Carolina-based Smart Online, Inc., develops and markets a full range of mobile application software products and services that are delivered via a SaaS/PaaS model. The Company also provides Web site and mobile consulting services to not-for- profit organizations and businesses. The Company's balance sheet at Sept. 30, 2012, showed $1.9 million in total assets, $27.8 million in total liabilities, and a stockholders' deficit of $25.9 million. Cherry, Bekaert & Holland, L.L.P., in Raleigh, North Carolina, expressed substantial doubt about Smart Online's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31 2011. The independent auditors noted that the Company has suffered recurring losses from operations and has a working capital deficiency as of Dec. 31, 2011. SNO MOUNTAIN: Trustee Has Final OK to Borrow $498K from Lender -------------------------------------------------------------- The Bankruptcy Court has granted Chapter 11 Trustee Gary F. Seitz final authority to borrow up to $497,585.80 of postpetition financing from Wynnewood Capital Partners, LLC. Pursuant to the final order, the liens of DFM Realty, Inc., and any other perfected lien as of the Petition Date will be senior to the liens granted to the DIP Lender to secure the DIP Loan. As security for the DIP Obligations, the DIP Lender is granted, among others, a first lien on unencumbered property of the Debtor and a junior lien on all of the Debtor's real and personal property that is subject to valid and unavoidable liens in existence prior to the petition date. About Sno Mountain 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. SOUTHERN AIR: Ch. 11 Plan Could Shortchange Gov't, US Says ---------------------------------------------------------- Lance Duroni of BankruptcyLaw360 reported that the U.S. government on Wednesday asked a Delaware bankruptcy judge to reject Southern Air Holdings Inc.'s reorganization plan unless the cargo carrier alters the plan so it won't prejudice claims from various government agencies. The report related that in an objection filed with the court, the government took issue with several plan details, including provisions that appear to bar payment of postpetition interest on administrative claims and automatically subordinate late-filed claims, resulting in zero recovery for tardy creditors. The government also demanded changes to a "supplemental injunction" clause in the Plan, the report added. 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. SPENDSMART PAYMENTS: EisnerAmper Replaces BDO as Accountants ------------------------------------------------------------ The SpendSmart Payments Company dismissed BDO LLP as its registered public accounting firm. The Company's Board of Directors approved of the dismissal on Feb. 25, 2013, at the recommendation of the Company's audit committee. The reports of BDO on the Company's financial statements for the years ended Sept. 30, 2012, and 2011 did not contain an adverse opinion or disclaimer of opinion, and those reports were not qualified or modified as to uncertainty, audit scope, or accounting principle, except to indicate that there was substantial doubt as to the Company's ability to continue as a going concern. Through the period covered by the financial audit for the years ended Sept. 30, 2012, and 2011 there have been no disagreements with BDO on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of BDO would have caused them to make reference thereto in their report on the financial statements. On Feb. 27, 2013, the Company engaged EisnerAmper LLP as its new registered independent public accountant. During the years ended Sept. 30, 2012 and 2011, the Company did not consult with Eisner regarding (i) the application of accounting principles to a specified transaction, (ii) the type of audit opinion that might be rendered on the Company's financial statements by Eisner, in either case where written or oral advice provided by Eisner would be an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issues or (iii) any other matter that was the subject of a disagreement between the Company and its former auditor or was a reportable event. Changes Name to SpendSmart Payments Effective Feb. 15, 2013, BillMyParents, Inc., has changed its name to The SpendSmart Payments Company, Inc., and effective Feb. 28, 2013, the Company's ticker symbol has changed to "SSPC". The name change is part of a larger repositioning and growth strategy to leverage the management expertise, technology and operations of the Company to address significant additional payment card market opportunities beyond the teen pre-paid segment. "The SpendSmart Payments Company name more accurately reflects our ability and desire to serve a broader customer base driven by our company's core foundation of enabling responsible spending. Expanding beyond the teen segment, we intend to serve several under-penetrated demographics. We also intend to pursue opportunities in international markets," stated The SpendSmart Payments Company Chairman and Chief Executive Officer, Mike McCoy. "It is clear to our Company that there are additional card products and distribution opportunities that our platform and experience position us to serve," Mr. McCoy added. About The SpendSmart Payments Company The SpendSmart Payments Company, Inc. (OTCQB: SSPC) -- Making Money Smarter -- is developing a number of payment solution options to serve the specific needs of a range of demographic groups both in the U.S. and internationally. The Company's payment card products include a card solution for parents who want to help their teens develop smart spending habits. This card is an instantly trackable, reloadable MasterCard prepaid card that lets parents and teens track spending in real time. Features include the ability to instantly lock, unlock and reload the card at any time; text alerts to parents and teens showing real-time transaction details with each purchase; and the freedom and security of a MasterCard prepaid card without the risk of overdrafts, accruing debt or affecting credit scores. The SpendSmart Payments Company provides parents with a modern way to help teach their teens financial responsibility, when it counts. BillMyParents incurred a net loss and comprehensive net loss of $25.71 million for the year ended Sept. 30, 2012, compared with a net loss and comprehensive net loss of $14.21 million during the prior year. BDO USA, LLP, in La Jolla, California, issued a "going concern" qualification on the consolidated financial statements for the year ended Sept. 30, 2012. The independent auditors noted that the Company has incurred net losses since inception and has an accumulated deficit at Sept. 30, 2012. The Company's balance sheet at Dec. 31, 2012, showed $6.80 million in total assets, $18.13 million in total liabilities, all current, $8.36 million in redeemable series B convertible preferred stock, $1.03 million in redeemable common stock, and a $20.73 million total stockholders' deficit. SPILLMAN DEVELOPMENT: Credit Bid Discharges Liability on Guarantee ------------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Court of Appeals in New Orleans ruled in a Feb. 28 opinion that when a secured lender makes a credit bid for the full amount of a debt, it precludes the lender from suing guarantors of the debt. The report recounts that at an auction sanctioned by the bankruptcy court, a competing bidder offered cash for nearly the full amount of a secured debt. The lender raised the credit bid to the full amount of the debt and won the auction. The guarantors on the debt then sued the lender in bankruptcy court contending the debt had been paid and asking the judge to return their collateral. The bankruptcy judge said it didn't require "rocket science" to know that the debt had been paid and the collateral should be returned. The lender appealed unsuccessfully in federal district court, contending the credit bid should be given the value of the collateral. According to the report, the lender lost the appeal in a 12-page opinion authored by Circuit Judge Edith Brown Clement. She said the "credit bid had the effect of retiring the senior indebtedness." Mr. Rochelle relates that Judge Clement's decision is also significant for its treatment of a forum-selection clause, which, if enforced, would have required the guarantors to sue in a different district. Judge Clement equated a forum selection clause to an arbitration provision which a bankruptcy court can decline to enforce when "unreasonable under the circumstances." Since the issue involved a "core" issue involving the interpretation of credit bidding rights created under the U.S. Bankruptcy Code, Judge Clement said there is a "strong public-policy interest" for declining to enforce the forum selection clause. Judge Clement also said that the dispute over the guarantee was "core" and within the competence of the bankruptcy court under Stern v. Marshall because the issue involved rights created under bankruptcy law. The case is Fire Eagle LLC v. Bischoff (In re Spillman Development Group Ltd.), 11-51057, 5th U.S. Circuit Court of Appeals (New Orleans). A copy of the Fifth Circuit's Feb. 28 decision is available at http://is.gd/qXDCEOfrom Leagle.com. Spillman Development Group, Ltd. -- http://www.falconheadaustin.com/-- operates a golf course in Austin, Texas. The Debtor filed for chapter 11 protection (Bankr. W.D. Tex. Case No. 05-14415) on Aug. 1, 2005. Eric J. Taube, Esq., at Hohmann, Taube & Summers, LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it disclosed $7,588,543 in assets and $16,118,709 in liabilities. SPIRIT REALTY: Incurs $76.2 Million Net Loss in 2012 ---------------------------------------------------- Spirit Realty Capital, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $76.23 million on $282.70 million of total revenues for the year ended Dec. 31, 2012, as compared with a net loss of $63.86 million on $272.69 million of total revenues during the prior year. The Company incurred a $86.53 million net loss in 2010. The Company's balance sheet at Dec. 31, 2012, showed $3.24 billion in total assets, $1.99 billion in total liabilities and $1.25 billion in total stockholders' equity. A copy of the Form 10-K is available for free at: http://is.gd/omXbkN 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. * * * As reported by the TCR on Jan. 30, 2013, Standard & Poor's Ratings Services placed its 'B' corporate credit rating on Spirit Realty Capital Inc. (Spirit) on CreditWatch with positive implications. "The CreditWatch placement follows the announcement that Spirit will merge with Cole Credit Property Trust II (unrated), a nontraded REIT, in a stock-for-stock exchange," said credit analyst Elizabeth Campbell. "The merged company, which will retain the name Spirit, will become the second-largest publicly traded triple-net-lease REIT in the U.S. with a pro forma enterprise value of approximately $7.1 billion." 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." SPRINT NEXTEL: Obtains $2.8-Bil. Revolving Facility From JPMorgan ----------------------------------------------------------------- Sprint Nextel Corporation entered into a new $2.8 billion unsecured revolving credit facility with JPMorgan Chase Bank, N.A., as administrative agent, CitiBank, N.A., as syndication agent, and certain lenders. The Credit Facility expires in February 2018 and replaces the Company's $2.2 billion revolving credit facility that was due to expire in October 2013. The Credit Facility will provide supplemental liquidity for general corporate purposes and will be used to support the letter of credit required by the Federal Communications Commission's Report and Order to reconfigure the 800 MHz band. The Credit Facility requires that the ratio of total indebtedness to trailing four quarters earnings before interest, taxes, depreciation and amortization and other non-recurring items, as defined in the Credit Facility (adjusted EBITDA), not exceed 6.25 to 1.0 through June 30, 2014. Subsequent to June 30, 2014, the maximum allowed Leverage Ratio declines on a scheduled basis, as set forth in the Credit Facility, until the ratio becomes fixed at 4.0 to 1.0 for the fiscal quarter ended Dec. 31, 2016, and each fiscal quarter ending thereafter. Equipment net subsidy is no longer included in the calculation of adjusted EBITDA under the Credit Facility. The Credit Facility provides an exception to the definition of "Change of Control" as defined therein for transactions involving one or more "Permitted Holders," which is defined in the Credit Facility to include SOFTBANK CORP. and its affiliates. A copy of the Credit Agreement is available for free at: http://is.gd/14ioeJ Short-Term Compensation Plan On Feb. 27, 2013, the Compensation Committee of the Board of Directors of Sprint Nextel Corporation established the performance objectives and other terms of the Company's 2013 Short-Term Incentive Plan for officers and other eligible employees of the Company. As called for under the Agreement and Plan of Merger, dated as of Oct. 15, 2012, as amended on Nov. 29, 2012, by and among the Company, SOFTBANK CORPORATION, Starburst I, Inc., a Delaware corporation and a direct wholly owned subsidiary of SoftBank, Starburst II, Inc., a direct wholly owned subsidiary of HoldCo and Starburst III, Inc., a direct wholly owned subsidiary of New Sprint, the Compensation Committee has established two six- month performance periods as opposed to one annual period. The first period is from Jan. 1, 2013, through June 30, 2013, and the second is from July 1, 2013, through Dec. 31, 2013. Each performance period has discrete performance objectives, and 2013 STI Plan participants generally must be employed on Dec. 31, 2013, in order to be eligible to receive compensation for either period. The first period of 2013 STI Plan provides for a payment of incentive compensation to officers and other eligible employees based on the achievement of the following specified performance objectives and weightings: (1) adjusted OIBDA (operating income before depreciation and amortization excluding severance, exit costs, and other special items) at 50%; (2) a measure of retention of our Sprint platform postpaid wireless subscribers, which we refer to as post-paid churn, at 30%; and (3) Sprint platform net subscriber additions (excluding Nextel Platform, Assurance Wireless and Wholesale) at 20%. Each of the performance objectives will have a threshold, target and maximum level of payment opportunity. The maximum payment opportunity is equal to 200% of the participant's target opportunity, and failure to attain the threshold goal for each performance objective results in forfeiture of the associated opportunity. The award payment under the 2013 STI Plan for each performance period will be determined based on the Company's results using three variables: (1) the participant's annual incentive target opportunity, which is based on a percentage of the participant's base salary; (2) the Compensation Committee's assessment and certification of Company performance compared with the target for each of the above-referenced performance objectives; and (3) relative weightings for each performance objective. The determination of payments for certain executive officers will be made so as to comply with Section 162(m) of the Internal Revenue Code. Under the 2013 STI Plan: Daniel R. Hesse's target opportunity is 200% of base salary; Joseph J. Euteneuer's target opportunity is 130% of base salary; Steven L. Elfman's target opportunity is 125% of base salary; and Robert L. Johnson's target opportunity is 100% of base salary. Keith O. Cowan's target opportunity is 125% of base salary, but he was employed with the Company only through Jan. 2, 2013, and will be entitled only to a pro rata portion of any payout earned. The actual incentive amounts paid under the 2013 STI Plan will be based on the Company's actual results during 2013 in relation to the established performance objectives, and these payments may be greater or less than the target amounts that were established and are subject to the Compensation Committee's discretion. About Sprint Nextel Overland Park, Kan.-based Sprint Nextel Corp. (NYSE: S) -- http://www.sprint.com/-- is a communications company offering a comprehensive range of wireless and wireline communications products and services that are designed to meet the needs of individual consumers, businesses, government subscribers and resellers. Sprint Nextel incurred a net loss of $4.32 million in 2012, a net loss of $2.89 million in 2011, and a net loss of $3.46 million in 2010. The Company's balance sheet at Dec. 31, 2012, showed $51.57 million in total assets, $44.48 million in total liabilities and $7.08 million in total shareholders' equity. Bankruptcy Warning "If the Merger Agreement terminates and we are unable to raise sufficient additional capital to fulfill our funding needs in a timely manner, or we fail to generate sufficient additional revenue from our wholesale and retail businesses to meet our obligations beyond the next twelve months, our business prospects, financial condition and results of operations will likely be materially and adversely affected, substantial doubt may arise about our ability to continue as a going concern and we will be forced to consider all available alternatives, including a financial restructuring, which could include seeking protection under the provisions of the United States Bankruptcy Code," the Company said in its annual report for the period ended Dec. 31, 2012. On Dec. 17, 2012, the Company entered into an agreement and plan of merger pursuant to which Sprint agreed to acquire all of the outstanding shares of Clearwire Corporation Class A and Class B common stock not currently owned by Sprint, SOFTBANK CORP., which or their affiliates. At the closing, the outstanding shares of common stock will be canceled and converted automatically into the right to receive $2.97 per share in cash, without interest. * * * As reported by the TCR on Oct. 17, 2012, Standard & Poor's Ratings Services said its ratings on Overland Park, Kan.-based wireless carrier Sprint Nextel Corp., including the 'B+' corporate credit rating, remain on CreditWatch. "The CreditWatch update follows the announcement that Sprint Nextel has agreed to sell a majority stake to Softbank," said Standard & Poor's credit analyst Allyn Arden. In the Oct. 17, 2012, edition of the TCR, Moody's Investors Service has placed all the ratings of Sprint Nextel, including its B1 Corporate Family Rating, on review for upgrade following the announcement that the Company has entered into a series of definitive agreements with SOFTBANK CORP. As reported by the TCR on Aug. 8, 2012, Fitch Ratings affirms, among other things, the Issuer default rating (IDR) of Sprint Nextel and its subsidiaries at 'B+'. The ratings for Sprint reflect the ongoing execution risk both operationally and financially regarding several key initiatives that the company expects will improve cash generation, network performance and longer-term profitability. SPRINT NEXTEL: S&P Assigns 'BB-' Rating to $2.8-Bil. Facility ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' issue-level rating and '2' recovery rating to Overland Park, Kan.-based wireless carrier Sprint Nextel Corp.'s $2.8 billion senior unsecured revolving credit facility due 2018. The '2' recovery rating indicates S&P's expectation for meaningful (70%-90%) recovery in the event of a payment default. This new debt will replace the company's $2.25 billion revolver. At the same time, S&P placed its ratings on the new revolver on CreditWatch with positive implications. All other ratings on Sprint Nextel, including the 'B+' corporate credit rating, remain on CreditWatch, where they were placed with positive implications Oct. 11, 2012. Sprint Nextel has agreed to sell a 70% stake to Japan-based SoftBank Corp. for about $20 billion. The companies expect the transaction to close in the second quarter of 2013. S&P expects to resolve the CreditWatch listing at that point, although it also expects to provide more clarity on the ultimate ratings outcome as the companies make available more information on financial policy and strategic direction. The ultimate corporate credit rating on Sprint Nextel will depend on several factors, including: -- S&P's assessment of its stand-alone credit profile under SoftBank ownership; -- S&P's view of the strategic relationship between Sprint Nextel and SoftBank; -- Sprint Nextel's proposed acquisition of the remaining 49% stake in wireless services provider Clearwire Corp. that it does not already own; and -- The corporate credit rating on SoftBank, which is also on CreditWatch. An important factor in S&P's analysis would be the degree of extraordinary financial support it would expect from the higher- rated SoftBank in a stress scenario at Sprint Nextel. While S&P do not expect to equalize the ratings of the two companies, it could impute some degree of extraordinary support, which could lead to a higher rating on Sprint Nextel than it would receive on a stand-alone basis. S&P is revising its liquidity assessment to "adequate" from "less than adequate" following the company's refinancing of its revolving credit facility, which will provide it with greater covenant cushion. The facility has a maximum total leverage covenant of 6.25x, which steps down to 6x at Sept. 30, 2014, and a minimum interest coverage covenant of 2x, which tightens to 2.25x on June 30, 2014. If Sprint Nextel were successful in its bid to acquire the remaining stake in Clearwire, S&P would reevaluate its liquidity assessment based on its forecast of covenant headroom including any new debt issued or assumed in that transaction. RATINGS LIST Sprint Nextel Corp. Corporate Credit Rating B+/Watch Pos/-- New Ratings; On Watch Sprint Nextel Corp. Senior Unsecured $2.8B revolving credit facility due 2018 BB-/Watch Recovery Rating 2 STEREOTAXIS INC: Incurs $4.3 Million Net Loss in Fourth Quarter --------------------------------------------------------------- Stereotaxis, Inc., reported a net loss of $4.31 million on $12.20 million of total revenue for the three months ended Dec. 31, 2012, as compared with a net loss of $5.51 million on $11.61 million of total revenue for the same period during the prior year. The Company incurred a net loss of $9.23 million on $46.56 million of total revenue for the 12 months ended Dec. 31, 2012, as compared with a net loss of $32.03 million on $41.98 million of total revenue during the prior year. The Company's balance sheet at Dec. 31, 2012, showed $32.16 million in total assets, $50.95 million in total liabilities and a $18.79 million total stockholders' deficit. Michael P. Kaminski, president and chief executive officer of Stereotaxis, said, "During 2012, we made significant progress in converting the excitement around our unique EpochTM platform into capital orders and customer upgrades, resulting in an 11% increase in total full year revenue over 2011. By year-end, we achieved our strategic milestone of upgrading half of our installed base in North America and Europe to the new technology. We also reached shipment targets for the Niobe(R) ES system, receiving an additional $2.5 million of funding on January 31, 2013, under our existing agreement with Healthcare Royalty Partners (previously 'Cowen')." Mr. Kaminski continued, "Our strong financial performance for the year included record improvement to the bottom line, primarily occurring in the second half of the year. Through strict financial management, we reduced our annual operating expenses 31% and cash burn by 68% from the prior year. As a result, operating loss for the full year decreased 67% over 2011. In the fourth quarter, operating loss declined 81% to an eight-year low of $880,000 and cash burn was a record $77,000." A copy of the press release is available for free at: http://is.gd/W3lSdx CEO Steps Down Michael Kaminski will step down as President and Chief Executive Officer, effective April 12, 2013, to accept a position as division president of a company in an unrelated field. The Stereotaxis Board has appointed Chairman William Mills III as interim CEO and created an interim Office of the Chief Executive, with Director Dr. Euan Thomson providing support and guidance in certain areas to ensure a seamless transition to new company leadership. Augmenting this office will be a senior executive committee representing the Company's business segments. The Board will immediately retain an executive search firm to assist in conducting a comprehensive search for a successor. Mr. Kaminski, who will remain as an advisor to the Company through October 2014, said, "While this was a difficult personal decision, the timing was right for me and my family to pursue a new, exciting endeavor. I have treasured the opportunity to work alongside some of the brightest minds in the industry who have responded to the needs of the market with unique, transformative solutions. The Company is taking the correct steps toward profitability, while keeping innovation and clinical adoption as priorities, and I believe is on its way to establishing the standard of care for interventional procedures throughout the world." Mr. Kaminski, who joined the Company in 2002 as Chief Operating Officer, was appointed President and COO in 2007, and then Chief Executive Officer in January 2009. During his four years as CEO, the Company greatly expanded the commercialization of its technology platform, generated double-digit revenue growth and improved operating loss by over 74%. "Mike has provided critical, visionary leadership during the Company's emergence from innovator to major commercial player in the electrophysiology market," said Mr. Mills. "He has been one of the strongest champions of our technology's contribution to medicine, and the Board and I thank him for all of his efforts in driving business improvements while advancing the Company's industry-leading capabilities." Mr. Mills has served on the Stereotaxis Board of Directors since June 2000 and was elected Chairman in May 2012. He has more than 30 years experience as a venture capitalist with an emphasis on science-based medicine and medical technology. Mr. Mills currently serves as a director on a number of venture capital, corporate and advisory boards, in addition to his role with Stereotaxis. He holds graduate degrees in Chemistry and in Management from MIT and an A.B. in Chemistry from Princeton University. "The Stereotaxis Board has an abiding confidence in and commitment to the Company's life-changing technology and long-term vision, and we are resolved to ensure effective leadership that will continue to deliver expanding value to each of our stakeholders," Mr. Mills concluded. Additional information can be found at http://is.gd/jBLRSu About Stereotaxis Based in St. Louis, Mo., Stereotaxis, Inc., designs, manufactures and markets the Epoch Solution, which is an advanced remote robotic navigation system for use in a hospital's interventional surgical suite, or "interventional lab", that the Company believes revolutionizes the treatment of arrhythmias and coronary artery disease by enabling enhanced safety, efficiency and efficacy for catheter-based, or interventional, procedures. For the year ended Dec. 31, 2011, Ernst & Young LLP, in St. Louis, Missouri, expressed substantial doubt about Stereotaxis' ability to continue as a going concern. The independent auditors noted that the Company has incurred recurring operating losses and has a working capital deficiency. STORAGE ALLIANCE: Case Summary & 5 Unsecured Creditors ------------------------------------------------------ Debtor: Storage Alliance Holdings II, LLC P.O. Box 7324 Golden, CO 80403 Bankruptcy Case No.: 13-35468 Chapter 11 Petition Date: March 3, 2013 Court: United States Bankruptcy Court Southern District of New York (Poughkeepsie) Judge: Cecelia G. Morris Debtor's Counsel: Elizabeth A. Haas, Esq. ELIZABETH A. HAAS, ESQ., PLLC 254 S. Main Street, Suite 210 New City, NY 10956 Tel: (845) 708-0340 Fax: (845) 708-5622 E-mail: info@thehaaslawfirm.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 five unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/nysb13-35468.pdf The petition was signed by Thomas Anarumo, member. STREAM GLOBAL: S&P Affirms 'B+' CCR & Revises Outlook to Negative ----------------------------------------------------------------- Standard & Poor's Rating Services affirmed its 'B+' corporate credit rating on Wellesley, Mass.-based Stream Global Inc. At the same time, S&P revised the outlook to negative from stable. S&P also affirmed the existing 'B+' issue-level rating on the company's outstanding $200 million 11.25% senior secured notes maturing 2014, which the company has upsized with a $30 million add-on tranche. The '4' recovery rating remains unchanged and indicates expectations for average (30% to 50%) recovery of principal and interest in the event of a payment default. The company intends to use the proceeds toward the recent $46 million acquisition of LBM Ltd., a U.K. company. Pro forma for the transaction, year-end 2012 estimated leverage of 4.2x compares with the September 2012 4.1x. The negative outlook reflects the 2014 maturities of the senior secured notes and revolving credit. Currently, Stream Global does not have sufficient internal resources to repay them and they have to be refinanced, which exposes the company to market risks. Although the revolving credit agreement was recently amended to allow its extension to 2017, that will only occur after the senior notes are refinanced and extended. The 'B+' rating reflects Stream Global's technology sector client concentration, as well as its modest market share within the fragmented and moderately capital-intensive customer care/call center outsourcing services sector. These factors are offset by the company's growing presence in low-cost geographic areas and attractive call center outsourcing industry growth prospects. As a result, S&P characterizes the company's business risk profile as "weak." The rating also reflects Stream Global's pro forma leverage of about 4x. This metric contributes to S&P's assessment of its financial risk profile as "aggressive." "We expect Stream Global to only gradually reduce its significant client and technology sector concentrations," said Standard & Poor's credit analyst Jacob Schlanger. For the 12 months ended December 2012, its top three clients, Dell, Hewlett-Packard, and Microsoft, represented about 28% of its revenue. It derived about 40% of its revenue from the technology sector and about 40% from the telecommunications sector. S&P expects Stream Global to continue to participate in outsourcing services industry growth, considering its geographic footprint in low-cost areas outside of the U.S. and Europe. For the full year, the company derived about one-quarter of its revenue from each of the Philippines, the U.S., Europe/Middle East/Africa, and Canada and others. The company operates out of 54 locations in 22 countries. LBM, primarily a provider of BPO services in the U.K. and Ireland to large multinational telecom and utility companies, will increase Stream Global's market opportunities and footprint in Europe. S&P believes Stream Global will continue to expand its business in low-cost offshore areas, especially the Philippines, where contract pricing tends to run lower than pricing for U.S.-based services, but labor cost arbitrage and client demand support profitability. Consequently, S&P expects revenues to increase in the low- to mid-single digits and EBITDA margins to grow and approach 12%. Considering contract churn and geographic repositioning inherent to the industry, S&P expects capital expenditures to remain significant, at about 5% of revenues subsequent to 2013. For the coming 12 months, however, S&P anticipates the company's data center consolidation project will elevate capital expenditures to about 6% of revenues. The negative outlook reflects the significant financing risk the company faces over the next one and a half years as the senior notes mature in October 2014. If the company successfully refinances the debt and extends its maturity as well as the revolver, S&P could revise the outlook to stable. S&P's expectation is that recent contract wins will insulate the company from its exposure to weak global PC business conditions and business presence in high-cost areas, enabling it to maintain consistent leverage reduction prospects over the coming 12 months. S&P could lower the rating if competitive or industry pressures reduce profitability such that leverage exceeds the mid-5x area on a sustained basis. The company's corporate credit rating is constrained at the current 'B+' rating because of its private- equity ownership structure. SUN PRODUCTS: Moody's Assigns 'B1' Rating to $100MM Revolver ------------------------------------------------------------ Moody's Investors Services affirmed the Corporate Family and Probability of Default Ratings of Sun Products Corporation at B2 and B2-PD, respectively. Moody's also revised the outlook to stable from negative. Moody's also assigned a B1 rating to the company's $100 million 1st lien Senior Secured Revolving credit and a B1 rating to its $1,080 million Term Loan B facility. Moody's will withdraw Sun Product's existing bank facility ratings upon completion of the transaction. Assigned ratings will also be dependent on Moody's successful review of the final documentation. The affirmation of the company's B2 Corporate Family Rating reflects Sun Product's continued progress in restoring its profitability and deleveraging. Moody's expects EBIT margins and debt-to-EBITDA to improve to the low-double digits and around 6.5 times over the next 12 to 18 months as compared with approximately 8% and over 7.5 times for the fiscal year ending December 31, 2012. Moody's debt and leverage calculation includes approximately $150 million or about 0.6 times EBITDA adjustment for the remaining preferred equity which was issued by Sun Product's parent company and is held by Unilever (rated A1). The preferred is subject to annual dividends of either 10% in cash or 12% in PIK. The affirmation also reflects the company's stronger free cash flow generation and better working capital management as well as its considerable scale and diversified portfolio of branded and private label laundry and dishcare products. The stable outlook reflects Moody's expectation that Sun Products will successfully restore its credit metrics to levels appropriate for its B2 rating following a difficult ERP implementation in 2011. In part, the revised outlook depends on the successful completion of the refinancing which extends the maturity and lowers the interest cost of its debt financing. The bank facilities' rating of B1 is one notch below the company's existing bank facilities ratings due in part to the elimination of the cushion provided by more junior debt which Moody's expects will be repaid as part of this transaction. "Sun Product's ability to sustain its much improved profitability, generate free cash flow and reduce its leverage to approximately 6.0 times over the next 6 to 9 months is made more challenging given the sluggish U.S. economic recovery, highly price sensitive U.S. consumer and potential for volatile raw material costs," says Moody's Senior Vice President, Janice Hofferber. The following ratings of Sun Products were assigned: - $100 million senior secured revolving credit facility due March 2018 at B1 (LGD3, 35%) - $1,080 million senior secured term loan B due March 2020 at B1 (LGD3, 35%) The following ratings of Sun Product's were affirmed: - Corporate Family Rating at B2 - Probability of Default rating at B2-PD - $792 million first lien term loans due April 2014 at Ba3 (LGD2, 24%) - $225 million second lien term loan due October 2014 at B3 (LGD4, 60%) The following ratings of Sun Product's will be withdrawn upon closing: - $125 million senior secured revolving credit facility due April 2014 at Ba3 (LGD2, 24%) - $792 million first lien term loans due April 2014 at Ba3 (LGD2, 24%) - $225 million second lien term loan due October 2014 at B3 (LGD4, 60%) The outlook is stable Ratings Rationale: Sun Product's B2 Corporate Family Rating reflects its very high leverage (debt-to-EBITDA of approximately 7.5 times), heightened competitive activity from better capitalized operators (primarily Procter & Gamble (rated Aa3), Henkel (rated A2) and Church & Dwight (rated Baa2), and significant retailer concentration for its core private label and branded laundry care products. Moreover, the company's branded strategy remains challenged by the significant additional investments required to compete effectively, especially given the recent category declines and intense price competition. The rating benefits from a good liquidity profile, highlighted by improving free cash flow generation, ample cash balances and availability on the company's revolving credit facility. Sun Product's ratings could be downgraded if category growth continues to decline and profitability remains weak. Specifically, ratings could be downgraded if the company is not able to reduce its debt-to-EBITDA below 6.5 times by December 31, 2013 or if free cash flow is negative. Sun Product's ratings could be upgraded if operating performance and organic growth was restored such that debt-to-EBITDA is sustained below 5.0 times and free cash flow-to-debt climbs above 5%. The principal methodology used in this rating was the Global Packaged Goods published in December 2012. Other methodologies used include Loss Given Default for Speculative-Grade Non- Financial Companies in the U.S., Canada and EMEA published in June 2009. The Sun Products Corporation, based in Wilton, Connecticut, provides moderately priced and private label laundry detergents, fabric softeners and other related household and personal care products in the North America market. Significant brands include all, Snuggle, Sun Wisk, Sunlight (Canada), and Surf. The company is also the largest private label manufacturer of laundry care products in North America. Sun Products' parent company, Spotless Group Holding, LLC is controlled by affiliates of Vestar Capital Partners. Sun Products' sales for the fiscal year ending December 31, 2012 were approximately $1.8 billion. SUN PRODUCTS: S&P Affirms 'B-' CCR & Revises Outlook to Stable -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed the 'B-' corporate credit rating on Wilton, Conn.-based The Sun Products Corp. and revised its outlook to stable from negative. S&P also assigned its 'B-' debt rating to the company's proposed senior secured credit facilities, which include a $100 million revolving credit facility due 2018 and a $1.08 billion term loan facility due 2020. The recovery rating is '3', indicating S&P's expectation for meaningful recovery (50% to 70%) of principal in the event of a payment default. The proposed facilities are rated at the same level as the company's corporate credit rating, but one notch below the rating on the company's existing securities. "We believe recovery prospects for lenders of the new facilities will be lower because of the incremental senior secured debt within the company's proposed capital structure," said Standard & Poor's credit analyst Mark Salierno. The ratings are subject to review of final documentation upon completion of the transaction. In addition, the ratings on the existing credit facilities will be withdrawn upon completion of the transaction. The outlook revision reflects Standard & Poor's view that following the proposed refinancing, liquidity will remain "adequate" over the next year. The revision also incorporates S&P's forecast that the company will sustain its recent improvement in operating performance in 2013, despite S&P's view that growth in the fabric care category will remain sluggish and the industry environment will remain difficult because of extremely competitive operating conditions. S&P expects key metrics will remain weak and indicative of a "highly leveraged" financial risk profile for the foreseeable future, despite improved liquidity prospects upon completion of the proposed refinancing and some improvement in credit protection measures over the past year. S&P believes the company will maintain a "vulnerable" business risk profile, based on its narrow business focus, participation in the intensely competitive laundry category, and declining profitability. SYMPHONYIRI GROUP: Moody's Rates New US$50MM Credit Facility 'B1' ----------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to SymphonyIRI Group, Inc.'s new $50 million Senior Secured Revolving Credit Facility due 2017, while also affirming the B1 Corporate Family Rating (CFR), B1-PD Probability of Default Rating and B1 rating on the upsized $424 million Senior Secured Term Loan B due 2017. The rating on the existing revolving credit facility will be withdrawn upon closing of the refinancing. The ratings outlook is stable. The upsized term loan will be used to add to balance sheet cash and pay transaction fees and expenses. Ratings Rationale: The B1 CFR reflects high financial leverage which should decline steadily in 2013 as revenue from new products featuring Wal-Mart data are adopted by the market. Financial metrics are currently weak for the "B1" category due to the rise in costs experienced in 2012 as the new Wal-Mart data and associated products were developed and implemented before any revenue was earned. Moody's expects debt to EBITDA to fall below 4.5 times and free cash flow to debt to return to about 8% in the next 12 to 18 months. The stable outlook reflects Moody's expectation in 2013 of 5% to 7% revenue growth and EBITDA (after Moody's standard adjustments) of at least $100 million on improving EBITDA margins, driving free cash flow of at least $30 million. The ratings could be upgraded if the company demonstrates significant top line growth, improving credit metrics and a commitment to conservative financial policies such that Moody's comes to expect debt to EBITDA and free cash flow to debt to be sustained at about 3.5 times and 10%, respectively. The ratings could be downgraded if Moody's comes to expect debt to EBITDA and free cash flow to debt to be sustained above 5 times or below 5%, respectively. The following rating (assessment) was assigned: Senior Secured Revolving Credit Facility due 2017, B1 (LGD3, 46%) The following ratings were affirmed (assessments revised): Corporate Family Rating, B1 Probability of Default Rating, B1-PD Senior Secured Term Loan B due 2017, B1 (to LGD3, 46% from LGD3, 44%) The principal methodology used in this rating was Global Business and 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. IRI provides market measurement data and related services to consumer packaged goods and health care manufacturers in the US and seven countries in Europe. IRI is majority owned by affiliates of New Mountain Capital. Moody's expects 2013 revenue of over $800 million. TAR HEEL: S&P Assigns 'B+' Rating to Series 2013-1 Notes -------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'B+(sf)' preliminary rating to the series 2013-1 notes to be issued by Tar Heel Re Ltd. (Tar Heel Re). The notes cover losses in North Carolina from hurricanes on an annual aggregate basis. The preliminary rating is based on the lower of the rating on the catastrophe risk ('B+'), the rating on the assets in the collateral account ('AAAm'), and the rating of the ceding reinsurer ('AA-'). Covered losses will not be directly linked to Munich Re America's exposure in North Carolina, rather they will be based on the actual losses of the North Carolina Joint Underwriters Association (NCJUA) and the North Carolina Insurance Underwriters Association (NCIUA). This is the fourth catastrophe bond sponsored by the NCJUA/NCIUA to be rated by Standard & Poor's, though the first one modeled by RMS. Because of the significant difference between the AIR and RMS modeled losses, the stress rate applied to the aggregate exceedence probability curve was higher as compared to the indicative level for indemnified transactions set forth in S&P's criteria. RATINGS LIST New Rating Tar Heel Re Ltd. Senior secured series 2013-1 notes B+(sf) (Prelim) TERRESTAR CORP: Swarts Claims Junked for Second Time ---------------------------------------------------- Jeffrey and Patricia Swarts failed to convince a New York bankruptcy court to reconsider the expungement of their claims filed in the bankruptcy cases of Terrestar Corporation and Terrestar Networks, Inc. Filed in May 2011, the Swarts claims were asserted to be "derivative" and were based on amounts allegedly owed to Mr. Swarts by Loral Space & Communications, who was a creditor of TSN. Mr. Swarts asserted that any recovery Loral received on its claim should go directly to him as compensation for the harm he suffered during the Loral bankruptcy. In a March 2012 ruling, the Court noted that being a creditor in the Loral bankruptcy and being dissatisfied with the result in that case did not give Mr. Swarts standing to assert a claim against the Terrestar Debtors. In an order dated Feb. 28, 2013, Bankruptcy Judge Sean Lane held that Mr. Swarts has failed to present any evidence -- whether newly discovered or previously overlooked by the Court -- that would change the outcome of the Court's March 2012 decision to expunge the claims. A copy of Judge Lane's Feb. 28 memorandum of decision and order is available at http://is.gd/QS7lFsfrom Leagle.com. About TerreStar Corp. TerreStar Corporation and TerreStar Holdings, Inc., filed voluntary Chapter 11 petitions with the U.S. Bankruptcy Court for the Southern District of New York on Feb. 16, 2011. TSC's Chapter 11 filing joins the bankruptcy proceedings of TerreStar Networks Inc. and 12 other affiliates, which filed on Oct. 19, 2010. The October Chapter 11 cases are procedurally consolidated under TSN's Case No. 10-15446 under Judge Sean H. Lane. TSC is the parent company of each of the October Debtors. TSC has four wholly owned direct subsidiaries: TerreStar Holdings, Inc., TerreStar New York Inc., Motient Holdings Inc., and MVH Holdings Inc. TSC's case is jointly administered with the cases of seven of the October Debtors under the caption In re TerreStar Corporation, et al., Case No. 11-10612 (SHL). The seven Debtor entities who sought joint administration with TSC are TerreStar New York Inc., Motient Communications Inc., Motient Holdings Inc., Motient License Inc., Motient Services Inc., Motient Ventures Holdings Inc., and MVH Holdings Inc. TSC is a Delaware corporation whose main asset is the equity in non-Debtor TerreStar 1.4 Holdings LLC, which has the right to use a "1.4 GHz terrestrial spectrum" pursuant to 64 licenses issued by the Federal Communication Commission. TSC also has an indirect 89.3% ownership interest in TerreStar Network, Inc., which operates a separate and distinct mobile communications business. TerreStar Holdings is a Delaware corporation that directly holds 100% of the interests in 1.4 Holdings LLC. TerreStar Networks -- TSN -- the principal operating entity of TSC, developed an innovative wireless communications system to provide mobile coverage throughout the United States and Canada using satellite-terrestrial smartphones. The system, however, required an enormous amount of capital expenditures and initially produced very little in the way of revenue. TSN's available cash and borrowing capacity were insufficient to cover its funding; thus, forcing TSN to seek bankruptcy protection in October 2010. TSC estimated assets and debts of $100 million to $500 million in its Chapter 11 petition. Ira S. Dizengoff, Esq., at Akin, Gump, Strauss, Hauer & Feld, LLP, in New York, serves as counsel for the TSC and TSN Debtors. Garden City Group is the claims and notice agent. Blackstone Advisory Partners LP is the financial advisor. The Garden City Group, Inc., is the claims and noticing agent in the Chapter 11 cases. Otterbourg Steindler Houston & Rosen P.C. is the counsel to the Official Committee of Unsecured Creditors formed in TSN's Chapter 11 cases. FTI Consulting, Inc., is the Committee's financial advisor. TerreStar Networks sold its business to Dish Network Corp. for $1.38 billion. It canceled a June 2011 auction because there were no competing bids submitted by the deadline. TerreStar Networks previously filed a reorganization plan that called for secured noteholders to swap more than $850 million in debt for nearly all the equity in reorganized TerreStar. Junior creditors, however, would see little recovery under that plan while existing equity holders would be wiped out. TerreStar Networks scrapped that plan in 2011 in favor of the auction. In November 2011, TerreStar Networks filed a liquidating Chapter 11 plan after striking a settlement with creditors. The creditors' committee initiated lawsuits in July to enhance the recovery by unsecured creditors. Judge Lane approved on Feb. 14, 2012, TerreStar Networks Inc.'s Chapter 11 plan to divvy up the proceeds from the sale to Dish Network. TEXAS GRAND PRAIRIE: 5% Interest Rate Is OK for Cramdown -------------------------------------------------------- The U.S. Court of Appeals for the Fifth Circuit in New Orleans ruled March 1 that a 5% interest rate imposed on a secured lender in cramming down a Chapter 11 plan is a proper interest rate. The report recounts that in bankruptcy court, the lender agreed with the hotel owner that the plurality's 2004 Supreme Court opinion called Till governed the rate to be imposed on a lender through cramdown where the lender votes against the plan. The hotel owner was able to win confirmation of the plan because a separate class of unsecured creditors voted in favor. The plurality in Till said the correct interest rate for cramdown in Chapter 13 is the prime rate of interest plus an additional amount for risk, known as the "prime plus" formula. The hotel owner won the appeal because Circuit Judge Patrick E. Higginbotham concluded that the bankruptcy judge didn't make clearly erroneous findings in deciding that the proper rate is the 3.25% prime rate plus 1.75 additional percentage points to account for risk. The lender had wanted 8.8%. According to Higginbotham, 5% was an "uncontroversial application" of Till. Mr. Rochelle says the 21-page opinion by Judge Higginbotham is of pivotal importance in corporate reorganizations in the states of Texas, Louisiana and Mississippi, where Fifth Circuit law governs. The case on appeal is Wells Fargo Bank NA v. Texas Grand Prairie Hotel Realty LLC (In re Texas Grand Prairie Hotel Realty LLC), 11-11109, U.S. Court of Appeals for the Fifth Circuit (New Orleans). A copy of the Fifth Circuit's March 1 decision is available at http://is.gd/y7mEN4from Leagle.com. About Texas Grand Prairie Texas Grand Prairie Hotel Realty LLC and three affiliates filed for Chapter 11 on May 13 in Fort Worth, Texas (Bankr. N.D. Tex. Case No. 10-43242). The Debtors own four Hyatt Place hotels in Texas. Each said the assets are worth less than $10 million while debt exceeds $10 million. The hotels have a combined 513 rooms and were remodeled in 2007. The properties are known as Hyatt Place San Antonio Airport/North Star Mall; Hyatt Place Houston/Greenpoint/IAH Airport; Hyatt Place Austin/Arboretum; and Hyatt Place Dallas/North Arlington/Grand Prairie. Attorneys at Munsch, Hardt, Kopf & Harr, in Dallas, represent the Debtors. THINES LLC: Case Summary & 5 Unsecured Creditors ------------------------------------------------ Debtor: Thines, LLC 7146 Montevideo Road Jessup, MD 20794 Bankruptcy Case No.: 13-13868 Chapter 11 Petition Date: March 5, 2013 Court: United States Bankruptcy Court District of Maryland (Baltimore) Debtor's Counsel: Arlene Adasa Smith-Scott, Esq. STRATEGIC LAW GROUP, LLC 367 Main Street Laurel, MD 20707 Tel: (240) 280-2370 Fax: (240) 280-2381 E-mail: Asmithscott@aol.com Scheduled Assets: $2,428,300 Scheduled Liabilities: $2,941,340 A list of the Company's five largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/mdb13-13868.pdf The petition was signed by Tyrone Hines, managing member. TIGER MEDIA: Steve Ye Named Chief Financial Officer --------------------------------------------------- Tiger Media Inc. appointed Steve Ye as Chief Financial Officer effective March 4, 2013. Mr. Ye brings to Tiger Media over 15 years of financial management experience, including many years with U.S. listed Chinese companies. Mr. Ye has extensive experience in financial oversight with GAAP, SOX compliance, implementing operational efficiencies, risk management and financial integration, as well as SEC financial reporting, budgeting and treasury management. Mr. Ye joins Tiger Media from Suntech, one of the world's largest producers of solar panels with 2011 revenue of $3.1 billion, and which is listed on the NYSE. At Suntech, Mr. Ye served as the Finance Director since 2011 and was responsible for financial reporting, planning as well as daily operational management of production. Prior to Suntech, Mr. Ye served as Chief Financial Officer for Solar Entertech from 2009 to 2011 and was responsible for SEC public reporting, overseeing all accounting functions and operations management. Prior to Solar Enertech, Mr. Ye worked at Wells Fargo, General Electric and ABN AMRO Bank in various financial leadership roles. Mr. Ye possesses an undergraduate degree from Shanghai International Studies University with a major in Accounting and a Masters of Business Administration from University of Rochester. Mr. Ye is both a Certified Public Accountant and Certified Financial Analyst. Mr. Peter Tan, chief executive officer of Tiger Media, commented, "We are very excited to add Steve Ye to our executive team and I believe Steve will be critical to the implementation and expansion of our extensive concession pipeline. His experience at other NYSE listed companies will be valuable to us in addition to his equipment and component supply chain expertise. We are pleased with the initial interest of both the Luxury Mall LCD and Home Inns network and we expect to announce additional concessions and new media opportunities throughout the year. Steve has a proven track record of effective financial management within a high growth, entrepreneurial Chinese company listed in the U.S market. I would also like to thank Shirley Liu for serving as Chief Finance Officer and she will continue with the Company for a limited transition period before taking time off for family commitments." Mr. Ye added, "I am extremely excited to join Tiger Media. Tiger Media has a highly scalable business focus and I expect to be able to effectively manage both the financial and operational oversight of the Company. I am confident that I can effectively partner with the senior management team to grow and expand Tiger Media." Business Update Tiger Media announced an update on its Luxury Mall LCD and Home Inns concessions. With the first LCD media installation at Raffles City in early February 2013, Tiger Media has launched its Luxury Mall LCD concession network in prominent locations in Shanghai, including Wuxiang Du, Shanghai Center and Xintiandi. The Company's locations have many similar characteristics highlighted by Raffles City, which is a popular luxury mall near the high traffic People's Square and is very close to the famous Bund area of Shanghai. The Company believes that Raffles City's many leading luxury goods chains combined with its ability to reach consumers as they enter the mall complex appeals to the Company's advertisers and potential advertisers. Xintiandi is a very affluent entertainment district in central Shanghai, which allows Tiger Media another touch point to reach consumers throughout the Shanghai metropolitan area. The concession is scheduled to be executed in two phases, with the initial roll out to 10 malls anticipated to be operational before the end of March 2013 and the second roll out of 15 malls anticipated to be operational before the end of April 2013 to complete the Shanghai city network. The Company is also planning to expand the network to other cities and will update investors on the progress of this expansion as it develops. There was a two-month delay in the deployment of this concession due primarily to protracted procurement negotiations with equipment vendors and tailor made installation requirements for each mall. The Company has already entered into certain pre-sale contracts with advertisers and expects sales revenue to ramp up in May 2013. The first two locations for the Home Inns concession are expected to be installed in Shanghai this summer based upon the current government and landlord approval timeline. Both of these hotels are adjacent to Yan An Road, the main central highway in Shanghai. As a result of the high traffic and premium location of these billboards, many prominent advertisers are interested in leasing these locations and we expect these locations will be fully occupied once the government approval is granted. Additional Home Inns locations will be added throughout China and the will provide regular updates to investors throughout the year. However, the Company anticipates that the Home Inns concession will require a longer time to implement than originally anticipated due to the geographical scope and various consents required from parties other than Home Inns. Additional information and images of the Company's concessions are available at www.tigermedia.com Web site. About Tiger Media Tiger Media -- http://www.tigermedia.com-- is a multi-platform media company based in Shanghai, China. Tiger Media operates a network of high-impact LCD media screens located in the central business district areas in Shanghai. Tiger Media's core LCD media platforms are complemented by other digital media formats that it is developing including transit advertising and traditional billboards, which together enable it to provide multi-platform, "cross-over" services for its local, national and international advertising clients. Marcum Bernstein & Pinchuk LLP, in New York, issued a "going concern" qualification on the company's consolidated financial statements for the year ended Dec. 31, 2011. The independent auditors noted that the Company has suffered recurring losses and has a working capital deficiency of roughly $31,000,000 at Dec. 31, 2011, which raises substantial doubt about its ability to continue as a going concern. Searchmedia Holdings reported a net loss of $13.45 million in 2011, a net loss of $46.63 million in 2010, and a net loss of $22.64 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed US$39.88 million in total assets, US$35.41 million in total liabilities, $979,000 in minority interest, and US$3.49 million in total shareholders' equity. TIGRENT INC: Lazarus Discloses 7% Ownership as of Feb. 5 -------------------------------------------------------- In a Schedule 13G filing with the U.S. Securities and Exchange Commission, Lazarus Investment Partners LLLP and its affiliates disclosed that, as of Feb. 5, 2013, they beneficially own 937,241 shares of common stock of Tigrent, Inc., representing 7.2% of the shares outstanding. A copy of the filing is available at: http://is.gd/xMy7Iu About Tigrent Inc. Cape Coral, Fla.-based Tigrent Inc. (OTC BB: TIGE) -- http://www.tigrent.com/-- is a provider of practical, high- quality and value-based training, conferences, publications, technology-based tools and mentoring to help customers become financially literate. The Company provides customers with comprehensive instruction and mentoring in the topics of real estate and financial instruments investing and entrepreneurship in the United States, the United Kingdom, and Canada. The Company reported a net loss of $697,000 on $102.63 million of revenue for the year ended Dec. 31, 2010, compared with net income of $9.78 million on $170.92 million of revenue during the prior year. The Company's balance sheet at Dec. 31, 2010 showed $33.53 million in total assets, $77.77 million in total liabilities, and a $44.24 million stockholders' deficit. TYRONE CROSSINGS: Case Summary & 8 Unsecured Creditors ------------------------------------------------------ Debtor: Tyrone Crossings Investors III, LLC. c/o Porter Development 1700 66th Street North, Suite 300 Saint Petersburg, FL 33710 Bankruptcy Case No.: 13-02844 Chapter 11 Petition Date: March 5, 2013 Court: United States Bankruptcy Court Middle District of Florida (Tampa) Debtor's Counsel: Buddy D. Ford, Esq. BUDDY D. FORD, P.A. 115 N. MacDill Avenue Tampa, FL 33609-1521 Tel: (813) 877-4669 Fax: (813) 877-5543 E-mail: Buddy@tampaesq.com Scheduled Assets: $4,815,598 Scheduled Liabilities: $9,579,812 A copy of the Company's list of its eight largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/flmb13-02844.pdf The petition was signed by Lester M. Porter, III, manager. Affiliate that filed separate Chapter 11 petition: Petition Debtor Case No. Date ------ -------- ---- Kennedy Plaza, LLC 12-13880 09/11/12 UNDERGROUND ENERGY: Files for Bankruptcy to Protect Lease --------------------------------------------------------- Underground Energy Inc. filed a Chapter 11 petition (Bankr. C.D. Cal. Case No. 13-10563) in Santa Barbara, California, on March 4. Los Olivios, California-based Underground Energy Inc. is the operating unit of California oil explorer and developer Underground Energy Corp. It disclosed about $2.5 million in assets and about $4.1 million in debt. According to a statement, three creditors of the operating company have recorded liens against wells drilled on the Debtor's Zaca project and in response to such lien filings, the principal lessor of UGE's major property at Zaca comprising 7,750 gross acres notified the Company that it considers uncured liens to be a breach of the lease which the Lessor believes may be grounds for termination of the lease. Negotiations and discussions with the Lessor have yet to resolve the issue. As a defensive measure and to help protect the Debtor's interest in the major property at Zaca, the operating company decided to seek Chapter 11 protection to forestall cancellation of the Zaca lease and litigation related to the liens. The Debtor's farmout partners have advised the Company that they are waiting for the liens to be removed or subordinated and a resolution of the alleged default by the Lessor prior to spudding wells at Zaca. UGE had been seeking alternatives and negotiating with the Lessor and with creditors of the Operating Company in a manner that would allow the Operating Company to continue operating outside of Chapter 11, however, the Board of Directors of the Company determined that Chapter 11 protection was in the best interests of the Company, its creditors, employees, and other interested parties. While there can be no assurance that the Operating Company will emerge from Chapter 11 with a feasible plan, the Company looks forward to using the protection of Chapter 11 in an attempt to develop and obtain court approval of a plan which will allow the Company to emerge from Chapter 11 and to develop its core assets at Zaca, Burrel and Asphaltea. UGE -- http://www.ugenergy.com/-- is focused on developing its Zaca Field Extension Project in Santa Barbara County, California. UPWARDLY MOBILE: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Upwardly Mobile, LLC 131 E. Broadway Tucson, AZ 85701 Bankruptcy Case No.: 13-03008 Chapter 11 Petition Date: March 5, 2013 Court: United States Bankruptcy Court District of Arizona (Tucson) Judge: Eileen W. Hollowell Debtor's Counsel: Scott D. Gibson, Esq. THOMPSON KRONE GIBSON PLC 6303 E Tanque Verde Road #210 Tucson, AZ 85715 Tel: (520) 884-9694 Fax: (520) 323-4613 E-mail: sdgecf@lawtkg.com Estimated Assets: $100,001 to $1,000,000 Estimated Debts: $100,001 to $1,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. The petition was signed by Barry Bellovin, trustee of Bellovin Revocable Lyng Trust. VANGUARD HEALTH: Term Loan Increase No Impact on Moody's 'B2' CFR ----------------------------------------------------------------- Moody's Investors Service commented that Vanguard Health Systems, Inc.'s proposed re-pricing of its senior secured term loan and contemplated increase in the amount of term loan outstanding by $200 million has no impact on the company's B2 Corporate Family Rating or stable outlook. Existing debt ratings will also remain unchanged if the company completes the funding of the incremental term loan amount. Vanguard owns and operates 28 acute care and specialty hospitals and complementary facilities and services in metropolitan Chicago, Illinois; metropolitan Phoenix, Arizona; metropolitan Detroit, Michigan; San Antonio, Texas; Harlingen and Brownsville, Texas; and Worcester and metropolitan Boston, Massachusetts. Vanguard Health recognized revenue, net of the provision for bad debt, of approximately $6.0 billion for the twelve months ended December 31, 2012. VITRO SAB: Bondholders Get 85.25% Plus Fees Under Settlement ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Vitro SAB settled with dissenting U.S. bondholders by agreeing they will receive cash equal to 85.25% of their principal holdings of $1.2 billion of bonds in default since May 2009. In addition, the Mexican glassmaker agreed the bondholders will be reimbursed $57.5 million for legal expenses fighting in courts in the U.S. and Mexico. The report notes that the settlement gives the same 85.25% recovery to the holders of a few percent of the bonds who weren't members of the dissenting bondholder group. According to the report, the U.S. Bankruptcy Judge in Dallas said last week that he could hold a March 14 hearing for approval of the settlement, which also must be blessed by a court in Mexico. The settlement ends all disputes among Vitro, Fintech, and the bondholders. Chapter 11 Proceedings A group of noteholders opposed the exchange -- namely Knighthead Master Fund, L.P., Lord Abbett Bond-Debenture Fund, Inc., Davidson Kempner Distressed Opportunities Fund LP, and Brookville Horizons Fund, L.P. Together, they held US$75 million, or approximately 6% of the outstanding bond debt. The Noteholder group commenced involuntary bankruptcy cases under Chapter 11 of the U.S. Bankruptcy Code against Vitro Asset Corp. (Bankr. N.D. Tex. Case No. 10-47470) and 15 other affiliates on Nov. 17, 2010. Vitro engaged Susman Godfrey, L.L.P. as U.S. special litigation counsel to analyze the potential rights that Vitro may exercise in the United States against the ad hoc group of dissident bondholders and its advisors. A larger group of noteholders, known as the Ad Hoc Group of Vitro Noteholders -- comprised of holders, or investment advisors to holders, which represent approximately US$650 million of the Senior Notes due 2012, 2013 and 2017 issued by Vitro -- was not among the Chapter 11 petitioners, although the group has expressed concerns over the exchange offer. The group says the exchange offer exposes Noteholders who consent to potential adverse consequences that have not been disclosed by Vitro. The group is represented by John Cunningham, Esq., and Richard Kebrdle, Esq. at White & Case LLP. A bankruptcy judge in Fort Worth, Texas, denied involuntary Chapter 11 petitions filed against four U.S. subsidiaries. On April 6, 2011, Vitro SAB agreed to put Vitro units -- Vitro America LLC and three other U.S. subsidiaries -- that were subject to the involuntary petitions into voluntary Chapter 11. The Texas Court on April 21 denied involuntary petitions against the eight U.S. subsidiaries that didn't consent to being in Chapter 11. Kurtzman Carson Consultants is the claims and notice agent to Vitro America, et al. Alvarez & Marsal North America LLC, is the Debtors' operations and financial advisor. The official committee of unsecured creditors appointed in the Chapter 11 cases of Vitro America, et al., has selected Sarah Link Schultz, Esq., at Akin Gump Strauss Hauer & Feld LLP, in Dallas, Texas, and Michael S. Stamer, Esq., Abid Qureshi, Esq., and Alexis Freeman, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, as counsel. Blackstone Advisory Partners L.P. serves as financial advisor to the Committee. The U.S. Vitro companies sold their assets to American Glass Enterprises LLC, an affiliate of Sun Capital Partners Inc., for US$55 million. U.S. subsidiaries of Vitro SAB are having their cases converted to liquidations in Chapter 7, court records in January 2012 show. In December, the U.S. Trustee in Dallas filed a motion to convert the subsidiaries' cases to liquidations in Chapter 7. The Justice Department's bankruptcy watchdog said US$5.1 million in bills were run up in bankruptcy and hadn't been paid. On June 13, 2012, U.S. Bankruptcy Judge Harlin "Cooter" Hale in Dallas entered a ruling that precluded Vitro from enforcing its Mexican reorganization plan in the U.S. Vitro's appeal is pending. In November 2012, the U.S. Court of Appeals Judge Carolyn King ruled that Vitro SAB won't be permitted to enforce its bankruptcy reorganization plan in the U.S. She said that Vitro "has not shown that there exist truly unusual circumstances necessitating the release" preventing bondholders from suing subsidiaries. In early March 2013, Vitro announce a settlement that will end all litigation between Vitro and certain creditors in Mexico and the United States over the past two years. WADDINGTON NORTH: $250MM Debt Facility Gets Moody's 'B1' Rating --------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to the proposed $250 million senior secured credit facilities for Waddington North America, Inc. Concurrently, Moody's assigned a B2 Corporate Family Rating and a B2-PD Probability of Default Rating to WNA. The rating outlook is stable. Proceeds from the proposed senior secured credit facilities are expected to be used to refinance existing debt (unrated), to provide working capital and capital expenditure needs, and to pay fees and expenses. The following ratings have been assigned subject to review of final documentation: Corporate Family Rating at B2 Probability of Default Rating at B2-PD $30 million senior secured revolving credit facility expiring 2017 at B1 (LGD 3, 37%) $220 million senior secured term loan due 2018 at B1 (LGD 3, 37%) Ratings Rationale: The B2 CFR reflects WNA's small scale, narrow product focus, competitive industry environment, and relatively high financial leverage. The company is highly concentrated in the cyclical food service sector that is sensitive to consumer discretionary spending and the general economy. The rating is also constrained by significant customer concentration, the less differentiated commoditized nature of a large portion of WNA's revenue, and susceptibility to resin cost increases. These factors have led to more volatile earnings for WNA in the past and will likely continue to affect earnings stability going forward. Positive rating consideration is given to WNA's overall good operating margins, driven by its leading position in the niche premium rigid plastic disposable tableware category and the long relationships with its main customers. Moody's also views favorably the improved operating performance in the nine months ended December 2012, as a result of continued integration of acquired Eco Products business, revenue growth in the specialty and premium segments, and improved operating margins -- partly due to a more favorable resin supply contract. Moody's expectation that WNA will maintain a good liquidity position also supports the rating. Despite earnings volatility which will likely persist, the stable rating outlook reflects Moody's expectation that the company will further reduce its leverage and maintain debt/EBITDA (incorporating Moody's standard accounting adjustments) in the range between 4.0-5.0 times. The outlook also incorporates Moody's view that WNA's revenue and earnings will grow modestly over the next year and that its liquidity will remain sound. The rating could be downgraded if debt/EBITDA rises above 5.0 times or free cash flow diminishes on a sustained basis. A loss of major customers, increased earnings volatility or significant margin erosion could also result in a downgrade. Given the relatively small size of the company and its narrow product and industry focus, an upgrade is unlikely in the near term. Over time, if WNA is able to improve its scale and product diversification while maintaining good margins, ratings could be upgraded. Quantitatively, an upgrade would require WNA to sustain debt/EBITDA below 4.0 times and EBIT/interest above 2.0 times. An upgrade would also require the company to reduce earnings volatility from commodity fluctuations and maintain a conservative financial policy. The principal methodology used in this rating was the Global Packaged Goods published in December 2012. Other methodologies used include Loss Given Default for Speculative-Grade Non- Financial Companies in the U.S., Canada and EMEA published in June 2009. WNA primarily designs and manufactures plastic plates, cups and cutlery. Sales during the twelve months ended December 31, 2012 were approximately $344 million. Olympus Partners, a private equity firm, acquired the company in October 2012. WARNER MUSIC: Inks Supplemental Indentures with Wells Fargo ----------------------------------------------------------- In connection with solicitations of consents distributed to holders of outstanding notes on Feb. 21, 2013, of WMG Acquisition Corp. and WMG Holdings Corp. in respect of: (i) WMG's outstanding 11.50% Senior Notes Due 2018 issued pursuant to the Indenture, dated as of July 20, 2011, as amended through March 5, 2013, by and among WMG, the guarantors from time to time party thereto and Wells Fargo Bank, National Association, as Trustee, and WMG's outstanding 6.000% Senior Secured Notes due 2021 and 6.250% Senior Secured Notes due 2021 each issued pursuant to the Indenture, dated as of Nov. 1, 2012, as amended through the March 5, 2013, by and among WMG, the guarantors from time to time party thereto, the Trustee and Credit Suisse AG, as Notes Authorized Agent and as Collateral Agent; and (ii) Holdings' outstanding 13.75% Senior Notes Due 2019 issued pursuant to the Indenture, dated as of July 20, 2011, as amended through March 5, 2013, between Holdings and the Trustee, WMG and Holdings, as applicable, each entered into a supplemental indenture to the Indentures governing the 2018 Notes, the 2019 Notes and the 2021 Notes, as applicable, after the requisite consents with respect to the applicable consent solicitations were received on March 4, 2013. WMG and the subsidiaries of WMG that are guarantors of the 2018 Notes entered into a Fourth Supplemental Indenture, dated as of March 4, 2013, with the Trustee, which supplements the 2018 Indenture. WMG and the subsidiaries of WMG that are guarantors of the 2021 Notes also entered into a Third Supplemental Indenture, dated as of March 4, 2013, with the Trustee, which supplements the 2021 Indenture. Holdings entered into a Fourth Supplemental Indenture, dated as of March 4, 2013, with the Trustee, which supplements the 2019 Indenture. Each Supplemental Indenture amends the applicable Indenture to permit WMG and Holdings, as applicable, to provide certain Specified Information with respect to the future consummation of the proposed acquisition of the Parlophone Label Group from Universal Music Group in satisfaction of the financial reporting covenants in the Indentures governing the Notes. Copies of the Supplemental Indentures are available at: http://is.gd/266VMX http://is.gd/dMiBgB http://is.gd/9EWcSr About Warner Music Group Based in New York, Warner Music Group Corp. (NYSE: WMG) -- http://www.wmg.com/-- was formed by a private equity consortium of investors on Nov. 21, 2003. The Company is the direct parent of WMG Holdings Corp., which is the direct parent of WMG Acquisition Corp. WMG Acquisition Corp. is one of the world's major music-based content companies and the successor to substantially all of the interests of the recorded music and music publishing businesses of Time Warner Inc. The Company classifies its business interests into two fundamental operations: Recorded Music and Music Publishing. The Company's Recorded Music business primarily consists of the discovery and development of artists and the related marketing, distribution and licensing of recorded music produced by such artists. The Company's Music Publishing operations include Warner/Chappell, its global Music Publishing company, headquartered in New York with operations in over 50 countries through various subsidiaries, affiliates and non-affiliated licensees. In May 2011, Warner Music Group Corp. and Access Industries, the U.S.-based industrial group, announced the execution of a definitive merger agreement under which Access Industries will acquire WMG in an all-cash transaction valued at $3.3 billion. The purchase includes WMG's entire recorded music and music publishing businesses. On July 20, 2011, the Company notified the New York Stock Exchange, Inc., of its intent to remove the Company's common stock from listing on the NYSE and requested that the NYSE file with the SEC an application on Form 25 to report the delisting of the Company's common stock from the NYSE. On July 21, 2011, in accordance with the Company's request, the NYSE filed the Form 25 with the SEC in order to provide notification of that delisting and to effect the deregistration of the Company's common stock under Section 12(b) of the Securities Exchange Act of 1934, as amended. On August 2, 2011, the Company filed a Form 15 with the SEC in order to provide notification of a suspension of its duty to file reports under Section 15(d) of the Exchange Act. The Company continues to file reports with the SEC pursuant to the Exchange Act in accordance with certain covenants contained in the instruments governing the Company's outstanding indebtedness. Warner Music incurred a net loss attributable to the Company of $112 million for the fiscal year ended Sept. 30, 2012, compared with a net loss attributable to the Company of $31 million for the period from July 20, 2011, through Sept. 30, 2011. The Company's balance sheet at Dec. 31, 2012, showed $5.19 billion in total assets, $4.33 billion in total liabilities and $864 million in total equity. * * * As reported by the TCR on Feb. 13, 2013, Standard & Poor's Ratings Services placed its ratings on New York City-based recorded music and music publishing company Warner Music Group (WMG) on CreditWatch with negative implications. This action follows the company's announcement that it has entered into a definitive agreement to acquire U.K.-based Parlophone Label Group for about $765 million in cash. WPCS INTERNATIONAL: Stockholders Elect Seven Directors to Board --------------------------------------------------------------- WPCS International Incorporated held its annual meeting of stockholders on Feb. 28, 2013, at which the Company's stockholders elected seven individuals to the Board of Directors, namely: (1) Andrew Hidalgo; (2) Kevin Coyle; (3) Norm Dumbroff; (4) Neil Hebenton; (5) Charles Benton; (6) Sebastian Giordano; and (7) Edward Gildea. The Company's stockholders: (a) ratified the appointment of CohnReznick LLP as the Company's independent registered public accounting firm for the fiscal year ending April 30, 2013; (b) approved an amendment to the Certificate of Incorporation of the Company to effect a reverse stock split of the Company's common stock, at a ratio of not less than one- for-two and not greater than one-for-ten, with the exact ratio to be set within that range in the discretion of the Board of Directors without further approval or authorization of the Company's shareholders, provided that the Board of Directors determines to effect the reverse stock split and that amendment is filed with the Secretary of State of Delaware no later than one year from the date of the Annual Meeting; (c) approved an amendment to the Certificate of Incorporation of the Company to increase the Company's authorized shares of common stock from 25,000,000 to 100,000,000; and (d) approved the potential issuance of more than 20% of the Company's issued and outstanding common stock at a price that is less than the greater of book or market value in accordance with a securities purchase agreement between the Company and the buyers, dated Dec. 4, 2012. As a result of the Company's stockholders approving the potential issuance of more than 20% of the Company's issued and outstanding common stock at a price that is less than the greater of book or market value in accordance with a securities purchase agreement between the Company and the Buyers, dated Dec. 4, 2012, the conversion price of the secured convertible notes and exercise price of the common stock purchase warrants issued pursuant to the Purchase Agreement were adjusted to $0.3077, effective as of Feb. 28, 2013, in accordance with the terms of the Notes and Warrants. On March 4, 2013, the Company filed a certificate of amendment to its Certificate of Incorporation increasing the authorized number of shares of common stock to 100 million. About WPCS International Exton, Pennsylvania-based WPCS International Incorporated provides design-build engineering services that focus on the implementation requirements of communications infrastructure. The Company provides its engineering capabilities including wireless communication, specialty construction and electrical power to the public services, healthcare, energy and corporate enterprise markets worldwide. As reported by the TCR on Dec. 8, 2011, WPCS International and its United Stated based subsidiaries, previously entered into a loan agreement, dated April 10, 2007, as extended, modified and amended several times, with Bank of America, N.A. The Company is seeking alternative debt financing and has conducted discussions with other senior lenders to replace the Loan Agreement. The Company may not be successful in obtaining alternative debt financing or additional financing sources may not be available on acceptable terms. If the Company is required to repay the Loan Agreement, the Company has sufficient working capital to repay the outstanding borrowings. J.H. COHN LLP, in Eatontown, New Jersey, issued a "going concern" qualification on the consolidated financial statements for the fiscal year ended April 30, 2012. The independent auditors noted that the Company is in default of certain covenants of its credit agreement and has incurred operating losses, negative cash flows from operating activities and has a working capital deficiency as of April 30, 2012. These matters raise substantial doubt about the Company's ability to continue as a going concern. WPCS reported a net loss attributable to the Company of $20.54 million for the year ended April 30, 2012, compared to a net loss attributable to the Company of $36.83 million during the prior fiscal year. The Company's balance sheet at Oct. 31, 2012, showed $21.47 million in total assets, $14.69 million in total liabilities and $6.78 million in total equity. "At October 31, 2012, the Company had cash and cash equivalents of $921,206 and working capital of $1,265,636, which consisted of current assets of $15,897,614 and current liabilities of $14,631,978, and on December 4, 2012, repaid the existing loan with Sovereign. However, the Company's outstanding obligations under the Zurich Agreement and Indemnity Agreement raise substantial doubt about the Company's ability to continue as a going concern," according to the Company's Form 10-Q for the period ended Oct. 31, 2012. * 'Wild Card' Bankruptcy Exemption Applies to Cars: 9th Circ. ------------------------------------------------------------- Ciaran McEvoy of BankruptcyLaw360 reported that the Ninth Circuit ruled Tuesday that a California real estate agent may claim a bankruptcy exemption for her 2001 Mercedes-Benz 320E sedan in order for a lower court to determine whether she uses the car for work or primarily for pleasure. The report related that a three-judge panel ruled that Angie M. Garcia may use California's "wild card" or "grubstake" exemption to keep her car. The panel, the report said, affirmed U.S. District Judge Josephine Staton Tucker's decision to remand the case to bankruptcy court so a judge there can determine whether the car is used for work or for pleasure. * Loan Non-Dischargeable When Use of Proceeds Misrepresented ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that U.S. District Judge Norman K. Moon in Lynchburg, Virginia, ruled that when an individual doesn't use proceeds of a loan as promised, the resulting debt won't be discharged in bankruptcy even though the borrower originally intended to repay the debt. The case is Johnson v. Dowling, 12- cv-00065, U.S. District Court, Western District Virginia (Lynchburg). * Judge Posner Writes Elegant Dicta on Complex UCC Issue -------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Circuit Judge Richard A. Posner wrote an opinion on a question involving subordination agreements where the country's courts have different answers. Mr. Rochelle says that although enlightening, Judge Posner's analysis on subordination was unnecessary for the result and therefore appears to fall in the category of "dicata," or statements by a court that aren't binding because they were unnecessary for the result. The case involved first, second and third liens. The holder of the first lien subordinated the debt to the third lien holder. The question for which there are different answers in different courts is whether the second-lien moves up to first place, or the first and third lien holders merely swap positions. According to the report, Judge Posner composed a typically elegant, insightful analysis of the subordination issue. In addition to being dicta, Judge Posner's analysis must take a back seat to state courts who have the final say on questions involving the Uniform Commercial Code. The case turned on the unremarkable proposition that the first- lien creditor couldn't produce a security agreement and therefore ended up with an unsecured debt. The case is Caterpillar Financial Services Corp. v. Peoples National Bank NA, 12-02854, 7th U.S. Circuit Court of Appeals (Chicago). * 10 Florida CDD Bond Ratings Lowered on Inadequate Debt Service ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its long- term and underlying (SPUR) long-term ratings on 10 Florida community development districts' (CDDs) bond series due to its view that these series have inadequate funding of their debt service reserve (DSR) funds. The DSR for each CDD bond series is funded with a surety bond provided by National Public Finance Guaranty Corp., which S&P recently downgraded to 'BB/Developing' from 'BBB/Stable'. Non-ad valorem special assessments imposed and levied on benefited land parcels within each CDD and collected by the respective county in which each district is located secure all the bonds. Special assessments are levied to match debt service payments with very limited excess cash flow; therefore, the DSR is an important security feature that provides additional liquidity if assessments are not received in full or on a timely basis. In S&P's opinion, the speculative-grade credit quality of the DSR provider raises concerns about the availability of this liquidity should it be needed to make debt service payments and weakens a security feature S&P considers essential to maintaining investment-grade ratings on these bonds. The downgraded bond series are as follows: -- Brooks of Bonita Springs CDD, series 2006: to 'BB/Stable' from 'A-/Stable'; -- Brooks of Bonita Springs CDD II, series 2006: to 'BB/Stable' from 'A-/Stable'; -- Oakstead CDD, series 2006A-1 and 2006A-2: to 'BB/Stable' from 'A-/Stable'; -- Westchase CDD (original issuer: Westchase East CDD), series 2007-1: to 'BB/Stable' from 'A/Stable'; -- Westchase CDD (original issuer: Westchase East CDD), series 2007-2: to 'BB/Stable' from 'A/Stable'; -- Westchase CDD (original issuer: Westchase East CDD), series 2007-3 to 'BB/Stable' from 'BBB/Stable'; Hamal CDD, series 2006A: to 'BB/Stable' from 'BBB+/Stable'; Lakewood Ranch 5, series 2007: to 'BB/Stable' from 'BBB/Stable'; Waterchase CDD, series 2007: to 'BB/Stable' from 'A-/Stable'; and Tampa Palms Open Space and Transportation CDD, series 2004: to 'BB/Stable' from 'A-/Stable'. The outlook on the underlying (SPUR) ratings is stable and reflects S&P's view that the current rating level appropriately reflects the risks associated with an inadequately funded DSR. According to Standard & Poor's criteria, the long-term rating on a fully credit-enhanced bond issuance is the higher of the rating on the credit enhancer and the SPUR on the bonds. The bonds are guaranteed by bond insurance policies from National Public Finance Guarantee Corp. (BB/Developing). The positive outlook on the long-term ratings on the bonds is based on the stable outlook of the 'BB' underlying ratings (SPURs) on these bonds in conjunction with the developing outlook on National's rating. Based on S&P's criteria, if the bond insurer's rating and the SPUR are the same, the issue outlook is assigned based on Standard & Poor's assessment of the possible outcomes for the issue rating. In this case, a stable outlook on the 'BB' SPUR and a developing outlook on the 'BB' long-term rating on National results in a positive outlook on the bonds. * Fed Says Modest Growth Spurred by Housing in Survey ----------------------------------------------------- Jeff Kearns and Steve Matthews, writing for Bloomberg News, report that the U.S. economy grew at a modest to moderate pace across most of the country amid rising consumer demand for homes and autos, the Federal Reserve said. "The majority of districts reported modest improvements in labor market conditions, although hiring plans were limited in several districts," the central bank said in its Beige Book business survey, which is based on reports from the Fed's 12 regional banks. "Residential real estate markets strengthened in nearly all districts and home prices rose amid falling inventories across much of the country." The anecdotal snapshot of the economy helps the Federal Open Market Committee evaluate whether the labor market shows signs of the substantial improvement it says would warrant shrinking or halting $85 billion in monthly bond purchases. The committee is scheduled to meet March 19-20. Companies added 198,000 workers last month, more than projected and an indication the job market will keep expanding, according to figures released today by the Roseland, New Jersey- based ADP Research Institute. The jobless rate, while falling from a 26-year high of 10 percent in 2009, has stayed at 7.8 percent to 7.9 percent since September. "This shows there's no seismic change in the underlying momentum of the economy," said Eric Green, the global head of research at TD Securities Inc. in New York. "It's steady as she goes, and in this context that's growth in the 1.5 to 2 percent range in the first half." * Fitch Reports on Impact of Industry Selection on Default Risk --------------------------------------------------------------- Over the period 1980 to 2012, consistently avoiding the top five defaulting sectors results in a 60% reduction in the high yield market's average annual default rate -- from 4.6% to 1.8%, according to a new Fitch Ratings study. The top five defaulting sectors experienced an average annual rate of 13.9% over the 33- year period. The results both build a case for diversification and illustrate that industry selection is a critical component of managing portfolio default risk. Since 1980, roughly half of the 25 sectors tracked by Fitch have produced average annual default rates in a range of 3% - 5%, quite close to the long-term market average of 4.6%. However, there is strong variability over shorter horizons and this presents both risk and opportunity. Fitch examined industry default patterns over a period spanning three decades and $617 billion in defaults and assumed annual sector rotation. The top five defaulting sectors while representing an average 22% of market volume accounted for 70% of default volume. Industries are always in flux; therefore, historical behavior is not necessarily predictive of future performance. But much can be learned from the drivers of default risk. Poorly managed growth, overcapacity, product or business obsolescence, cyclicality -- all of these have had an impact. For full details please see 'Fitch U.S. High Yield Default Insight -- The Impact of Industry Selection on Default Risk', available at http://www.fitchratings.com/ * Moody's Sees Continued Decline of Outstanding Balance of VRDBs ---------------------------------------------------------------- The balance of outstanding variable rate demand bonds and similar variable rate municipal products will continue to decline in 2013, but at a slower pace than in recent years, says Moody's Investors Service. New issuance of VRDBs could follow any increase in long- term tax-exempt interest rates. "Many issuers motivated to take advantage of historically low fixed rates by converting VRDBs to fixed rate alternatives have likely already done so," says Tom Jacobs, Moody's Vice President - - Senior Credit Officer and co-author of Moody's report "2013 VRDB Market Review and Outlook." At the same time, banks' appetite for making direct loans to municipal obligors as an alternative to providing credit and liquidity support for VRDBs will continue to put downward pressure on outstanding VRDB balances. "The recent easing of Basel III liquidity coverage requirements, which we expect to positively affect banks' appetite to write letters of credit and standby bond purchase agreements (SBPAs) in support of VRDBs and the pricing of such facilities, will also contribute to stabilization," says Jacobs. Changes in the tax law, such as a proposed 28% cap on the federal tax exemption included in President Obama's 2013 budget, could make tax-exempt municipal investments less desirable to certain investors, although such a change would likely affect the fixed rate long-term market more than it would the short-term, variable rate market. In fact, issuers reluctant to lock in long-term interest rates might turn to the VRDB market, leading to increased issuance. In recent years new issuance and outstanding balances of VRDBS have declined significantly. In 2012, Moody's rated portfolio of VRDBs and similar variable rate municipal instruments declined by 12%. The outstanding balance of all VRDBs declined for a third consecutive year, ending the year at $264 billion, down from $301 billion in 2011, also a 12% decline. VRDBs outstanding declined by 19% in 2011. Refinancing VRDBs with fixed rate debt, indexed variable rate debt and direct bank loans accounted for most of the decline, says Moody's. During 2012, ratings on VRDBS migrated downward, as Moody's lowered the ratings of many of the banks providing credit and liquidity support for these securities. Moody's notes that market access was available to issuers whose support facilities expired - virtually all expirations were resolved through extension, substitution, refinancing or conversion to bank loans. * Moody's Sees Modest Growth for US For-Profit Hospital Sector -------------------------------------------------------------- Moody's stable outlook for the US for-profit hospital sector reflects expectations for modest earnings growth over the next 12- 18 months, the rating agency says in a new report. But earnings growth will be at the low end of the range for a stable outlook, given the many headwinds facing the sector. "We expect same facility aggregate EBITDA to rise by around 0.0% to 0.5% in the next year or so," says Vice President -- Senior Credit Officer, Dean Diaz in "EBITDA Growth in 2013 Will Be Difficult But Resume in 2014 As Coverage Expands." "Weak admissions, a decline in the number of patients with high-paying commercial insurance and increasing bad debt expense are all currently constraining earnings." Weak patient volumes will continue throughout 2013, Diaz says, as those who have lost their health insurance or must pay a larger portion of their medical expenses defer non-urgent care. In addition, reimbursement rates will remain under pressure as growth in the portion of revenue from patients with commercial insurance declines as a percentage of total patient service revenue, and as more services are performed on an outpatient basis. But the expansion of health insurance coverage under healthcare reform laws should trigger a return to modest EBITDA growth beginning next year, Diaz says. "Volumes and pricing should see more positive momentum in 2014, as the provisions of the Patient Protection and Affordable Care Act start to kick in, including, most importantly, the expansion of coverage to approximately 27 million individuals currently without insurance." Potential budget cuts to Medicare spending remain a wild card for US for-profit hospitals. If the 2% cut included in the sequester that became effective on March 1 remains in place, EBITDA likely will fall this year. If, however, Congress reverses the cuts, it could take a broader approach to cutting spending that would take time to implement, delaying reductions in Medicare payments to hospitals and relieving pressure on EBITDA growth during the outlook horizon. In an effort to maintain their profitability, hospitals will stay focused on controlling medical device and pharmaceutical costs, while their uncompensated care costs should decline as the number of insured increases next year, Diaz says. Until then, margins will remain under pressure as hospitals employ more physicians and acquire physician practices and smaller or struggling hospitals, which will further dilute their margins, at least initially. * Moody's Reports Stable Outlook on Closed-end Fund Sector ---------------------------------------------------------- Moody's holds a stable outlook on the leveraged closed-end fund sector for 2013, as slowly improving macroeconomic factors, a low interest-rate environment and better underlying securities boost CEF investments, says Moody's Investors Service in its new sector comment "Closed-End Funds: 2013 Outlook and 2012 Review." "We believe conditions are suitable for sustaining leverage at or near the current modest levels of 27%, in the aggregate," said Neal Epstein, a Moody's Vice President -- Senior Credit Officer. "Liquidity of portfolio assets has returned to normalized levels, reducing a significant concern during the 2008 financial crisis, and credit quality is unlikely to deteriorate materially as the economy is expected to slowly recover." These improvements will be seen in municipal bond CEFs in particular, as public finance issues begin to strengthen relative to 2012, when 80% of rating actions resulted in downgrades. However, some CEFs that specialize in taxable high-yield investments may be affected by the increasing number of weaker issuers entering the sector, says Moody's. The short-term credit quality of variable rate demand preferred securities issued by CEFs is driven by the rating of liquidity providers for the VRDP's many of which have been under credit pressure. Moody's concluded rating actions on banks that provide liquidity support in June 2012, and in 2013, the rating agency expects these ratings to remain stable, given their stable short- term rating outlooks. Moody's expects interest rates to remain low, which will support current fixed-charge coverage, given historically low funding rates and the steep yield curve. In addition, refinancing, upsizings and redemptions are unlikely in 2013 as most funds have already completed necessary capital transactions, says Moody's. Moody's notes that the outlook for the CEF sector might change in the event of an accelerated economic recovery, and an early curtailment of the Fed's supportive monetary policy, which would likely cause interest rates, and leverage costs to rise rapidly. The extreme opposite economic scenario might also affect its outlook for the CEF sector; a fiscal policy stalemate in Washington could point the economy toward recession, which could undermine investment fundamentals for the sectors in which CEFs are invested. * White House Asks CFTC Chief to Stay for Another Term ------------------------------------------------------ Scott Patterson and Jamila Trindle, writing for The Wall Street Journal, reported that the Obama administration has asked Gary Gensler to serve a second term as the U.S.'s top futures-industry regulator, according to people familiar with the matter. The question now is whether Mr. Gensler will say yes, WSJ said, as Mr. Gensler, who heard from the White House in January, hasn't decided whether he will stay as chairman of the Commodity Futures Trading Commission. Instead, he is interested in taking on a role as a senior economic official elsewhere in the administration, these people say, according to WSJ. Top Senate aides and CFTC commissioners say they believe Mr. Gensler will leave the agency later this year and Mr. Gensler said during a meeting with CFTC officials he might leave the commission as soon as this summer, according to a person familiar with the meeting, WSJ related. WSJ added that Mr. Gensler said in an interview that he plans to keep working on rules to regulate derivatives trading and hasn't decided whether he will stay at the agency for a second term. * Bankruptcy Filings Show Signs of Bottoming Out in February ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that bankruptcy filings show signs of bottoming out following two years of persistent declines. After January when bankruptcies of all types were the fewest in five years, the 82,300 filings in February represented an increase from January although 17.2% on a daily basis below the same month in 2012, according to data compiled from court records by Epiq Systems Inc. The same is true for Chapter 11, where larger companies or wealthy individuals reorganize or sell assets. Filings climbed from January to February although last month's 800 Chapter 11s were 18.9% fewer than the same month a year ago. Commercial bankruptcies of all types are down even more steeply, Epiq reported. In February, business bankruptcies were 25.2% lower from a year earlier. February followed a pattern where commercial bankruptcies are trending down more steeply than bankruptcies of all types. So far this year, filings are down 16% in all 50 states compared with the same period in 2012. States with the most bankruptcies in February per capita were Tennessee, Alabama and Georgia, the same as the prior month. Declining 14.1% across the country, bankruptcies totaled 1,185,000 in 2012, compared with 1,380,000 in 2011. The 2011 bankruptcies represented an 11.7 decline from the 1.56 million in 2010, the most bankruptcies since the all-time record of 2.1 million set in 2005. In the last two weeks before the bankruptcy laws tightened in 2005, 630,000 American sought bankruptcy protection. * Debt, Bankruptcy in Retirement Growing Trend in Canada -------------------------------------------------------- Personal Bankruptcy Canada disclosed that it is a fairly well established fact that Canadians are not putting aside enough money for retirement, and to make matters worse, more Canadians are carrying debt into retirement. One-third of retired households carry an average of $60,000, and 17% carrying an average debt of $100,000 or more. According to data released last week by TD Bank, debt accumulation by those aged 65 and over is markedly up. This group gained more than $6,000 in new debt, or 15 percent more in 2012 than the previous year and most of this is from consumer spending. It's an increase that Personal Bankruptcy Trustee, David Smith, says is contributing to the rising number of insolvent "grandpa debtors". "Living on a fixed income can pose many challenges for new retirees but with more seniors entering retirement with debt and not enough savings, any sort of unexpected financial hiccup can push them into a bankruptcy," says Mr. Smith, President of Personal Bankruptcy Canada, a nationwide network of bankruptcy trustees dedicated to helping people deal with bad debt. Data released by the Office of the Superintendent of Bankruptcy (OSB) last week shows a close to 10 percent increase in consumer filings in New Brunswick, the province with the highest proportion of the population aged 65 or older. "Over half of Canadians aged 50 and older believe they will run out of retirement savings within the first 10 years after leaving work. It's amazing how many retirees I see using credit cards to pay their bills. The reality is that too few Canadians are properly prepared for retirement," says Smith. Seniors and retirees in need of support or assistance with debt are advised to speak with a bankruptcy trustee. About Personal Bankruptcy Canada Personal Bankruptcy Canada is a free website that provides consumers with general debt and bankruptcy resources, including access to highly qualified bankruptcy trustees across the Canadian provinces and valuable education information on bankruptcy and debt management. * Banks Defeat Bid to Revive Auction-Rate Antitrust Case -------------------------------------------------------- David McLaughlin & Christie Smythe, writing for Bloomberg News, reported that Goldman Sachs Group Inc. (GS), UBS AG (UBSN) and Citigroup Inc. (C) defeated an effort to revive lawsuits claiming they violated antitrust laws by abandoning the market for auction- rate securities. The U.S. Court of Appeals in New York upheld a lower- court ruling that dismissed complaints brought on behalf of issuers of the securities and investors, according to the Bloomberg report. The market was facing an "inevitable death spiral" and the banks' exit from the market was rational, the court said. "Defendants' alleged actions -- their en masse flight from a collapsing market in which they had significant downside exposure -- made perfect business sense," the court said, Bloomberg cited. Before the market failed, auction-rate securities had their interest rates periodically reset at auctions, Bloomberg related. Plaintiffs, including the Baltimore City Council, claimed the banks had propped up the market by bidding and violated antitrust laws by colluding to simultaneously exit the market, according to court papers. Other banks named as defendants in the case included Morgan Stanley (MS), JPMorgan Chase & Co. (JPM), Deutsche Bank AG (DBK) and Bank of America Corp. (BAC) The cases are Mayor and City Council of Baltimore v. Citigroup Inc., 10-0722, and Mayfield v. Citigroup Inc., 10- 00867, U.S. Court of Appeals for the Second Circuit (Manhattan). * House Votes to Avert Shutdown as Obama Looks for Big Deal ----------------------------------------------------------- Rosalind S. Helderman and Philip Rucker, writing for The Washington Post, reported that the House took its first step to avert a government shutdown on Wednesday as President Obama began a series of rare meetings with Republican lawmakers, reviving chances for a long-term deal to reduce the deficit. According to the Post, Washington is looking to forgo forcing a fiscal crisis this month, as the House approved a six-month spending bill that would fund the government through the end of the current fiscal year. The measure passed 267 to 151, with most Republicans supporting it and most Democrats voting against it, the Post said. The stopgap measure provides $982 billion, enough to keep federal agencies humming past March 27, when the mechanism currently funding the government expires, but it would lock in the across- the-board spending cuts known as the sequester for the rest of the fiscal year, the Post said. The bill now heads to the Senate, where Democrats are likely to seek amendments to help blunt the impacts of the domestic spending cuts that began last week but there is bipartisan optimism that a final version of the bill will clear Congress by the end of the month, the Post added. With a government shutdown now unlikely, the Post said Obama is turning his focus to a new round of talks that the White House hopes could break Washington's fiscal impasse. After more than two years of negotiations with Republican leaders failed to achieve a "grand bargain," Obama is courting rank-and-file Republicans he believes might be interested in a deal pairing cuts to entitlement programs with a tax overhaul that would include new revenues, the report added. * Stress Tests Seen Boosting U.S. Bank Shareholder Payouts ---------------------------------------------------------- Dakin Campbell and Hugh Son, writing for Bloomberg News, reported that the six largest U.S. banks may return almost $41 billion to investors in the next 12 months, the most since 2007, as regulators conclude firms have amassed enough capital to withstand another economic shock. Lenders including Citigroup Inc. (C) and Bank of America Corp. (BAC) will buy back $26.4 billion in shares, up from $23.8 billion, according to the average estimate of three Wall Street analysts, Bloomberg said. An additional $14.5 billion will be paid in dividends, $3.4 billion more than 2012, separate estimates show. The payouts are contingent on approval by the Federal Reserve. Bloomberg said the central bank will release preliminary results of its stress tests on the 18 largest U.S. lenders. Next week, it will tell banks whether they can increase their payouts. "You've gone from a few years ago, when the industry as a whole didn't have enough capital, to the point where in the not- too- distant future, it's going to have too much," Jason Goldberg, a New York-based banking analyst at Barclays Plc, said in a telephone interview with Bloomberg. The Fed's endorsement is "a Good Housekeeping seal of approval." * With Legal Reserves Low, Bank of America Faces a Big Lawsuit -------------------------------------------------------------- Jesse Eisinger, writing for ProPublica, reported that Bank of America has been underestimating its legal risks for years, and brazenly so, according to its critics. Is that strategy about to pay off with the Federal Reserve? On Thursday, the Fed will release figures on how much capital the nation's biggest banks must have to cover a "stress" situation and the following week, investors find out whether those banks will be able to return more of their capital to shareholders by paying dividends or buying back stock, the report said. According to the report, last year, the Fed passed most of the big banks and let them pay out billions. Bank of America, sensing a request would be unwelcome, didn't even ask. This year, however, Wall Street expects that Bank of America will get the green light yet the bank continues to face gargantuan payouts to clean up legal disputes from the bubble years. Now a lawsuit suggests that the bank's mortgage portfolio could cost it tens of billions more than it had planned, the report added. In one big case, if things go wrong, Bank of America may be required to make good on many more billions worth of bad mortgages from Countrywide Financial, which the bank acquired, in the sense that one acquires Ebola virus, in 2008. The dispute, according to the report, involves a 2011 settlement that Bank of America reached with some of the world's biggest investors, including Pimco and BlackRock, for $8.5 billion. That amount covers more than $400 billion of Countrywide loans, on which there have been tens of billions of losses. The actual loss total is in dispute because they are estimates, but it ranges from $70 billion or so to well over $100 billion. That means, at the high end of the range, the settlement was for pennies on the dollar. The report said that on a conference call last week held by Mike Mayo, the CLSA bank analyst, a legal expert suggested that if things went south in the courts for Bank of America, the settlement might rise to $25 billion to $30 billion. * Morgan Stanley Seeks Dismissal of MetLife Mortgage Suit --------------------------------------------------------- Chris Dolmetsch, writing for Bloomberg News, reported that Morgan Stanley asked a judge to dismiss a suit filed by MetLife (MET) Inc. over mortgage-backed securities, saying the insurer knew the U.S. housing market was starting to deteriorate before it bought most of them. MetLife had invested about $56.5 billion in residential mortgage- backed securities before 2008, making it a "sophisticated investor," and the insurer that same year bought the mortgage unit of First Horizon National Corp., which had originated loans for securities in the case, lawyers for Morgan Stanley said during a hearing before New York State Supreme Court Justice Eileen Bransten in Manhattan, according to the Bloomberg report. The New York-based insurer knew that underwriting standards for mortgages had started to deteriorate and had already begun to reduce its exposure to mortgage-backed securities by mid- 2007, before it made 36 of the 52 purchases at issue in the case, Morgan Stanley (MS) attorneys said in a court filing, the Bloomberg report further related. "Not only did MetLife invest more than $50 billion in mortgage- backed securities, one of their affiliates originated the mortgages that are alleged to be fraudulent in this case," James P. Rouhandeh of Davis Polk & Wardwell LLP, an attorney for New York-based Morgan Stanley, said during the hearing, Bloomberg cited. The case is Metropolitan Life Insurance Co. v. Morgan Stanley, 651360/2012, New York State Supreme Court, New York County (Manhattan). * HSBC Sells U.S. Loan Portfolio for $3.2 Billion ------------------------------------------------- Julia Werdigier, writing for The New York Times' DealBook blog, reported that the British bank HSBC made some progress on Tuesday in shrinking its consumer loan portfolio in the United States, which has been a drag on its earnings. The DealBook said HSBC agreed to sell a portfolio of personal unsecured loans and mortgages to Springleaf Finance and the Newcastle Investment Corporation for $3.2 billion in cash. HSBC also said it was selling Springleaf its loan servicing facility in London, Ky. Reducing the loan book in the United States, which it acquired through the takeover of the former Household International subprime lender, has been a priority for HSBC's management, according to the DealBook. The bank started to wind down the American loan portfolio about five years ago after huge loan losses at the business prompted management to admit the 2003 acquisition was a mistake. If successful, the most recent sale would reduce the old Household portfolio to about $39 billion of assets, according to HSBC. The sale to Springleaf and Newcastle is expected to be completed before the end of this year. The portfolio includes about 400,000 loans, which will be managed by Indiana-based Springleaf, Newcastle said in a statement. * Former Wells Fargo Broker Is Sentenced to Two Years ----------------------------------------------------- Susanne Craig, writing for The New York Times' DealBook blog, reported that a federal judge in California has sentenced Philip Horn, a former Wells Fargo broker who pleaded guilty to defrauding more than a dozen clients, to two years in jail. The judge, Gary A. Feess, noted in handing down the sentence on Monday that Mr. Horn had already paid more than $1 million in restitution, according to a news release issued by Andre Birotte Jr., United States attorney for the Central District of California, the DealBook related. The two-year sentence is longer than the 18 months the United States attorney's office had recommended, the DealBook noted. A spokeswoman for Wells Fargo said the bank believed that the court "acted appropriately in the resolution of the issues presented to it." * Ex-Kirkland Partner Pleads Guilty to $2-Mil. Tax Scheme --------------------------------------------------------- Michael Bathon, substituting for Bloomberg bankruptcy columnist Bill Rochelle, reports that former Kirkland & Ellis LP senior partner Theodore Freedman pleaded guilty to fraud in connection with the filing of false tax forms. According to the report, Mr. Freedman changed his plea March 5 from not guilty to guilty of four counts of tax fraud. U.S. District Judge Deborah Batts in Manhattan accepted the plea and set sentencing for Sept. 17. Freedman's lawyers reached a plea agreement with U.S. attorneys. Indicted in July 2011, Mr. Freedman misrepresented his income as a bankruptcy partner at the law firm by about $2 million, the U.S. said. He also claimed more than $500,000 in expenses for a sole proprietorship that didn't exist, the government said. Freedman was a member of the firm's restructuring group. His income for the years 2001 through 2004 was $5.39 million, compared with the $2.1 million he reported for the period, the U.S. said in a statement. The tax loss to the government from Freedman's fraud was more than $1 million, the U.S. said. He faced a maximum sentence of 12 years in prison, if convicted on all charges. At the time of his indictment, Kirkland & Ellis said it "relates exclusively to Mr. Freedman's personal conduct. Accordingly the firm will not comment on the matter." The case is U.S. v. Freedman, 11-cr-00599, U.S. District Court, Southern District of New York (Manhattan). * Judge Lyons Retiring From Bankruptcy Bench in Trenton, NJ ----------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that U.S. Bankruptcy Judge Raymond T. Lyons in Trenton, New Jersey, will retire June 30, to be replaced by Christine Gravelle, a lawyer with Markowitz Gravelle LLP in Lawrenceville, New Jersey. Judge Lyons went on the bankruptcy bench in 1999 and will have served a full 14-year term. He said in an interview that he will join the firm Fox Rothschild LLP. Serving as mediator, Judge Lyons helped negotiate a settlement laying the foundation for the reorganization of Washington Mutual Inc. * BOOK REVIEW: Stephanie Wickouski's Bankruptcy Crimes ------------------------------------------------------ Author: Stephanie Wickouski Publisher: Beard Books Softcover: 395 Pages List Price: $124.95 https://ecommerce.beard.com/beardbooks/bankruptcy_crimes_third_edi tion.html Review by Gail Owens Hoelscher Did you know that you could be executed for non-payment of debt in England in the 1700s? Or that the nailing of an ear was the sentence for perjury in bankruptcy cases in 1604? While ruling out such archaic penalties, Stephanie Wickouski does believe "in the need for criminal sanctions against bankruptcy fraud and for consistent, effective enforcement of those sanctions." She decries the harm done to individuals through fraud schemes and laments the resulting erosion in public confidence in the judicial system. This leading authoritative treatise on the subject of bankruptcy fraud, first published in August 2000 and updated annually with new material, will prove invaluable for bankruptcy law practitioners, white collar criminal practitioners, and prosecutors faced with criminal activity in bankruptcy cases. Indeed, E. Lawrence Barcella, Jr. of Paul, Hastings, Janofsky, and Walker, in Washington, DC, says, "If I were a lawyer involved in a bankruptcy matter, whether civil or criminal, and had only one reference work that I could rely upon, it would be this book." And, Thomas J. Moloney with Cleary, Gottlieb, Steen & Hamilton describes the book as "an essential reference tool." An estimated ten percent of bankruptcy cases involve some kind of abuse or fraud. Since launching Operation Total Disclosure in 1992, the U.S. Department of Justice has endeavored to send the message that bankruptcy fraud will not be tolerated. Bankruptcy judges and trustees are required to report suspected bankruptcy crimes to a U.S. attorney. The decision to prosecute is based on the level of loss or injury, the existence of sufficient evidence, and the clarity of the law. In some cases, civil penalties for fraud are deemed sufficient to punish and deter. Ms. Wickouski suggests that some lawyers might not recognize criminal activity that the DOJ now targets for investigation. She gives several examples, including filing for bankruptcy using an incorrect Social Security number, and receiving payments from a bankruptcy debtor that were not approved by the bankruptcy court. In both of these real life examples, DOJ investigations led to convictions and jail time. Ms. Wickouski says that although new schemes in bankruptcy fraud have come along, others have been around for centuries. She takes the reader through the most common traditional schemes, including skimming, the bustout, the bleedout, and looting, as well as some new ones, including the bankruptcy mill. The main substance of Bankruptcy Crimes is Ms. Wickouski's detailed analysis of the U.S. Bankruptcy Criminal Code, chapter 9 of title 18, the Federal Criminal Code. She painstakingly analyzes each provision, carefully defining terms and providing clear and useful examples of actual cases. She ends with a good chapter on ethics and professional responsibility, and provides a comprehensive set of annexes. Bankruptcy Crimes is never dry, and some of the cases will make you nostalgic for the days of ear-nailing. This comprehensive, well researched treatise is a particularly invaluable guide for debtors' counsel in dealing with conflicts, attorney-client relationships, asset planning, and an array of legal and ethical issues that lawyers and bankruptcy fiduciaries often face in advising clients in financially distressed situations. Stephanie Wickouski is a partner in the New York office of Bryan Cave LLP. Her practice is concentrated in business bankruptcy, insolvency, and commercial litigation. This book may be ordered by calling 888-563-4573 or through your favorite Internet bookseller or through your local bookstore. ********* 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 ***