/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/130313.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, March 13, 2013, Vol. 17, No. 71 Headlines 710 LONG RIDGE: Nursing Centers Have Logan as Claims Agent 710 LONG RIDGE: Final Cash Collateral Hearing Today 710 LONG RIDGE: CBA Modified; Still Needs DIP Financing A123 SYSTEMS: Fisker Questions Ch. 11 Plan, Cites $139M Claim AHERN RENTALS: Plan Hearing Moved to June, Lienholders Amend Plan ALLEN FAMILY: Del. Superior Court Rules in Wrongful Death Case AMERICAN AIRLINES: Attys Pull Back Curtain on US Airways Deal AMERICAN AIRLINES: S&P Rates 5.625% Class B Certificates 'B+' AMERICAN AIRLINES: February Load Factor Hits All-Time Record High AMERICAN AIRLINES: Committee Wins OK for Hay Group as Advisor AMERICAN AIRLINES: Bondholders Failed to Post $100MM Appeal Bond AMERICAN AIRLINES: Sale-Leaseback of 15 Boeing Planes Okayed AMERICAN AIRLINES: Proposes Jones Day as Special Counsel AMERICAN INT'L GROUP: Shareholders as Group Can Sue U.S. AMERICAN SUZUKI: Court Enters Second Modified Plan Order ARGOSY ENERGY: Enters Into Forbearance Agreement with Lender ATKINS NUTRITIONALS: S&P Assigns Prelim. 'B-' CCR; Outlook Stable ATP OIL: Macquarie Unit Sues Debtor Over Royalties ATP OIL: Gulf Island to Seek Bluewater Cheviot Balance Repayment BELDEN INC: Moody's Assigns 'Ba2' Rating to Proposed Euro Notes BELDEN INC: S&P Rates New EUR200MM Sr. Subordinated Notes 'B+' BERNARD L. MADOFF: Merkin Sued by Charity over Losses BEST INTERNATIONAL: Judge Recommends Stay of US v. Safeco Suit BIG M: Court Approves PwC as Financial Advisor BIG M: Court Approves Lowenstein Sandler as Bankruptcy Counsel BIG M: Court Approves GRL Capital's Langberg as CRO C. W. MINING: Improper Punctuation Dooms UCC Financing Statement CCT RESERVE: Dist. Court Won't Issue Stay Ruling in CresCOM Suit CENTENNIAL BEVERAGE: Hires RGS as Financial Advisor CENTENNIAL BEVERAGE: Committee Taps Munsch Hardt as Attorneys CENTENNIAL BEVERAGE: Committee Hires Lain Faulkner as Advisor CERIDIAN CORP: Proposed US$400MM Debt Gets Moody's 'Caa3' Rating CERIDIAN CORP: S&P Assigns 'CCC' Rating to $400MM Notes Due 2021 COMBAT SPORTS: Judge Enters TRO on U.S. Actions CONEXANT SYSTEMS: Final Hearing on DIP Facility Set for April 10 CONEXANT SYSTEMS: Proposes A&M as Financial Advisor CONEXANT SYSTEMS: Hearing on Plan Disclosures Set for April 10 DEWEY & LEBOEUF: Ex-Staffers Can Move Ahead With WARN Class Action DEWEY & LEBOEUF: Yoon & Kim Approved as Collection Attorneys DEWEY & LEBOEUF: Adler Approved as Collection Attorneys DIGITAL DOMAIN: D&O Investigation Fees Increased to $725,000 DOW CORNING: 6th Cir. Affirms Ruling on Time Value Credits DVORKIN HOLDINGS: Court OKs Carpenter Lipps as Conflicts Counsel EASTMAN KODAK: Posts Bigger Loss, But Sees Mid-2013 Ch.11 Exit ERESEARCH TECHNOLOGY: Moody's Keeps 'B2' CFR After Dividend Plan ERESEARCH TECHNOLOGY: S&P Revises Rating Outlook to Stable FALCON GAS: Natural Gas Co. Wants Trustee for Arcapita Subsidiary EAST COAST BROKERS: Section 341(a) Meeting Scheduled for April 8 FOURTH QUARTER PROPERTIES: Section 341(a) Meeting on April 9 GENERAL EMPLOYMENT: Under NYSE MKT Listing Periodic Review GENERAL MOTORS: E.D. Mich. Court Rules in Trombly Suit GIBRALTAR KENTUCKY: Amends Plan, Sale Hearing Set for March 21 GLOBAL GEOPHYSICAL: Moody's Lowers CFR to B3; Outlook Negative GLOBAL SHIP: Lenders OK Waiver on Leverage Ratio Test GOODMAN NETWORKS: Moody's Confirms 'B2' CFR; Outlook Negative GURSHEEL DHILLON: Dismissal of Suit v. Tenn. Medical Board Urged HELLER EHRMAN: Has Claim v. 4 Law Firms for Ex-Partners' Work HOSTESS BRANDS: Apollo's $410MM Bid for Snack Cakes Unchallenged HOWREY LLP: Former Partners Sued for Fraudulent Transfers INTERFAITH MEDICAL: Wants More Time to File Plan LAKELAND INDUSTRIES: May Default on TD Bank Facility LANDMARK FENCE: Employees' Class Suit Goes Back to Bankr. Court LE-NATURE'S INC: 3rd Circ. Upholds Exec's 15-Year Sentence LEGENDS GAMING: Casino Wants Bonuses to Fend Off Competitors LEUCADIA NATIONAL: Moody's Ups CFR to Ba1 After Jefferies Merger LEVI STRAUSS: Fitch Assigns 'BB-' Rating to $140MM Senior Notes LEVI STRAUSS: Debt Level Decline Cues Moody's to Raise CFR to Ba3 LEVI STRAUSS: S&P Affirms 'B+' CCR & Revises Outlook to Positive LONGWEI PETROLEUM: Receives NYSE MKT Delisting Notice MAAN AL SANEA: Court Allows AHAB's Claims to Proceed to Trial MARBLE CLIFF: Court Rejects 32-Year Repayment Plan MF GLOBAL: Trustee, et al. Ink Deal to Settle Intercompany Claims MF GLOBAL: Hearing on Plan Outline Revisions Today MF GLOBAL: Sapere in Appeals Court vs. Corzine Insurance MPG OFFICE: Enters Into Agreement to Sell U.S. Bank Tower NATIONAL POOL: Court Reinstates Clawback Suit Against Josantos OCALA FUNDING: Judge Approves Outline of Liquidation Plan OTANGELES LLC: Creditor Preempts Bid to Use Cash With Objection OVERSEAS SHIPHOLDING: Employs Deloitte Tax, Mercer PATRIOT COAL: Mine Workers Oppose Bonuses for Managers PLAYBOY ENTERPRISES: S&P Lowers Corporate Credit Rating to 'CCC+' PROCTOR HOSPITAL: Moody's Reviews 'Ba2' Rating for Downgrade PUEBLO OF SANTA ANA: Fitch Affirms 'BB' Issuer Default Rating PROFESSIONAL VETERINARY: Bankr. Court Won't Hear Lawsuit v. D&Os PULSE ELECTRONICS: Oaktree Capital Agrees Forbearance QUALTEQ INC: Kirkland Won't Get Paid for Overhead Cost RAPID-AMERICAN CORP: Proposes Logan & Co. as Claims Agent READER'S DIGEST: Seeks to Employ Ernst & Young as Tax Provider RG STEEL: Further Amends Agreement to Resolve SNA Objection RICHARD FRIEDBERG: Chapter 7 Conversion Affirmed ROCMEC MINING: Interim Financial Statements Need Amendment RODEO CREEK: Sec. 341(a) Meeting of Creditors Moved to April 8 RODEO CREEK: US Trustee Appoints 3 Members to Creditors' Committee SNO MOUNTAIN: Judge Clears $4.6-Mil. Sale to Lenders SOUTHERN AIR: Gets Court OK to Pay $96,000 to 4 Key Employees TEREX CORP: S&P Affirms 'BB-' CCR and Revises Outlook to Positive TERRESTAR CORP: Reorganization Plan Declared Effective TGAG LLC: Goddard Elementary School Files in White Plains TULARE LOCAL: Fitch Lowers Revenue Bond Ratings to 'B+' UNIGENE LABORATORIES: Remains in Default of Primary Debt Terms WESTERN REFINING: Moody's Rates New Senior Notes Issue 'B2' WESTERN REFINING: S&P Assigns 'BB-' Rating to $350MM Debt WINDSORMEADE OF WILLIAMSBURG: To Seek Plan Approval in May WINDSORMEADE OF WILLIAMSBURG: Taps BMC as Claims & Balloting Agent WINDSORMEADE OF WILLIAMSBURG: Wins Interim Approval of Financing * Chapter 13 Circuit Split Set for March 19 Argument * Refinancings Still High on Newer U.S. Mortgages, Fitch Reports * Moody's Outlook on Worldwide Beverage Sector is Positive * Moody's Forecasts Strong 2013 Revenues for US Lodging Sector * Small U.S. Banks Hit by Rising Insurance Cost * HSH Nordbank Settles 2008 CDO Suit in N.Y. Against UBS * Illinois Accused of Fraud, Settles with SEC * USDA to Bail Out Sugar Processors * Hearing Today on Asbestos Trust Transparency Bill * Diamond McCarthy Opens Los Angeles Office; Bazoian Joins Firm * Upcoming Meetings, Conferences and Seminars ********* 710 LONG RIDGE: Nursing Centers Have Logan as Claims Agent ---------------------------------------------------------- 710 Long Ridge Road Operating Company II, LLC, and its affiliates sought and obtained approval to hire Logan & Company, Inc., as the official noticing and claims agent. Although the Debtors have not yet filed their schedules of assets and liabilities, they anticipate that there will be in excess of 4,000 entities to be noticed. Due to the large number of parties who would be required to receive notice in the Chapter 11 cases from the Clerk's Office of the U.S. Bankruptcy Court for the District of New Jersey, the Debtors have determined that it would be in the estates' best interest to retain an outside firm to provide notices and to process claims. For monthly data storage, Logan will charge the Debtor $0.10 per creditor name per month. Logan will charge $205 per hour for Web site design and maintenance. For consulting services, professionals at Logan will provide a 30% reduction of their hourly rates: Discounted Category Rate -------- ---------- Principal $208 Court Testimony $228 Senior Consultant $158 Statement & Schedule Preparation $154 Account Executive Support $144 Public Web site Design and Maintenance $144 Programming Support $116 Project Coordinator $98 Quality Control and Audit $54 Data Entry & Other Admin. Tasks $54 Clerical Support $35 Prior to the Filing Date, the Debtors provided Logan a $5,000 retainer. About 710 Long Ridge 710 Long Ridge Road Operating Company II LLC and four affiliates own sub-acute and long-term nursing care facilities for the elderly in Connecticut. The facilities, which are managed by HealthBridge Management LLC, are Long Ridge of Stamford, Newington Health Care Center, Westport Health Care Center, West River Health Care Center, and Danbury Health Care Center. 710 Long Ridge and its affiliates sought Chapter 11 protection (Bankr. D.N.J. Case Nos. 13-13653 to 13-13657) on Feb. 24, 2013, to modify their collective bargaining agreements with the New England Health Care Employees Union, District 1199, SEIU. The Debtors owe $18.9 million to M&T Bank and $7.99 million on loans from the U.S. Department of Housing and Urban Development Federal Housing Administration. Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, serve as counsel to the Debtors. Logan & Company, Inc. is the claims and notice agent. 710 LONG RIDGE: Final Cash Collateral Hearing Today --------------------------------------------------- To preserve their businesses and assets for the benefit of all creditors, 710 Long Ridge Road Operating Company II, LLC, and its affiliates filed a motion to use their prepetition lenders' cash collateral. Early in the case, the bankruptcy judge gave interim approval on the Debtors' use of cash collateral in the amount of (a) $944,516 with respect to Danbury and (b) (i) $931,405 and $665,997, with respect to Newington and West River, respectively, through and including March 15, 2013. The judge will consider, on a final basis, the Debtors' continued access to cash collateral at a hearing scheduled for today, March 13 at 10:00 a.m. The Debtors owe $18.9 million to M&T Bank and $7.99 million on loans from the U.S. Department of Housing and Urban Development Federal Housing Administration. The Debtors will grant the prepetition lenders replacement liens on postpetition assets and a superpriority administrative expense claim as adequate protection. The Debtors said they will be forced to cease operations of their nursing facilities, resulting to the loss of 1,140 jobs, if they are not allowed to access cash collateral. About 710 Long Ridge 710 Long Ridge Road Operating Company II LLC and four affiliates own sub-acute and long-term nursing care facilities for the elderly in Connecticut. The facilities, which are managed by HealthBridge Management LLC, are Long Ridge of Stamford, Newington Health Care Center, Westport Health Care Center, West River Health Care Center, and Danbury Health Care Center. 710 Long Ridge and its affiliates sought Chapter 11 protection (Bankr. D.N.J. Case Nos. 13-13653 to 13-13657) on Feb. 24, 2013 to modify their collective bargaining agreements with the New England Health Care Employees Union, District 1199, SEIU. Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, serve as counsel to the Debtors. Logan & Company, Inc. is the claims and notice agent. 710 LONG RIDGE: CBA Modified; Still Needs DIP Financing ------------------------------------------------------- Bankruptcy Judge Donald H. Steckroth last week approved a motion by 710 Long Ridge Road Operating Company II, LLC and four other affiliates that own nursing care facilities to implement interim modifications to expired collective bargaining agreements with the New England Health Care Employees Union, District 1199, SEIU, pending good-faith collective bargaining between the Debtors and the union. The Union and the National Labor Relations Board opposed the Debtors' request despite claims by the Debtors that they would no longer be able to operate or pursue reorganization without implementation of the interim modified terms. The Debtors said that implementing the terms and conditions of employment for the unionized employees that were in effect on June 16, 2012 would allow them to have savings of $802,000 and $2,600,000 in the aggregate over the first 13 weeks. The Debtors project they will run out of funds by mid-April 2013, if required to operate under the economic terms of the CBAs. The Union and NLRB assert that the Debtors fail to carry their burden for relief under 11 U.S.C. Sec. 1113(e) on the merits and raised threshold arguments: (1) whether the Sec. 1113(e) relief is an improper attempt to modify the terms of an order of the district court; and (2) whether the Debtors are precluded from litigating the financial issues under principles of collateral estoppel or claim preclusion. "The Bankruptcy Code does not authorize bankruptcy judges to intervene in ongoing law enforcement proceedings by federal agencies and, specifically, does not empower this Court to stay or modify the Connecticut District Court injunction secured by the NLRB in the exercise of its exclusive jurisdiction under Section 10(j) of the NLRA," the Union said in court filings. The NLRB stated, "In any event, Section 1113(e) of the Bankruptcy Code simply does not authorize the relief Debtors are seeking. By its express terms, Section 1113(e) only applies "during a period when the collective bargaining agreement continues in effect." Section 1113(e) does not give this Court authority to make "interim changes" to anything except "collective bargaining agreements" -- certainly not labor injunctions entered by a federal district court. Judge Steckroth held that in the present case, the terms of the expired CBA have been continued and are "in effect" due to the injunctive relief issued by the Federal District Court for the District of Connecticut pursuant to Section 10(j) of the National Labor Relations Act. Because the terms sought to be modified are those of the expired CBAs, and they have been continued in effect, the Court finds that it has the authority to modify pursuant to Sec. 1113(e). Judge Steckroth ruled, "[I]n consideration of the authority contained in Section 1113(e) and the reorganization purpose of the Bankruptcy Code, the continued care and safety of the patients and the continued employment of 1,100 workers in Connecticut, the Motion shall be granted authorizing the Debtors to implement the interim modifications as requested. The interim modifications shall be authorized for a period of six weeks. Even with the modifications, the Debtors need DIP financing to operate profitably during Chapter 11 and attempt to negotiate a Plan of Reorganization. If a DIP facility cannot be obtained in such a timeframe, there is not the same justification for Debtors to continue with the interim modified terms and must instead recognize, as the testimony revealed, that closure may be necessary. If acceptable DIP financing can be obtained on condition of implementation of interim modifications, Debtors are free to return to Court and seek continued interim modifications as necessary in addition to approval of DIP financing." A copy of the opinion is available for free at: http://is.gd/2Fcwzt Attorneys for the NLRB are: Elinor Merberg, Esq. Nancy E. Kessler Platt, Esq. Dawn L. Goldstein, Esq. Joel F. Dillard, Esq. Micah P.S. Jost, Esq. Julie Kaufman, Esq. Thomas E. Quigley, Esq. John A. McGrath, Esq. ABBY PROPIS SIMMS 1099 14th Street, NW Washington, DC Tel: (202) 273-2930 Attorneys for the Union are: Susan J. Cameron, Esq. Suzanne Hepner, Esq. LEVY RATNER, P.C. 80 Eighth Avenue, 8th Floor New York, New York 10011-5126 Phone: (212) 627-8100 Facsimile: (212) 627-8182 - and - JAMES & HOFFMAN, P.C. Kathy L. Krieger, Esq. Darin M. Dalmat, Esq. 1130 Connecticut Ave., NW, Suite 950 Washington, DC 20036-3975 Tel: (202) 496-0500 Fax: (202) 496-0555 About 710 Long Ridge 710 Long Ridge Road Operating Company II, LLC and four affiliates own sub-acute and long-term nursing care facilities for the elderly in Connecticut. The facilities, which are managed by HealthBridge Management LLC, are Long Ridge of Stamford, Newington Health Care Center, Westport Health Care Center, West River Health Care Center, and Danbury Health Care Center. 710 Long Ridge and its affiliates sought Chapter 11 protection (Bankr. D.N.J. Case Nos. 13-13653 to 13-13657) on Feb. 24, 2013 to modify their collective bargaining agreements with the New England Health Care Employees Union, District 1199, SEIU. The Debtors owe $18.9 million to M&T Bank and $7.99 million on loans from the U.S. Department of Housing and Urban Development Federal Housing Administration. Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, serve as counsel to the Debtors. Logan & Company, Inc. is the claims and notice agent. A123 SYSTEMS: Fisker Questions Ch. 11 Plan, Cites $139M Claim ------------------------------------------------------------- Lance Duroni of BankruptcyLaw360 reported that Fisker Automotive Inc. on Monday demanded more information about bankrupt A123 Systems Inc.'s liquidation plan, which the electric car company and former top A123 customer said does not account properly for its $139 million claim against the defunct battery maker. The report related that A123's disclosure statement explaining its Chapter 11 plan does not contain adequate information for a creditor to make an informed decision when voting on the plan, Fisker said in an objection filed in Delaware bankruptcy court. The bankruptcy judge will convene a hearing on the disclosure statement today, March 13. A123 Systems Inc., which sold its automotive lithium-ion batteries business, filed a liquidating Chapter 11 plan giving holders of $143.8 million in subordinated notes and $124 million of general unsecured claims a recovery of about 65%. Holders of $35.7 million in senior note claims will be paid in full. The disclosure statement says it's unlikely there will be any distribution for shareholders. 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 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. AHERN RENTALS: Plan Hearing Moved to June, Lienholders Amend Plan ----------------------------------------------------------------- The hearing to consider confirmation of the competing plans for Ahern Rentals, Inc., has been moved to June 3 at 9:30 a.m. and will continue June 5 to 6 before Judge Bruce Beesley of the U.S. Bankruptcy Court for the District of Nevada. Objections to the confirmation of the Plans should be filed on or before May 13. According to court papers, Judge Beesley approved the disclosure statements explaining the competing plans during the March 8 hearing. The Plans -- one proposed by the Debtor and the other proposed by holders of approximately 90% of 9.25% senior secured notes due 2013 -- are now up for voting by creditors. On March 11, the Noteholders delivered to Court a Second Amended Plan of Reorganization proposing to restructure the Debtor by reducing the principal amount of its outstanding indebtedness by at least $267.7 million through the conversion of all of the Second Lien Notes into New Equity Interests of Reorganized Ahern. The Noteholder Plan provides, inter alia, for a $15 million equity investment in Reorganized Ahern. Other than the Second Lien Notes Claims, the Noteholder Plan leaves Unimpaired or otherwise pays in full in Cash all of the Debtor's Claim Holders. Don F. Ahern and John Paul Ahern, Jr., the sole shareholders of the Debtor, will receive New Warrants in satisfaction of their existing Equity Interests. The Noteholders maintain that their Plan provides Holders of Claims against the Debtor with superior treatment to that which the Holders would receive under the Debtor's Plan, which impairs substantially all of the Debtor's Claim Holders other than Holders of First Lien Term Loan Claims. The Second Amended Noteholder Plan proposes to fund Cash Distributions to be made under the Noteholder Plan by an Exit Financing Facility in the anticipated amount of up to $450 million. In addition, the Noteholders will backstop a rights offering of the New Equity Interests of Reorganized Ahern for an additional infusion of $15 million of equity capital. Moreover, the Noteholders have entered into a Plan Support Agreement pursuant to which they have agreed, subject to certain conditions, to support the Noteholder Plan and, after entry of an order approving a disclosure statement for the Noteholder Plan, to vote in favor of the Noteholder Plan. The Noteholder Plan Support Agreement includes an agreement among the Proponents regarding some, but not all, of the corporate governance issues related to Reorganized Ahern. The New Board of Directors of Reorganized Ahern will be composed of seven members. A full-text copy of the Disclosure Statement, dated March 11, 2013, is available for free at: http://bankrupt.com/misc/AHERNliends2.pdf About Ahern Rentals Founded in 1953 with one location in Las Vegas, Nevada, Ahern Rentals Inc. -- http://www.ahern.com/-- now offers rental equipment to customers through its 74 locations in Arizona, Arkansas, California, Colorado, Georgia, Kansas, Maryland, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia and Washington. Ahern Rentals filed a voluntary Chapter 11 petition (Bankr. D. Nev. Case No. 11-53860) on Dec. 22, 2011, after failing to obtain an extension of the Aug. 21, 2011 maturity of its revolving credit facility. In its schedules, the Debtor disclosed $485.8 million in assets and $649.9 million in liabilities. Judge Bruce T. Beesley presides over the case. Lawyers at Gordon Silver serve as the Debtor's counsel. The Debtor's financial advisors are Oppenheimer & Co. and The Seaport Group. Kurtzman Carson Consultants LLC serves as claims and notice agent. The Official Committee of Unsecured Creditors has tapped Covington & Burling LLP as counsel, Downey Brand LLP as local counsel, and FTI Consulting as financial advisor. Counsel to Bank of America, as the DIP Agent and First Lien Agent, are Albert M. Fenster, Esq., and Marc D. Rosenberg, Esq., at Kaye Scholer LLP, and Robert R. Kinas, Esq., at Snell & Wilmer. Attorneys for the Majority Term Lenders are Paul Aronzon, Esq., and Robert Jay Moore, Esq., at Milbank, Tweed, Hadley & McCloy LLP. Counsel for the Majority Second Lienholder are Paul V. Shalhoub, Esq., Joseph G. Minias, Esq., and Ana M. Alfonso, Esq., at Willkie Farr & Gallagher LLP. Attorney for GE Capital is James E. Van Horn, Esq., at McGuirewoods LLP. Wells Fargo Bank is represented by Andrew M. Kramer, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C. Allan S. Brilliant, Esq., and Glenn E. Siegel, Esq., at Dechert LLP argue for certain revolving lenders. Attorneys for U.S. Bank National Association, as successor to Wells Fargo Bank, as collateral agent and trustee for the benefit of holders of the 9-1/4% Senior Secured Notes Due 2013 under the Indenture dated Aug. 18, 2005, is Kyle Mathews, Esq., at Sheppard, Mullin, Richter & Hampton LLP and Timothy Lukas, Esq., at Holland & Hart. ALLEN FAMILY: Del. Superior Court Rules in Wrongful Death Case -------------------------------------------------------------- Estate of Herbert Mitchell v. Allen Family Foods, Inc., C.A. No. 10C-06-005-JOH (Del. Super. Ct.), is a wrongful death action arising from a fatal injury that allegedly occurred at a silo in Delmar, Delaware, on June 4, 2008. On Dec. 14, 2012, the Superior Court granted the defendants' motion for summary judgment as to Allen Hatchery, Inc., and Allen's Milling Co. Summary judgment was granted as to Allen's Milling Co., as it was no longer a corporation. Summary judgment was granted as to Allen Hatchery, Inc., and the decedent's claim was thus barred under the exclusivity provisions of 19 Del.C. Sec. 2304. Summary judgment as to Allen Family Foods, Inc., was denied, as there are genuine issues of material fact regarding whether decedent was defendant's employee. Prior to the pre-trial conference, the parties moved, in limine, on (1) the plaintiff's motion to preclude any evidence of contributory negligence of any co-worker or employer; (2) the defendant's motion to exclude the introduction and use of photographs; and (3) the defendant's motion to exclude plaintiffs' punitive damages claims. Additionally, the defendant moved to bifurcate the trial into separate factual issues of whether decedent was employed by Allen Family Foods, Inc., from the issues of negligence and damages. In a March 1 ruling available at http://is.gd/kZvTA9from Leagle.com, the Superior Court (i) granted the plaintiffs' motion to exclude any evidence of negligence of co-employees as to Allen Hatchery, Inc., and Allen's Milling Co., and denied as to Allen Family Foods, Inc.; (2) denied the defendant's motion to exclude the punitive damages claim; and (3) granted the plaintiffs' submission to admit alleged OSHA violations without an expert. About Allen Family Foods Allen Family Foods Inc. is a 92-year-old Seaford, Del., poultry company. Allen Family Foods and two affiliates, Allen's Hatchery Inc. and JCR Enterprises Inc., filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Case No. 11-11764) on June 9, 2011. Allen estimated assets and liabilities between $50 million and $100 million in its petition. Robert S. Brady, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in Wilmington, Delaware, serve as counsel to the Debtors. FTI Consulting is the financial advisor. BMO Capital Markets is the Debtors' investment banker. Epiq Bankruptcy Solutions LLC is the claims and notice agent. Roberta DeAngelis, U.S. Trustee for Region 3, appointed seven creditors to serve on an Official Committee of Unsecured Creditors in the Debtors' cases. Lowenstein Sandler PC and Womble Carlyle Sandridge & Rice, PLLC, serve as counsel for the committee. J.H. Cohn LLP serves as the Committee's financial advisor. The Debtors' Chapter 11 plan was confirmed by the bankruptcy judge in December. The Plan provided for the creation of a trustee to liquidate the remaining assets, claims and causes of action the Debtors and distribute the proceeds to creditors. The Debtors sold their business in September 2011 to Korean poultry producer Harim Co., generating $45.2 million. A settlement with the lender gave unsecured creditors $5 million. The bank also agreed to waive claims, so it won't share in distributions to unsecured creditors as a result of a shortfall in payment of the secured claim. Under the plan, unsecured creditors with $32.2 million in claims were projected to make a 10% recovery. AMERICAN AIRLINES: Attys Pull Back Curtain on US Airways Deal ------------------------------------------------------------- Maria Chutchian of BankruptcyLaw360 reported that American Airlines Inc.'s merger with US Airways Group Inc. is a victory for a carrier that just 15 months ago was drowning in financial problems but attorneys involved in the negotiations told Law360 that it was a long road full of twists and turns that led to the final deal. The report related that American Airlines' parent AMR Corp. announced the $11 billion deal with US Airways in mid-February following nearly a year of talks and speculation that the two would eventually join forces, creating the world's largest carrier. 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: S&P Rates 5.625% Class B Certificates 'B+' ------------------------------------------------------------- Standard & Poor's Ratings Services said that it has assigned its 'BBB-' (sf) rating to American Airlines Inc.'s 4% series 2013-1 Class A pass-through certificates with an expected maturity of July 15, 2025, and its 'B+' (sf) rating to American's 5.625% series 2013-1 Class B pass-through certificates with an expected maturity of Jan. 15, 2021. The final legal maturities will be 18 months after the expected maturity. The ratings are based on: -- The consolidated credit quality of American's parent, AMR Corp. (both rated 'D'); -- S&P's expectations regarding AMR's and American's likelihood of emerging from bankruptcy; -- Substantial collateral coverage by good-quality aircraft; and -- The legal and structural protections available to the pass- through certificates. The company will use proceeds of the offerings to finance 2013 deliveries of four Boeing B777-300ER (extended range) aircraft and to finance or refinance eight B737-800s and one B777-200ER aircraft delivered in 2000-2001. Each aircraft's secured notes are cross-collateralized and cross-defaulted--a provision S&P believes increases the likelihood that American would affirm the notes (and thus continue to pay on the certificates) in any future bankruptcy. American is highly incented to pay debt service on the certificates while in the current Chapter 11 proceedings because they are a post-petition obligation. S&P currently do not believe that the proposed merger of AMR and US Airways Group Inc. would affect S&P's ratings on the 2013-1 certificates, but S&P will review all ratings of each entity if and when that combination occurs. RATINGS LIST American Airlines Inc. AMR Corp. Corporate credit rating D/--/-- New Ratings American Airlines Inc. Equipment trust certificates Series 2013-1 Class A pass-thru certs BBB-(sf) Series 2013-1 Class B pass-thru certs B+(sf) AMERICAN AIRLINES: February Load Factor Hits All-Time Record High ----------------------------------------------------------------- AMR Corporation on March 8 reported February 2013 consolidated revenue and traffic results for its principal subsidiary, American Airlines, Inc., and its wholly owned subsidiary, AMR Eagle Holding Corporation. Consolidated load factor in February was an all-time record high for the month, at 77.9 percent, 2.6 points higher versus the same period last year. Consolidated capacity and traffic were 4.4 percent and 1.1 percent lower year-over-year, respectively. Domestic capacity and traffic were 5.0 percent and 1.3 percent lower year-over-year, respectively, resulting in a domestic load factor of 81.2 percent, 3.0 points higher compared to the same period last year. International load factor of 74.6 percent was 2.2 points higher year-over-year, as traffic decreased 0.8 percent on 3.8 percent less capacity. The Pacific entity recorded the highest load factor of 78.1 percent, an increase of 7.6 points versus February 2012. February's consolidated passenger revenue per available seat mile (PRASM) increased an estimated 4.7 percent versus the same period last year. On a consolidated basis, the company boarded 7.9 million passengers in February. A copy of AMR's Traffic Summary for February 2013 is available for free at http://is.gd/kbGjcT 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: Committee Wins OK for Hay Group as Advisor ------------------------------------------------------------- U.S. Bankruptcy Judge Sean Lane authorized the Official Committee of Unsecured Creditors in AMR Corp.'s Chapter 11 cases to hire Hay Group Inc. as its consultant. Hay Group will provide consulting services related to compensation programs proposed by AMR Corp. for its employees. Specifically, the firm will review background information regarding compensation proposals and prepare a report of its findings. It will also provide litigation consulting services and testimony in court in behalf of the committee in connection with those compensation programs. Hay Group will be paid on an hourly basis and will be reimbursed for its expenses. The firm's hourly rates are: Professionals Hourly Rates ------------- ------------ U.S. Executive Compensation $975 Practice Leader Other Vice President $930 Senior Principal $825 Principal $725 Senior Consultant $625 Consultant $525 Senior Associate $450 Associate $400 Analyst $350 The firm does not hold or represent interest adverse to the interests of AMR's estate, according to a declaration by Irv Becker, vice-president of Hay Group. 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: Bondholders Failed to Post $100MM Appeal Bond ---------------------------------------------------------------- Bondholders failed to post a $100 million appeal bond by the March 1 deadline set by U.S. Bankruptcy Judge Sean Lane who oversees AMR Corp.'s Chapter 11 case, according to a Bloomberg News report. Last week, Judge Lane ordered U.S. Bank Trust N.A. to post a bond as condition for the temporary suspension of his Feb. 1 decision, which allowed AMR to obtain $1.5 billion in aircraft refinancing and to pay off its existing loans with the new financing without paying a so-called make-whole premium. U.S. Bank, the indenture trustee for bondholders, appealed that decision. The bank, arguing the make-whole is due, relied in part on the so-called 1110 election AMR made early in the bankruptcy. Judge Lane rejected, however, the idea that the 1110 election obliged AMR to pay the make-whole, citing provisions in the indenture saying that the make-whole isn't owing if the underlying default results from bankruptcy. AMR, the bondholders and Judge Lane all want an expedited appeal directly to the U.S. Court of Appeals in Manhattan. It remains to be seen if AMR can complete the refinancing while the appeal is outstanding, even in the absence of a stay pending appeal, Bloomberg News reported. 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: Sale-Leaseback of 15 Boeing Planes Okayed ------------------------------------------------------------ AMR Corp. obtained court approval to implement a sale and simultaneous leaseback of 15 Boeing 737-823 planes and one Boeing 777-323ER plane with International Lease Finance Corp. The 15 Boeing planes are scheduled to be delivered by The Boeing Co. to American Airlines Inc. between May 2013 and December 2014. Meanwhile, the Boeing 777-323ER aircraft is set to be delivered this month, according to the court filing. 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: Proposes Jones Day as Special Counsel -------------------------------------------------------- AMR Corp. asks the U.S. Bankruptcy Court in Manhattan for authority to hire Jones Day as special counsel. Since AMR's bankruptcy filing, Jones Day has provided antitrust counseling, and legal services to the company's regional carrier, American Airlines Inc., in connection with a lawsuit it filed against Transportation Security Administration. In November 2012, Jones Day's fees exceeded the monthly cap for "ordinary course" professionals, prompting AMR to file an application to employ the firm pursuant to Section 327 of the U.S. Bankruptcy Code. Jones Day will charge for its services on an hourly basis in one- tenth hour increments. Its current hourly rates range from $750 to $950 for partners, $425 to $625 for associates, and $325 to $375 for paraprofessionals. The firm will also receive reimbursement for work-related expenses. The firm doesn't have any connection with creditors or other parties adverse to AMR and its affiliated debtors, according to a declaration by Lawrence Rosenberg, Esq., a partner at Jones Day. 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 INT'L GROUP: Shareholders as Group Can Sue U.S. -------------------------------------------------------- Tom Schoenberg, writing for Bloomberg News, reported that American International Group Inc. (AIG) shareholders can sue the U.S. as a group in a lawsuit brought by former Chief Executive Officer Maurice "Hank" Greenberg over losses caused by the government takeover of the insurer, a judge ruled, saying the case may affect tens of thousands of people. Bloomberg related that U.S. Claims Judge Thomas Wheeler on March 12 granted a request by Greenberg's Starr International Co. to certify two classes of AIG investors in the suit. The judge also appointed David Boies of Boies, Schiller & Flexner LLP as lead counsel for the groups. "Considering the estimation of plaintiff's counsel that the putative plaintiffs may number more than tens of thousands of geographically dispersed persons, class certification is by far the most efficient method of adjudicating these claims," Wheeler said in his ruling, according to Bloomberg. Bloomberg related that Starr International Co. sued the government in 2011 in the U.S. Court of Federal Claims in Washington, calling the public assumption of almost 80 percent of AIG stock in September 2008 a seizure of property in violation of the Constitution's Fifth Amendment right to just compensation. The lawsuit seeks at least $25 billion in damages. One class involves those holding shares on Sept. 22, 2008, when a credit agreement giving the U.S. 79.9 percent equity interest in AIG was imposed. The second class comprises people who owned AIG stock on June 30, 2009, who were denied a vote when the company conducted a reverse stock split, according to the ruling. In January, New York-based AIG's board opted against joining the lawsuit, saying it was unlikely to succeed and risked harming the insurer's reputation after its bailout by the government, Bloomberg recalled. The case is Starr International Co. v. U.S., 1:11-cv-00779, U.S. Court of Federal Claims (Washington). AMERICAN SUZUKI: Court Enters Second Modified Plan Order -------------------------------------------------------- The Hon. Scott C. Clarkson of the U.S. Bankruptcy Court for the Central District of California, Santa Ana Division, entered on March 8 a Second Modified Order Confirming American Suzuki Motor Corporation's Fourth Amended Plan of Liquidation to replace and supersede the Modified Order Confirming the Debtor's Fourth Amended Plan of Liquidation entered on March 1, which order contained extraneous pages in Exhibit A. The extraneous pages have been removed from the Second Modified Order. No substantial changes were made to the March 1 Plan Confirmation Order. A full-text copy of the Second Modified Order is available for free at http://bankrupt.com/misc/ASMC2ndplanorder.pdf A full-text copy of the Debtor's Fourth Amended Plan of Liquidation, dated March 6, is available for free at: http://bankrupt.com/misc/ASMCplan0306.pdf About American Suzuki Established in 1986, American Suzuki Motor Corporation is the sole distributor of Suzuki automobiles and vehicles in the United States. American Suzuki wholesales virtually all of its inventory through a network of independently owned and unaffiliated dealerships located throughout the continental United States. The dealers then market and sell the Suzuki Products to retail customers. Suzuki Motor Corp., the 100% interest holder in the Debtor, manufacturers substantially all of the Suzuki products. American Suzuki has 295 employees. There are approximately 220 automotive dealerships, over 900 motorcycle/ATV dealerships, and over 780 outboard marine dealerships. American Suzuki filed a Chapter 11 petition (Bankr. C.D. Cal. Case No. 12-22808) on Nov. 5, 2012, to sell the business to SMC, absent higher and better offers. SMC is not included in the Chapter 11 filing. The Debtor disclosed assets of $233 million and liabilities totaling $346 million. Debt includes $32 million owing to the parent on a revolving credit and $120 million for inventory financing. There is about $4 million owing to trade suppliers. The Court approved the amended Chapter 11 Plan. Under the Company's amended Plan, its Motorcycles/ATV and Marine divisions, along with its continued Automotive parts and service operation, will be sold to a newly organized, wholly-owned subsidiary of Suzuki Motor Corporation, enabling those operations to continue uninterrupted. The new entity will use the ASMC brand name and operate in the continental U.S. ASMC's legal advisor on the restructuring is Pachulski Stang Ziehl & Jones LLP, and its financial advisor is FTI Consulting, Inc. Nelson Mullins Riley & Scarborough LLP is serving as special counsel on automobile dealer and industry issues. Further, ASMC has proposed the appointment of Freddie Reiss, Senior Managing Director at FTI Consulting, as chief restructuring officer, and has also added two independent Board members to assist it through this period. Rust Consulting Omni Bankruptcy, a division of Rust Consulting, Inc., is the claims and notice agent. The Debtor has retained Imperial Capital, LLC as investment banker. SMC is represented by lawyers at Klee, Tuchin, Bogdanoff & Stern LLP. The Official Committee of Unsecured Creditors is represented by Irell & Manella LLP. AlixPartners, LLC serves as its financial advisor. ARGOSY ENERGY: Enters Into Forbearance Agreement with Lender ------------------------------------------------------------ Argosy Energy Inc. which includes its wholly owned subsidiary, Radius Resources Corp. on March 11 disclosed that it has entered into a Forbearance Agreement with its secured lender, the National Bank of Canada, including delivery of a Consent Receivership Order to be held in accordance with the said Forbearance. The Bank has made demand upon Argosy for payment in full of its outstanding indebtedness in the aggregate amount of approximately $21.8 million plus accrued interest, costs and fees by the close of business on March 18, 2013. In addition, the Bank has provided Argosy with a Notice of Intention to Enforce Security pursuant to subsection 244(1) of the Bankruptcy and Insolvency Act. Under the terms of the Forbearance Agreement, the Company has waived the 10 day notice period pursuant to demands issued by the Bank dated March 8, 2013. Under the terms of the Forbearance Agreement the Bank has agreed to forbear from enforcing its remedies subject to the Company continuing to be bound and perform the same as outlined in the previous Credit Amending Agreement entered into with the Bank dated February 25, 2013, which major terms and conditions include: -- Requirement to continue the process with Sayer Energy Advisors as the Company's sales and marketing agent to pursue a sale of all of its property and assets. -- Requirement that all of the proceeds from any sale of or disposition of any of the Company's petroleum and natural gas assets whether under and pursuant to the Sayer sales process or otherwise, shall be used to permanently repay amounts owed to the Bank. -- Closing of a transaction of purchase and sale on or before April 30, 2013. -- Repayment in full of all indebtedness to the Bank on or before April 30, 2013. -- Amendment fees and monthly extension fees payable to the Bank. Unless further extended by the Bank, in its sole and unfettered discretion, the forbearance of the Bank's rights shall remain in full force and effect until the earlier of April 30, 2013 and the date the Bank issues a notice as the result of non-performance of Argosy under the Credit Agreement, Credit Amending Agreement, Security, Letter of Guarantee or the Forbearance Agreement or the stay of proceedings in the NOI Proceedings being terminated. In addition, the Company and its wholly owned subsidiary, Radius Resources Corp. have filed a Notice of Intention to File a Proposal to their creditors under Section 50.4 of the BIA and have appointed PricewaterhouseCoopers Inc. as Proposal Trustee therein. About Argosy Energy Inc. Argosy is a junior oil and gas company focused on the exploration for and development of oil and natural gas in western Canada. ATKINS NUTRITIONALS: S&P Assigns Prelim. 'B-' CCR; Outlook Stable ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned a preliminary 'B-' corporate credit rating to Denver, Colo.-based Atkins Nutritionals Holdings II Inc. The outlook is stable. At the same time, S&P assigned a preliminary 'B-' issue rating to the proposed $20 million first-lien revolving credit facility due 2018 and $280 million first-lien term loan due 2019, and a preliminary 'CCC' issue rating to the proposed $125 million second-lien term loan due 2019. The preliminary recovery rating on the first-lien credit facilities is '3', which indicates S&P's expectation of meaningful recovery (50% to 70%) for first-lien creditors in the event of a payment default. The preliminary recovery rating on the second-lien term loan is '6', which indicates S&P's expectation for negligible recovery (0% to 10%) for lenders in the event of a payment default. The preliminary corporate credit and issue ratings are subject to review of final documentation upon completion of the refinancing. "The ratings reflect our assessment of the company's very aggressive financial policy, given the large debt-financed dividend, and our forecast for credit ratios to remain weak for at least the next two years," said Standard & Poor's credit analyst Mark Salierno. Pro forma for the transaction, Standard & Poor's expects Atkins' total debt to EBITDA to be above 5x, and funds from operations to total debt to be below 12%. S&P also believes the company will maintain a narrow business focus in the highly fragmented and intensely competitive weight-management industry and face significant customer concentration. S&P expects profitability to be pressured as the company incorporates lower-margin frozen meals into its product line, but S&P expects credit ratios will remain close to current levels because of modest debt paydown from the cash flow sweep. S&P could raise the ratings if Atkins is able to improve its operating efficiency, given success in its newly added frozen food line. S&P could lower the ratings if the company's operating performance deteriorates. ATP OIL: Macquarie Unit Sues Debtor Over Royalties -------------------------------------------------- Stephanie Gleason at Daily Bankruptcy Review reports that a subsidiary of Macquarie Group Ltd. is suing ATP Oil & Gas Corp., saying it owns the rights to royalty payments from three ATP offshore-drilling operations, entitling it to payments and exempting those rights from ATP's bankruptcy estate. About ATP Oil & Gas 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. ATP OIL: Gulf Island to Seek Bluewater Cheviot Balance Repayment ---------------------------------------------------------------- Gulf Island Fabrication, Inc. on March 11 disclosed that on July 13, 2012, the Company received notice from its customer, Bluewater Industries, requesting (i) a slowdown of work on ATP Oil & Gas (UK) Limited's Cheviot project ordered pursuant to a master service contract between Bluewater and the Company, and (ii) an amendment to the scheduled payment terms under the Contract. On August 16, 2012, the Company entered into a binding agreement with Bluewater, an engineering consulting firm engaged by ATP UK to oversee the fabrication of the Cheviot project, to amend and restate the Contract and suspend the project. Among other things, the Agreement outlines the revised payment terms for the contracts receivable balance and the limitations on Bluewater's ability to request an extended suspension of work. Specifically, Bluewater must pay $200,000 on or before the last day of each calendar month through February 28, 2013, with the remaining outstanding Balance due on or before March 31, 2013. In addition, if Bluewater has fully paid the Balance on or prior to March 31, 2013, Bluewater has the option to extend the suspension of work on the Cheviot project to June 30, 2013, after which Bluewater will have no further rights to request a suspension of work. If Bluewater fails to make timely payments pursuant to the revised payment plan, the Company has the right to terminate the Contract, and it will continue to retain title to any project deliverables. The Company also entered into a security agreement with Bluewater pursuant to which Bluewater granted it a security interest in certain of its equipment currently located on our facilities. As of March 11, 2013, all installments under the Agreement had been paid. In August 2012, ATP Oil & Gas, Inc., the parent company of ATP UK, filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code. Although ATP is not the Company's customer and ATP UK is not a party to the bankruptcy, the Company believes ATP has historically financed the operations of its subsidiaries, including ATP UK. On January 22, 2013, ATP filed an emergency motion to sell all or substantially all of its deepwater assets, including 100% of its equity ownership in ATP UK. The motion has since been approved by the court and ATP is currently seeking qualified bidders to purchase these assets. The sale hearing is expected to take place between March 26, 2013 and April 16, 2013. The Company does not know whether or not ATP will be successful in its efforts to sell these assets or whether a purchaser of ATP UK would fund the Cheviot project. However, in the absence of a sale of ATP UK to a purchaser desiring to complete the Cheviot project or utilize the structure in another location, it does not appear that Bluewater will be able to pay the remaining Balance on March 31, 2013. In the event Bluewater is unable to continue to meet its obligations under the Agreement, we may attempt to recover or partially recover the unpaid Balance through the disposition of project deliverables and the enforcement of our security interest. As of December 31, 2012, $56.8 million has been billed on the Cheviot project and the outstanding Balance was approximately $31.3 million. The Company recorded a $14.5 million reserve on the Balance as of December 31, 2012 and we believe the outstanding Balance, less the $14.5 million reserve, is collectible through the disposition of project deliverables and the enforcement of its security interest in the event of a default by Bluewater. The Cheviot project represents revenue backlog of $30.0 million and labor backlog of 308,000 man-hours, both of which are excluded from the Company's backlog at December 31, 2012. The disclosure was made in Gulf Island Fabrication's earnings release fourth quarter ended Dec. 31, 2012, a copy of which is available for free at http://is.gd/HITEjN 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. BELDEN INC: Moody's Assigns 'Ba2' Rating to Proposed Euro Notes --------------------------------------------------------------- Moody's Investors Service assigned Ba2 ratings to Belden's proposed euro issue subordinated notes and affirmed its Ba1 corporate family rating and Baa2 senior secured rating. The new notes will be used to repay secured revolver outstandings and for general corporate purposes. The rating outlook remains stable, however, the recent acquisition related increase in debt levels, and in particular the increase in non-prepayable debt, significantly reduces the company's flexibility within the Ba1 corporate family rating heightening the risk of downgrade if revenue, EBITDA and free cash flow do not improve. Ratings Rationale: The Ba1 CFR continues to reflect Belden's leading positions within segments of the enterprise and industrial cabling and connectivity product markets, which can produce solid upper single digit operating margins and good free cash flow during a strong market. However, the rating incorporates the cyclicality of the business, as evidenced by the 32% revenue decline in fiscal year 2009 due to the then challenging macroeconomic environment, and the company's exposure to volatile raw material prices. Belden's ratings also recognize its acquisition appetite and potential for debt financed acquisitions. Belden has spent approximately $1.8 billion on acquisitions since 2007. Belden's leverage level, pro forma for recent acquisitions, divestitures, restructuring costs and the proposed euro notes (debt to EBITDA of approximately 4.4x) is higher than other Ba1-rated manufacturing peers of similar size and leaves minimal room within the rating category. The debt level is mitigated by the company's strong cash positions (expected in excess of $450 million pro forma for the note issue). While leverage is ultimately expected to return to 3.5x or stronger levels, it will likely not be until the end of 2014. The ratings could face downward pressure if performance does not improve in the near term, cash levels diminish or leverage is not on track to get to the 3.5x level. While a moderate level of acquisitions is expected, a large acquisition or acquisition with substantial integration risk could also drive downwards ratings pressure until leverage returns to historic levels. An upgrade is unlikely in the near to medium term due to the high debt load and aggressive acquisition appetite. The individual debt instrument ratings are determined in conjunction with Moody's Loss Given Default Methodology and based on the relative positions within the capital structure. Though the paydown of the revolver could drive an upgrade in the senior secured rating, the rating remains unchanged at Baa2 given the potential for future draws. Affirmations: Issuer: Belden Inc. Probability of Default Rating, Affirmed Ba1-PD Corporate Family Rating, Affirmed Ba1 US$200M 9.25% Senior Subordinated Regular Bond/Debenture Jun 15, 2019, Affirmed Ba2, revised to LGD4, 66 % from LGD4, 65 % US$700M 5.5% Senior Subordinated Regular Bond/Debenture Sep 1, 2022, Affirmed Ba2, revised to LGD4, 66 % from LGD4, 69 % US$400M Senior Secured Bank Credit Facility Apr 25, 2016, Affirmed Baa2, revised to LGD2, 12 % from LGD2, 13 % Assignments: Issuer: Belden Inc. EUR200M Senior Subordinated Regular Bond/Debenture, Assigned Ba2, LGD4, 66 % The principal methodology used in this rating was the Global Manufacturing Industry published in December 2010. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Belden Inc. is designs and manufactures connectivity and signal transmission products for the global network communication and specialty electronic marketplaces with 2012 revenues of $1.8 billion. The company is headquartered in St. Louis, Missouri. BELDEN INC: S&P Rates New EUR200MM Sr. Subordinated Notes 'B+' -------------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'B+' issue-level rating (two notches below the corporate credit rating) and '6' recovery rating to Belden Inc.'s proposed EUR200 million of senior subordinated notes issuance. These notes rank and are rated the same as the company's existing $700 million senior subordinated notes due 2022. At the same time, S&P raised the issue-level rating on the company's $400 million senior secured revolving credit facility to 'BBB-' (two notches higher than the corporate credit rating) from 'BB+'. S&P revised the recovery rating to '1' from '2', indicating its expectation of very high (90% to 100%) recovery for lenders in the event of a payment default. In addition, S&P affirmed its 'BB' corporate credit rating on the company. The outlook is stable. "The higher rating on the revolver reflects an increase in our default-level valuation on the company to account for recent acquisitions and margin improvement," said Standard & Poor's credit analyst Alfred Bonfantini. S&P's ratings on Belden Inc. reflect the company's "fair" business risk profile, characterized by its participation in the highly competitive and cyclical cable, connectivity, and networking markets and its exposure to volatile raw material pricing and foreign currency rates. The ratings also reflect its "significant" financial profile, with pro forma leverage currently elevated at about 4x. Belden's diversification into higher- margin, value-added specialty products and vertical/geographic market expansion, along with "adequate" liquidity and good cash flow characteristics, partly offset these risks. The outlook is stable, reflecting expected meaningful pro forma margin improvement, good free cash flow, enhanced revenue diversity, and S&P's expectation that the company will reduce leverage to below the mid-3x area by the end of 2013. If revenue growth turns materially negative and elevated raw material costs or other operating issues pressure EBITDA margins, such that the company sustains leverage at the 4x area, S&P could lower the rating to 'BB-'. S&P could also lower the rating if the company's credit measures weaken due to further debt-funded acquisitions or a more aggressive posture toward share repurchases. Conversely, if continued business diversification boosts margins further and indicates somewhat reduced exposure to cyclicality, and the company deleverages and intends on maintaining leverage below the mid-2x area, S&P could raise the rating to 'BB+'. BERNARD L. MADOFF: Merkin Sued by Charity over Losses ----------------------------------------------------- Karen Freifeld, writing for Reuters, reported that money manager Ezra Merkin has been hit with a new lawsuit over his secretly steering client money to Ponzi schemer Bernard Madoff. Keren Matana, an Israeli charity, sued to recover $1.5 million it lost by investing in the Ascot Fund, an offshore hedge fund managed by Merkin that fed money to Madoff, according to the Reuters report. The charity is also seeking $5 million in punitive damages. Merkin agreed last year to a settlement of $405 million for investors in his hedge funds whose assets went to Madoff, ending a lawsuit brought by the New York attorney general's office, Reuters recalled. In its lawsuit, filed Thursday in federal court in Manhattan, Keren Matana claimed it can't collect through the settlement, Reuters related. Keren Matana said a Merkin lawyer, an unnamed partner at Dechert, claimed the charity is excluded from the settlement unless Benjamin Jesselson, a former member of its executive committee, waives his right to an arbitration award against Merkin. The charity's case is Keren Matana v. J. Ezra Merkin, U.S. District Court for the Southern District of New York, No. 13-cv- 01534. The trustee's case against the New York attorney general's settlement with Merkin is Picard v Schneiderman, U.S. District Court for the Southern District of New York, 12-cv-06733. 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.). BEST INTERNATIONAL: Judge Recommends Stay of US v. Safeco Suit -------------------------------------------------------------- In the case, UNITED STATES OF AMERICA FOR THE USE AND BENEFIT OF HAMMERHEAD DISTRIBUTION INCORPORATED d/b/a MORRIS GINSBERG COMPANY, Plaintiff, v. SAFECO INSURANCE COMPANY OF AMERICA, COMMONWEALTH CONSTRUCTION CO., INC., BEST INTERNATIONAL CONSTRUCTION CO., INC. and KYU H. PARK, Defendants, Civil Action No. 11-1160-SLR-SRF (D. Del.), Magistrate Judge Sherry R. Fallon has recommended that the District Court deny the plaintiff's "Motion for Entry of Default Judgment Against Best International Construction Co., Inc.", without prejudice to renew upon resolution of Best's bankruptcy proceedings and termination of the automatic stay. A copy of Magistrate Judge Fallon's Feb. 15, 2013 Report and Recommendation is available at http://is.gd/LMXF1lfrom Leagle.com. Best International Construction Company, Inc., based in College Park, Maryland, filed a Chapter 11 petition (Bankr. D. Md. Case No. 12-17878) on April 26, 2012. Augustus T. Curtis, Esq., at Cohen, Baldinger & Greenfeld, LLC, serves as the Debtor's counsel. In its petition, the Debtor estimated under $50,000 in assets and $1 million to $10 million in debts. A list of the Company's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/mdb12-17878.pdf The petition was signed by Kyu Hong Park. BIG M: Court Approves PwC as Financial Advisor ---------------------------------------------- Big M, Inc., obtained approval from the U.S. Bankruptcy Court for the District of New Jersey to employ PricewaterhouseCoopers LLP as financial advisor and investment banker, nunc pro tunc to the Petition Date. PwC was engaged by the Debtor in January 2013 in connection with its financial advisory and restructuring services and has since assisted the Debtor in evaluating its restructuring alternatives. Postpetition, the firm will provide various services, including: a. advising and assisting in developing a teaser and a management presentation describing the Debtor and the opportunities that the company may provide to prospective acquirers; b. assisting with the development of a potential buyers lists; and c. assisting with the preparation for and coordination of due diligence visits by potential buyers; d. assisting the Debtor in its evaluation of indications of interest and negotiations of asset purchase agreements, stalking horse bids, and bidding procedures. PwC will be compensated for the advisory services pursuant to PwC's ordinary billing rates and in accordance with its customary billing practices with respect to other charges and expenses. In addition, the Debtor agrees to pay PwC a cash fee promptly upon consummation of the closing of a transaction, of equal to the greater of 2.5% of the "aggregate consideration" paid or $750,000. Fees for prepetition services ($25,000) and monthly advisory fees will be credited against the additional fees. The Debtor submits the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not hold or represent an interest adverse to the Debtor's estate. About Big M Inc. Totowa, New Jersey-based Big M, Inc., owner of Mandee, Annie sez, and Afazxe Stores, filed a Chapter 11 petition (Bankr. D.N.J. Case No. 13-10233) on Jan. 6, 2013 with Salus Capital Partners, LLC, funding the Chapter 11 effort. The Mandee brand is a juniors fashion retailer with 84 stores in Illinois and along the East Coast. Annie sez is a discount department-store retailer for women with 35 stores. Afaze is 10-store jewelry and accessory chain. Kenneth A. Rosen, Esq., at Lowenstein Sandler LLP, in Roseland, serves as counsel to the Debtor. PricewaterhouseCoopers LLP has been tapped to serve as financial advisor. GRL Capital Advisors LLC's Glenn R. Langberg has been hired to serve as chief restructuring officer. The Debtor estimated up to $100 million in both assets and liabilities. BIG M: Court Approves Lowenstein Sandler as Bankruptcy Counsel -------------------------------------------------------------- Big M, Inc., sought and obtained permission from the U.S. Bankruptcy Court to employ Lowenstein Sandler LLP as counsel, effective as of the Petition Date. The firm will be compensated at its ordinary billing rates. Prior to the Petition Date, the Debtor paid the firm a $250,000 retainer. The Debtor attests the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Prepetition, Lowenstein represented the Debtors in connection with general corporate and other matters. About Big M Inc. Totowa, New Jersey-based Big M, Inc., owner of Mandee, Annie sez, and Afazxe Stores, filed a Chapter 11 petition (Bankr. D.N.J. Case No. 13-10233) on Jan. 6, 2013 with Salus Capital Partners, LLC, funding the Chapter 11 effort. The Mandee brand is a juniors fashion retailer with 84 stores in Illinois and along the East Coast. Annie sez is a discount department-store retailer for women with 35 stores. Afaze is 10-store jewelry and accessory chain. Kenneth A. Rosen, Esq., at Lowenstein Sandler LLP, in Roseland, serves as counsel to the Debtor. PricewaterhouseCoopers LLP has been tapped to serve as financial advisor. GRL Capital Advisors LLC's Glenn R. Langberg has been hired to serve as chief restructuring officer. The Debtor estimated up to $100 million in both assets and liabilities. BIG M: Court Approves GRL Capital's Langberg as CRO --------------------------------------------------- Big M, Inc., sought and obtained permission from the Bankruptcy Court to (i) employ GRL Capital Advisors LLC to provide the Debtor with a chief restructuring officer and certain temporary staff, and (ii) designate the firm's Glenn R. Langberg as CRO. The firm has already performed prepetition work on the Debtor's behalf. The Debtor said the firm, as a result, has acquired significant knowledge of the Debtor and its businesses, financial affairs, debt structure, operations and related matters. As members of the Debtor's senior management, Mr. Langberg, with the assistance of the temporary Staff, will provide the senior management services that GRL and the Debtor deem appropriate and feasible in order to assist the Debtor during the Chapter 11 case. Specifically, the CRO will assist the Company in: (a) developing strategies to improve cash flow, enhance profitability and to reduce expenses; (b) identifying and implementing both short-term and long-term liquidity generating initiatives, including forecasting and reporting cash flow performance; (c) negotiating and implementing financing, including debtor- in-possession financing; (d) amending or terminating leases and contracts; and (e) negotiating with lenders and other creditors in furtherance of a restructuring and reorganization. GRL will receive a flat monthly fee of $74,350. The fee is in addition to the salaried amounts paid by the Company directly to certain of the temporary staff: Professional Annual Salary ------------ ------------- Glenn R. Langberg, CRO $0 Joe Catalano, Asst. CRO $112,500 Bill Drozdowski, EVP Finance $155,000 Larry Berrill, EVP IT $85,000 Other than with respect to Mr. Langberg's prepetition role as CRO, GRL said it is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Big M Inc. Totowa, New Jersey-based Big M, Inc., owner of Mandee, Annie sez, and Afazxe Stores, filed a Chapter 11 petition (Bankr. D.N.J. Case No. 13-10233) on Jan. 6, 2013 with Salus Capital Partners, LLC, funding the Chapter 11 effort. The Mandee brand is a juniors fashion retailer with 84 stores in Illinois and along the East Coast. Annie sez is a discount department-store retailer for women with 35 stores. Afaze is 10-store jewelry and accessory chain. Kenneth A. Rosen, Esq., at Lowenstein Sandler LLP, in Roseland, serves as counsel to the Debtor. PricewaterhouseCoopers LLP has been tapped to serve as financial advisor. GRL Capital Advisors LLC's Glenn R. Langberg has been hired to serve as chief restructuring officer. The Debtor estimated up to $100 million in both assets and liabilities. C. W. MINING: Improper Punctuation Dooms UCC Financing Statement ---------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that a financing statement filed to perfect a security interest is defective for lack of periods and spaces after initials in the borrower's corporate name. According to the report, the proper name for a company that went into bankruptcy was "C. W. Mining Co.," with periods and spaces after the initials. A lender filed a financing statement under the Uniform Commercial Code in the name "CW Mining Co.," without periods or spaces following the initials. On appeal, U.S. District Judge Ted Stewart in Salt Lake City upheld the bankruptcy court and ruled that the lack of periods and spaces made the UCC financing statement "seriously misleading" and therefore ineffective to perfect a security interest. Judge Stewart said a majority of courts are "unforgiving" and find financing statements inadequate even for "minimal errors." The report relates that Judge Stewart returned the case to the bankruptcy court for a determination as to whether agreements created a security interest in coal produced from the mine or transferred title to the lender immediately when the coal was severed from the coal seam. Because the agreements were ambiguous, Judge Stewart said it was an error not to hold a trial and hear evidence on whether the parties intended to transfer title or create a security interest. Although there isn't a valid security interest, the lender still might win if the bankruptcy court decides the agreement transferred title. The case is Rushton v. Utah American Energy Inc. (In re C.W. Mining Co.), 10-cv-00271, U.S. District Court, District of Utah (Salt Lake City). Based in Salt Lake City, Utah, C. W. Mining Co. dba Co-Op Mining Company operated the Bear Canyon Mine in Emery County, Utah, under the terms of a lease with C.O.P. Coal Development Company, which owns the mine. Aquila Inc., Owell Precast, LLC, and House of Pumps, Inc., filed an involuntary Chapter 11 petition (Bankr. D. Utah Case No. 08-20105) on Jan. 8, 2008. In November 2008, the Chapter 11 case was converted to a Chapter 7 liquidation proceeding. Kenneth A. Rushton serves as the Chapter 7 Trustee, and is represented by Brent D. Wride, Esq., at Ray Quinney & Nebeker, in Salt Lake City. CCT RESERVE: Dist. Court Won't Issue Stay Ruling in CresCOM Suit ---------------------------------------------------------------- CresCom Bank sued CCT Reserve LLC on Jan. 5, 2012, to recover on four separate loans secured by promissory notes and mortgages executed by CCT and its predecessor companies. CresCom also sued Edward Terry as guarantor of the promissory notes. As part of its bankruptcy proceedings, CCT filed a plan of reorganization that provides for treatment of the claims asserted in this action by CresCom. Under the proposed plan, CCT would convey to CresCom all of the real estate or collateral securing CresCom's loans at values to be determined by the bankruptcy court. The value of the collateral as established by the bankruptcy court would be credited against CresCom's claims and would constitute a full or partial satisfaction of CresCom's claims. The proposed plan also requires Mr. Terry to personally contribute cash for an additional infusion of capital so as to allow CCT to pay certain tax and unsecured claims. On Jan. 8, 2013, Mr. Terry requested the District Court to extend the automatic stay to cover the action until completion of CCT's bankruptcy proceedings. CresCom filed a brief in opposition, and Terry filed a reply brief. Neither Mr. Terry nor CCT has sought any modification of the automatic stay from the bankruptcy court. According to District Judge Patrick Michael Duffy, the question of whether to extend the automatic stay to the action is most appropriately considered by the bankruptcy court overseeing CCT's bankruptcy proceedings. Mr. Terry maintains CCT's reorganization efforts will be harmed if he is forced to defend the suit and if he cannot infuse capital into the company. The bankruptcy court - - with its expertise, greater access to financial facts, and jurisdiction to adopt the proposed reorganization plan -- Judge Duffy said, is in a superior position to assess the validity of these arguments. Accordingly, Judge Duffy defers to the bankruptcy court's judgment on the matter. Absent an order from the bankruptcy court extending the stay, Judge Duffy said the action will proceed. The case is, CresCom Bank, successor by merger to Community FirstBank Plaintiff, v. Edward L. Terry, Harris Street, LLC, n/k/a CCT Reserve, LLC; Sugarloaf Marketplace, LLC; and CCT Reserve, LLC Defendants, Case No. 2:12-cv-00063-PMD (D. S.C.). A copy of the Court's March 7, 2013 Order is available at http://is.gd/lQimOD from Leagle.com. Marietta, Georgia-based CCT Reserve, LLC, fka Harris Street Properties and aka CCT Reserve, filed for Chapter 11 bankruptcy (Bankr. N.D. Ga. Case No. 12-71670) on Aug. 31, 2012. Judge Paul W. Bonapfel oversees the case. The Law Office of David G Bisbee serves as the Debtor's counsel. CCT scheduled assets of $4,208,578 and liabilities of $12,894,576. The petition was signed by Edward L. Terry, its manager. CENTENNIAL BEVERAGE: Hires RGS as Financial Advisor --------------------------------------------------- Centennial Beverage Group LLC asks the U.S. Bankruptcy Court for permission to employ RGS LLC as financial advisor. Specifically, the firm is will provide these services: a. financial advisory services in connection with the evaluation of various restructuring alternatives for the Debtor; b. preparation of financial analyses and cash flow forecasts relating to the various alternative; and c. negotiations regarding DIP financing, preparation of bankruptcy schedules and statements, liquidation analysis, claim analysis, and plan preparation; and d. such other services in connection with the restructuring process as management may request. RGS's principal, Matt Donnell, has developed significant relevant experience and expertise regarding the Debtor that will assist him in providing effective and efficient services in the Chapter 11 case. Compensation will be payable to RGS on an hourly basis, plus reimbursement of actual, necessary expenses incurred by RGS. Mr. Donnell's hourly fee is $275. Prior to the petition date, RGS received a retainer of $7,625 for work to be performed by RGS. The firm was also paid $12,375 for work performed pre-petition relating to the bankruptcy filing. RGS was not a creditor of the Debtor when the bankruptcy was filed. Mr. Donnell attests that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Centennial Beverage Centennial Beverage Group LLC, a chain of 23 liquor stores in Texas, filed a petition for Chapter 11 reorganization (Bankr. N.D. Tex. Case No. 12-37901) amid lower sales brought by competition from big-box retailers. The 75-year-old-company once had 70 stores throughout Texas. They are now concentrated in the Dallas-Fort Worth area. Sales for the year ended in November were $158 million. Year-over-year, revenue was down 50%, according to a court filing. In its schedules, the Debtors disclosed $24,053,049 in assets and $48,451,881 in liabilities as of the Petition Date. Robert Dew Albergotti, Esq., at Haynes And Boone, LLP, in Dallas, serves as counsel. CENTENNIAL BEVERAGE: Committee Taps Munsch Hardt as Attorneys ------------------------------------------------------------- The Official Committee of Unsecured Creditors of Centennial Beverage Group, LLC asks the U.S. Bankruptcy Court for permission to retain Munsch Hardt Kopf & Harr, P.C. as attorneys, effective as of Jan. 2, 2013. The firm will provide various services, including: (a) assisting, advising, and representing the Committee with respect to the administration of the Bankruptcy Case; (b) providing all necessary legal advice with respect to the Committee's powers and duties; and (c) assisting the Committee in working to maximize the value of the Debtor's assets for the benefit of the Debtor's unsecured creditors. At the request of the Committee, Munsch Hardt has agreed to perform services at a 15% discount from the hourly rates customarily charged by Munsch Hardt for legal services provided in a case of this nature. Prior to the discount, the range of Munsch Hardt's customary hourly rates are: Professional Rates ------------ ----- Shareholders $385 to $685 Associates $300 to $325 Paralegals $200 to $245 Deborah M. Perry attests that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The Committee's attorneys may be reached at: Deborah M. Perry, Esq. Jonathan L. Howell, Esq. MUNSCH HARDT KOPF & HARR, P.C. 500 North Akard Street 3800 Lincoln Plaza Dallas, TX 75201-6659 Tel: (214) 855-7500 Fax: (214) 855-7584 E-mail: dperry@munsch.com jhowell@munsch.com About Centennial Beverage Centennial Beverage Group LLC, a chain of 23 liquor stores in Texas, filed a petition for Chapter 11 reorganization (Bankr. N.D. Tex. Case No. 12-37901) amid lower sales brought by competition from big-box retailers. The 75-year-old-company once had 70 stores throughout Texas. They are now concentrated in the Dallas-Fort Worth area. Sales for the year ended in November were $158 million. Year-over-year, revenue was down 50%, according to a court filing. In its schedules, the Debtors disclosed $24,053,049 in assets and $48,451,881 in liabilities as of the Petition Date. Robert Dew Albergotti, Esq., at Haynes and Boone, LLP, in Dallas, serves as counsel to the Debtor. CENTENNIAL BEVERAGE: Committee Hires Lain Faulkner as Advisor ------------------------------------------------------------- The Official Committee of Unsecured Creditors of Centennial Beverage Group LLC is seeking authority from the Bankruptcy Court to retain Lain, Faulkner & Co., P.C. as financial advisors effective as of Jan. 8, 2013. The firm has agreed to, among other things: a. provide general advice to the Committee with respect to the Debtor's business operations and financial condition; b. advise the Committee on any and all potential transactions involving the sale of assets of the Debtor's estate; and c. provide independent analysis and related support, as required, in connection with any claims against the Debtor, and related entities, insiders and/or third parties. At the request of the Committee, Lain Faulkner has agreed to perform the financial advisory services at a 10% discount from the hourly rates customarily charged by Lain Faulkner for financial services provided in a case of this nature. The firm's customary hourly rates are: Professional Rates ------------ ----- Shareholders $345 to $450 Paraprofessionals $150 to $340 Clerical staff $75 to $95 The Committee believes that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Centennial Beverage Centennial Beverage Group LLC, a chain of 23 liquor stores in Texas, filed a petition for Chapter 11 reorganization (Bankr. N.D. Tex. Case No. 12-37901) amid lower sales brought by competition from big-box retailers. The 75-year-old-company once had 70 stores throughout Texas. They are now concentrated in the Dallas-Fort Worth area. Sales for the year ended in November were $158 million. Year-over-year, revenue was down 50%, according to a court filing. In its schedules, the Debtors disclosed $24,053,049 in assets and $48,451,881 in liabilities as of the Petition Date. Robert Dew Albergotti, Esq., at Haynes and Boone, LLP, in Dallas, serves as counsel to the Debtor. CERIDIAN CORP: Proposed US$400MM Debt Gets Moody's 'Caa3' Rating ---------------------------------------------------------------- Moody's Investors Service assigned a Caa3 rating to Ceridian Corporation's proposed $400 million Senior Notes due 2021 ("2021 Senior Notes"). All other ratings, including the B3 corporate family rating, were affirmed. The rating outlook remains stable. Proceeds of the 2021 Senior Notes will be used to repay up to $60 million of the $825 million 11.25% Senior Notes due November 2015 with the remaining proceeds used to repay a portion of the $506 million of 12.25% Senior PIK Notes due November 2015. "The offering represents an important step in refinancing the near term debt maturities, but Ceridian will still have over $900 million of debt maturing in November 2015," noted Terry Dennehy, Senior Analyst at Moody's Investors Service. Rating Rationale: Ceridian's B3 CFR reflects Ceridian's high financial leverage, with debt to EBITDA (Moody's adjusted) of about 7.5x and weak financial metrics compared to other B3 rated companies. The rating also reflects the dependence of both of Ceridian's business segments on the level of general economic activity and Ceridian's small scale in payroll processing relative to its payroll competitors ADP and Paychex. The rating is supported by Ceridian's generally recurring revenue stream based on long term contracts and products with high switching costs. The Caa3 rating on the 2021 Senior Notes reflects weak creditor protections, most notably that Ceridian will be permitted to spin- off the Payment Systems (PS) business, leaving the new Senior Notes supported by only the Human Capital Management (HCM) business. Moreover, Moody's believes that following a spin-off of PS, the HCM business will be permitted to carry a debt load in excess of a level supporting a B3 CFR. The proposed notes will also lack a change of control put. Therefore, Moody's applied a one notch downward override to the LGD model indicated rating for these notes. The Caa3 rating on the proposed notes is one notch lower than the Caa2 rating on the existing senior notes, which contain greater covenant protections. The stable outlook reflects Moody's expectation that Ceridian will continue to make progress refinancing the remaining 2015 debt maturities. Although Moody's expects that leverage will remain high for the B3 rating, this should improve over the remainder of 2013 and into 2014 due to EBITDA growth as Ceridian benefits from the cost reduction efforts of the past two years and the rollout of customers on Dayforce HCM products. Ceridian's ratings could be downgraded if Ceridian does not make progress in refinancing the remaining 2015 debt maturities or engages in shareholder-friendly actions prior to meaningful debt reduction. The rating could also be lowered if Ceridian fails to achieve organic revenue and EBITDA growth such that Moody's expects the ratio of debt to EBITDA (Moody's adjusted) to remain over 7x over the next year. The rating could be upgraded if Ceridian completes the refinancing of the 2015 debt maturities and increases EBITDA and free cash flow such that Moody's believes that debt to EBITDA (Moody's adjusted) and FCF to debt (Moody's adjusted) will improve to less than 6x and higher than the low single digits percent, respectively. The following rating has been assigned: Senior Notes due 2021: Caa3 (LGD6, 99%) The following ratings are affirmed: CFR: B3 PDR: B3-PD Senior Secured Revolving Credit Facility due 2014 (non-extended tranche): B1 (LGD2, 27%) Senior Secured Revolving Credit Facility due 2016: B1 (LGD2, 27%) Senior Secured Term Loan B due 2017: B1 (LGD2, 27%) Senior Secured Term Loan due 2014: B1 (LGD2, 27%) Senior Secured Notes due 2019: B1 (LGD2, 27%) Senior Notes due 2015: Caa2 (LGD5, 82%) Senior PIK Notes due 2015: Caa2 (LGD5, 82%) The principal methodology used in rating Ceridian is the Global Business and Consumer Service Industry Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative Grade Non-Financial Companies in the U.S., Canada, and EMEA published in June 2009. Ceridian, based in Minneapolis, Minnesota, is a services and transaction processing company primarily serving the needs of the human resources, transportation, and retail markets. CERIDIAN CORP: S&P Assigns 'CCC' Rating to $400MM Notes Due 2021 ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'CCC' issue-level rating and '6' recovery rating to Minneapolis-based Ceridian Corp.'s proposed issue of $400 million of notes due 2021. The '6' recovery rating indicates S&P's expectation of negligible (0% to 10%) recovery in the event of a payment default by the borrower. The company will use proceeds to refinance a portion of the 12.25% senior toggle notes due 2015 and repurchase a portion of the 11.25% senior notes due 2015. In addition, S&P affirmed its 'B-' corporate credit rating and all other existing ratings on Ceridian. The outlook is stable. "The ratings on Ceridian reflect a very aggressive capital structure as well as the effects of a weak economy on the company's revenue and operating earnings," said Standard & Poor's credit analyst Jacob Schlanger. The proposed transaction follows a series of transactions in 2012 that were aimed at easing the impact of $3.4 billion of maturing debt in 2014 and 2015. After this transaction the company will have $931 million maturing in 2015 and the remainder at various times beginning in 2017 and extending to 2021. The new notes are structured in such a way as to allow the company to pursue various strategic alternatives, including a spin-off or sale of parts of the company. However, the success, timing, and capital structure following any potential actions are uncertain and S&P is not currently incorporating them into its ratings or outlook. Ceridian provides information services to the human capital management (HCM), stored value cards and solutions (SVS), and-- through its Comdata Network Inc. subsidiary--transportation industries and has annual revenues of about $1.5 billion. Barriers to entry in Ceridian's markets are high, the result of developed niche market positions, economies of scale, and long- term customer relationships. S&P's stable rating outlook reflects Ceridian's modest near-term debt maturities, and the company's significant base of recurring revenues. S&P expects revenue to slowly grow in conjunction with the economic recovery, introduction of new offerings, and expansion into new markets. The highly leveraged capital structure limits a possible upgrade. S&P do not expect to lower ratings in the near term given the company's adequate liquidity and recent strengthening in operating trends. COMBAT SPORTS: Judge Enters TRO on U.S. Actions ----------------------------------------------- At the behest of BDO Canada Limited, the receiver appointed in Canada for Combat Sports Inc., the U.S. Bankruptcy Court for the Western District of Washington signed a temporary injunction halting creditor actions in the U.S. until the U.S. court has an opportunity to rule whether Canada is indeed home to the foreign main bankruptcy proceeding. If Canada eventually is found to be the foreign main bankruptcy, creditor actions in the U.S. will be stopped permanently. The judge signed the temporary restraining order after the receiver demonstrated "a substantial likelihood of success on the merits that Combat is subject to a foreign main proceeding in Canada and that the receiver is the foreign representative of Combat." Combat Sports Inc. is a Canadian manufacturer of baseball, hockey and lacrosse sticks. Secured lender PNC Bank Canada Branch, owed $3.6 million, began proceedings against the U.S. and Canadian Combat companies on Feb. 19 under the Bankruptcy & Insolvency Act. BDO was later appointed as receiver. BDO filed for Combat Sports a Chapter 15 petition (Bankr. W.D. Wash. Case No. 13-11632) on Feb. 26, 2013, in Seattle, where the U.S. operations are located. The receiver disclosed that Combat Sport has assets of C$13.7 million ($13.4 million) and liabilities of C$16.4 million in the Chapter 15 petition. CONEXANT SYSTEMS: Final Hearing on DIP Facility Set for April 10 ---------------------------------------------------------------- The Bankruptcy Court will convene a final hearing April 10 at 11:30 a.m. to consider whether to allow Conexant Systems Inc. to access the remaining $10 million of the $15 million of debtor-in- possession financing being provided by an entity managed by Soros Fund Management LLC. The interim order granted at a hearing on March 1 authorized the Debtor to access $10 million of the financing. Objections are due April 4, 2013, at 4 p.m. Soros' QP SFM Capital Holdings Limited, which is already owed $175 million on account of 11.25% senior secured notes, has agreed to provide $15 million in incremental liquidity for the pre- arranged Chapter 11 restructuring on these terms: -- Interest rate would be Adjusted LIBOR plus 7% with default interest at +2%; -- The DIP financing will mature 120 days; -- Upon the receipt of net cash proceeds in excess of $150,000 from an asset sale, the Debtors will promptly prepay the term loan in an amount equal to 100% of the net cash proceeds, -- The DIP obligations will have priority over any and all administrative expenses, subject to carve-out for U.S. Trustee fees and professional fees of the Debtors and a statutory committee; -- The DIP financing contemplates providing the DIP lender with priming liens on the liens granted prepetition pursuant to 11 U.S.C. Sec. 364(d); -- The Debtors will grant adequate protection in the form of liens and superpriority administrative claims; -- Parties-in-interest will have until the earlier of 75 days from the date of the interim order or 60 days from the date a statutory committee is first appointed to investigate the validity, perfection and enforceability of the Soros liens. 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. Kirkland & Ellis LLP and Klehr Harrison Harvey Branzburg LLP serve as legal counsel and Alvarez & Marsal acts as restructuring advisor to Conexant. Akin Gump Strauss Hauer & Feld LLP and Pepper Hamilton LLP serve as legal counsel and Blackstone Advisory Partners L.P. as restructuring advisor to the secured lender. BMC Group Inc. is the claims and notice agent. CONEXANT SYSTEMS: Proposes A&M as Financial Advisor --------------------------------------------------- Conexant Systems Inc. and its affiliates ask the Bankruptcy Court for approval to employ Alvarez & Marsal North America, LLC, to serve as financial advisor, nunc pro tunc to the Petition Date. Among other things, A&M will provide assistance to the Debtors with respect to management of the overall restructuring process and day-to-day matters associated with business operations and the Chapter 11 cases. A&M will assist the Debtors in the management and execution of a sale transaction, in the identification of DIP and exit financing, and the preparation of information for the confirmation of a plan of reorganization. A&M professionals will be paid by the Debtors at their customary hourly billing rates: Billing Category Range ---------------- ----- Managing Directors $625 to $850 Directors $450 to $625 Associates $300 to $450 Analysts $225 to $300 In addition, A&M will be paid a monthly advisory fee of $85,000, solely in connection with a sale transaction. Fifty percent of all monthly fees will be credited against the sale transaction fee. A&M will be paid a sale transaction fee upon closing of a sale transaction, if any, equal to, (i) to the extent of any sale transactions results in sale proceeds of up to $60 million, a sale transaction fee equal to 1% of the sale proceeds, (ii) to the extent of sale proceeds of more than $60 million but less than $120 million, a 1.2% fee, and (iii) to the extent of sale proceeds of more than $120 million, a 1.5% of the sale proceeds over $1.2 million and a 1.25% fee applicable to the next $60 million. In connection with any secured noteholder's credit bid in an instance where no third party has submitted a letter of intent to consummate a sale, the sale transaction fee will be $600,000. A&M will be reimbursed for all reasonable out-of-pocket expenses. The Debtors have already paid A&M a fixed fee of $185,000 for valuation services. A&M also received $300,000 as retainer before the filing of the Chapter 11 cases. 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. Kirkland & Ellis LLP and Klehr Harrison Harvey Branzburg LLP serve as legal counsel and Alvarez & Marsal acts as restructuring advisor to Conexant. Akin Gump Strauss Hauer & Feld LLP and Pepper Hamilton LLP serve as legal counsel and Blackstone Advisory Partners L.P. as restructuring advisor to the secured lender. BMC Group Inc. is the claims and notice agent. CONEXANT SYSTEMS: Hearing on Plan Disclosures Set for April 10 -------------------------------------------------------------- Conexant Systems Inc. and its affiliates will ask the Bankruptcy Court at a hearing on April 10, 2013 at 11:30 a.m. to approve the disclosure statement explaining their proposed reorganization plan that was negotiated with secured lender, QP SFM Capital Holdings Limited, an entity managed by Soros Fund Management LLC. Objections to the adequacy of the information in the Disclosure Statement are due April 3, 2013. After approval of the Disclosure Statement, the Debtors will commence solicitation of votes on the Plan then will present the Plan for confirmation. The Plan contemplates a substantial reduction in funded debt obligations by converting the secured portion of the $175 million of 11.25% senior secured notes held by Soros to new common stock and $76 million in pay-in-kind notes. The prearranged restructuring is supported by Conexant's existing sponsors, Golden Gate Private Equity, Inc. and August Capital. As reported in the March 5 edition of the TCR, the parties have entered into a Restructuring Support Agreement, which binds the parties to support the Debtors' chapter 11 plan of reorganization. Soros has agreed to provide Conexant with $15 million in senior secured debtor-in-possession financing for working capital during the chapter 11 cases. The DIP Financing will convert into equity in the reorganized Debtors on the effective date of the Plan. According to the accompanying Disclosure Statement, the Plan provides for these terms: 1. Soros will convert the secured portion of its existing senior secured notes claim totaling approximately $80 million into (a) new equity in the reorganized Debtors and (b) $76 million in unsecured "payable in kind" ("PIK") notes to be issued by a newly formed holding company on the effective date of the Plan. Projected recovery by Soros is 41%. 2. Holders of administrative claims, non-priority tax claims and other secured claims will recover 100% provided that the claims do not exceed the caps set for those claims. 3. Holders of allowed unsecured claims will receive a pro rata share of $2.0 million; provided that if the class of unsecured creditors votes in favor of the Plan, Soros has agreed to waive its unsecured deficiency claim totaling approximately $114.5 million. If unsecured creditors accept the Plan, they'll recover 4.1% but if they reject, they'll recover only 1.2%. 4. Holders of existing interests in Conexant will not receive any distribution on account of their interests, and the existing interests will be cancelled and discharged on the effective date. Only Soros and the general unsecured claimants are voting on the Plan. The equity holders are deemed to reject the Plan on account of their 0% recovery. In the motion seeking approval of the Disclosure Statement, the Debtors proposed this timeline: Event Date ----- ---- Deadline for objections to Disclosure Statement April 1, 2013 Voting record date April 8, 2013 Deadline to solicit votes on the Plan April 12, 2013 Deadline to submit ballots on the Plan May 9, 2013 Deadline to file Plan confirmation Objections May 9, 2013 Confirmation hearing on Plan May 16, 2013 A copy of the Plan is available for free at: http://bankrupt.com/misc/Conexant_Prearranged_Plan.pdf A copy of the Disclosure Statement is available for free at: http://bankrupt.com/misc/Conexant_Disc_Statement.PDF 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. Kirkland & Ellis LLP and Klehr Harrison Harvey Branzburg LLP serve as legal counsel and Alvarez & Marsal acts as restructuring advisor to Conexant. Akin Gump Strauss Hauer & Feld LLP and Pepper Hamilton LLP serve as legal counsel and Blackstone Advisory Partners L.P. as restructuring advisor to the secured lender. BMC Group Inc. is the claims and notice agent. DEWEY & LEBOEUF: Ex-Staffers Can Move Ahead With WARN Class Action ------------------------------------------------------------------ Maria Chutchian of BankruptcyLaw360 reported that former Dewey & LeBoeuf LLP employees who claim they were not given proper notice of their May 2012 layoffs will officially move forward as a class action, according to a New York bankruptcy court filing Friday. The report related that the lawsuit was filed last May claiming Dewey, which obtained court approval of its liquidation plan late last month, violated the New York state and federal Worker Adjustment and Retraining Notification Acts when it laid off about 550 employees shortly before it entered Chapter 11 bankruptcy. About Dewey & LeBoeuf Dewey & LeBoeuf LLP sought Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 12-12321) to complete the wind-down of its operations. The firm had struggled with high debt and partner defections. Dewey disclosed debt of $245 million and assets of $193 million in its chapter 11 filing late evening on May 29, 2012. Dewey & LeBoeuf LLP operated as a prestigious, New York City- based, law firm that traced its roots to the 2007 merger of Dewey Ballantine LLP -- originally founded in 1909 as Root, Clark & Bird -- and LeBoeuf, Lamb, Green & MacCrae LLP -- originally founded in 1929. In recent years, more than 1,400 lawyers worked at the firm in numerous domestic and foreign offices. At its peak, Dewey employed about 2,000 people with 1,300 lawyers in 25 offices across the globe. When it filed for bankruptcy, only 150 employees were left to complete the wind-down of the business. Dewey's offices in Hong Kong and Beijing are being wound down. The partners of the separate partnership in England are in process of winding down the business in London and Paris, and administration proceedings in England were commenced May 28. All lawyers in the Madrid and Brussels offices have departed. Nearly all of the lawyers and staff of the Frankfurt office have departed, and the remaining personnel are preparing for the closure. The firm's office in Sao Paulo, Brazil, is being prepared for closure and the liquidation of the firm's local affiliate. The partners of the firm in the Johannesburg office, South Africa, are planning to wind down the practice. The firm's ownership interest in its practice in Warsaw, Poland, was sold to the firm of Greenberg Traurig PA on May 11 for $6 million. The Pension Benefit Guaranty Corp. took $2 million of the proceeds as part of a settlement. Judge Martin Glenn oversees the case. Albert Togut, Esq., at Togut, Segal & Segal LLP, represents the Debtor. Epiq Bankruptcy Solutions LLC serves as claims and notice agent. The petition was signed by Jonathan A. Mitchell, chief restructuring officer. JPMorgan Chase Bank, N.A., as Revolver Agent on behalf of the lenders under the Revolver Agreement, hired Kramer Levin Naftalis & Frankel LLP. JPMorgan, as Collateral Agent for the Revolver Lenders and the Noteholders, hired FTI Consulting and Gulf Atlantic Capital, as financial advisors. The Noteholders hired Bingham McCutchen LLP as counsel. The U.S. Trustee formed two committees -- one to represent unsecured creditors and the second to represent former Dewey partners. The creditors committee hired Brown Rudnick LLP led by Edward S. Weisfelner, Esq., as counsel. The Former Partners hired Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt & Winters, LLP, as counsel. Dewey filed a Chapter 11 Plan of Liquidation and an accompanying Disclosure Statement on Nov. 21, 2012. It filed amended plan documents on Dec. 31, in an attempt to address objections lodged by various parties. A second iteration was filed Jan. 7, 2013. The plan is based on a proposed settlement between secured lenders and Dewey's official unsecured creditors' committee, as well as a settlement with former partners. On Feb. 27, 2013, the Bankruptcy Court confirmed Dewey & Leboeuf's Second Amended Chapter 11 Plan of Liquidation dated Jan. 7, 2013, As of the Effective Date of the Plan, the Debtor will be dissolved. DEWEY & LEBOEUF: Yoon & Kim Approved as Collection Attorneys ------------------------------------------------------------ Dewey & LeBoeuf LLP obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to employ Yoon & Kim LLP as special collections counsel to prosecute past due receivables relating to the collection of A/R, primarily in New York, on a contingency fee basis. Dewey & LeBoeuf says that approximately 78% of outstanding A/R is owed by former clients of the Debtor's former offices located in New York. Y&K will render professional services to the Debtor, which may include, but are not limited to: -- investigation of a claim; -- determination of responsible or additional parties; -- preparation and filing of required notices, pleadings and papers; -- application for provisional remedies when appropriate; -- prosecution of a claim to judgment; and -- negotiation with opponent regarding settlement. The Debtor proposes to pay Y&K: * For matters with an outstanding legal fee owed to the Debtor in amount equal to or less than $100,000: (a) 15% of the gross recovery for each matter resolved prior to the filing or service of any initial litigation, arbitration or mediation document; (b) 22.5% of the gross recovery for each matter resolved subsequent to the filing or service of any initial litigation, arbitration or mediation document, including but not limited to the service of a "Notice to Arbitrate: under Part 137 of the Rules of the Chief Administrator, the filing of a Summons and Complaint, and the filing of Claim of Arbitration, but prior to the filing by the Former Client of any responsive litigation, arbitration or mediation document or pleading; (c) 32.5% of the gross recovery for each matter resolved subsequent to the filing by the Former Client of any responsive litigation, arbitration or mediation document or pleading, including but not limited to the filing by the Former Client of a "Client Request for Fee Arbitration" under Part 137 of the Rules of the Chief Administrator, the filing of an Answer or Motion, and the filing of a Response to a Claim for Arbitration; (d) 32.5% of the gross recovery of a matter resolved through default judgment as a result of a Former Client's default in any litigation or arbitration matter. * For matters with an outstanding legal fee owed to the Debtor, in an amount greater than $100,000 and equal to or less than $500,000: (1) 12.5% of the gross recovery for each matter resolved prior to the filing or service of any initial litigation, arbitration or mediation document; (2) 20% of the gross recovery for each matter resolved subsequent to the filing or service of any initial litigation, arbitration or mediation document, including but not limited to the service of a "Notice to Arbitrate" under Part 137 of the Rules of the Chief Administrator, the filing of a Summons and Complaint, and the filing of Claim of Arbitration, but prior to the filing by the Former Client of any responsive litigation, arbitration or mediation document or pleading; (3) 30% of the gross recovery for each matter resolved subsequent to the filing by the Former Client of any responsive litigation, arbitration or mediation document or pleading, including but not limited to the filing by the Former Client of a "Client Request for Fee Arbitration" under Part 137 of the Rules of the Chief Administrator, the filing of an Answer or Motion, and the filing of a Response to a Claim for Arbitration; (4) 30% of the gross recovery of a matter resolved through default judgment as a result of a Former Client's default in any litigation or arbitration matter. * For matters with an outstanding legal fee owed to the Debtor in an amount greater than $500,000 and equal to or less than $1,000,000: (a) 10% of the gross recovery for each matter resolved prior to the filing or service of any initial litigation, arbitration or mediation document; (b) 17.5% of the gross recovery for each matter resolved subsequent to the filing or service of any initial litigation, arbitration or mediation document, including but not limited to the service of a "Notice to Arbitrate" under Part 137 of the Rules of the Chief Administrator, the filing of a Summons and Complaint, and the filing of Claim of Arbitration, but prior to the filing by the Former Client of any responsive litigation, arbitration or mediation document or pleading; (c) 25% of the gross recovery for each matter resolved subsequent to the filing by the Former Client of any responsive litigation, arbitration or mediation document or pleading, including but not limited to the filing by the Former Client of a "Client Request for Fee Arbitration" under Part 137 of the Rules of the Chief Administrator, the filing of an Answer or Motion, and the filing of a Response to a Claim for Arbitration; (d) 25% of the gross recovery of a matter resolved through default judgment as a result of a Former Client's default in any litigation or arbitration matter. * For matters with an outstanding legal fee owed [including disbursements] to the Debtor in an amount greater than $1,000,000: (a) 7.5% of the gross recovery for each matter resolved prior to the filing or service of any initial litigation, arbitration or mediation document; (b) 15% of the gross recovery for each matter resolved subsequent to the filing or service of any initial litigation, arbitration or mediation document, including but not limited to the service of a "Notice to Arbitrate" under Part 137 of the Rules of the Chief Administrator, the filing of a Summons and Complaint, and the filing of Claim of Arbitration, but prior to the filing by the Former Client of any responsive litigation, arbitration or mediation document or pleading; (c) 22.5% of the gross recovery for each matter resolved subsequent to the filing by the Former Client of any responsive litigation, arbitration or mediation document or pleading, including but not limited to the filing by the Former Client of a "Client Request for Fee Arbitration" under Part 137 of the Rules of the Chief Administrator, the filing of an Answer or Motion, and the filing of a Response to a Claim for Arbitration; (d) 22.5% of the gross recovery of a matter resolved through default judgment as a result of a Former Client's default in any litigation or arbitration matter. To the best of the Debtor's knowledge, Y&K does not hold or represent any interest adverse to the Debtor or its estate with respect to the matters as to which Y&K is to be employed. About Dewey & LeBoeuf Dewey & LeBoeuf LLP sought Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 12-12321) to complete the wind-down of its operations. The firm had struggled with high debt and partner defections. Dewey disclosed debt of $245 million and assets of $193 million in its chapter 11 filing late evening on May 29, 2012. Dewey & LeBoeuf LLP operated as a prestigious, New York City- based, law firm that traced its roots to the 2007 merger of Dewey Ballantine LLP -- originally founded in 1909 as Root, Clark & Bird -- and LeBoeuf, Lamb, Green & MacCrae LLP -- originally founded in 1929. In recent years, more than 1,400 lawyers worked at the firm in numerous domestic and foreign offices. At its peak, Dewey employed about 2,000 people with 1,300 lawyers in 25 offices across the globe. When it filed for bankruptcy, only 150 employees were left to complete the wind-down of the business. Dewey's offices in Hong Kong and Beijing are being wound down. The partners of the separate partnership in England are in process of winding down the business in London and Paris, and administration proceedings in England were commenced May 28. All lawyers in the Madrid and Brussels offices have departed. Nearly all of the lawyers and staff of the Frankfurt office have departed, and the remaining personnel are preparing for the closure. The firm's office in Sao Paulo, Brazil, is being prepared for closure and the liquidation of the firm's local affiliate. The partners of the firm in the Johannesburg office, South Africa, are planning to wind down the practice. The firm's ownership interest in its practice in Warsaw, Poland, was sold to the firm of Greenberg Traurig PA on May 11 for $6 million. The Pension Benefit Guaranty Corp. took $2 million of the proceeds as part of a settlement. Judge Martin Glenn oversees the case. Albert Togut, Esq., at Togut, Segal & Segal LLP, represents the Debtor. Epiq Bankruptcy Solutions LLC serves as claims and notice agent. The petition was signed by Jonathan A. Mitchell, chief restructuring officer. JPMorgan Chase Bank, N.A., as Revolver Agent on behalf of the lenders under the Revolver Agreement, hired Kramer Levin Naftalis & Frankel LLP. JPMorgan, as Collateral Agent for the Revolver Lenders and the Noteholders, hired FTI Consulting and Gulf Atlantic Capital, as financial advisors. The Noteholders hired Bingham McCutchen LLP as counsel. The U.S. Trustee formed two committees -- one to represent unsecured creditors and the second to represent former Dewey partners. The creditors committee hired Brown Rudnick LLP led by Edward S. Weisfelner, Esq., as counsel. The Former Partners hired Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt & Winters, LLP, as counsel. Dewey filed a Chapter 11 Plan of Liquidation and an accompanying Disclosure Statement on Nov. 21, 2012. It filed amended plan documents on Dec. 31, in an attempt to address objections lodged by various parties. A second iteration was filed Jan. 7, 2013. The plan is based on a proposed settlement between secured lenders and Dewey's official unsecured creditors' committee, as well as a settlement with former partners. On Feb. 27, 2013, the Bankruptcy Court confirmed Dewey & LeBoeuf's Second Amended Chapter 11 Plan of Liquidation dated Jan. 7, 2013, As of the Effective Date of the Plan, the Debtor will be dissolved. DEWEY & LEBOEUF: Adler Approved as Collection Attorneys ------------------------------------------------------- Dewey & LeBoeuf LLP in February obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to employ Adler Law Firm as collection attorneys. As reported in the Jan. 25, 2013 edition from the TCR, Adler will render collection services to the Debtor, which may include, but are not limited to: a) investigation of each claim; b) determination of responsible or additional parties; c) provisional selection, vetting, hiring (subject to Bankruptcy Court approval) and supervision of out of area counsel; d) preparation and filing of required notices, pleadings and papers; e) application for provisional remedies when appropriate. The Debtor proposes to pay Adler: * 12% of the gross recovery in the event the recovery is solely the result of sending a demand letter and the claim is $150,000 or less; * 10% of the gross recovery in the event the recovery is solely the result of sending a demand letter and the claim is more than $150,000, but less than $500,000; and * 5% of the gross recovery in the event the recovery is solely the result of sending a demand letter and the claim is more than $500,000. For all non-routine matters, the Debtor proposes to pay Adler 35% of the gross recovery, plus reimbursement of Adler's costs and expenses. To the best of the Debtor's knowledge, Adler does not hold or represent any interest adverse to the Debtor or its estate with respect to the matters as to which Adler is to be employed. About Dewey & LeBoeuf Dewey & LeBoeuf LLP sought Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 12-12321) to complete the wind-down of its operations. The firm had struggled with high debt and partner defections. Dewey disclosed debt of $245 million and assets of $193 million in its chapter 11 filing late evening on May 29, 2012. Dewey & LeBoeuf LLP operated as a prestigious, New York City- based, law firm that traced its roots to the 2007 merger of Dewey Ballantine LLP -- originally founded in 1909 as Root, Clark & Bird -- and LeBoeuf, Lamb, Green & MacCrae LLP -- originally founded in 1929. In recent years, more than 1,400 lawyers worked at the firm in numerous domestic and foreign offices. At its peak, Dewey employed about 2,000 people with 1,300 lawyers in 25 offices across the globe. When it filed for bankruptcy, only 150 employees were left to complete the wind-down of the business. Dewey's offices in Hong Kong and Beijing are being wound down. The partners of the separate partnership in England are in process of winding down the business in London and Paris, and administration proceedings in England were commenced May 28. All lawyers in the Madrid and Brussels offices have departed. Nearly all of the lawyers and staff of the Frankfurt office have departed, and the remaining personnel are preparing for the closure. The firm's office in Sao Paulo, Brazil, is being prepared for closure and the liquidation of the firm's local affiliate. The partners of the firm in the Johannesburg office, South Africa, are planning to wind down the practice. The firm's ownership interest in its practice in Warsaw, Poland, was sold to the firm of Greenberg Traurig PA on May 11 for $6 million. The Pension Benefit Guaranty Corp. took $2 million of the proceeds as part of a settlement. Judge Martin Glenn oversees the case. Albert Togut, Esq., at Togut, Segal & Segal LLP, represents the Debtor. Epiq Bankruptcy Solutions LLC serves as claims and notice agent. The petition was signed by Jonathan A. Mitchell, chief restructuring officer. JPMorgan Chase Bank, N.A., as Revolver Agent on behalf of the lenders under the Revolver Agreement, hired Kramer Levin Naftalis & Frankel LLP. JPMorgan, as Collateral Agent for the Revolver Lenders and the Noteholders, hired FTI Consulting and Gulf Atlantic Capital, as financial advisors. The Noteholders hired Bingham McCutchen LLP as counsel. The U.S. Trustee formed two committees -- one to represent unsecured creditors and the second to represent former Dewey partners. The creditors committee hired Brown Rudnick LLP led by Edward S. Weisfelner, Esq., as counsel. The Former Partners hired Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt & Winters, LLP, as counsel. Dewey filed a Chapter 11 Plan of Liquidation and an accompanying Disclosure Statement on Nov. 21, 2012. It filed amended plan documents on Dec. 31, in an attempt to address objections lodged by various parties. A second iteration was filed Jan. 7, 2013. The plan is based on a proposed settlement between secured lenders and Dewey's official unsecured creditors' committee, as well as a settlement with former partners. On Feb. 27, 2013, the Bankruptcy Court confirmed Dewey & Leboeuf's Second Amended Chapter 11 Plan of Liquidation dated Jan. 7, 2013, As of the Effective Date of the Plan, the Debtor will be dissolved. DIGITAL DOMAIN: D&O Investigation Fees Increased to $725,000 ------------------------------------------------------------ The Hon. Brendan L. Shannon of the U.S. Bankruptcy Court for the District of Delaware approved the third amendment to the final order authorizing DDMG Estate, et al., to obtain debtor-in- possession financing, to increase the D&O investigation fees, as defined in the Final DIP Order, from $425,000 to $725,000, for the purpose of paying the allowed fees and disbursements of counsel to the Official Committee of Unsecured Creditors. A full-text copy of the third amendment to the Final DIP Order is available for free at http://bankrupt.com/misc/DDMGdipord.pdf About Digital Domain Port St. Lucie, Florida-based Digital Domain Media Group, Inc. -- http://www.digitaldomain.com/-- engaged in the creation of original content animation feature films, and development of computer-generated imagery for feature films and trans-media advertising primarily in the United States. Digital Domain Media Group, Inc. and 13 affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-12568) on Sept. 11, 2012, to sell its business for $15 million to Searchlight Capital Partners LP, subject to higher and better offers. The company disclosed assets of $205 million and liabilities totaling $214 million. The Debtors also have sought ancillary relief in Canada, pursuant to the Companies' Creditors Arrangement Act in the Supreme Court of British Columbia, Vancouver Registry. Attorneys at Pachulski Stang Ziehl & Jones serve as counsel to the Debtors. FTI Consulting, Inc.'s Michael Katzenstein is the chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. An official committee of unsecured creditors appointed in the case is represented by lawyers at Sullivan Hazeltine Allinson LLC and Brown Rudnick LLP. At a bankruptcy auction, the principal part of the business was purchased by a joint venture between Galloping Horse America LLC, an affiliate of Beijing Galloping Horse Co., and an affiliate of Reliance Capital Ltd., based in Mumbai. The $36.7 million total value of the contact includes $3.6 million to cure defaults on contracts and $2.9 million in reimbursement of payroll costs. As the result of a settlement negotiated by the unsecured creditors' committee with secured lenders, there will be some recovery for the committee's constituency. DOW CORNING: 6th Cir. Affirms Ruling on Time Value Credits ---------------------------------------------------------- The U.S. Court of Appeals for the Sixth Circuit affirmed a district court ruling that denied the request of Dow Corning Corporation seeking Time Value Credits to account for the timing of certain payments it made to a depository trust set up for the benefit of breast implant tort claimants. The district court denied Dow Corning's requests except for the instances where the Funding Payment Agreement expressly provides for Time Value Credits. "We affirm the district court's order with respect to every finding except its determination that Dow is never entitled to a Time Value Credit for Funding Periods after Funding Period," the Sixth Circuit said. Faced with thousands of lawsuits brought by women who had received silicon breast implants that it manufactured, Dow Corning filed for Chapter 11 bankruptcy on May 15, 1995. The Bankruptcy Court confirmed the Amended Joint Plan of Reorganization on Nov. 30, 1999. Much litigation followed, and the Plan finally took effect on June 1, 2004. The Plan outlines the procedures for resolving breast implant claims. Claimants can choose to settle their claims through a Settlement Facility or litigate their claims against a Litigation Facility. Claims and administrative expenses are paid with monies held in a trust known as the Depository Trust. The Trustee's responsibilities are enumerated in a Depository Trust Agreement, the first version of which was dated March 27, 2001. Dow Corning's payment obligations are set forth in a Funding Payment Agreement, which requires Dow to make payments to the Trust up to a maximum aggregate amount of $3.172 billion. However, the Funding Agreement does not require Dow to make this payment all at once, but spreads out Dow's payment obligations over time. To account for the timing of these payments, the Funding Agreement provides that Dow's funding obligation cannot exceed a net present value of $2.35 billion, calculated as of the Effective Date (June 1, 2004). To compare the net present value of Dow's payment stream with the net present value funding cap, all payments -- with certain possible exception -- must be discounted to the Effective Date using a rate of 7% per year compounded annually. The Sixth Circuit noted that the method by which Dow Corning fulfills its payment obligations under the Funding Agreement is remarkably complicated. When executing the Plan, the parties anticipated that appeals might be filed that would delay the Plan's implementation. To prepare for that contingency, the Plan provided that Dow would make an initial payment of $985 million to the Trust to "be held in escrow pending the outcome of the appeal, with any interest accruing thereon to be held as part of the fund." The Plan further provided that the funds could be used for administrative expenses by the Settlement Facility to prepare "to begin processing Claims promptly after the Effective Date." If the confirmation of the Plan was upheld on appeal, these funds would be disbursed to pay claims; if the confirmation of the Plan was overturned on appeal, the remaining funds would be returned to Dow. Confirmation of the Plan was in fact appealed, so the payments were made -- mostly in 2001 -- pursuant to a detailed provision in the Trust Agreement. Another important aspect of the Funding Agreement is that Dow Corning's payment obligations are spread out over time. The Funding Agreement creates a series of 16 "Funding Periods." Each Funding Period lasts exactly one year, and the first begins exactly one year after the Effective Date. Each Funding Period has a corresponding "Annual Payment Ceiling" which determines Dow's maximum payment obligation during that Funding Period. Every three months, the Claims Administrator sends Dow Corning a notification informing Dow of the amount of claims and expenses expected to be paid out in excess of reserves each month. At the end of each month, the Claims Administrator sends Dow a notification informing Dow of the actual claims and expenses paid out in excess of reserves during the preceding month. Dow must promptly pay that amount. Dow is not required to pay more than necessary to cover the actual claims and expenses paid in excess of reserves, and cannot be required to pay more than the Annual Payment Ceiling. But the Annual Payment Ceilings really only limit Dow's obligations with respect to cash payments. "Insurance Proceeds" received by Dow before the Effective Date were required to be held in trust by Dow and paid to the Trust 90 days after the Effective Date. After the Effective Date, Insurance Proceeds are supposed to be paid by the insurers directly to the Trust, and if Dow receives Insurance Proceeds, it must transfer them to the Trust immediately, whether or not they exceed the applicable Annual Payment Ceiling. The Sixth Circuit noted that requiring Insurance Proceeds to be paid to the Trust without regard to the Annual Payment Ceilings means that Dow's payment of cash and Insurance Proceeds during a Funding Period could exceed the Annual Payment Ceiling. Recognizing this fact, the Funding Agreement provides that when Dow's payments during a Funding Period exceed the applicable Annual Payment Ceiling, Dow receives a credit for the excess amount that operates to reduce the Annual Payment Ceiling in a future funding period. Sometimes this credit is applied to the very next Annual Payment Ceiling, and sometimes it is applied to an Annual Payment Ceiling farther in the future. In addition to crediting the nominal value of the excess amount against a future Annual Payment Ceiling, the Funding Agreement sometimes also expressly credits the time value of the excess amount. This so-called "Time Value Credit" recognizes that Dow has essentially paid its obligation early, and credits Dow for the timing of the payment as well as the nominal amount. The Time Value Credit is calculated at the rate of 7% per year -- the same rate used to calculate the net present value of the total payments for purposes of comparing it with the net present value funding cap. The Claims Administrator is charged with the responsibility of adjusting the Annual Payment Ceilings. In 2004, Dow requested that the Claims Administrator adjust the Annual Payment Ceilings to take into account several different payments it had made. Dow claimed it was entitled to Time Value Credits for making these payments early. Specifically, Dow sought Time Value Credits for the following eight payments: (1) The $985 million Initial Payment, paid mostly in 2001. (2) $18.4 million paid in 2001 to settle Class 6D claims. (3) $211,456,278 in Insurance Proceeds that were received by Dow before the Effective Date and paid in June 2004. (4) $2.9 million paid from Dow's MDL 926 escrow account in June 2004. (5) $2,180,656 paid from Dow's MDL 926 escrow account in June and September 2004. (6) $7.2 million paid in June 2004 to Class 4A claimants. (7) $214,363,369 in Insurance Proceeds that were received by Dow after the Effective Date and paid in June 2004. (8) $57,736,990 in Insurance Proceeds paid in Funding Period 3. The Claimants' Advisory Committee, which represents the tort claimants, objected to Dow's request for Time Value Credits for most of these payments. When the Claims Administrator did not grant its request, Dow filed a motion in the United States District Court for the Eastern District of Michigan requesting that the court require the Claims Administrator to award the Time Value Credits. The district court found that the Funding Agreement is unambiguous. It determined that Dow is entitled to Time Value Credits only in those instances where the Funding Agreement expressly provides for them. It concluded that if the parties had intended Dow to receive Time Value Credits for particular payments, the Funding Agreement would specifically provide for them. Since the Funding Agreement specifically provides a Time Value Credit for the $214,363,369 in Insurance Proceeds that were received by Dow after the Effective Date and paid in June 2004 (payment number 7), the district court found that Dow was entitled to one. It further found that the Funding Agreement specifically provides a Time Value Credit for the $211,456,278 in Insurance Proceeds received before the effective date and paid in June 2004 (payment number 3), but only for the period from the date of payment until the beginning of Funding Period 1. The Funding Agreement does not specifically provide a Time Value Credit for the other payments, so the district court denied Dow's request for Time Value Credits for these payments. Unsatisfied with this outcome, Dow appealed the district court's order. According to the Sixth Circuit, the district court was correct to distinguish between Time Value Credits and net present value adjustments. Time Value Credits are credits that operate to reduce the Annual Payment Ceilings when expressly provided for in the Funding Agreement. Net present value adjustments, on the other hand, are the adjustments made to compare the net present value of Dow's total payments with the $2.35 billion net present value funding cap. The Sixth Circuit also held that the Funding Agreement clearly states that if the cash and Insurance Proceeds received by the Trust during the Funding Periods exceeds the applicable Annual Payment Ceiling, Dow is entitled to a Time Value Credit for the excess. "We hold that the Funding Agreement is unambiguous and that Dow is entitled to Time Value Credits only where expressly provided by the Funding Agreement. We express no opinion as to whether Dow is entitled to a net present value adjustment for the Initial Payment," the Sixth Circuit said. The appellate case is, DOW CORNING CORPORATION, Interested Party- Appellant, v. CLAIMANTS' ADVISORY COMMITTEE, Interested Party- Appellee, No. 11-2632 (6th Cir.). A copy of the Sixth Circuit's March 8, 2013 Opinion is available at http://is.gd/oqBWkBfrom Leagle.com. About Dow Corning Dow Corning Corp. -- http://www.dowcorning.com/-- produces and supplies more than 7,000 silicon-based products and services to more than 25,000 customers worldwide. Dow Corning is equally owned by The Dow Chemical Company and Corning Incorporated. The Company filed for Chapter 11 protection on May 15, 1995 (Bankr. E.D. Mich. Case No. 95-20512) to resolve silicone implant- related tort liability. The Company owed its commercial creditors more than $1 billion at that time. A consensual Joint Plan of Reorganization, amended on February 4, 1999, offering to pay commercial creditors in full with post-petition interest, establish a multi-billion-dollar settlement trust for tort claims, and leave Dow Corning's shareholders unimpaired, took effect on June 30, 2004. DVORKIN HOLDINGS: Court OKs Carpenter Lipps as Conflicts Counsel ---------------------------------------------------------------- Gus A. Paloian, the Chapter 11 Trustee of the estate of Dvorkin Holdings, LLC, sought and obtained permission from the U.S. Bankruptcy Court to employ Carpenter Lipps & Leland LLP as conflicts counsel. The firm will provide these services: a. review and analyze documents produced by the Debtor and third parties, and investigate potential causes of action that may give rise to claims on behalf of the estate; b. prepare on behalf of the trustee all necessary papers, applications, pleadings, reports, and/or other legal papers; and C. appear in Court and protect the interests of the Chapter 11 trustee before the Court. The firm's hourly rates are: Professional Rates ------------ ----- Jonathan M. Cyrluk $450 Associates $200 to $300 Paralegal $110 Jonathan M. Cyrluk, Esq., attests that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Dvorkin Holdings Dvorkin Holdings, LLC, a holding company that has interests in 40 non-debtor entities, filed a Chapter 11 petition (Bankr. N.D. Ill. Case No. 12-31336) in Chicago on Aug. 7, 2012. The Debtor estimated assets of at least $10 million and debts of up to $10 million. Bankruptcy Judge Jack B. Schmetterer oversees the case. Michael J. Davis, Esq., at Springer, Brown, Covey, Gaetner & Davis, in Wheaton, Illinois, served as counsel to the Debtor. The petition was signed by Loran Eatman, vice president of DH-EK Management Corp. The Bankruptcy Court in October 2012 granted the request of Patrick S. Layng, the U.S. Trustee for the Northern District of Illinois, to appoint Gus Paloian as the Chapter 11 trustee. Lender, FirstMerit Bank, N.A., also sought appointment of a chapter 11 trustee. EASTMAN KODAK: Posts Bigger Loss, But Sees Mid-2013 Ch.11 Exit -------------------------------------------------------------- Eastman Kodak Company had a 2012 consolidated net loss of $1.38 billion. Excluding reorganization and restructuring costs totaling $1.07 billion, the loss for the year would have been $308 million. The operating loss for the Commercial Imaging segments (Digital Printing and Enterprise and Graphics, Entertainment and Commercial Films) improved by $278 million in 2012. On a GAAP basis, the consolidated 2012 loss from continuing operations before interest expense, other income (charges), net, reorganization items, net and income taxes increased by $33 million. Selling, general and administrative costs fell by $226 million as Kodak continued its focus on cost reductions. With other profit improvement initiatives implemented for 2013, Kodak believes it is on a path to emerge from Chapter 11 reorganization in mid-2013. Kodak's revenue of $4.11 billion in 2012 was a decline of 20% from the previous year, reflecting strategic decisions to focus on profitable businesses and accounts, soft industry demand as a result of the broader economic downturn in some businesses and regions, lower sales of traditional products, and unfavorable foreign exchange impact. "We progressed in 2012 by maintaining absolute focus on our customers," said Antonio M. Perez, Chairman and Chief Executive Officer. "We earned our customers' continuing loyalty, and look forward to moving ahead with even deeper business relationships built around the industry's most comprehensive and innovative portfolio of solutions. "We also optimized our use of the Chapter 11 process, which offers valuable restructuring advantages despite the many demands it also imposes." The company's worldwide cash balance was $1.14 billion at the end of 2012. "Our momentum continues as we work to file our Plan of Reorganization and then complete the final actions that will enable us to emerge from Chapter 11 in mid-2013," said Mr. Perez. "Thanks to the talent and dedication of our employees, our 2012 performance was on track or ahead of our adjusted EBITDA and cash projections, and we have remained in compliance with the covenants of our debtor-in-possession facility, laying the foundation for emergence as a profitable, sustainable company." About Eastman Kodak Rochester, New York-based Eastman Kodak Company and its U.S. subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan. Subsidiaries outside of the U.S. were not included in the filing and are expected to continue to operate as usual. Kodak, founded in 1880 by George Eastman, was once the world's leading producer of film and cameras. Kodak sought bankruptcy protection amid near-term liquidity issues brought about by steeper-than-expected declines in Kodak's historically profitable traditional businesses, and cash flow from the licensing and sale of intellectual property being delayed due to litigation tactics employed by a small number of infringing technology companies with strong balance sheets and an awareness of Kodak's liquidity challenges. In recent years, Kodak has been working to transform itself from a business primarily based on film and consumer photography to a smaller business with a digital growth strategy focused on the commercialization of proprietary digital imaging and printing technologies. Kodak has 8,900 patent and trademark registrations and applications in the United States, as well as 13,100 foreign patents and trademark registrations or pending registration in roughly 160 countries. Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. FTI Consulting, Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is the investment banker. Kurtzman Carson Consultants LLC is the claims agent. The Official Committee of Unsecured Creditors has tapped Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel. Michael S. Stamer, Esq., David H. Botter, Esq., and Abid Qureshi, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the Unofficial Second Lien Noteholders Committee. The Retirees Committee has hired Haskell Slaughter Young & Rediker, LLC, and Arent Fox, LLC as Co-Counsel; Zolfo Cooper, LLC, as Bankruptcy Consultants and Financial Advisors; and the Segal Company, as Actuarial Advisors. Robert J. Stark, Esq., Andrew Dash, Esq., and Neal A. D'Amato, Esq., at Brown Rudnick LLP, represent Greywolf Capital Partners II; Greywolf Capital Overseas Master Fund; Richard Katz, Kenneth S. Grossman; and Paul Martin. Kodak completed the $527 million sale of digital-imaging technology on Feb. 1, 2013. Kodak intends to reorganize by focusing on the commercial printing business. ERESEARCH TECHNOLOGY: Moody's Keeps 'B2' CFR After Dividend Plan ---------------------------------------------------------------- Moody's Investors Service reports that eResearch Technology's plan for a $50 million dividend to sponsor Genstar, announced just before closing an in-progress financing agreement, is a credit negative. The ratings are unaffected at this time, including the B2 corporate family rating. eResearch Technology, Inc. provides cardiac safety, respiratory efficacy and ePRO solutions to pharmaceutical and healthcare organizations sponsoring or involved in the clinical trial of new drugs owned by affiliates of Genstar Capital. Moody's projects 2013 revenue of over $240 million in 2013. ERESEARCH TECHNOLOGY: S&P Revises Rating Outlook to Stable ---------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on Philadelphia-based cardiac and respiratory central laboratory provider eResearch Technology Inc. to stable from positive. All ratings on the company, including the 'B' corporate credit rating and 'B+' rating on ERT's proposed $255 million term loan, are affirmed. S&P's ratings on ERT reflect the company's "weak" business risk profile, which reflects ERT's narrow operating focus and small scale, despite its broad customer base and leading market share in cardiac safety and respiratory central laboratory services. While ERT is a market leader in its three business segments, the company is a very small player in the much larger health care services industry. S&P's rating also reflects ERT's "highly leveraged" financial risk profile, characterized by adjusted leverage of about 5.5x and funds from operations (FFO) to total debt that S&P expects to normalize in the low to mid-teens. Based on the company's decision to fund a shareholder dividend, S&P believes the company will use its capacity to improve shareholder value, and S&P now expects financial policies to support leverage at or near current metrics over time. "Based on year-to-date performance trends, we expect ERT to exceed our low-teens 2012 revenue growth forecasts, which primarily reflects higher-than-expected cardiac safety revenues and higher EPRO revenues following the invivodata acquisition," said Standard & Poor's credit analyst Shannan Murphy. EBITDA margins have been stronger than S&P expected over the past two quarters, because of better operating leverage on stronger growth and a better-than-expected pricing environment. In 2013, S&P expects revenue growth to slow to the low double digits, reflecting low- to mid-single-digit organic growth and the full- year impact of the invivodata acquisition. S&P expects modest margin expansion in 2013, reflecting the full-year impact of 2012 cost savings, and more than $40 million in FFO generation, representing about 13% of total debt. S&P's assessment of ERT's business risk profile as weak considers its narrow focus and small size, and S&P's expectation that any increase in scale will come from acquisitions, which could pose integration risks. While ERT is a market leader in cardiac safety and respiratory central laboratory services, and is among the industry leaders in electronic patient outcomes (EPRO) following the mid-2012 acquisition of competitor invivodata, S&P views these as niche markets. In addition, the cardiac safety and respiratory central laboratories businesses are capital intensive. However, ERT benefits from favorable industry demand trends, especially in cardiac safety; because cardiac safety issues are the leading reason for drug recalls, safety testing is usually required as part of the drug approval process, and biopharma customers are increasingly willing to outsource this type of work. S&P's assessment of a highly leveraged financial risk profile is supported by adjusted leverage of about 5.5x and funds from operations to total debt that S&P expects to normalize in the low to mid-teens. It also reflects S&P's expectation that the company will remain acquisitive over the near term, and that the company may use internally generated cash flow and debt capacity to fund dividends precluding any meaningful improvement in credit ratios. FALCON GAS: Natural Gas Co. Wants Trustee for Arcapita Subsidiary ----------------------------------------------------------------- Eric Hornbeck of BankruptcyLaw360 reported that Tide Natural Gas Storage I LP, which paid $515 million for natural gas assets from a subsidiary of Bahrain's bankrupt Arcapita Bank BSC, asked a New York bankruptcy court Monday to appoint a trustee of the subsidiary's bankruptcy because of conflicts of interest. The report related that Tide asked to convert Arcapita subsidiary Falcon Gas Storage Co. Inc.'s bankruptcy from Chapter 11 to Chapter 7 and for the court to appoint a trustee because Arcapita reorganization's plan will give the Bahraini bank and its creditors too much power to strip off the bankrupt company's assets. About Falcon Gas Atlanta-based Falcon Gas Storage Company, Inc., an operator of natural-gas storage facilities, filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-11790) on April 30, 2012, estimating assets and debts of up to $100 million. Falcon Gas is an affiliate of Arcapita Bank BSC. The list of Falcon's larger creditors includes Commerzbank AG and National Bank of Bahrain BSC, two members of the Arcapita unsecured creditors' committee. The two were listed as having claims of $164.7 million and $132.3 million, respectively. Falcon Gas is represented by Gibson, Dunn & Crutcher LLP as bankruptcy counsel, Linklaters LLP as corporate counsel, Trowers & Hamlins LLP as international counsel, and Hatim S Zu'Bi & Partners as Bahraini counsel. Rothschild Inc. serves as financial advisor, while GCG, Inc., serves as notice and claims agent. EAST COAST BROKERS: Section 341(a) Meeting Scheduled for April 8 ---------------------------------------------------------------- A meeting of creditors in the bankruptcy case of East Coast Brokers & Packers, Inc., will be held on April 8, 2013, at 9:30 a.m. at Tampa, FL(861) - Room 100-B, Timberlake Annex, 501 E. Polk Street. Creditors have until May 20 to submit their proofs of claim. 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. East Coast Brokers & Packers, Inc., along with four related entities, sought Chapter 11 protection (Bankr. M.D. Fla. Case No. 13-02894) in Tampa, Florida, on March 6, 2013. East Coast estimated at least $50 million in assets and liabilities in its bare-bones Chapter 11 petition. Scott A. Stichter, Esq., at Stichter, Riedel, Blain & Prosser, in Tampa, serves as counsel to the Debtors. According to the docket, the Chapter 11 plan and disclosure statement are due July 5, 2013. FOURTH QUARTER PROPERTIES: Section 341(a) Meeting on April 9 ------------------------------------------------------------ A meeting of creditors in the bankruptcy case of Fourth Quarter Properties XXXVIII, LLC, will be held on April 9, 2013, at 11:00 a.m. at Hearing Room 362, Atlanta. 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. Fourth Quarter Properties XXXVIII, LLC, filed a Chapter 11 petition (Bankr. N.D. Ga. Case No. 13-10585) in Newnan, Georgia, on March 5, 2013. The Debtor is a single asset real estate debtor as defined in 11 U.S.C. Sec. 101(51B) and has property in 45, 47 & 59 Ansley Drive, in Newnan. The Debtor estimated at least $10 million in assets and at least $1 million in liabilities as of the Chapter 11 filing. Matthew Cathey, Esq., at Stone & Baxter, LLP, in Macon, Georgia, serves as the Debtor's counsel. According to the docket, the Chapter 11 plan and disclosure statement are due July 3, 2013. GENERAL EMPLOYMENT: Under NYSE MKT Listing Periodic Review ---------------------------------------------------------- General Employment Enterprises, Inc. on March 11 disclosed that on January 17, 2013 and February 21, 2013 the Company received notices from the NYSE MKT staff indicating that the Company is below certain of the Exchange's continued listing standards due to its delinquency in filing Form 10-K for fiscal year ended September 30, 2012 and the delinquency in filing Form 10-Q for the quarter ended December 31, 2012, as set forth in sections 134 and 1101 of the NYSE MKT Company Guide. The Company was afforded the opportunity to submit a plan of compliance to the Exchange and on January 31, 2013 presented its plan for both reports to the Exchange. On March 5, 2013 the Exchange notified the Company that it accepted the Company's plan of compliance and granted the Company an extension until May 1, 2013 to regain compliance with the continued listing standards. The Company will be subject to periodic review by the Exchange staff during the extension period. Failure to make progress consistent with the plan or to regain compliance with the continued listing standards by the end of the extension period could result in the Company being delisted from the NYSE MKT LLC. Commenting on the Company's status, Michael Schroering, Chairman of the Board & CEO stated, "We have made great progress on the audit with Friedman, LLP and expect to meet or exceed the expectations of the NYSE MKT." Mr. Schroering also commented, "We are transitioning to a new and invigorated team at General Employment Enterprise, Inc., whom I believe will work aggressively and be able to accomplish our strategic goals for this year and beyond. We have seen encouraging results from this year's first quarter of operations and have already started the necessary infrastructure changes for our future." General Employment Enterprises, Inc. was incorporated in the State of Illinois in 1962 and is the successor to employment offices doing business since 1893. The Company's segments consist of the following: (a) professional placement services specializing in the placement of information technology, engineering, and accounting professionals for direct hire and contract staffing, (b) temporary staffing services in the agricultural industry and (c) temporary staffing services in light industrial staffing. GENERAL MOTORS: E.D. Mich. Court Rules in Trombly Suit ------------------------------------------------------ JEREMIAH J. TROMBLY, Plaintiff, v. FIDELITY WORKPLACE SERVICES LLC, et al., Defendants, Case No. 11-13477 (E.D. Mich.), challenges a decision denying Mr. Trombly's request for so-called "interim supplement" benefits under a retirement plan offered to salaried employees of defendant General Motors Corporation. In his five-count second amended complaint, the Plaintiff alleges that these benefits are owed to him either (i) under the terms of the plan itself, (ii) by virtue of breaches of duties owed to him by Defendant Fidelity Workplace Services, LLC and/or the Defendant plan administrator in their purported roles as plan fiduciaries, (iii) under the theory of equitable estoppel, or (iv) under state- law theories of breach of contract or misrepresentation. The District Court's subject matter jurisdiction over the case rests upon the Plaintiff's claim for benefits under an employee welfare benefit plan governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. Sec. 1001 et seq. Both the Plaintiff and the Defendants have filed cross-motions to reverse or affirm, respectively, the plan administrator's determination that the Plaintiff was not entitled to "interim supplement" benefits under the General Motors retirement plan. The Defendants argue that under the plain language of the plan, the Plaintiff's election of an early retirement date of Dec. 1, 2007, left him just short of the 85 points -- calculated by adding age at retirement and years of credited service -- needed to be eligible for the "interim supplement" benefits he seeks in this suit. The Defendants further contend (i) that the Plaintiff's breach of fiduciary claim is subject to dismissal as a mere repackaging of his claim for benefits under an ERISA plan, (ii) that Plaintiff cannot establish several of the elements of a viable ERISA claim of equitable estoppel, and (iii) that Plaintiff's state-law claims are preempted by ERISA. The Plaintiff, meanwhile, argues primarily that he is entitled to relief in light of the alleged misrepresentations made to him by representatives of Defendant Fidelity, as well as omissions of material facts, during telephone conversations in which the Plaintiff sought benefit information bearing upon his decision whether to take early retirement. Mr. Trombly worked for General Motors from 1966 to 1992. While employed at GM, he accrued 25 years and 9 months of credited service under the General Motors Retirement Program for Salaried Employees. In 1992, the Plaintiff left GM to work for Electronic Data Systems. Under the GM Plan, the Plaintiff retained his credited service upon moving to EDS, but he did not accrue any additional credited service during his time at EDS. GM was the sponsor and administrator of the Plan. The Defendant GM Employee Benefit Plans Committee was given authority under the GM Plan to hear appeals from decisions of the plan administrator denying claims for benefits. In a March 7, 2013 Opinion and Order is available at http://is.gd/qcOwxdfrom Leagle.com, E.D. Michigan Chief District Judge Gerald E. Rosen ruled that the Defendants' May 29, 2012 motion to affirm the plan administrator's decision and motion in limine is granted in part, to the extent that the Defendants seek an order affirming the plan administrator's decision and granting summary judgment in their favor on the Plaintiff's remaining claims, and denied in part, to the extent that the Defendants seek an order strictly limiting the Court's review to the administrative record as it existed at the time of the plan administrator's final benefit determination. The Court denied the Plaintiff's May 29, 2012 motion to reverse the decision of the plan administrator. About General Motors With its global headquarters in Detroit, Michigan, General Motors Company (NYSE:GM, TSX: GMM) -- http://www.gm.com/-- is one of the world's largest automakers, traces its roots back to 1908. GM employs 208,000 people in every major region of the world and does business in more than 120 countries. GM and its strategic partners produce cars and trucks in 30 countries, and sell and service these vehicles through the following brands: Baojun, Buick, Cadillac, Chevrolet, GMC, Daewoo, Holden, Isuzu, Jiefang, Opel, Vauxhall, and Wuling. GM's largest national market is China, followed by the United States, Brazil, the United Kingdom, Germany, Canada, and Italy. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. General Motors Co. was formed to acquire the operations of General Motors Corp. through a sale under 11 U.S.C. Sec. 363 following Old GM's bankruptcy filing. The U.S. government once owned as much as 60.8% stake in New GM on account of the financing it provided to the bankrupt entity. The deal was closed July 10, 2009, and Old GM changed its name to Motors Liquidation Co. General Motors Corp. and three of its affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 09-50026) on June 1, 2009. The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, serves as the Chief Executive Officer for Motors Liquidation Company. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. Garden City Group is the claims and notice agent of the Debtors. The U.S. Trustee appointed an Official Committee of Unsecured Creditors and a separate Official Committee of Unsecured Creditors Holding Asbestos-Related Claims. Lawyers at Kramer Levin Naftalis & Frankel LLP served as bankruptcy counsel to the Creditors Committee. Attorneys at Butzel Long served as counsel on supplier contract matters. FTI Consulting Inc. served as financial advisors to the Creditors Committee. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represented the Asbestos Committee. Legal Analysis Systems, Inc., served as asbestos valuation analyst. The Bankruptcy Court entered an order confirming the Debtors' Second Amended Joint Chapter 11 Plan on March 29, 2011. The Plan was declared effect on March 31, 2011. GIBRALTAR KENTUCKY: Amends Plan, Sale Hearing Set for March 21 -------------------------------------------------------------- Gibraltar Kentucky Development, LLC, amended its plan of reorganization to provide for 100% payout to all allowed creditors. Under the Second Amended Plan, holders of Class 2 Claims will receive a pro rata share of $153,459 paid over five year at 1% interest in 12 quarterly payments. The Debtor says it anticipates an unknown but potentially significant recovery from the so-called "Lindsey Group" of alleged creditors. That recovery, if made, will be applied to Class 2 claims first to reduce the total term of payments. Holders of Class 3 Claims will receive a pro rata share of $1,125,324 paid in monthly minimum payments of $8,390 representing a 20-year amortization at 6.5% interest. In addition, members of Class 3 will receive a pro rata share of 90% of the disposable income of the Debtor paid monthly. "Disposable Income" is the gross income, less taxes, and less all reasonable and necessary expenses. A full-text copy of the Disclosure Statement explaining the Second Amended Plan, dated Feb. 27, is available for free at: http://bankrupt.com/misc/GIBRds0227.pdf The Lindley Group is a series of alleged creditors, including Guy Lindley, his wife and several entities who, as alleged by the Debtor, have attempted to perpetuate a fraud by asserting that an equity ownership interest they either own or control is at the same time somehow a liability of the Debtor as well. The Debtor says there remains an open issue with the Lindley Creditors. On Feb. 27, the Debtor amended its schedules of assets and liabilities to disclose an increase in the total amount of claims held by unsecured non-priority creditors from $1,189,480 to $2,289,805. Full-text copies of the Amended Schedules are available for free at http://bankrupt.com/misc/GIBRsal0227.pdf The Debtor's Plan will be funded by proceeds resulting from the disposition of the unencumbered assets and properties of the Debtors, augmented by the unencumbered cash held by the Debtors at the time of the commencement of its liquidation. A hearing on the Debtor's request to sell substantially all of its assets is scheduled for March 21, 2013, at 01:30 PM, before Judge Erik P. Kimball of the U.S. Bankruptcy Court for the Southern District of Florida, West Palm Beach Division. About Gibraltar Kentucky Gibraltar Kentucky Development, LLC, filed a Chapter 11 bankruptcy petition (Bankr. S.D. Fla. Case No. 12-13289) on Feb. 10, 2012, in West Palm Beach, Florida. Palm Beach Gardens-based Gibraltar Kentucky says that it is not a small business debtor under 11 U.S.C. Sec. 101(51D). Documents attached to the petition indicate that McCaugh Energy LLC owns 42.15% of the "fee simple" securities. The Chapter 11 case was converted to one under Chapter 7. According to the Web site http://www.gibraltarenergygroup.com/ Gibraltar Kentucky is part of the Gibraltar Energy Group. The various companies of the group are involved with the drilling, development and production of oil and gas, as well as, the sale of coal and timber. Offices are in Michigan and Florida and investments are in Michigan and Kentucky. Judge Erik P. Kimball presides over the case. David L. Merrill, Esq., at Talarchyk Merrill, LLC, serves as the Debtor's counsel. The Debtor disclosed $175,395,449 in assets and $1,193,516 in liabilities as of the Chapter 11 filing. The petition was signed by Bill Boyd, as manager. Steven R. Turner, Trustee for Region 21, has informed the Court that, until further notice, he will not appoint a committee of creditors. GLOBAL GEOPHYSICAL: Moody's Lowers CFR to B3; Outlook Negative -------------------------------------------------------------- Moody's Investors Service downgraded Global Geophysical Services, Inc.'s Corporate Family Rating to B3 from B2, Probability of Default Rating to B3-PD from B2-PD, senior unsecured notes to Caa1 from B3 and Speculative Grade Liquidity rating to SGL-4 from SGL- 3. The rating outlook remains negative. "The downgrade reflects GGS's high leverage profile and high cash flow volatility due to its dependence on the cyclical capital expenditure budgets of exploration and production companies," stated Michael Somogyi, Vice President and Senior Analyst. "In addition, GGS's asset and revenue base is small relative to most other rated oilfield services companies, which makes it more vulnerable to fluctuating industry and capital market conditions." The SGL-4 Speculative Grade Liquidity rating reflects GGS's weak liquidity profile with approximately $25 million cash on hand, only $5.5 million available under its revolving credit facility and the early 2014 maturity date for the revolving credit facility. Issuer: Global Geophysical Services, Inc. Downgrades: Corporate Family Rating, downgraded to B3 from B2 Probability of Default rating, downgraded to B3-PD from B2-PD Speculative Grade Liquidity Rating, downgraded to SGL-4 from SGL-3 US$200 million Senior Unsecured Regular Bond/Debenture, downgraded to Caa1 from B3 US$50 million Senior Unsecured Regular Bond/Debenture, downgraded to Caa1 from B3 Ratings Rationale: With total adjusted assets of approximately $660 million and revenues of $340 million as of December 31, 2012, GGS is small relative to most other rated oilfield services companies and makes the company more vulnerable to fluctuating industry and capital market conditions. Following a ramp up in data acquisition for its multi-client library, GGS reported peak revenues of approximately $385 million in 2011. The continued, large capital spend for multi-client library through 2012, however, has extended the company's negative free cash flow operating profile for three consecutive years ending December 31, 2012 and has led to its elevated leverage profile and weakened liquidity position. Despite an additional $165 million capital spend to expand its multi-client library in 2012; GGS reported a 12% year-over-year decline in revenues to approximately $340 million. GGS's adjusted EBITDA fell 30% year-over-year to $34 million and the company outspent internally generated cash flows by $75 million. Moody's subtracts multi-client seismic library capital expenditures from reported EBITDA in calculating Moody's metrics to reflect the multi-client business segment's high capital intensity and the low near term certainty of generating cash flow net of capital expenditures. This is a standard calculation for the seismic companies that Moody's rates. GGS ended 2012 with an adjusted debt balance of over $460 million and has averaged over $400 million over the last three years. The company's adjusted leverage profile at year-end was over 13x, with the five year average rising to over 6.5x at year end December 2012 compared to approximately 5.5x a year-ago. This leverage metric is commensurate with the Caa rating band. Over the longer term, Moody's views the through the industry cycle debt / EBITDA of 4.0x -- 5.0x as appropriate for maintaining the B3 CFR given GGS's high business risk profile. GGS announced the appointment of Richard White as its new President and CEO effective October 26, 2012. Along with additional executive appointments announced in December 2012, GGS enters 2013 transitioning to a more balanced earnings mix and prioritizing debt reduction through positive free cash flow generation. GGS is guiding to reduced capital spending on its multi-client data library program and a reduction in the company's fixed cost structure. Reflective of the company's reduced capex guidance as it shifts focus to proprietary service offerings in North America, Moody's expects GGS to grow EBITDA and generate positive free cash flow to support targeted debt reduction of $30 - $40 million in 2013. The SGL-4 Speculative Grade Liquidity rating reflects GGS's weakened liquidity profile with approximately $25 million cash on hand and only $5.5 million available under its revolving credit facility. The company's $85 million senior secured RCL matures April 2014 with a step down of $17.5 million scheduled in April 2013. It is Moody's understanding that the company is in discussions with its bank lending group to re-syndicate and extend the facility. Covenants under the senior secured credit facility include EBITDA / interest of not less than 2.5x and senior secured debt / EBITDA of no more than 2.0x. As of December 31, 2012, GGS had good headroom under these covenants. Substantially all of the company's assets are pledged as security under the credit facility which limits the extent to which asset sales could provide a source of additional liquidity if needed. The Caa1 senior unsecured note rating reflects GGS' overall probability of default, to which Moody's has assigned a PDR of B3- PD, and a loss given default of LGD4-64%. The size of the senior secured revolver's potential priority claim relative to the senior unsecured notes results in the notes being rated one notch beneath the B3 CFR under Moody's Loss Given Default Methodology. The rating outlook is negative. In order to stabilize the outlook, GGS must improve its liquidity profile and execute on initiatives to generate positive free cash flows and reduce leverage. Given GGS's small size within the broader oilfield services industry and the highly cyclical nature of the demand for seismic services, an upgrade is unlikely without a significant reduction in its leverage position. An upgrade is possible, if GGS successfully executes on its debt reduction strategy through free cash flow generation leading to adjusted Debt / EBITDA (net of multi-client spending) to be sustained below 3x. Moody's could downgrade the ratings if liquidity were to deteriorate or if adjusted Debt / EBITDA (net of multi-client spending) is sustained at or above 5x. The principal methodology used in this rating was the Global Oilfield Services Industry Methodology published in December 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Global Geophysical Services, Inc. is a seismic data company that offers an integrated suite of seismic data solutions to the global oil and gas industry. Global Geophysical Services is headquartered in Houston, Texas. GLOBAL SHIP: Lenders OK Waiver on Leverage Ratio Test ----------------------------------------------------- Global Ship Lease, Inc. on March 11 disclosed that while the Company's stable business model largely insulates it from volatility in the freight and charter markets, a covenant in the credit facility with respect to the Leverage Ratio, which is the ratio of outstanding drawings under the credit facility and the aggregate charter free market value of the secured vessels, causes the Company to be sensitive to significant declines in vessel values. Under the terms of the credit facility, the Leverage Ratio cannot exceed 75%. The Leverage Ratio has little impact on the Company's operating performance as cash flow is largely predictable under its business model. Due to the continuing excess supply of capacity, there has been a decline in charter free market values of containerships in recent months. The Company anticipated that the Leverage Ratio as at November 30, 2012 would, if tested, exceed 75%. Therefore, it has agreed with its lenders a further waiver for two years of the requirement to perform the Leverage Ratio test. The next scheduled test will be as at December 1, 2014. During the waiver period, the fixed interest margin to be paid over LIBOR is 3.75%, prepayments are based on cash flow, subject to a minimum of $40 million on a rolling 12 month basis, rather than a fixed amount, and dividends on common shares cannot be paid. It has also been agreed that all secured vessels will be included in the Leverage Ratio test, whether they are subject to a charter or not. In the three months ended December 31, 2012, a total of $11.1 million of debt was prepaid leaving a balance outstanding of $425.7 million. In the year ended December 31, 2012, a total of $57.9 million of debt was prepaid. Dividend Under the terms of the waiver of the requirement to perform the Leverage Ratio test, Global Ship Lease is not currently able to pay a dividend on common shares. Net Income/Loss Net income for the three months ended December 31, 2012 was $8.1 million after a $4.7 million non-cash interest rate derivative mark-to-market gain. For the three months ended December 31, 2011 net income was $10.9 million, after $4.0 million non-cash interest rate derivative mark-to-market gain. Normalized net income was $3.5 million for the three months ended December 31, 2012 and $6.8 million for the three months ended December 31, 2011, which excludes the effect of the non-cash interest rate derivative mark- to-market gains. Net income was $31.9 million for the year ended December 31, 2012 after a $9.7 million non-cash interest rate derivative mark-to- market gain. For the year ended December 31, 2011, net income was $9.1 million after the $13.6 million non-cash impairment charge and a $0.9 million non-cash interest rate derivative mark-to- market loss. Normalized net income was $22.2 million for the year ended December 31, 2012, and $23.6 million for the year ended December 31, 2011. The disclosure was made in Global Ship's earnings release for the three months ended Dec. 31, 2012, a copy of which is available for free at http://is.gd/pi3vxk About Global Ship Lease London, England-based Global Ship Lease (NYSE: GSL, GSL.U and GSL.WS) -- http://www.globalshiplease.com/-- is a containership charter owner. Incorporated in the Marshall Islands, Global Ship Lease commenced operations in December 2007 with a business of owning and chartering out containerships under long-term, fixed rate charters to world class container liner companies. Global Ship Lease owns 17 vessels with a total capacity of 66,297 TEU with a weighted average age at June 30, 2010, of 6.3 years. All of the current vessels are fixed on long-term charters to CMA CGM with an average remaining term of 8.6 years. The Company has contracts in place to purchase two 4,250 TEU newbuildings from German interests for approximately US$77 million each that are scheduled to be delivered in the fourth quarter of 2010. The Company also has agreements to charter out these newbuildings to Zim Integrated Shipping Services Limited for seven or eight years at charterer's option. As reported in the Dec. 1, 2012, edition of the TCR, Global Ship Lease disclosed that it had entered into an agreement with its lenders to waive until Nov. 30, 2012, the requirement under its credit facility to conduct loan-to-value tests. The credit facility requires that loan-to-value, which is the ratio of outstanding borrowings under the credit facility to the aggregate charter-free market value of the secured vessels, cannot exceed 75%. The Company's balance sheet at Sept. 30, 2012, showed US$907.84 million in total assets, US$549.46 million in total liabilities and US$358.38 million in total stockholders' equity. GOODMAN NETWORKS: Moody's Confirms 'B2' CFR; Outlook Negative ------------------------------------------------------------- Moody's Investors Service confirmed the B2 Corporate Family, B2-PD Probability of Default and B2 senior secured debt ratings of Goodman Networks, Inc. and revised the outlook to negative, following resolution of the company's delayed financial reporting and audit restatement issues within the extended waiver period granted by its lender, PNC Bank, N.A. These actions conclude the ratings review that commenced on June 8, 2012. The ratings confirmation reflects Goodman's filing of its audited fiscal 2011 financial results (delivered in October 2012) and quarterly financial statements ended March 2012, June 2012 and September 2012 (delivered in January 2013) within the extended waiver periods for ABL credit facility. Goodman was permitted access to the ABL facility during the waiver periods, however the facility remained undrawn during this timeframe. These filings cured the technical default under the senior secured notes indenture. In addition, the company restated its financial results for fiscal years 2010 and 2009. Following Moody's ratings review in June 2012, Goodman's March 2012, June 2012 and September 2012 financial results were further delayed due to the unexpectedly lengthy review and restatement process. Goodman eventually delivered these quarterly statements after receiving three waiver extensions from its lender. In Moody's opinion, the restatements did not materially impact the company's financial position or cash flows. Ratings Confirmed: Corporate Family Rating -- B2 Probability of Default Rating -- B2-PD $225 Million 12.125% Million Senior Secured Notes due 2018 -- B2, LGD assessment revised to (LGD-4, 57%) Ratings Rationale: Goodman's B2 Corporate Family Rating considers the relatively high business risks associated with the small scale and low margins of its outsourced engineering and infrastructure operations that serve primarily large communications and technology companies in the US. The rating also reflects Goodman's significant customer concentration, key-man and project execution risks, and exposure to the capital expenditure cycles of its customers, which are represented largely by AT&T (about 87% of revenue) and Alcatel- Lucent (11%), and the resulting unevenness in free cash flow generation. In addition, as outsourcing of services represents an integral component of the company's revenue base, Goodman needs to deliver more cost effective alternatives than its larger and better capitalized customers can perform in-house. Moody's also notes that delays in new contract wins and a slowdown in carriers' capital spending could also elevate leverage in the future, which further constrains the rating. These risks are offset by Goodman's recent contract wins from other carriers such as Sprint, Windstream, US Cellular and CenturyLink, which will enable the company to diversify its revenue away from AT&T and Alcatel-Lucent. Nonetheless, Moody's expects Goodman will benefit over the near-term from AT&T's November 2012 announcement that it plans to invest an additional $8 billion to expand its LTE network coverage to 300 million PoPs (points of presence) by year-end 2014 and to densify its urban network. Further, Goodman has generated higher-than-expected free cash flow given that management decided not to pursue certain projects, which would have resulted in a consumption of cash flow during the early years of the contract. Moody's notes that Goodman's B2 CFR also embeds the inadequate systems, internal controls and oversight related to the company's historical misapplication of percentage of completion revenue recognition and the resulting impact on financial reporting accuracy, which increases accounting risk. While the financial adjustments are not deemed material, Moody's confidence in the company's financial reporting has weakened. The rating reflects Goodman's efforts to remediate the material weaknesses and the impact of potentially higher costs associated with the review, additional audit work and modification of accounting and IT systems, as well as the risk that senior management could be distracted from effective operation of the business. Rating Outlook The negative rating outlook reflects Moody's view that Goodman will exhibit weaker cash flow from operations and negative free cash flow in 2013 due to higher working capital requirements, as well as the possible need to take additional actions to remediate material weaknesses in financial reporting. What Could Change the Rating -- Up Ratings could be upgraded to the extent the company is able to profitably increase and diversify its business away from AT&T and Alcatel-Lucent while sustaining total debt to EBITDA below 3.0x (Moody's adjusted). What Could Change the Rating -- Down Ratings could experience downward migration if Moody's expects the company's total debt to EBITDA will be sustained at around 4.5x (Moody's adjusted), and liquidity is strained such that the revolving credit facility is largely drawn and free cash flow is negative for extended periods. The rating could also be revised downward if further concerns regarding weaknesses in internal, financial disclosure and accounting controls resurfaced or if Goodman witnessed a sudden slowdown in customer demand. The principal methodology used in rating Goodman Networks, Inc. was Global Business and Consumer Service Industry Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Goodman Networks, Inc., headquartered in Plano, TX, is a specialized technical service provider to wireless and wireline carriers throughout the US. Goodman provides cell site builds, upgrades, and professional services to maintain and improve existing networks. Goodman executes projects for its principal customer, AT&T, in seven major markets. Revenue for the twelve months ended September 30, 2012 totaled approximately $764 million. GURSHEEL DHILLON: Dismissal of Suit v. Tenn. Medical Board Urged ---------------------------------------------------------------- Magistrate Judge Juliet Griffin in Nashville, Tennessee, recommends the dismissal of the lawsuit styled as, GURSHEEL S. DHILLON M.D. v. STATE OF TENNESSEE HEALTH RELATED BOARD OF MEDICAL EXAMINERS; LARRY ARNOLD M.D.; KEITH LOVELADY M.D.; MITCHELL MUTTER M.D.; MICHAEL ZANOLLI M.D.; BARRETT ROSEN M.D.; MICHAEL BARON M.D.; NEIL BECKFORD M.D.; DANIEL GARNER M.D.; KIMBERLY BELL M.D.; DENISE MORAN; JANICE STONE; KEN JONES; ANDREA HUDDLESTON; REGINE WEBSTER; JOHN and JANE DOES 1-25; and LIFEPOINT HOSPITAL'S SOUTHERN TENNESSEE MEDICAL CENTER; WILLIAM RUSS SPRAY; and MARK WERT M.D., No. 3-12-0151 (M.D. Tenn.). The Plaintiff, a physician, filed the action pro se on Feb. 7, 2012. His original Complaint seeks damages and unspecified equitable relief and names as defendants the Board; Larry Arnold, the Board's Medical Director and Consultant; Board members Keith Lovelady, Mitchell Mutter, Michael Zanolli, Barrett Rosen, Michael Baron, Regine Webster, and Neil Beckford; Department of Health employees Denise Moran, Juanita Stone, and Ken Jones; Andrea Huddleston, Department of Health Deputy General Counsel; Daniel Garner and Kimberly Bell, two physicians who provided expert testimony at the Plaintiff's hearings before the Board; Lifepoint Hospital's Southern Tennessee Medical Center; and William Spray and Mark Wert, two STMC employees. The Plaintiff's motion to amend his complaint, was granted by Order entered Feb. 19, 2013. In his Amended Complaint, the Plaintiff seeks damages and reinstatement of his medical license and naming as additional defendants: STMC physicians Counsil Rudolph and Elizabeth Reimers; Cumberland Health Care Group; Cumberland Group physicians Nicholas Petrachko, Louis Koella, and Ron Gordon; and physicians Diane Petrilla and Thomas Zimmerman. By Order entered Feb. 10, 2012, the civil action was referred to the Magistrate Judge for case management, decision on all pretrial, nondispositive motions and report and recommendation on all dispositive motions under 28 U.S.C. Sec. 636(b)(1) and to conduct any necessary proceedings under Rule 72 of the Federal Rules of Civil Procedure. Four motions to dismiss were filed against the complaint: (1) Motion to Dismiss filed by Defendants Tennessee Board of Medical Examiners, Larry Arnold, Keith Lovelady, Mitchell Mutter, Michael Zanolli, Barrett Rosen, Michael Baron, Regine Webster, Neal Beckford, Andrea Huddleston, Denise Moran, Ken Jones, and Janice Stone; (2) Motion to Dismiss filed by Defendants Southern Tennessee Medical Center, LLC, incorrectly identified in the Complaint as "LifePoint Hospital's Southern Tennessee Medical Center," William Russell Spray and Mark Wert; (3) Motion to Dismiss filed by Defendant Daniel Garner; and (4) Motion to Dismiss filed by Defendant Kimberly Bell The Plaintiff was granted a medical license to practice in the State of Tennessee by the Tennessee Board of Medical Examiners on June 25, 1999. Thereafter, he began practicing internal medicine in Winchester, Tennessee, and contracted with the Southern Tennessee Medical Center LLC to become a staff physician at the STMC's medical facility in Winchester. The Plaintiff's relationship with STMC deteriorated over the next three years, and in early 2003, STMC placed the Plaintiff under the review of a Peer Review Panel. The Panel recommended that the Plaintiff not be appointed to the STMC active staff. This recommendation was adopted, and the Plaintiff's working relationship with the STMC was terminated in May 2003. The Plaintiff subsequently filed a civil lawsuit against the STMC in the Chancery Court for Williamson County, Tennessee, seeking damages from STMC based on the events that had occurred. The Plaintiff remained in litigation with the STMC for the next several years, with judgments ultimately entered against him in 2006 and 2008. During this time period, the Plaintiff continued to practice medicine in the Winchester area through arrangements with other medical facilities. However, in 2007, a Notice of Charges and Memorandum for Assessment of Civil Penalties was filed against the Plaintiff by the Tennessee Department of Health, Division of Health Related Boards regarding the Plaintiff's medical treatment of a patient during 2004 and 2005. After a hearing, the Board entered an Amended Final Order on March 19, 2008, which placed the Plaintiff's medical license on probationary status and required that he meet several conditions for the probation to be lifted. The Plaintiff did not comply with the Board's requirements, and, in 2009, the Department of Health initiated further proceedings against the Plaintiff by filing a second Notice of Charges and an Amended Notice of Charges alleging that he had failed to comply with the March 19, 2008, Order and that he had engaged in a pattern of continued or repeated malpractice, ignorance, negligence, or incompetence regarding the medical care of 13 patients between January 2000 and December 2002. Prior to hearings before the Board, the Plaintiff filed a complaint in the Chancery Court for Davidson County, Tennessee, seeking various forms of relief, including a temporary injunction preventing any hearings on the charges and a stay of the administrative proceedings. The Plaintiff's attempt to stop the proceedings before the Board was unsuccessful and the Board held hearings on the charges, after which it entered a Final Order on Feb. 3, 2011, finding that the Plaintiff had not complied with the prior directives from the Board and indefinitely suspending the Plaintiff's medical license until such time as he complied with the Amended Final Order of March 19, 2008. Shortly after the Board's suspension of his license, the Plaintiff initiated two new actions in the state courts. On March 21, 2011, he filed a complaint in the Chancery Court of Davidson County, Tennessee, against the Department of Health, Larry Arnold, Keith Lovelady, Mitchell Mutter, Michael Zanolli, Barrett Rosen, Ken Jones, Andrea Huddleston, Daniel Garner, Juanita Stone, Denise Moran, and Kimberly Bell alleging violations of his federal constitutional rights, as well as violations of state and federal law, and seeking unspecified declaratory and injunctive relief. On April 21, 2011, the state judge entered a final order dismissing the action in its entirety after finding that the Plaintiff had not sought review of the administrative decision of the Board to suspend the Plaintiff's medical license but that the Plaintiff had brought an original action against the individual defendants over which the state court had no subject matter jurisdiction. On February 21, 2012, the Plaintiff filed a motion to set aside the dismissal and re-open his case, which the state court denied on May 29, 2012, after holding a hearing on May 11, 2012. The plaintiff also filed an action in the Chancery Court of Davidson County, Tennessee under the Tennessee Uniform Administrative Procedures Act seeking to reverse an administrative law judge's denial of his motion for an award of costs and his objections to an affidavit of costs filed by the Department of Health for the costs of the proceedings before the Board. By Order entered May 9, 2012, the state judge affirmed the orders of the administrative law judge and dismissed the Plaintiff's action. On June 6, 2012, the Plaintiff filed a notice of appeal from the orders entered in both Chancery Court actions. The current status of the appeal is unknown. Gursheel S. Dhillon M.D. filed a voluntary Chapter 11 petition (Bankr. M.D. Tenn. Case No. 08-03109) on April 15, 2008. By Order entered on July 27, 2012, the Bankruptcy case remains open pending resolution of matters in that case. The Trustee's Motion to Close the case, filed Feb. 5, 2013, remains pending at this time. A copy of Magistrate Judge Griffin's March 7, 2013 Report and Recommendation addressed to District Judge Aleta A. Trauger is available at http://is.gd/3D1oKZfrom Leagle.com. HELLER EHRMAN: Has Claim v. 4 Law Firms for Ex-Partners' Work ------------------------------------------------------------- Jacqueline Palank, writing for Dow Jones Newswires, reports Bankruptcy Judge Dennis Montali in San Francisco said Monday that four law firms -- Jones Day, Davis Wright Tremaine LLP, Foley & Lardner LLP and Orrick, Herrington & Sutcliffe LLP -- owe Heller Ehrman LLP's estate for the profits they made on work that originated at Heller before its demise. A trial will still be held to determine the specific dollar amounts, if any, the firms must pay Heller. Dow Jones says Judge Montali's ruling is likely to be appealed. The report says Monday's ruling affects the law firms that decided to fight the unfinished-business lawsuits. Arnold & Porter LLP attorney Jonathan Hughes, Esq. -- Jonathan.Hughes@aporter.com -- represented Orrick in the lawsuit. According to Dow Jones, Mr. Hughes said Tuesday that Orrick "remains confident in its defenses" and that the battle is far from over. "The bottom line is that Orrick doesn't believe that the law is that Heller should be entitled to be paid for work that Orrick is doing for its clients," Mr. Hughes said. The report also notes Davis Wright Tremaine spokesman Mark Fefer -- markfefer@dwt.com -- said the firm "strenuously" disagrees with Judge Montali's decision "in every respect" but that it remains "delighted with former [Heller] shareholders who elected to join" Davis Wright Tremaine. Dow Jones says the other two firms, Foley & Lardner and Jones Day, didn't respond to a request for comment. The report also relates Heller's attorney, Christopher Sullivan, Esq. -- csullivan@GreenfieldSullivan.com -- at Greenfield Sullivan Draa & Harrington LLP, said Tuesday that the ruling not only "paves the way forward" in Heller's effort to recover as much money as possible for its creditors but also provides "critical guidance" for other law-firm bankruptcies. About Heller Ehrman Headquartered in San Francisco, California, Heller Ehrman, LLP -- http://www.hewm.com/-- was an international law firm of more than 730 attorneys in 15 offices in the United States, Europe, and Asia. Heller Ehrman filed a voluntary Chapter 11 petition (Bankr. N.D. Calif., Case No. 08-32514) on Dec. 28, 2008. Members of the firm's dissolution committee led by Peter J. Benvenutti approved a plan dated Sept. 26, 2008, to dissolve the firm. The Hon. Dennis Montali presides over the case. Pachulski Stang Ziehl & Jones LLP assisted the Debtor in its restructuring effort. The Official Committee of Unsecured Creditors is represented by Felderstein Fitzgerald Willoughby & Pascuzzi LLP. The firm estimated assets and debts at $50 million to $100 million as of the Petition Date. According to reports, the firm had roughly $63 million in assets and 54 employees at the time of its filing. The Court confirmed Heller Ehrman's Plan of Liquidation in September 2010. HOSTESS BRANDS: Apollo's $410MM Bid for Snack Cakes Unchallenged ---------------------------------------------------------------- Hostess Brands Inc. on March 12 disclosed that the stalking horse bid submitted by affiliates of Apollo Global Management and Metropoulos & Co. for the majority of the Company's snack cake business, which includes both Hostess(R) and Dolly Madison(R) branded products, will be the bid presented for approval to the U.S. Bankruptcy Court as no other qualified bids were received for those assets. Apollo and Metropoulos have agreed to pay $410 million to purchase the brands, five bakeries and certain equipment. Among the products included are the Company's Twinkies(R), Ho Hos(R), Ding Dongs(R) and Donettes(R) snack cakes. The Company will ask the U.S. Bankruptcy Court for the Southern District of New York to approve the transaction at a hearing on March 19. "The agreement results in significant value for our stakeholders and we look forward to putting the proposed transaction before the Court next week," said Hostess Brands Chairman and Chief Executive Officer Gregory F. Rayburn. Flowers Foods, Inc. has been signed to $360 million for the majority of the bread business assets. The agreement includes, in addition to the brands, 20 bakeries, 38 depots and other assets. In a separate transaction, Grupo Bimbo, S.A.B. de C.V. was selected as the winning bidder for the assets related to the Company's Beefsteak(R) bread business at the conclusion of a Feb. 28 auction. Grupo Bimbo has agreed to pay $31.9 million for the Beefsteak(R) assets. The Court will also consider approval of these brands at the same March 19 hearing for the Hostess(R) and Dolly Madison(R) brands. On March 15 Hostess Brands will conduct an auction for its Drake's(R) snack cake business and Sweetheart(R), Standish Farms(R), Grandma Emilie's(R) and Eddy's(R) bread businesses. The combined stalking horse bids for those assets total approximately $56.6 million. Jones Day provided legal advice to Hostess Brands on all of the transactions. Perella Weinberg Partners served as the Company's financial advisor. Asset Sales The auction for the snack cakes business that was slated for March 13 was canceled. The hearing to approve sale will take place March 19. "Pursuant to the bidding procedures order, no auction will be conducted and buyer is the successful bidder," the company's attorneys wrote in a filing on Monday with the U.S. Bankruptcy Court in White Plains, NY, Reuters related. Reuters related that Apollo said in a press release announcing its bid that it expects the deal to close before the end of April. The firm, which had $113 billion in assets under management at the end of last year, said it saw "significant potential for renewed growth and expansion into additional channels of distribution," with the brands. Jacqueline Palank, writing for Dow Jones Newswires, reports that Evan Metropoulos, a member of the investment firm his father founded, said Tuesday he hopes to quickly return Twinkies and Hostess's other snacks to store shelves, where they have been missing since their maker went into liquidation. "We would hope to have this wonder product back on the shelf by early this summer," he said. Bloomberg News notes that assuming Hostess overcomes opposition from the bakery workers' union, next week's hearing is also to approve selling most of the bread business, including the Wonder bread brand, to Flowers Foods Inc. for $360 million. Mexican bread maker Grupo Bimbo SAB won the auction for the Beefsteak rye bread business with its $31.9 million offer. The major sales will finish on March 15 with an auction for some of the remaining bread businesses and the Drakes cakes operation. The opening bids at that auction will total $56.35 million. Hurst Capital partners Zach and Austin Hurst said in an e-mailed statement Tuesday regarding the bidding for Hostess: "At this point Hurst Capital has determined not to pursue an increased bid for select assets of Hostess due to the likelihood of increased potential costs levels and execution risks which exceed Hurst Capital's investment performance criteria. Hurst Capital continues to focus its efforts and resources on the acquisition of other under-performing assets, including notable iconic brands in the technology space." 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. HOWREY LLP: Former Partners Sued for Fraudulent Transfers --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the trustee liquidating Howrey LLP filed lawsuits in bankruptcy court this week against six of the defunct law firm's former partners. The suits contend the former partners are liable to give up profits they made at new firms in finishing business begun at Howrey. According to the report, from three of the partners, the suits are seeking $3.75 million in distributions the firm made after June 2010, when the trustee believes Howrey became insolvent. The trustee contends the payments to the partners were fraudulent transfers because there were no profits available for distribution to partners. The suits to recover profits from unfinished business are based on what's known as the Jewel doctrine, named after a California decision holding former partners liable to give up profits made at their new firms. Mr. Rochelle notes that courts are split on whether the Jewel doctrine is good everywhere. The issue is now in the U.S. Court of Appeals in Manhattan arising from the liquidation of Coudert Brothers LLP. Federal district judges in Manhattan are split on whether profits at a new firm must be given up. In September U.S. District Judge William H. Pauley III ruled in a case involving Thelan LLP that hourly fees earned on unfinished business by a new law firm aren't property of the defunct firm. Judge Pauley disagreed with a decision in May by U.S. District Judge Colleen McMahon who ruled in the Coudert liquidation that fees earned on unfinished business belong to the liquidated firm. The decision by the appeals court in New York won't be binding on the court in California in the Howrey bankruptcy. About Howrey LLP Three creditors filed an involuntary Chapter 7 petition (Bankr. N.D. Calif. Case No. 11-31376) on April 11, 2011, against the remnants of the Washington-based law firm Howrey LLP. The filing was in San Francisco, where the firm had an office. The firm previously was known as Howrey & Simon and Howrey Simon Arnold & White LLP. The firm at one time had more than 700 lawyers in 17 offices. The partners voted to dissolve in March 2011. The firm specialized in antitrust and intellectual-property matters. The three creditors filing the involuntary petition together have $36,600 in claims, according to their petition. The involuntary chapter 7 petition was converted to a chapter 11 case in June 2011 at the request of the firm. In its schedules filed in July, the Debtor disclosed assets of $138.7 million and liabilities of $107.0 million. Representing Citibank, the firm's largest creditor, is Kelley Cornish, Esq., a partner at Paul, Weiss, Rifkind, Wharton & Garrison. Representing Howrey is H. Jason Gold, Esq., a partner at Wiley Rein. The Official Committee of Unsecured Creditors is represented in the case by Bradford F. Englander, Esq., at Whiteford, Taylor And Preston LLP. In September 2011, Citibank sought conversion of the Debtor's case to Chapter 7 or, in the alternative, appointment of a Chapter 11 Trustee. The Court entered an order appointing a Chapter 11 Trustee. In October 2011, Allan B. Diamond was named as Trustee. INTERFAITH MEDICAL: Wants More Time to File Plan ------------------------------------------------ Interfaith Medical Center, Inc., asks the U.S. Bankruptcy Court for the Eastern District of New York to further extend its exclusive period to file a plan until July 1, 2013, and its exclusive period to solicit acceptances of that plan until August 30. The Debtor needs the additional time to continue negotiations with The Brooklyn Hospital Center and the Dormitory Authority of the State of New York. The Debtor relates that it has negotiated a memorandum of understanding with DASNY regarding plan treatment of DASNY's multiple claims, Chapter 11 financing arrangements, and related issues, and the Debtor soon will be filing a motion seeking approval of a financing arrangement with DASNY providing for longer term consensual use of cash collateral and a debtor-in- possession financing agreement. The Debtor adds that it has also been negotiating the terms of a business relationship with one or more other hospitals, including TBHC. The Debtor says the transactions contemplated under the ongoing negotiations will serve as the lynchpin of its proposed plan of reorganization. A hearing on the exclusive periods extension request is set for March 18. About Interfaith Medical Center Headquartered in Brooklyn, New York, Interfaith Medical Center, Inc., operates a 287-bed hospital on Atlantic Avenue in Bedford- Stuyvesant and an ambulatory care network of eight clinics in central Brooklyn, in Crown Heights and Bedford-Stuyvesant. The Company filed for Chapter 11 protection (Bankruptcy E.D. N.Y. Case No. 12-48226) on Dec. 2, 2012. The Debtor disclosed $111,872,972 in assets and $193,540,998 in liabilities as of the Chapter 11 filing. Alan J. Lipkin, Esq., at Willkie Farr & Gallagher LLP, serves as bankruptcy counsel to the Debtor. Nixon Peabody LLP is the special corporate and healthcare counsel. CohnReznick LLP serves as financial advisor. Donlin, Recano & Company, Inc. serves as administrative agent. The Official Committee of Unsecured Creditors tapped Alston & Bird LLP as its counsel, and CBIZ Accounting, Tax & Advisory of New York, LLC as its financial advisor. LAKELAND INDUSTRIES: May Default on TD Bank Facility ---------------------------------------------------- Lakeland Industries, Inc. is reporting several material developments: -- Lower than expected sales in Brazil for the quarter ended January 31, 2013 resulting in anticipated operating loss in Brazil -- $11.5 million goodwill impairment charge in Brazil -- Potential default on bank line of credit with TD Bank Lower than expected sales in the quarter ended January 31, 2013 in Brazil will likely result in an operating loss from Brazil in such quarter. In view of the recent operating losses incurred by Lakeland Brazil, management determined that the carrying amount of the goodwill related to the Company's Brazil subsidiary exceeded its fair value, which was estimated based on the present value of expected future cash inflows. Accordingly, the Company has recorded an impairment charge at year end against the Goodwill and Intangible assets relating to its Lakeland Brazil subsidiary of $9.8 million. Based on the available objective evidence, including the Company's history of losses in Brazil, Management believes it is more likely than not that the net deferred tax assets related to Income taxes in Brazil only will not be fully realizable. Accordingly, the Company provided for a full valuation allowance of $1.5 million against its net deferred tax assets in Brazil at January 31, 2013. The combined charge will be $11.5 million and the net effect on stockholder equity will be $9.7 million, net of the $1.8 million reclassification from Other Comprehensive Income to reflect the cumulative adjustments previously made resulting from exchange rate differences. It is important to note that this is a write- down of intangible assets, as required by accounting rules, and has no effect on company operations or tangible assets. Management is planning several steps to strengthen its sales effort in Brazil by reorganizing the current sales force to focus less on very large government contracts, and seeking new sales partners and distributors. The Company's Brazilian Organization is restructuring to decrease costs and better service private industry, for which individual bids tend to be smaller but more regular. Such losses and impairment charge will potentially result in the company's being in default with its TD Bank facility, however we are currently in discussions with TD Bank about resolution of these matters. With the exception of Brazil, company-wide revenue continues to improve, with very strong revenue growth in most overseas markets, and a continued rebound in the United States from the loss of DuPont products in FY2012 that has seen strong growth achieved year over year in sales of Lakeland branded products. About Lakeland Industries, Inc. Lakeland Industries, Inc. manufactures and sells a comprehensive line of safety garments and accessories for the industrial protective clothing market. LANDMARK FENCE: Employees' Class Suit Goes Back to Bankr. Court --------------------------------------------------------------- District Judge Howard Matz affirmed, in part, and reversed, in part, a bankruptcy court order allowing a claim of a class of Landmark Fence Co. employees in the amount of more than $15 million. Landmark took an appeal from the bankruptcy court order, arguing that the bankruptcy court erred as a matter of law in concluding that Landmark's employees are entitled to compensation at prevailing wage rates for time spent fabricating components for use on public works sites and for time spent traveling between Landmark's shop and public works sites; and that the bankruptcy court erred in rejecting the damages estimate of Landmark's expert witness. Judge Matz, however, held that the bankruptcy court correctly determined that Landmark employees were entitled to compensation at prevailing wage rates for off-site fabrication work for public works projects. As for time spent traveling between Landmark's shop and the public works site, however, the District Court ruled that the bankruptcy court did not apply the correct legal standard in reaching its conclusion. Accordingly, the District Court remands for the bankruptcy court to make the factual findings necessary to determine whether the employees' travel time is compensable at prevailing wage rates under the correct standard. Finally, the Court ruled that, despite the fact that the bankruptcy court made an erroneous factual finding in rejecting the estimate of Landmark's damages expert, Landmark has not shown that the bankruptcy court committed clear error in adopting the estimate of the creditors' expert. On May 6, 2003, James Sahagun and Gerardo Garcia filed the putative class action suit in California state court alleging various wage and hour violations against their employer Landmark, a company that specializes in the fabrication, installation, and demolition of chain link fencing and other fencing components. On March 15, 2007, the state court certified a class of "all current and former non-exempt employees who at any time from May 6, 1999 to the present were employed by [Landmark] to work on public works projects or private construction projects in the State of California" and appointed Sahagun and Garcia as class representatives. Before trial of the class action on the merits, however, Landmark filed for Chapter 11 bankruptcy, which automatically stayed the state class action proceeding. The case before the District Court is, In re LANDMARK FENCE CO., INC., No. ED CV12-01582 AHM (C.D. Cal.). A copy of the Court's March 6, 2013 ruling is available at http://is.gd/oLWa2Sfrom Leagle.com. Landmark Fence Co., Inc., sought Chapter 11 protection (Bankr. C.D. Cal. Case No. 09-20206) on May 14, 2009, is represented by Charles Liu, Esq., and Marc J. Winthrop, Esq., at Winthrop Couchot in Newport Beach, Calif, and estimated its assets at less than $100,000 and debts at more than $1 million at the time of the Filing. LE-NATURE'S INC: 3rd Circ. Upholds Exec's 15-Year Sentence ---------------------------------------------------------- Jeff Overley of BankruptcyLaw360 reported that the Third Circuit refused Monday to void the 15-year prison term handed down to a onetime executive at bankrupt beverage bottler Le-Nature's Inc. for orchestrating a $660 million swindle of banks and investors, finding jurors weren't prejudiced by a prosecutor's comment about him not testifying. The report related that Robert B. Lynn, former chief of sales and revenue at the Pennsylvania company, didn't show that a government lawyer was criticizing his decision not to take the stand, and in any event, the district judge took appropriate action. About Le-Nature's Inc. Headquartered in Latrobe, Pennsylvania, Le-Nature's Inc. -- http://www.le-natures.com/-- made bottled waters, teas, juices and nutritional drinks. Its brands included Kettle Brewed Ice Teas, Dazzler fruit juice drinks and lemonade, and AquaAde vitamin-enriched water. On Oct. 27, 2006, the Delaware Chancery Court appointed Kroll Zolfo Cooper, Inc., as custodian of Le-Nature's, placing it in charge of management and operations. Within several days, Kroll uncovered massive fraud at Le-Nature's. On Nov. 1, 2006, Steven G. Panagos, a Kroll managing director, filed an affidavit with the Delaware Chancery Court setting forth the evidence of the financial fraud he had discovered at Le-Nature's. Four unsecured creditors of Le-Nature's filed an involuntary Chapter 7 petition against the Company (Bankr. W.D. Pa. Case No. 06-25454) on Nov. 1, 2006. Kroll converted the proceedings from Chapter 7 to Chapter 11. On Nov. 6, 2006, two of Le-Nature's subsidiaries, Le-Nature's Holdings Inc., and Tea Systems International Inc., filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. The Debtors' cases were jointly administered. The Debtors' schedules filed with the Court showed $40 million in total assets and $450 million in total liabilities. Douglas Anthony Campbell, Esq., Ronald B. Roteman, Esq., and Stanley Edward Levine, Esq., at Campbell & Levine, LLC, represented the Debtors in their restructuring efforts. The Court appointed R. Todd Neilson as Chapter 11 Trustee. Dean Z. Ziehl, Esq., Richard M. Pachulski, Esq., Stan Goldich, Esq., Ilan D. Scharf, Esq., and Debra Grassgreen, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub LLP, represented the Chapter 11 Trustee. David K. Rudov, Esq., at Rudov & Stein, and S. Jason Teele, Esq., and Thomas A. Pitta, Esq., at Lowenstein Sandler PC, represented the Official Committee of Unsecured Creditors. Edward S. Weisfelner, Esq., Robert J. Stark, Esq., and Andrew Dash, Esq., at Brown Rudnick Berlack Israels LLP, and James G. McLean, Esq., at Manion McDonough & Lucas, represented the Ad Hoc Committee of Secured Lenders. Thomas Moers Mayer, Esq., and Matthew J. Williams, Esq. at Kramer Levin Naftalis & Frankel LLP, represented the Ad Hoc Committee of Senior Subordinated Noteholders. On July 8, 2008, the Bankruptcy Court issued an order confirming the liquidation plan for Le-Nature's. LEGENDS GAMING: Casino Wants Bonuses to Fend Off Competitors ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the aborted sale and operating losses aren't the only problem confronting casino operator Legends Gaming LLC. A competing casino is to open soon in Bossier City, Louisiana, the primary market. Accordingly, the casinos, the report relates, are asking the bankruptcy court in Shreveport, Louisiana, to approve a $780,000 bonus program to keep existing employees from quitting. The program includes $91,000 for executives who would receive a 3% bonus like everyone else. The casinos are concerned that without bonuses, some workers will be hired away when the competitor opens in town. The report recounts that the owner of the DiamondJacks casinos in Bossier City and Vicksburg, Mississippi, should have completed a Chapter 11 reorganization financed by a sale of the properties to an affiliate of the Chickasaw Nation for $125 million. The buyer pulled out, claiming operations deteriorated to the extent the purchase could be canceled. About Legends Gaming Legends Gaming LLC, owns gaming facilities located in Bossier City, Louisiana, and Vicksburg, Mississippi, operating under the DiamondJack's trade name. Legends Gaming LLC, and five related entities, including Louisiana Riverboat Gaming Partnership, filed Chapter 11 petitions (Bankr. W.D. La. Case No. 12-12013) in Shreveport, Indiana, on July 31, 2012, to sell the business for $125 million to Global Gaming Solutions LLC, absent higher and better offers. Legends Gaming acquired the business from Isle of Capri Casinos Inc., in 2006 for $240 million. After breaching covenant with lenders, the Debtors in March 2008 sought Chapter 11 protection, jointly administered under Louisiana Gaming Partnership (Case No. 08-10824). The Debtors emerged from bankruptcy in September 2009 and retained ownership and operation of two "DiamondJacks" hotels and casinos in Bossier City and Vicksburg. The Plan restructured $162.1 million owed to the first lien lenders and $75 million owed to secured lien lenders, which would be paid in full, with interest, over time. The Debtors' properties comprise 60,000 square feet of gaming space with 1,913 slot machines, 48 table games and 693 hotel rooms. Revenues in fiscal 2011 were $99.8 million in Louisiana and $39.7 million in Mississippi. As of July 31, 2012, first lien lenders are owed $181.2 million and second lien lenders are owed $114.7 million. Louisiana Riverboat Gaming Partnership disclosed $104,846,159 in assets and $298,298,911 in liabilities as of the Chapter 11 filing. Attorneys at Heller, Draper, Hayden Patrick & Horn serve as counsel to the Debtors. Sea Port Group Securities, LLC is the financial advisor. Kurtzman Carson Consultants LLC as is the claims and notice agent. The Debtors have tapped Jenner & Block LLP as special counsel. LEUCADIA NATIONAL: Moody's Ups CFR to Ba1 After Jefferies Merger ---------------------------------------------------------------- Moody's Investors Service upgraded Leucadia National Corporation's Corporate Family and Probability of Default ratings to Ba1 and Ba1-PD from Ba3 and Ba3-PD respectively, and upgraded its senior unsecured debt rating to Ba2 and senior subordinated rating to Ba3, following the consummation of an all stock merger between Leucadia National Corporation and Jefferies Group Inc. The rating outlook is stable. The SGL-3 Speculative Grade liquidity Rating is unaffected. This action ends the ratings review that was initiated on November 12, 2012. Ratings Rationale: Leucadia is a diversified holding company that owned approximately 29% of Jefferies prior to the merger. While Leucadia's other investments are in a wide range of businesses including meat processing, manufacturing, gaming entertainment, real estate and medical products, its greatest exposure has been to the securities industry through Baa3 rated Jefferies. Under the structure of the merger, Leucadia has survived as the parent holding company with Jefferies operating as a wholly-owned holding company that holds Jefferies' various regulated and unregulated operating subsidiaries. As expected, the transaction was funded entirely with equity, and the combined company has equity capital totaling over $10 billion. The rating upgrade reflects the benefits to Leucadia from gaining full ownership of Jefferies and the management and operating control benefits that are expected to result from the merger. Jefferies' CEO is the new CEO of both Leucadia and Jefferies, Moody's believes the companies will be managed with common goals including maintaining Jefferies investment grade rating. Moody's believes that Leucadia will employ a more balanced investment philosophy now that its largest asset is Jefferies, an investment grade regulated financial company, as evidenced by public statements reflecting new policies on leverage, investment concentration, liquidity, and other factors. Management has stated it would target specific concentration, leverage and liquidity principles, expressed in the form of certain ratios and percentages. This includes a maximum ratio of parent company debt to stressed equity and a minimum ratio of available liquidity to parent company debt. In addition, the largest single investment will be no more than 20% of equity excluding Jefferies and that the next largest investment will be no more than 10% of equity excluding Jefferies, in each case measured at the time such investment was made. Moody's believes these commitments reduce the likelihood that large investments over a short period of time would meaningfully change the company's risk profile due, in part, to the benefits of diversification. The rating upgrade also considers Leucadia's large short term investment portfolio comprised of short term government securities and marketable securities totaling over $1.6 billion at year end 2012, excluding Jefferies. Rating actions and LGD adjustments: Issuer: Leucadia National Corporation Corporate Family Rating, Upgraded to Ba1 from Ba3 Probability of Default Rating, Upgraded to Ba1-PD from Ba3-PD Senior Unsecured Regular Bond/Debentures, Upgraded to Ba2 LGD5 80% from B1 LGD5 73% Senior Subordinated Conv./Exch. Bond/Debenture 2014, Upgraded to Ba3 LGD6 97% from B2 LGD6 95% Affirmations: Issuer: Leucadia National Corporation Speculative Grade Liquidity Rating, Affirmed SGL-3 Outlook Actions: Outlook, Changed To Stable From Rating Under Review The stable rating outlook reflects the expectation that the company will maintain adequate liquidity and manage its investment portfolio in a manner consistent with the financial policies that it has publicly disclosed including maximum investment concentration outside of Jefferies. What Could Change the Rating - Up As the holding company that owns Jefferies, Leucadia is structurally subordinated to Jefferies and is unlikely to be considered for upgrade absent a material improvement in the credit profile of Jefferies. Moreover, any upward momentum in Leucadia's rating would also be contingent on further strengthening the earnings and cash flow stability of its diversified investment portfolio which is primarily composed of high-yield credit exposures. Maintenance of a strong liquidity profile will also be a critical factor in the future credit prospects of Leucadia given the criticality of maintaining access to funding for its business activities. What Could Change the Rating - Down Jefferies performance and its ability to maintain its investment grade rating will remain an ongoing consideration in Leucadia's rating in part because Jefferies will be the company's largest investment. Moreover, a deviation from its stated investment philosophy could cause rating pressure as would weak performance of its investment portfolio or of its wholly owned companies. As Leucadia's largest investment, weakness in Jefferies credit quality could pressure Leucadia's rating. Leucadia, headquartered in New York, New York, is a diversified holding company engaged in a variety of businesses, including investment banking, manufacturing, beef processing, gaming entertainment, real estate activities, medical product development and other operations. The company also has significant investments in public companies and owns equity interests in operating businesses and investment partnerships which are not publicly traded. Total shareholder's equity for the combined company is over $10 billion. The principal methodology used in this rating was the Global Investment Holding Companies Industry Methodology published in October 2007. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. LEVI STRAUSS: Fitch Assigns 'BB-' Rating to $140MM Senior Notes --------------------------------------------------------------- Fitch Ratings has assigned a rating of 'BB-/RR3' to Levi Strauss & Co.'s proposed $140 million private placement of 6 7/8% senior notes due 2022. Fitch's Issuer Default Rating (IDR) on Levi is 'B+', and the Rating Outlook is Stable. Key Rating Drivers The ratings reflect Levi's well-known brands, strong market shares, and wide geographic diversity, balanced against soft but improving operating trends and moderately high financial leverage. The 'BB-/RR3' rating of the senior unsecured notes reflect a projected recovery of 50%-70% in a distressed scenario, based on an enterprise value (after administrative claims) of $1.6 billion. Levi's financial leverage (adjusted debt/EBITDAR) improved to 5.0x at fiscal year-end 2012, from 5.3x at fiscal year-end 2011, as Levi repaid $224 million of debt from FCF. Fitch expects leverage will improve toward the mid-4x range over the next two years on a gradual recovery in EBITDA and continued debt repayment. Proceeds from the proposed financing, plus cash on hand and borrowings on the revolver will be used to prepay the $324 million unsecured term loan that matures in April 2014. Beyond that, the company's next major debt maturity does not occur until 2018. 2012 Key Takeaways and 2013 Outlook Levi's constant currency top-line growth decreased by a slight 0.4% in fiscal 2012 (ending Nov. 25, 2012), following a 6.2% increase in fiscal 2011, reflecting primarily weakness in Asia Pacific (16% of 2012 revenues). Growth in the Americas (60% of 2012 revenues) and Europe (24%) slowed but remained positive. Fitch projects sales growth will turn positive in 2013 but that the economic slowdown in Europe and Asia, together with the discontinuation of the Denizen brand in Asia and the decision to license the boys' jeans business in the U.S., will moderately depress growth through the first half. Levi's EBIT margin improved to 7.4% in 2012 from 7.2% in 2011, as a moderate reduction in the gross margin due in part to the lingering effect of higher cotton prices in the first half of the year was more than offset by a sharp reduction in advertising and administrative costs. This represents a change in trend from five years of margin contraction caused by the global recession, Levi's investments in its products, advertising, and retail stores, and higher cotton costs. Fitch sees the potential for another 30-50 basis points of margin improvement in 2013 as the effect of lower cotton costs continue to benefit gross margins in the first half. Sustained margin improvement will also require greater productivity from the company's retail stores, which together with online sales accounted for 21% of Levi's sales in 2012, up from 11% in 2009. Free cash flow (FCF) after dividends turned positive in 2012, reaching $427 million, helped by a sharp reduction in working capital and lower capex. Fitch expects FCF will remain positive going forward, though at or under $100 million annually. Rating Sensitivities A negative rating action would be considered if recent margin improvement proves to be short lived, and sales trends remain soft, causing adjusted leverage to remain above 5x. A positive rating action would be considered if there is evidence that Levi's operating margins are in a sustained recovery. Fitch would also expect to see FCF directed to debt reduction, leading to improvement in adjusted leverage to the low 4x range. Fitch rates Levi Strauss & Co. as follows: -- IDR 'B+'; -- $850 million secured revolving credit facility 'BB+/RR1'; -- Senior unsecured term loan and notes 'BB-/RR3'. The Rating Outlook is Stable. LEVI STRAUSS: Debt Level Decline Cues Moody's to Raise CFR to Ba3 ----------------------------------------------------------------- Moody's Investors Service upgraded Levi Strauss & Co.'s Corporate Family Rating to Ba3 from B1. Moody's also upgraded the company's various unsecured notes to B1 from B2 and assigned a B1 rating to the company's proposed $140 million "add on" to its 2022 senior unsecured notes. The rating outlook is stable. LS&Co is issuing $140 million (principal amount) of 'add-on' notes to its existing $385 million senior unsecured notes due 2022. Proceeds from the new notes, coupled with available cash balances and drawings under the company's (unrated) $850 million asset based revolver are expected to prepay in full the company's $325 million senior unsecured term loan due in April 2014. LS&Co has disclosed that subsequent to its fiscal year end it has prepaid approximately $75 million of this term loan from available cash. The following ratings were upgraded: Corporate Family Rating to Ba3 from B1 Probability of Default Rating to Ba3-PD from B1-PD $250 (following $75 million prepayment subsequent to fiscal year end) million senior unsecured term loan due 2014 to B1 (LGD 4, 64%) from B2 (LGD 4, 66%) EUR 300 million senior unsecured notes due 2018 to B1 (LGD 4, 64%) from B2 (LGD 4, 66%) $525 million senior unsecured notes due 2020 to B1 (LGD 4, 64%) from B2 (LGD 4, 66%) $525 million senior unsecured notes due 2022 (including $140 million add-on) to B1 (LGD 4, 64%) from B2 (LGD 4, 66%) Ratings Rationale: The upgrade of LS&Co's Corporate Family Rating takes into consideration the meaningful amount of debt repayment during fiscal 2012 -- total debt declined by $243 million -- and Moody's expectations that the company will continue to reduce debt during fiscal 2013. The upgrade also reflects the company's positive recent trends in gross margins with gross margins rising to near 50% in the company's fourth fiscal quarter. Moody's expects the company will see further expansion in gross margins during 2013, as it benefits from lower input costs, with the bulk of the benefit likely to be in the earlier part of the fiscal year. Moody's expects moderate operating margin expansion, fueled by the improved gross margins, though some of this is expected to be reinvested in incremental advertising and promotion costs. LS&CO's Ba3 rating reflects its moderate financial leverage (debt/EBITDA is in the mid four times range), which should trend toward the low four times range over the course of fiscal 2013. The rating also reflects the iconic nature of the Levi's trademark, LS&Co's global reach with sales in over 110 countries and meaningful scale with net revenues in excess of $4.6 billion. The rating is constrained by the company's limited product diversification with men's slacks accounting for the significant majority of net revenues. The rating also reflects the company's exposure to volatile input costs which can have a meaningful impact on earnings and cash flows. The stable rating outlook reflects Moody's expectations the company will reduce absolute debt levels over the course of 2013 and record modest revenue growth and operating profit expansion. Moody's also expects the company to maintain dividend policies consistent with its recent history. The stable outlook also reflects that macro economic conditions remain weak in certain key regions, such as southern Europe. Ratings could be upgraded if the company makes continued progress deleveraging its balance sheet while further expanding its operating margins. Quantitatively, ratings could be upgraded if debt/EBITDA is sustained below 3.75 times, EBITA/interest is sustained above 2.75 times, and adjusted operating margins exceeded 12%. Ratings could be downgraded if the company were to see sustained negative trends in sales and operating margins which would most likely result from contraction in market share or a sustained global downturn. Ratings could be downgraded if the company's solid liquidity profile were to meaningfully erode. Quantitatively ratings could be downgraded if debt/EBITDA was sustained above 5 times. The principal methodology used in this rating was the Global Apparel Industry Methodology published in May 2010. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in San Francisco, California, Levi Strauss & Co designs and markets jeans, casual wear and related accessories under the "Levi's", "Dockers", "Signature by Levi Strauss & Co." and "Denizen" brands. The company sells product in more than 110 countries through chain retailers, department stores, online sites and franchised and company-owned stores. Levi Strauss & Co.'s net revenues exceed $4.6 billion LEVI STRAUSS: S&P Affirms 'B+' CCR & Revises Outlook to Positive ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on San Francisco-based Levi Strauss & Co. and revised the outlook to positive from stable. S&P also affirmed its 'B+' rating on all of the company's senior unsecured debt, including the 6.875% senior notes due 2022, which is being increased by $140 million through an add-on offering. The recovery ratings remain unchanged at '4', indicating S&P's expectation for average (30% to 50%) recovery for noteholders in the event of a payment default. Proceeds from the offering, together with the company's cash sources will be used to repay the $324 million term loan due 2014. Pro forma for the proposed financing, total debt outstanding will be about $1.59 billion. "The outlook revision reflects our view that the company's credit metrics will continue to improve with declining debt levels and modest EBITDA growth," said Standard & Poor's credit analyst Linda Phelps. Pro forma for the proposed financing transaction, Standard & Poor's estimates Levi Strauss' leverage will decline to roughly 4.8x from 5.0x for fiscal 2012 and from 5.6x for fiscal 2011. Furthermore, S&P believes leverage could further decline to the mid-4x area over the next 12 months. S&P could raise the rating if it believes leverage is sustainable below 4.5x and profit margins continue to improve. Although unlikely, S&P may revise the outlook to stable if operating performance deteriorates. LONGWEI PETROLEUM: Receives NYSE MKT Delisting Notice ----------------------------------------------------- Longwei Petroleum Investment Holding Ltd. on March 11 disclosed that it has received a Notice of Delisting from the NYSE MKT that its securities are subject to being delisted from the Exchange for failure to comply with Sections 132(e), 134, 801(h), 803(B)(2)(c), 803(B)(4), 1101, 1003(d) and 1003(f)(iii) of the NYSE MKT Company Guide. As previously report in the Company's Current Report on Form 8-K filed on February 1, 2013, two of the Company's independent board members and members of the Company's audit committee resigned, leaving one independent member on the Company's board and audit committee. Additionally, on February 19, 2013, the Company failed to file its Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2012 within the requisite time period, including permissible extension period. Furthermore, the Company is in violation of (i) Section 132 (e) of the Company Guide which requires the Company to provide additional information requested by the Exchange deemed necessary to make a determination regarding a security's continued listing, (ii) Section 1003(d) of the Company Guide, which states that securities of an issuer failing to comply with its listing or other agreements with the Exchange or the SEC are subject to suspension, (iii) Section 1003(f)(iii) which states that the Exchange may suspend or remove the listing of an issuer's securities if the issuer or management engages in operations which, in the opinion of the Exchange, are contrary to the public interest; and (iv) Section 803(B)(4) of the Company Guide, which governs the responsibility and authority of a listed issuer's audit committee. As previously stated, Longwei believes the Geo Investing report dated January 3, 2013 contains numerous errors of facts, misleading speculations and malicious interpretations of events. Nevertheless, in order to provide the highest level of transparency to its shareholders, the Company and its legal counsel in the U.S. and the PRC, as well as its auditor are reviewing the allegations and management is cooperating with the review process. The Company intends to take further action to defend itself. The Company will continue to release additional information concerning the allegations in due course. Longwei is committed to providing full and accurate disclosure to investors and to rebutting any false claims that attempt to undermine confidence in the Company. About Longwei Petroleum Investment Holding Limited Longwei Petroleum Investment Holding Limited is an energy company engaged in the storage and distribution of finished petroleum products in the People's Republic of China. The Company's oil and gas operations consist of transporting, storing and selling finished petroleum products, entirely in the PRC. The Company's headquarters are located in Taiyuan City, Shanxi Province. MAAN AL SANEA: Court Allows AHAB's Claims to Proceed to Trial ------------------------------------------------------------- The Grand Court of the Cayman Islands has rejected the latest efforts by the Liquidators of Maan al Sanea's companies in the Cayman Islands to dismiss portions of Ahmad Hamad Algosaibi & Brothers' (AHAB) case. At a hearing in November 2012, the Liquidators had requested that the court strike out AHAB's claims for recovery of stolen funds that were transferred to Mr. Al Sanea's Cayman Islands companies. With the exception of one small special purpose company, the court refused to dismiss AHAB's claims, directing that the case should move forward to trial against the primary companies. In June 2012, AHAB won a $2.5 billion interim default judgment against Mr. Al Sanea in the Cayman Islands. At the hearing in November, the Al Sanea company Liquidators also sought permission to appeal that judgment. The Cayman court's order denies any right to appeal on the grounds that such an appeal would have "no prospect for success" and would raise "no point of public importance." The court requested that the parties agree to a schedule for discovery and trial in the proceeding, so that it will move forward in a timely manner. The next step will involve agreeing to a process for discovery and a schedule that will take the case to trial in approximately one year. "After more than three years of procedural machinations, we look forward to moving into the trail phase of this case," said Eric Lewis, AHAB's chief legal coordinator. "Maan Al Sanea's companies in the Cayman Islands were instrumental to his multi-billion dollar global fraud, and their coffers remain filled with stolen funds that we intend to recover." AHAB continues to pursue the assets of Maan Al Sanea in courts around the world. In September 2012, a New York court ruled that it has jurisdiction to hear AHAB's claim in respect of Mr. Al Sanea's fraud and money laundering. For a copy of the judgment, please contact Graham Miller at: graham@sphereconsulting.com MARBLE CLIFF: Court Rejects 32-Year Repayment Plan -------------------------------------------------- Bankruptcy Judge Charles M. Caldwell declined to confirm the plan of reorganization filed on behalf of Marble Cliff Crossing Apartments, LLC. The only objecting party and holder of the largest secured and unsecured claims, is MTGLQ Investors, LP, an entity affiliated with Goldman Sachs. The Court was slated to convene a hearing March 5 to consider dismissal of the case, with prejudice. "From the Court's perspective, this two-party dispute has unique complexities that warrant amicable resolution rather than judicially imposed solutions. There is essential agreement on value, the balance due and validity of the lien. Most importantly, both the Debtor and the Creditor are hostage to the fact that this upscale apartment complex sits atop a former quarry filled with construction and organic debris. Methane gas is present, and a costly remediation plan is underway. It will take years, if ever, before the environmental complications will no longer hinder refinancing or sale of the property. Like the movie characters, Thelma and Louise, the Debtor and Creditor are bound tight and heading in the same direction," Judge Caldwell said in a Feb. 10 Memorandum Opinion and Order available at http://is.gd/yBLqd1from Leagle.com. On Nov. 1 through 30, 2012, the Court conducted a trial to confirm the plan and related amendments filed on behalf of Marble Cliff. The Debtor proposes to pay in full MTGLQ's $31,750,708 secured claim over a period of 32 years with interest at a market rate determined by the Court. MTGLQ argued that the loan terms are not available in the market, that the Debtor does not have the financial ability to consummate the plan, and liquidation would inevitably follow plan confirmation. Both parties have been unable to resolve their differences, and even more conflicts hatched, including whether the Debtor may now file an amended plan and if so, whether the Court should extend the Debtor's exclusive period to confirm any new plan and/or iteration of old plans filed and then withdrawn, and then perhaps filed again. Additionally, MTGLQ filed a second motion to convert as an alternative to plan confirmation, and has yet again expressed its belated intent to file a plan. Marble Cliff Crossing Apartments, LLC, filed for Chapter 11 bankruptcy (Bankr. S.D. Ohio Case No. 11-61545) in 2011. The Debtor owns an upscale 276-unit apartment complex located in Franklin County, Ohio. MF GLOBAL: Trustee, et al. Ink Deal to Settle Intercompany Claims ----------------------------------------------------------------- The trustee for MF Global Holdings Ltd. and its creditors have resolved a dispute with JP Morgan Chase Bank, N.A. over the value of intercompany claims. Under the deal, $275 million of MF Global's $1.887 billion claim against its finance unit will be subordinated below JPMorgan's $1.2 billion claim against the estate. JPMorgan agreed to vote in favor of MF Global's liquidation plan, and withdraw its earlier request to pursue the finance unit's claim to knock out a $928 million claim against the finance unit. The settlement, reached through court-ordered mediation, "will result in a slightly modified distribution range for unsecured creditors," according to Louis Freeh, MF Global trustee. The settlement needs approval by U.S. Bankruptcy Judge Martin Glenn, who oversees MF Global's bankruptcy case. The deal is formalized in an 8-page stipulation, which is available for free at http://is.gd/0aPqjM JPMorgan's claim is associated with the $1.2 billion revolving credit facility it arranged for MF Global, of which about $928 million was transferred to the finance unit before the bankruptcy. The transfer resulted in the finance unit owing money to both MF Global and the lenders, including JPMorgan. JPMorgan, which has claims against both MF Global and the finance unit, is currently projected to recoup up to 73 cents on the dollar but that figure could increase as a result of the settlement, Reuters reported. Under the current edition of MF Global's liquidation plan, proposed by a group of hedge fund creditors with the trustee's cooperation, unsecured creditors of MF Global would recover between 13.4 cents and 39 cents on the dollar. Meanwhile, creditors of its finance unit would receive between 14.7 cents and 34 cents on the dollar. It is unclear how the settlement will impact those figures, according to the Reuters report. 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. MF GLOBAL: Hearing on Plan Outline Revisions Today -------------------------------------------------- U.S. Bankruptcy Judge Martin Glenn will hold a hearing on March 13 to consider approval of the proposed revisions to MF Global Holdings Ltd.'s proposed disclosure statement. Last week, MF Global filed supplements to the disclosure statement, which contain a revision to its provisions governing the settlement of intercompany claims, setoffs and allowance of so-called "liquidity facility unsecured claims." MF Global revised the provisions as part of a settlement it reached with JPMorgan Chase Bank N.A. to resolve the bank's request to pursue claims against the company as well as its objections to the settlement of intercompany claims. As reported on Feb. 15 by TCR, JPMorgan asked for court approval to prosecute MF Global Finance's claim in a bid to knock out a $928 million claim against the finance unit. If the claim falls, the distribution to the bank and other creditors of the finance unit would significantly increase. 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. MF GLOBAL: Sapere in Appeals Court vs. Corzine Insurance -------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that commodities customer Sapere Wealth Management LLC is in the U.S. Court of Appeals arguing that former Senator Jon S. Corzine and other officers and directors of MF Global Holdings Ltd. have no right for defense costs to be paid from the liquidating broker's directors' and officers' liability insurance policies. The report notes that a victory by Sapere would take money away from Mr. Corzine, a New Jersey Democrat, and other MF Global executives while delivering insurance proceeds more quickly to customers whose money disappeared when $1.6 billion in supposedly segregated cash was mishandled. According to the report, creditors proposing the reorganization plan for the MF Global parent filed papers on March 8 laying out exactly who wins and who loses, and by how much, as a result of a settlement with JPMorgan Chase Bank NA, as agent for banks owed about $1.17 billion. MF Global has $225 million of directors' and officers' insurance coverage for the policy year May 2011 to May 2012, with another $150 million in errors and omissions insurance. In April 2012 the bankruptcy judge in New York ruled that Mr. Corzine and other MF Global executives were entitled to use part of the insurance policies to cover costs of defending several class lawsuits filed by customers, including Sapere. Sapere appealed to the court in Manhattan after the district court upheld the bankruptcy court in November. The report discloses that in a brief filed at the end of last week, Matthews, North Carolina-based Sapere argues that the bankruptcy judge abused his discretion by allowing MF Global executives to use insurance policies for defense. Because there is an admitted $1.6 billion shortfall in money segregated for customers, Sapare says the lower courts made mistakes when they didn't recognize that customers have an immediate right to policy proceeds even though they are yet to win a judgment. U.S. Bankruptcy Judge Martin Glenn said that "settled case law" provides that "individual insureds cannot be denied contractually provided insurance protection" simply because "others may have claims on the policies as well." Sapere previously said it had a $90.2 million claim for money that should have been held by MF Global in its customer account. The appeal is Sapere Wealth Management LLC v. Freeh (In re MF Global Holdings Ltd.), 12-4797, 2nd U.S. Circuit Court of Appeals (Manhattan). About MF Global New York-based MF Global (NYSE: MF) -- http://www.mfglobal.com/-- is one of the world's leading brokers of commodities and listed derivatives. MF Global provides access to more than 70 exchanges around the world. The firm is also one of 22 primary dealers authorized to trade U.S. government securities with the Federal Reserve Bank of New York. MF Global's roots go back nearly 230 years to a sugar brokerage on the banks of the Thames River in London. MF Global Holdings Ltd. and MF Global Finance USA Inc. filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15059 and 11-5058) on Oct. 31, 2011, after a planned sale to Interactive Brokers Group collapsed. As of Sept. 30, 2011, MF Global had $41,046,594,000 in total assets and $39,683,915,000 in total liabilities. It is easily the largest bankruptcy filing so far this year. Judge Honorable Martin Glenn presides over the Chapter 11 case. J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve as bankruptcy counsel. The Garden City Group, Inc., serves as claims and noticing agent. The petition was signed by Bradley I. Abelow, Executive Vice President and Chief Executive Officer of MF Global Finance USA Inc. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. U.S. regulators are investigating about $633 million missing from MF Global customer accounts, a person briefed on the matter said on Nov. 3 last year, according to Bloomberg News. The trustee for the holding company together with several creditors proposed a Chapter 11 plan that comes up for approval at an April 5 confirmation hearing. An impediment to plan approval was removed by a compromise reached through mediation with JPMorgan. MPG OFFICE: Enters Into Agreement to Sell U.S. Bank Tower --------------------------------------------------------- MPG Office Trust, Inc. on March 11 disclosed that it has entered into an agreement with an affiliate of Overseas Union Enterprise Limited to sell U.S. Bank Tower and Westlawn Garage, each located in Downtown Los Angeles, California. The purchase price is $367.5 million. The transaction is scheduled to close on June 28, 2013, following the expiration of the tax protection period on June 27, 2013. The buyer has made a non-refundable deposit in the amount of $7.5 million. The transaction is subject to customary closing conditions. Net proceeds from the transaction are estimated to be approximately $103 million and will be available for general corporate purposes, including potential loan rebalancing in connection with the refinancing of the Company's upcoming 2013 debt maturities. About MPG Office Trust MPG Office Trust, Inc., fka Maguire Properties Inc. -- http://www.mpgoffice.com/-- is the largest owner and operator of Class A office properties in the Los Angeles central business district and is primarily focused on owning and operating high- quality office properties in the Southern California market. MPG Office Trust is a full-service real estate company with substantial in-house expertise and resources in property management, marketing, leasing, acquisitions, development and financing. MPG Office Trust, Inc., reported net income of $210.47 million on $53.88 million of total revenue for the three months ended Dec. 31, 2012, as compared with a net loss of $30.82 million on $57.37 million of total revenue for the same period during the prior year. For the year ended Dec. 31, 2012, the Company reported net income of $396.11 million on $231.17 million of total revenue, as compared with net income of $98.22 million on $234.96 million of total revenue during the prior year. The Company's balance sheet at Dec. 31, 2012, showed $1.46 billion in total assets, $1.98 billion in total liabilities and a $518.32 million total deficit. The Company had $192.5 million of cash as of Dec. 31, 2012, of which $151.7 million was unrestricted and $40.8 million was restricted. A copy of the press release is available for free at: http://is.gd/yLMaAT The Company has been focused on reducing debt, eliminating repayment and debt service guarantees, extending debt maturities and disposing of properties with negative cash flow. The first phase of the Company's restructuring efforts is substantially complete and resulted in the resolution of 18 assets, relieving the Company of approximately $2.0 billion of debt obligations and potential guaranties of approximately $150 million. NATIONAL POOL: Court Reinstates Clawback Suit Against Josantos -------------------------------------------------------------- New Jersey Bankruptcy Judge Kathryn C. Ferguson reversed her prior order dismissing a clawback suit filed by Scott C. Pyfer, on behalf of National Pool Construction, Inc., against Josantos Construction. On Oct. 22, 2012, the Court found that the payments to the Defendant did not constitute a preference under 11 U.S.C. Sec. 547, and denied summary judgment on that basis and dismissed the complaint. In response to the dismissal, counsel for the Plaintiff contacted chambers requesting that the court rule on the remaining counts of the Complaint. After a review of the record, the court finds it appropriate to vacate the dismissal and address the remaining counts of the Complaint. The court said it does not need any further submissions from the parties; it would base its decision on the papers submitted in support and opposition to the summary judgment motion. The motion the Plaintiff filed on June 29, 20122, stated that summary judgment was sought on "all counts of the complaint". The relief sought in the proposed order submitted with the motion included avoidance of "the post-petition transfers from the Debtor to the Defendant in the amount of $4,285.00", as well as disallowance of "[a]ny claim(s) of the Defendant whether scheduled by the Debtor or pursuant to a filed proof of claim". Based on the notice of motion and the order, the court finds that the Defendant was on notice that relief was sought on all the counts of the Complaint. Accordingly, the court finds that it should have ruled on the remaining counts prior to dismissing the Complaint. The remaining counts addressed by the Court's March 8 opinion are Count II, which sought to avoid a post-petition transfer under 11 U.S.C. Sec. 549, Count III, which sought to recover the avoided transfer, and Count IV, which to sought to disallow any claim by the Defendant under 11 U.S.C. Sec. 502(d). In her ruling, Judge Ferguson granted summary judgment in favor of the Plaintiff on Counts II, III and IV. The case is, Scott C. Pyfer, v. Josantos Construction, Adv. Proc. No. 11-2377 (Bankr. D.N.J.). A copy of the Court's March 8, 2013 ruling, in the form of a letter to the parties' counsel, is available at http://is.gd/PVEPfnfrom Leagle.com. Robbinsville, New Jersey-based National Pool Construction, Inc. -- dba National Pools & Spas; and National Award Winning Pools & Spas -- filed for Chapter 11 bankruptcy (Bankr. D.N.J. Case No. 09-34394) on Sept. 16, 2009. Judge Kathryn C. Ferguson oversees the case. Peter Broege, Esq., at Broege, Neumann, Fischer & Shaver, represented the Debtor. The Debtor scheduled total assets of $2,437,219, and total debts of $2,628,531. The petition was signed by Ronald Burrell, president of the Company. A Liquidating Trust has been established under the Debtor's confirmed plan. The plan was declared effective Aug. 29, 2011. Courtney A. Schael, Esq., at Ashford Schael LLC, in Westfield, represents the Trust. OCALA FUNDING: Judge Approves Outline of Liquidation Plan --------------------------------------------------------- Patrick Fitzgerald at Daily Bankruptcy Review reports that a Florida bankruptcy judge approved the Chapter 11 outline for Ocala Funding, a mortgage-financing vehicle that was at the center of the multibillion-dollar fraud at failed mortgage lender Taylor Bean & Whitaker. About Ocala Funding Orange, Florida-based Ocala Funding, LLC, a funding vehicle once controlled by mortgage lender Taylor Bean & Whitaker Mortgage Corp., filed a Chapter 11 petition (Bankr. M.D. Fla. Case No. 12-04524) in Jacksonville on July 10, 2012. Ocala Funding used to be the largest originator and servicer of residential loans. Ocala was created by Taylor Bean to purchase loans originated by TBW and selling the loans to third parties, Freddie Mac. In furtherance of this structure Ocala raised money from noteholders Deutsche Bank AG and BNP Paribas Mortgage Corp. and other financial institutions, as secured lenders through sales of asset-backed commercial paper. Ocala disclosed $1,747,749,787 in assets and $2,650,569,181 in liabilities as of the Chapter 11 filing. Taylor Bean was forced to file for Chapter 11 relief (Bankr. M.D. Fla. Case No. 09-07047) on Aug. 24, 2009, amid allegations of fraud by Taylor Bean's former CEO Lee Farkas and other employees. Mr. Farkas is now serving a 30-year prison term for 14 counts of conspiracy and fraud for being the mastermind of a $2.9 billion bank fraud. Mr. Farkas allegedly directed the sale of more than $1.5 billion in fake mortgage assets to Colonial Bank and misappropriated more than $1.5 billion from Ocala. TBW's bankruptcy also caused the demise of Colonial Bank, which for years was TBW's primary bank. TBW and its joint debtor-affiliates confirmed their Second Amended Joint Plan of Liquidation on July 21, 2011, and the TBW Plan became effective on Aug. 10, 2011. The TBW Plan established the TBW Plan Trust to marshal and distribute all remaining assets of TBW. Neil F. Lauria, as CRO for TBW and trustee of the TBW Plan Trust, signed the Chapter 11 petition of Ocala. Ocala holds 252 mortgage loans with an unpaid balance of $42.3 million as of May 31, 2012. The Debtor also holds five "real estate owned" properties resulting from foreclosures. The Debtor also holds $22.4 million in proceeds of mortgage loans previously owned by it that are on deposit in an account in the Debtor's name at Regions Bank. It also has an interest in $75 million in cash, consisting of proceeds of mortgage loans previously owned by the Debtor, that are in an account maintained by Bank of America, N.A. as prepetition indenture trustee for the benefit of the Noteholders. The Debtor also holds a claim in the current amount of $1.6 billion against the estate of TBW. The largest unsecured creditors include the Federal Deposit Insurance Corp., owed $898,873,958; and Cadwalader, Wickersham & Taft LLP, owed $1,632,385. Judge Jerry A. Funk presides over Ocala's case. Proskauer Rose LLP and Stichter, Riedel, Blain & Prosser, serve as Ocala's counsel. Neil F. Lauria at Navigant Capital Advisors, LLC, serves as the Debtor's Chief Restructuring Officer. OTANGELES LLC: Creditor Preempts Bid to Use Cash With Objection --------------------------------------------------------------- Bankruptcy Judge J. Philip Klingeberger in a February ruling declined to act on an objection lodged by Colfin Bulls Funding A LLC to any attempt by Otangeles LLC to use cash collateral in which Colfin has an interest. At that time, the debtor has not filed a request to use Colfin's cash collateral and Judge Klingeberger said the objection will be heard only if the debtor files such motion. Judge Klingeberger also noted that the objection is nothing more than a statement of the creditor's position that it does not consent to the use of cash collateral in which it asserts that it has an interest, thus taking 11 U.S.C. Sec. 363(c)(2)(A) out of play for the debtor, and consequently requiring a court order to authorize the debtor's use of cash collateral in which Colfin asserts an interest. A copy of Judge Klingeberger's Feb. 15, 2013 Order is available at http://is.gd/gzHAxTfrom Leagle.com. Otangeles LLC, in Merrillville, Indiana, filed for Chapter 11 bankruptcy (Bankr. N.D. Ind. Case No. 13-20197) on Jan. 26, 2013. Judge J. Philip Klingeberger oversees the case. Andrew L. Kraemer, Esq., serves as the Debtor's counsel. In its petition, the Debtor estimated $1 million to $10 million in assets and debts. OVERSEAS SHIPHOLDING: Employs Deloitte Tax, Mercer -------------------------------------------------- Overseas Shipholding Group, Inc., and its debtor affiliates received authority from the U.S. Bankruptcy Court for the District of Delaware to employ Deloitte Tax LLP as tax advisor and Mercer (US) Inc. as compensation specialist. 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. PATRIOT COAL: Mine Workers Oppose Bonuses for Managers ------------------------------------------------------ Patriot Coal Corp. is facing opposition from the mineworkers union and two retirement plans on its bid to pay $7 million in bonuses for salaried workers. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the objectors say the payments are either prohibited retention bonuses or inequitable in view of concessions being imposed on current and retired mine workers. Although Patriot's top six executives won't participate in the bonuses, the mine workers' union is nonetheless opposed. The bankruptcy judge will consider approving the bonuses at a March 18 hearing, according to the report. The report relates that as for those that are explicitly retention bonuses, the union faults Patriot for not giving the eligible executives' job descriptions and responsibilities to determine if they fall into the category of "insiders" for whom Congress prohibits retention bonuses. As for so-called incentive bonuses, the union contends they are "thinly disguised retention bonuses." The union says the bonuses are improper when workers are losing their guarantee of lifetime health care. According to BankruptcyData, UMWA asserts, "First, the plans are prohibited by 11 U.S.C. Section 503(c) (1) because they reward corporate insiders with retention bonus payments, and are not 'ordinary course' transactions. Second, Patriot has not shown that either program is Necessary - that it faces serious attrition, or that the program targets are sufficiently challenging to be true incentives. Third, Patriot has not justified the personnel selected for bonuses even when not insiders. Finally, given the imminence of a motion seeking to deprive workers and retirees of their livelihood under Sections 1113 and 1114, the programs are enormously inequitable," BankruptcyData said, citing court documents. About Patriot Coal St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer and marketer of coal in the eastern United States, with 13 active mining complexes in Appalachia and the Illinois Basin. The Company ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls roughly 1.9 billion tons of proven and probable coal reserves. Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11 petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y. Lead Case No. 12-12900) on July 9, 2012. Patriot said it had $3.57 billion of assets and $3.07 billion of debts, and has arranged $802 million of financing to continue operations during the reorganization. Davis Polk & Wardwell LLP is serving as legal advisor, Blackstone Advisory Partners LP is serving as financial advisor, and AP Services, LLC is providing interim management services to Patriot in connection with the reorganization. Ted Stenger, a Managing Director at AlixPartners LLP, the parent company of AP Services, has been named Chief Restructuring Officer of Patriot, reporting to the Chairman and CEO. GCG, Inc. serves as claims and noticing agent. The U.S. Trustee appointed a seven-member creditors committee. Kramer Levin Naftalis & Frankel LLP serves as its counsel. Houlihan Lokey Capital, Inc., serves as its financial advisor and investment banker. Epiq Bankruptcy Solutions, LLC, serves as its information agent. On Nov. 27, 2012, the New York bankruptcy judge moved Patriot's bankruptcy case to St. Louis. The order formally sending the reorganization to Missouri was signed December 19 by the bankruptcy judge. The New York Judge in a Jan. 23, 2013 order denied motions to transfer the venue to the U.S. Bankruptcy Court for the Southern District of West Virginia. PLAYBOY ENTERPRISES: S&P Lowers Corporate Credit Rating to 'CCC+' ----------------------------------------------------------------- Standard & Poor's Rating Services lowered its corporate credit rating on Beverly Hills, Calif.-based Playboy Enterprises Inc. to 'CCC+' from 'B-'. At the same time, S&P removed the rating from CreditWatch, where it was placed with negative implications on Jan. 30, 2013. The rating outlook is developing. In addition, S&P lowered its issue-level rating on the senior secured debt to 'B-' (one notch higher than the 'CCC+' corporate credit rating on the company), in accordance with S&P's notching criteria for a '2' recovery rating. The '2' recovery rating indicates S&P's expectation for substantial (70% to 90%) recovery for lenders in the event of a payment default. "The downgrade reflects our expectation that the company will likely violate its minimum EBITDA covenant on June 30, 2013," said Standard & Poor's credit analyst Daniel Haines. The developing outlook is based on the elevated financial risk associated with a potential covenant violation, which could prompt a further downgrade. Conversely, terms of the credit agreement permit the equity sponsor to step in and provide equity of $10 million to eliminate this one-time covenant. If the sponsor were to do this and the company's operating performance demonstrated continuing progress of Playboy's licensing strategy, S&P could raise the rating at that time. The rating reflects the company's weak credit measures, operating shortfalls that have raised the risk of a potential covenant violation in June 2013, as well as operating risks linked to its business transition. The company is restructuring and transforming into a primarily brand management and licensing company. Although the business transition is nearly complete, operating performance has been slightly below S&P's expectations and short of the minimum EBITDA covenant. S&P considers the company's business risk profile "vulnerable," based on declining business segments that will continue to pressure overall performance. The strong possibility of a covenant violation in 2013 and high debt leverage support S&P's assessment of Playboy's financial risk profile as "highly leveraged." S&P expects Playboy to benefit from new overseas licensing deals, but it still faces the secular decline of the magazine sector. Playboy is a media and lifestyle company, marketing the Playboy brand primarily through licensing. In November 2011, it entered a partnership with Manwin Group related to the operation of its television and digital assets. This segment has been hampered by the availability of free adult content on the Internet. The transaction shifted Playboy's focus to its licensing segment, which has been more stable due to the steady stream of minimum guarantee payments the company receives when most contracts are signed. However, the large volume of small licensing contracts produces some operating volatility from quarter to quarter as negotiating delays may delay potential cash flow. S&P expects this segment's growth to benefit from the company's well-known brand, and in particular, S&P anticipates strong growth internationally relative to domestically as the brand has seen a spike in popularity abroad. Conversely, print operations have exhibited steadily declining results, reflecting the adverse fundamentals of the magazine sector. PROCTOR HOSPITAL: Moody's Reviews 'Ba2' Rating for Downgrade ------------------------------------------------------------ Moody's Investors Service placed Proctor Hospital's (IL) long-term rating under review for possible downgrade. This action affects the Series 2006A Bonds (approximately $22.5 million outstanding) issued through the Illinois Finance Authority. The action follows a substantial drop in liquidity and continued operating losses based on management-prepared fiscal year 2012 financial statements ending December 31, 2012. Management reports the problems are primarily due to revenue cycle problems caused by implementation of a new IT system. Management reports it has begun to address these issues and engaged outside consultants and expects improvement in revenue cycle during FY 2013. Proctor is also expecting a cash payment within the coming weeks upon sale of several physician practices to OSF Healthcare System (A3/Positive). Additionally, management reports Proctor violated its cash-to-debt covenant on its Series 2010 Bonds (non-rated variable rate) private placement with Regions Bank, but has obtained a waiver (valid through March 31) for this test. Given the decline in liquidity, a multi-notch rating movement is possible. Moody's expects to conclude its review within 90 days. The principal methodology used in this rating was Not-For-Profit Healthcare Rating Methodology published in March 2012. PUEBLO OF SANTA ANA: Fitch Affirms 'BB' Issuer Default Rating ------------------------------------------------------------- Fitch Ratings affirms the 'BB+' rating on approximately $16.3 million of Pueblo of Santa Ana's outstanding enterprise revenue bonds. Fitch also affirms Santa Ana's Issuer Default Rating (IDR) at 'BB'. The Rating Outlook is Stable. KEY RATING DRIVERS: Financial Profile The 'BB' IDR reflects the strong financial flexibility of Santa Ana's enterprises and the stable market position maintained by Santa Ana's gaming enterprise in the competitive Albuquerque market. The Pueblo's Santa Ana Star casino continues to garner around 15% market share in the Albuquerque market based on state reported net slot win through the end of calendar year 2012. Santa Ana's revenues largely track the Albuquerque market, and grew by 2% in calendar 2012. Santa Ana's EBITDA margin expanded 400 basis points (bps) in calendar 2012, reflecting a decrease in overall operating expenses. For 2013, Fitch expects flat to negative revenue growth for regional markets. Fitch has previously commented that the expiration of the payroll tax holiday creates an additional hurdle to an already lackluster outlook for U.S. casino operators. Management's plans to reinvest in the property partially offset Fitch's concerns related to the Albuquerque's difficult competitive environment. Santa Ana's enterprises consist of the 1,350 slot machine and 16 table game Santa Ana Star casino, a separate Hyatt-managed hotel and two golf courses (together 'Enterprises'), with the casino comprising 92% of the latest 12 month (LTM) through Dec. 31, 2012 Enterprises' EBITDA. Santa Ana's debt to LTM EBITDA was 0.8 times (x) at Dec. 31, 2012 and EBITDA and pledged tribal tax coverage of interest and principal was 5.0x. Improvement in credit metrics should continue as Santa Ana's debt amortizes quickly. Liquidity and Financial Flexibility Cash at the enterprise level remains well in excess of the amount needed for casino cage cash purposes, and the Enterprises generated positive free cash flow in 2012 (cash from operations less capital expenditures and transfers to the tribal government). In contrast, many Native American gaming credits exhibit free cash flow close to zero after transfers to tribal government. The Pueblo does not distribute per cap payments to its members, enabling for additional flexibility with respect to governmental budgeting and enterprise transfers to the tribe. Pueblo Santa Ana does not provide tribal financials or tribal budgets, which is negatively reflected in the ratings. Partially mitigating this non-disclosure is the maintenance of tribal liquidity at the enterprise level. There are no bullet maturities within Santa Ana's capital structure and near-term capital expenditure plans should be covered through cash flow. Longer term, Santa Ana may pursue a larger scale project; however, Santa Ana's strong financial profile can support a moderate amount of additional debt that may accompany the project without pressuring the 'BB' IDR. Revenue Bonds The one notch differential on the revenue bonds from the IDR takes into account a senior security interest in the Enterprises' net revenues and certain tax revenue of the tribe. The pledged revenues are subject to a trustee directed flow of funds if debt service coverage by EBITDA and pledged taxes is less than 2.0x. In addition, should debt service coverage dip below 2.0x, distribution levels of revenues to fund essential government services are restricted. Further supporting the rating is the Pueblo's limited ability to incur additional pari passu debt, which is limited by the bonds' covenants to $10 million ($20 million when including separate carveouts for FF&E debt and 'short-term debt'). RATING SENSITIVITIES: Negative rating actions are limited, reflecting the Santa Ana's sizable financial cushion. Negative rating actions could be considered should Santa Ana primarily fund a sizable hotel development in a leveraging transaction. This concern is however diminished on the enterprise revenue bond rating level based on its additional pari passu indebtedness covenant. Positive rating actions are also limited in the near-to-medium term given the Santa Ana Star's marginal operational diversification and the competitive nature of the Albuquerque market, with four other Pueblos operating casinos in the area. Mitigating these concerns somewhat is Santa Ana Star's attractive location in close proximity to the local population of Rio Rancho. The lack of tribal disclosures additionally limits potential positive momentum on the rating. Fitch affirms Pueblo of Santa Ana ratings as follows: -- IDR at 'BB'; -- Enterprise revenue bonds at 'BB+'. PROFESSIONAL VETERINARY: Bankr. Court Won't Hear Lawsuit v. D&Os ---------------------------------------------------------------- Bankruptcy Judge Timothy J. Mahoney, in a Report & Recommendation dated Feb. 13, said he would decline to hear the lawsuit, VICKY WINKLER, Liquidating Trustee for the Liquidating Trust for the Estates of Professional Veterinary Products, Ltd., Exact Logistics, LLC, and ProConn, LLC, Plaintiff, v. STEPHEN J. PRICE, et al., Defendants, ADV. PROC. No. A12-8049-TJM (Bankr. D. Neb.). The liquidating trustee filed the second amended complaint in January 2013, alleging claims for breach of fiduciary duty, negligence, negligent misrepresentation, and constructive fraud by the defendants while they were serving as officers and directors of the debtor companies. Judge Mahoney said the lawsuit is not considered a core proceeding because the causes of action are not created by any provision of the Bankruptcy Code and they would exist outside of the bankruptcy case. He said the trustee's claims are solely state-law claims, and the defendants have a right to a jury trial. "While the bankruptcy court may conduct jury trials, it may not do so without the consent of the parties, and the defendants here do not consent. Even if they did, the due process implications of this court's inability to enter a final judgment outweigh any considerations of convenience or docket management," Judge Mahoney said. "For these reasons, I respectfully recommend to the United States District Court for the District of Nebraska that it grant the parties' motion and withdraw the reference of this adversary proceeding to proceed with all further matters." A copy of the Court's Feb. 13, 2013 is available at http://is.gd/1MIe0kfrom Leagle.com. About Professional Veterinary Products Professional Veterinary Products, Ltd. -- http://www.pvpl.com/-- operates a veterinary supply company owned and managed by veterinarians. Professional Veterinary sought Chapter 11 protection from creditors (Bankr. D. Neb. Case No. 10-82436) on Aug. 20, 2010, in Omaha. Affiliates ProConn, LLC, and Exact Logistics, LLC, also filed for Chapter 11. Professional Veterinary Products reported $89.79 million in total assets, $78.23 million in total liabilities, and $11.56 million in stockholders' equity at April 30, 2010. The Company hired McGrath North Mullin & Kratz PC LLC, as bankruptcy counsel and Alliance Management as financial and restructuring advisors. As reported in the TCR on Dec. 20, 2011, the Bankruptcy Court confirmed the First Amended Joint Chapter 11 Plan of Liquidation proposed by the Debtors and the Official Committee of Unsecured Creditors. The effective date of the Plan is Jan. 26, 2012. PULSE ELECTRONICS: Oaktree Capital Agrees Forbearance ----------------------------------------------------- Pulse Electronics Corporation on March 11 disclosed Oaktree Capital Management, L.P. agreed to forbear if the Company fails to satisfy certain financial covenants of the loans, including leverage and minimum liquidity restrictions, through 2013. On Nov. 20, 2012, the company completed the closing of a recapitalization by certain affiliates of investment funds managed by Oaktree Capital Management, L.P., an affiliate of Oaktree Capital Group, LLC. At the closing of the recapitalization, Pulse received $75 million in cash under new Term Loan A and issued to Oaktree approximately 36.7 million shares of Pulse's common stock and a warrant to purchase shares of a subsidiary that would terminate upon issuance of shares of a new class of Pulse non-voting preferred stock. The common stock issued to Oaktree, along with other common stock Oaktree already owned, represents approximately 49% of the outstanding common stock of Pulse. Additionally, Oaktree exchanged approximately $28.5 million it owned of the company's $50 million in outstanding 7% senior convertible notes for new Term Loan B. Pulse used the proceeds to repay approximately $55 million outstanding under its senior credit agreement with its existing lenders. The new capital of approximately $20 million is being used for fees and expenses associated with the transactions, working capital, and general business purposes. It also allows the company to maintain a higher level of cash on hand. Additionally, as part of the initial phase of the recapitalization, at a special meeting on January 21, 2013, shareholders approved amendments to the company's articles of incorporation to authorize the issuance of non-voting preferred stock, and Oaktree was subsequently issued 1,000 shares of a new Series A Preferred Stock. The new Pulse preferred stock will automatically convert into additional shares of Pulse common stock upon discharge of the company's 7% senior convertible notes, and Oaktree would then hold approximately 64.38% of the common equity of Pulse (on a pro forma fully diluted basis as of November 20, 2012, and without giving effect to shares of common stock and warrants previously owned by Oaktree). Upon issuance of the preferred stock, the subsidiary warrant issued to Oaktree at closing was terminated. Following the closing of the initial phase, Oaktree and Pulse have worked closely to ensure that the entirety of the recapitalization meets the strategic and operational needs of the company. To eliminate any possible concern that a risk event could threaten the company's ability to meet its commitments to customers and vendors, Oaktree and the company entered into a letter agreement, which includes an incremental term loan commitment of $23.0 million upon which the company may draw if its common stock is delisted from the NYSE and the holders of its senior convertible notes require the company to repurchase these notes. Terms of the incremental term loan will be identical to those of the Term A Loan. Additionally, Oaktree agreed to forbear if the company fails to satisfy certain financial covenants of the loans, including leverage and minimum liquidity restrictions, through 2013. In consideration for the forbearance and additional commitment, the company has agreed to adjust the conversion ratio for the preferred stock held by Oaktree such that the total common stock issued to Oaktree upon conversion of the preferred stock will equal approximately 67.9% of the Company's total common stock (on a pro forma fully diluted basis as of November 20, 2012, and without giving effect to shares of common stock and warrants previously owned by Oaktree). The company expects the second phase of the recapitalization to occur during the first half of 2013. In this phase, Pulse intends to offer each holder of its outstanding senior convertible notes, other than Oaktree, the option to receive new debt under secured Term Loan B in exchange for its senior convertible notes at up to 80% of their par amount, as well as shares of Pulse common stock. To the extent the holders of 90% of the senior convertible notes, including those exchanged by Oaktree in the first phase, exchange their notes under this optional exchange, then the $28.5 million portion of Oaktree's Term Loan B will be reduced by 20%. First Quarter 2013 Outlook "Consistent with similar indications from industry experts and peer companies, we are encouraged by order rates that have been increasing slowly into the New Year," said Mr. Faison. "We are also encouraged by the reengagement of a number of key customers that had expressed concern about our financial condition throughout last year. Since the investment by Oaktree, most of these customers have indicated their higher confidence in Pulse and have begun discussions to increase business share and new program awards to us. We believe we have maintained our technology leadership in our core markets and this continues to attract the attention of our large electronic-industry customers that depend on the latest technology for their products. We are hopeful that these signs of strengthening will continue and have favorable effects on our sales in the coming quarters. However, normal first quarter seasonal softness and the effects of Chinese New Year, overall weak order rates in the fourth quarter, and the timing and strength of Wireless product ramps will keep our first quarter revenue somewhat lower than the fourth quarter. "On the other hand, we continue to see progress in improving our cost structure as demonstrated by our improving gross profit margins in the fourth quarter, which will result in non-GAAP operating profit at a level similar to fourth quarter despite the lower revenue," continued Mr. Faison. The company expects first quarter 2013 net sales to range from $80 million to $86 million and non-GAAP operating profit to range from a loss of $1 million to a profit of $1 million. The disclosure was made in Pulse Electronics Corporation's earnings release for fourth quarter and fiscal year ended Dec. 28, 2012, a copy of which is available for free at http://is.gd/FbWpoE San Diego, Calif.-based Pulse Electronics Corporation is a global producer of precision-engineered electronic components and modules. The Company serves the wireless and wireline communications, power management, military/aerospace and automotive industries. QUALTEQ INC: Kirkland Won't Get Paid for Overhead Cost ------------------------------------------------------ Bankruptcy Judge Eugene R. Wedoff in a February ruling awarded $1,947,208.50 in total interim fees to Kirkland & Ellis LLP, counsel to the trustee in the chapter 11 case of Qualteq Inc. Judge Wedoff deducted $820 from the total amount the firm requested. Judge Wedoff denied reimbursement of overhead costs and fees related to clerical work. He said overhead expenses are not compensable because they are built into the hourly rate. The judge also held that clerical or stenographic employees of the professional are part of the normal course of the professional's business, and must be absorbed by the applicant's firm as an overhead expense. A copy of Judge Wedoff's Feb. 13, 2013 Findings of Fact and Conclusions of Law is available at http://is.gd/ke1vK6from Leagle.com. The chapter 11 trustee is slated to return to the Bankruptcy Court March 13 for a hearing to approve the disclosure statement explaining the plan of liquidation the trustee filed last month. Pursuant to the plan, unsecured creditors with about $9 million in claims may be paid in full from a liquidating trust. The trustee intends to seek confirmation of the plan at the April 24 hearing. About QualTeq Inc. South Plainfield, New Jersey-based QualTeq, Inc., engaged in the design, manufacture, and personalization of plastic cards in the United States. The company manufactured magnetic, contact, and dual interface smart cards. Qualteq Inc. and 17 affiliated companies filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12572) on Aug. 14, 2011. Debtor Avadamma LLC disclosed $38,491,767 in assets and $36,190,943 in liabilities as of the Petition Date. The case was transferred to Chicago from Delaware in February 2012. At the request of Bank of America NA, the bankruptcy judge in Chicago appointed Fred C. Caruso of Development Specialists, Inc., as Chapter 11 trustee in May 2012. During the Delaware proceedings, the Debtors hired Fox Rothschild LLP, as local counsel and K&L Gates LLP acted as general bankruptcy counsel. Scouler & Company was tapped as restructuring advisors. The Debtors are currently represented by Harley J. Goldstein, Esq., and Matthew E. McClintock, Esq., at Chicago firm, Goldstein & McClintock LLC. In the Delaware proceedings, Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed four unsecured creditors to serve on the Official Committee of Unsecured Creditors. The Committee has hired Lowenstein Sandler PC as counsel and Eisneramper LLP as accountants and financial advisors. Cozen O'Connor serves as the Committee's Co-Counsel In November 2012, the Qualteq trustee completed the sale of the business for $51.2 million to Valid USA Inc. The price included $46.1 million in cash plus the assumption of liabilities. The Chapter 11 Trustee is represented by Kirkland & Ellis. RAPID-AMERICAN CORP: Proposes Logan & Co. as Claims Agent --------------------------------------------------------- Rapid-American Corp. seeks approval from the Bankruptcy Court to hire Logan & Company, Inc., as claims and noticing agent. Assuming that the Court allows the Debtor to serve asbestos personal injury claimants through their legal counsel, the Debtor anticipates that approximately 300 addressees will be eligible to receive notices in the Chapter 11 case. Based on the records maintained by the Debtor's national coordinating counsel for asbestos personal injury claims, an additional 275,000 claimants could be served with a proposed plan of reorganization. In view of the number of anticipated claimants and the complexity of the Debtor's business, the Debtor submits the appointment of a claims and noticing agent is both necessary and in the best interests of both the Debtor's estate and its creditors. For monthly storage, Logan will charge the Debtor $0.10 per creditor name per month. Logan will charge $174 per hour for Web site design and maintenance. For consulting services, professionals at Logan will provide a 15% reduction of their hourly rates: Discounted Category Rate -------- ---------- Principal $252 Court Testimony $276 Senior Consultant $191 Statement & Schedule Preparation $187 Account Executive Support $174 Public Wesbiste Design and Maintenance $174 Data & File Conversion/Programming Support $140 Project Coordinator $119 Analyst $106 Quality Control and Audit $65 Data Entry & Other Admin. Tasks $65 Clerical Support $42 Logan currently holds a $5,000 retainer as security for the payment of fees and expenses. Logan & Co. can be reached at: LOGAN & COMPANY, INC. 546 Valley Road, Second Floor Upper Montclair, NJ 07043 Attn: Kathleen M. Logan, President Tel: (973) 509-3190 Fax: (973) 509-3191 About Rapid-American Corp. Rapid-American Corp. filed for bankruptcy protection in Manhattan (Bankr. S.D.N.Y. Case No. 13-10687) on March 8, 2013, to deal with debt related to asbestos personal-injury claims. New York-based Rapid-American was formerly a holding company with subsidiaries primarily engaged in retail sales and consumer products and was never engaged in an asbestos business of any kind. Through a series of merger transactions going back more than 45 years, Rapid has nevertheless incurred successor liability for personal injury claims arising from plaintiffs' exposure to asbestos-containing products sold by The Philip Carey Manufacturing Company -- Old Carey -- as that entity existed prior to June 1, 1967. Attorneys at Reed Smith LLP serve as counsel to the Debtor. The Debtor estimated assets of at least $50 million and liabilities of up to $500 million. READER'S DIGEST: Seeks to Employ Ernst & Young as Tax Provider -------------------------------------------------------------- RDA Holding Co. and its affiliates request authorization from the Bankruptcy Court to employ Ernst & Young LLP as their tax and audit services provider nunc pro tunc to the Petition Date. The Debtors require the audit and tax consulting services of EY LLP. The firm and its professionals have extensive and specialized institutional knowledge of the Debtors and their tax structure that is vital to the Debtors and their ability to successfully reorganize. Certain professionals at EY LLP have provided tax advisory services to the Debtors for a period spanning over the past 10 years and they are directly responsible for assisting the Debtors in implementing their current global tax structure. The knowledge these professionals, and EY LLP as a whole, have acquired over that period of time will be instrumental to the Debtors during these chapter 11 cases and on a go-forward basis. Moreover, due to the recent departure of the Debtors' Vice President in charge of global tax, the institutional knowledge of EY LLP becomes even more critical to the Debtors. The Debtors are seeking to employ EY LLP to provide restructuring tax advisory services, including the tax implications relating to both domestic and international reorganization and restructuring alternatives. In addition, EY LLP will be providing routine on- call tax advisory services. EY LLP's long-time and extensive knowledge of the Debtors' and their tax structure makes them the most efficient choice to provide these services. The Debtors are also seeking to engage EY LLP for certain limited and discrete audit services related to the reissue of EY LLP's 2011 audit opinion. EY LLP previously served as the Debtors' independent outside auditing firm from 2006 through 2011. As such, the Debtors' require the services of EY LLP in connection with re-issuing any opinions related to the audit performed by EY LLP during those previous years. EY LLP has agreed to provide certain audit and tax services to the Debtors in connection with the chapter 11 cases: a) Audit Engagement Letter: EY LLP will reissue its report on the Debtors' December 31, 2011 financial statements and perform related services. b) Tax Services Engagement Letter: EY LLP will perform certain tax services as set forth in specific Statements of Work executed pursuant to the Tax Services Engagement Letter. c) Bankruptcy Tax Services SOW: EY LLP will work with appropriate Company personnel in developing an understanding of the tax issues and options related to the Company's Chapter 11 filings, taking into account the Company's specific facts and circumstances, for US Federal, International and State and local tax purposes. d) Routine On Call Tax Advice SOW: EY LLP will provide tax advisory services to the Debtors. The Debtors will compensate EY LLP on an hourly basis, at rates ranging from $240 to $871 per hour. In addition, the Debtors have agreed to reimburse EY LLP for all reasonable, documented out of pocket expenses actually incurred by EY LLP. To the best of the Debtors' knowledge, EY LLP 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. RDA Holding Co. listed total assets of $1,118,400,000 and total liabilities of $1,184,500,000 as of the Petition Date. 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. RG STEEL: Further Amends Agreement to Resolve SNA Objection ----------------------------------------------------------- RG Steel Wheeling LLC further amended its agreement with Bounty Minerals LLC to resolve SNA Carbon LLC's objection to the sale of its right, title and interest in and to 1,268.0230 net mineral acres in Ohio and West Virginia. Under the amended agreement, surface ownership of the land won't be included in the sale and will remain the property of RG Steel Wheeling. A copy of the agreement is available for free at http://is.gd/50q2F9 Last month, SNA Carbon asked U.S. Bankruptcy Judge Kevin Carey to deny approval of the sale, saying it might jeopardize the operations of Mountain State Carbon LLC, the company's joint venture with RG Steel. SNA Carbon also said it is unable to confirm if the property is related to MSC's operations since RG Steel did not provide legal descriptions of the property. About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as its financial advisor. The Debtor has sold off the principal plants. The sale of the Wheeling Corrugating division to Nucor Corp. brought in $7 million. That plant in Sparrows Point, Maryland, fetched the highest price, $72.5 million. RICHARD FRIEDBERG: Chapter 7 Conversion Affirmed ------------------------------------------------ District Judge Janet C. Hall tossed out an appeal by Richard Friedberg, appearing pro se, from the Bankruptcy Court's order converting his case from a Chapter 11 proceeding to a Chapter 7 proceeding. Mr. Friedberg contends the Bankruptcy Court erred when it concluded that cause existed, under 11 U.S.C. Sec. 1112(b)(1), for the conversion. Mr. Friedberg also seeks to vacate the Bankruptcy Court's Ruling. Mr. Friedberg was absent from the Bankruptcy Court hearing to consider conversion of the case due to a scheduled medical procedure. The Chapter 7 Trustee urged the District Court to affirm the Bankruptcy Court's Ruling and dismiss Mr. Friedberg's appeal. The appellate case is, RICHARD H. FRIEDBERG, Appellant, v. MELISSA ZELEN NEIER, Appellee, Civil Action No. 3:12-CV-00940 (JCH) (D. Conn.). A copy of the Court's March 5, 2013 decision is available at http://is.gd/1yGOlofrom Leagle.com. Richard H. Friedberg filed for Chapter 11 bankruptcy (Bankr. D. Conn. Case No. 08-51245) on Dec. 18, 2008. Mr. Friedberg claimed controlling interests in various entities, including Monteverde LLC and North South Development LLC. Monteverde was established to hold real property in Cortlandt Manor, New York. North South is an LLC through which the debtor held real property in South Carolina. While the debtor caused some of his entities to file bankruptcy petitions, neither Monteverde nor North South sought bankruptcy protection. Related entities controlled by Mr. Friedberg and which sought bankruptcy protection are 115 Allen Ground, LLC (Case No. 09- 51457); Allen & Delancey, LLC (Case No. 09-51514); and Monteverde Restaurant, LLC (Case No. 09-51514). These cases were jointly administered with Mr. Friedberg's case. The 115 Allen Ground and Allen & Delancey cases are now closed. On April 30, 2010, the Bankruptcy Court entered an Order approving the appointment of Melissa Zelen Neier as Chapter 11 Trustee. On June 15, 2010, Ms. Neier filed a Motion to Convert Case from Chapter 11 to Chapter 7. Following a hearing on June 22, 2010, the Bankruptcy Court granted the Motion to Convert. ROCMEC MINING: Interim Financial Statements Need Amendment ---------------------------------------------------------- Rocmec Mining Inc. is providing this default status report in accordance with Policy Statement 12-203 respecting Cease Trade Orders for Continuous Disclosure Defaults. On January 24 and 30, 2013, the Corporation announced that, for the reasons disclosed in the Default Announcement, the filing of the Corporation's annual financial statements, accompanying management's discussion and analysis and related CEO and CFO certifications for the financial year ended September 30, 2012 would not be completed by the prescribed deadline set by the Canadian securities legislation, being January 28, 2013. In addition, on March 8, 2013, the Corporation announced that its unaudited interim consolidated financial statements and related management's discussion and analysis for the three-month period ended December 31, 2012 would need to be amended in order to take into account the annual audit and the final version of the 2012 Annual Financial Documents. As a result of the delay in filing the 2012 Annual Financial Documents, the Corporation's principal regulator, the Autorite des marches financiers, granted a management cease trade order to the Corporation. The MCTO restricts all trading in securities of the Corporation, whether direct or indirect, by the Chief Executive Officer, the Chief Financial Officer and the directors of the Corporation until such time as the 2012 Annual Financial Documents have been filed by the Corporation. The MCTO does not affect the ability of shareholders who are not insiders of the Corporation to trade their securities. Rocmec wishes to announce that its auditors have now completed the audit of the annual financial statements. The 2012 Annual Financial Documents and the amended and restated Interim Financial Documents were filed with the applicable securities regulatory authorities and are available on the SEDAR database at http://www.sedar.com Once the AMF has reviewed the filed documents, it is expected that the MCTO will be lifted. Pursuant to the provisions of the alternative information guidelines specified by Policy Statement 12-203, the Corporation reports that since the Default Announcement and subsequent default status reports, except as stated in this Default Status Report, there have not been any material changes to the information contained therein; nor any failure by the Corporation to fulfill its intentions as stated therein with respect to satisfying the provisions of the alternative information guidelines, and there are no additional defaults or anticipated defaults subsequent to the disclosure therein, other than the delay in filing the 2012 Annual Financial Documents. Further, there are no additional material information respecting the Corporation and its affairs that have not been generally disclosed and there are no insolvency proceedings against the Corporation as of the date of this Default Status Report. Rocmec is active in the exploration and the development of gold resources in Quebec and Peru. The Corporation holds a gold property with resources recognized in accordance with NI43-101, a modular treatment plant and also an exclusive license for the thermal fragmentation mining method for exploiting narrow-vein ore deposits. RODEO CREEK: Sec. 341(a) Meeting of Creditors Moved to April 8 -------------------------------------------------------------- The meeting of creditors of Rodeo Creek Gold Inc., and its affiliates under Section 341(a) of the Bankruptcy Code is reset to April 8, 2013, at 2:00 PM, at Young Bldg, Rm 3087. Proofs of claim are due by July 1. 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: US Trustee Appoints 3 Members to Creditors' Committee ------------------------------------------------------------------ The U.S. Trustee assigned to the Chapter 11 case of Rodeo Creek Gold, Inc., appointed three members to the Official Committee of Unsecured Creditors: 1. QUALITY TRANSPORTATION INC. Represented by: John Davis 1110 Muleshoe Rd. Battle Mountain, NV 89820 Phone: 775-635-9540 Fax: 775-635-8017 E-mail: qti.john.davis@att.net 2. PROMETHEUS ENERGY GROUP, INC. Represented by: Leonard H. York 10370 Richmond Avenue Suite 450 Houston TX 77003 Phone: 832-456-6502 Fax: 832-456-0048 E-mail: lyork@PrometheusEnergy.com 3. F & H MINE SUPPLY Represented by: Thomas M. Vasseur 1140 Checker Lane Battle Mountain, NV 89820 Phone: 208-752-1294 Fax: 208-752-7032 E-mail: tvfrontdesk@vslawfirm.com 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. SNO MOUNTAIN: Judge Clears $4.6-Mil. Sale to Lenders ---------------------------------------------------- Marie Beaudette at Dow Jones' DBR Small Cap reports that a bankruptcy judge has cleared the trustee operating Pennsylvania's Sno Mountain to sell the ski resorts assets to its lender, DFM Realty, for $4.6 million. 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: Gets Court OK to Pay $96,000 to 4 Key Employees ------------------------------------------------------------- Southern Air Holdings Inc. and its debtor affiliates obtained approval from the U.S. Bankruptcy Court for the District of Delaware to pay a total of $96,618 to four employees under a key employee retention plan (KERP). The four employees serve as Director of Operations, Director of Accounting and Facilities, Accounting and Reporting Manager, and Director of Human Resources and are recognized by the Debtors as important to their operations and their reorganization process. In addition to the KERP Payments, the KERP provides for the Key Employees to receive (i) continued medical, dental, life, and vision coverage under the Debtors' employee benefit plans in place at the time until the last day of the month in which their employment is terminated, and (ii) payment for all accrued but unused vacation time. 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. TEREX CORP: S&P Affirms 'BB-' CCR and Revises Outlook to Positive ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it affirmed its ratings, including the 'BB-' corporate credit rating, on Terex Corp. At the same time, S&P revised its outlook to positive from stable. "The outlook revision reflects better operating prospects that we believe could support credit measures and cash flow generation in line with a higher rating," said Standard & Poor's credit analyst Dan Picciotto. The ratings on Terex reflect Standard & Poor's assessment of the company's "aggressive" financial risk profile and "fair" business risk profile. Terex's operating results can be significantly exposed to economic fluctuations, but S&P bases case calls for a continuation of a slow global economic recovery. For 2013, S&P forecasts revenue growth to decelerate to the high- single digits and expect continued improvements in profitability to result in the adjusted EBITDA margin approaching 10%, benefitting from the the company's restructuring and improved volumes. By segment, S&P expects aerial work platforms and cranes to both generate double-digit growth rates and for construction to be the weakest performer. S&P do not incorporate the expectation for any sizable acquisitions in 2013 in S&P's projections but do assume acquisition activity will remain part of the company's strategy in future years. S&P believes this will support improved credit measures, including adjusted debt to EBITDA of less than 4x and funds from operations (FFO) to total debt of about 20%, which would meet S&P's expectations for the rating after a prolonged period of very weak credit measures. Terex manufactures a broad range of equipment for the construction and infrastructure industries. The company operates in the highly cyclical and competitive construction equipment industry, and its profitability can be volatile. However, S&P expects it will maintain good positions in some niche construction-related markets--such as its No. 2 position in the aerial work platform market. Terex has good geographic diversity. Europe and the U.S. account for close to 30% and 35% of sales, respectively, and about 40% comes from the rest of the world. Terex also has decent product diversity across its five reporting segments. S&P views the company's management and governance to be "fair." "We consider Terex's financial risk profile to be aggressive because of its acquisitive strategy and our expectation for significant swings in cash flow generation through the operating cycle. Credit measures have recently improved for the rating and we expect them to meet our expectations in 2013 and beyond. At the rating, we expect Terex to maintain FFO to total debt of 15%- 20%. Decent cash balances and a manageable maturity profile also support the ratings. Terex has also increased its credit offering to customers through Terex Financial Services (TFS). The scale of this operation is modest, with about $150 million in assets at the end of the fourth quarter, and we do not anticipate rapid growth in the near term," S&P said. The outlook is positive. S&P's base-case assumptions anticipates some improvement in credit measures this year to levels that are commensurate with the rating, such as adjusted FFO to total debt of between 15% and 20%, after several years of weak credit measures. For a higher rating, S&P would expect Terex to maintain adjusted FFO to total debt of 20% to 30% and debt to EBITDA of less than 4x. In addition, S&P would expect Terex to generate meaningfully positive free cash flow of $200 million or more annually, on average, for the next few years. This could occur if a continuation of the global economic recovery supports organic revenue growth in the mid-single digits beyond 2013, adjusted EBITDA margin remains 10% or more, and potential acquisition activity does not result in meaningful increases in debt balances. S&P could revise the outlook to stable if additional debt were likely to result in FFO to total adjusted debt less than 15% in 2013 and excess cash balances were not significant. TERRESTAR CORP: Reorganization Plan Declared Effective ------------------------------------------------------ BankruptcyData reported that TerreStar Corporation's Third Amended Joint Plan of Reorganization became effective, and the Company emerged from Chapter 11 protection. The Court confirmed the Plan on October 24, 2012, the report related. All shares of common stock and preferred stock that were outstanding prior to the emergence date have been cancelled, BankruptcyData said. 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. TGAG LLC: Goddard Elementary School Files in White Plains --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the operator of the Goddard private elementary school from Yorktown Heights, New York, filed a petition for Chapter 11 reorganization (Bankr. S.D.N.Y. Case No. 13-22403) on March 11 in White Plains, New York, vowing to "rehabilitate the operation of the business" with income expected in a "relatively short period of time." Revenue for the school was $500,000 in 2012. The closely owned franchise in Yorktown Heights is one of 400 Goddard schools, according to the Web site. Court papers listed assets of $3.4 million and liabilities totaling $1.8 million. The principal asset is the franchise valued at $3 million. Liabilities include $1.5 million owing to secured creditors. TULARE LOCAL: Fitch Lowers Revenue Bond Ratings to 'B+' ------------------------------------------------------- Fitch Ratings has downgraded the following bonds issued by Tulare Local Health Care District to 'B+' from 'BB+': -- $15.7 million refunding revenue bonds, series 2007. The Rating Outlook is revised to Negative from Stable. SECURITY Debt payments are secured by a pledge of the gross revenues of Tulare Local Health Care District. A fully funded debt service reserve fund provides additional security. KEY RATING DRIVERS CONTINUED FINANCIAL WEAKENING: The multi-notch downgrade is driven by a rapid decline in Tulare's overall financial profile in fiscal year ended June 30, 2012 (unaudited interim financials), with continued deterioration through the six-month interim period ended Dec. 31, 2012. Performance has resulted in negative debt service coverage for both periods and Tulare is likely in violation of its debt service coverage covenant for fiscal 2012. The fiscal 2012 audit and debt service coverage covenant calculation are still unavailable. LARGE OPERATING LOSSES: Impacted by challenged patient utilization and increased bad debt, profitability took a sharp turn as the district posted large operating losses of $7.3 million in fiscal 2012 and $3.8 million through the interim period, respectively. WEAK BALANCE SHEET: Unrestricted cash and investments declined sharply to $10.5 million at Dec. 31, 2012 from $24.5 million at fiscal year-end (FYE) 2010 due to increased capital investments and negative operating cash flow. Additionally, debt load increased in December 2011 due to a $6 million loan to finance certain equipment. Expected further demand on liquidity for the construction project presents significant concerns. CONSTRUCTION PROJECT DELAYED: The completion of the new bed tower that was initially scheduled for October 2012 has been delayed due to structural problems related to the concrete used on certain floors. Tulare is currently developing a recovery schedule and evaluating the amount of additional funding necessary to complete the project. RECENT MANAGEMENT TURNOVER: Tulare experienced considerable management turnover in the last two years. Following the November 2012 election of three new board members, the current CEO rejoined the organization in December 2012 after having resigned in April 2012 due to differences with the previous board. The current CFO joined the organization in August 2012, replacing an interim CFO that had been in place since January 2012. COMMUNITY SUPPORT: As a California health care district, Tulare benefits from a pro rata allocation of property taxes collected in Tulare County in support of operations and capital outlays. RATING SENSITIVITY FURTHER WEAKENING OF FINANCIAL PROFILE: Further balance sheet deterioration or inability to curb ongoing operating losses and improve cash flow would lead to negative rating action. CREDIT PROFILE The rating downgrade to 'B+' from 'BB+' reflects dramatic decline in unrestricted liquidity beginning fiscal 2011 followed by material deterioration in profitability and debt metrics in fiscal 2012. The apparent, yet unanticipated need for additional funding related to the delayed construction project adds further pressure on the already week balance sheet. Operating profitability took a sharp turn in fiscal 2012, posting an operating margin of negative 9.3% after solid margins of 7% in 2011 and 5.8% in 2010 (including District tax revenues not related to the general obligation bond debt service). Operating income was primarily impacted by lower than budgeted volumes, lower supplemental funding receipts, increase in bad debt, and elevated expenses related to IT and capital projects. Bad debt increased 33% from 2011 to 2012 and doubled from 2008 to 2012, reflecting the service area's poor economic characteristics. Through the six- month interim period ended Dec. 31, 2012, level of bad debt moderated somewhat to $6.6 million versus $9.5 million the prior year period. However, due to continued challenges in utilization, operating margin weakened further to negative 10% in the interim period. Similarly, operating EBITDA margins were low at negative 4.3% in fiscal 2012 and negative 4.5% through the interim period. Management is in the process of planning and executing various strategies to improve profitability such as enhancing revenue cycle management, strengthening contracts, and reducing overall expenses. The initiatives are being implemented throughout the 2013 calendar year, and benefits are expected to be realized somewhat in fiscal 2013 and in full over fiscal 2014. Management expects break-even performance for fiscal 2013. Fitch believes this will be challenging based on current performance, but recognizes the strong operating results posted from 2009 to 2011 under the current CEO's leadership. Driven by a combination of capital spending and negative cash flow, unrestricted cash and investments declined further from $24.5 million at FYE 2010 to $10.5 million at Dec. 31, 2012. Over $6 million of the $14 million decline is attributable to IT related investments. Days cash on hand of 48.5, cushion ratio of 4.1x, and cash to debt of 51.2% are weak compared to Fitch's median for below investment grade ratings. Given future capital needs related to the construction project and other infrastructure investments, Fitch expects ongoing negative pressure on liquidity levels. Tulare has a major construction project in progress, which plans to feature a 24-bed emergency department, a new diagnostic department, a 16-bed obstetric unit, four surgery suites, and 27 new private patient rooms meeting seismic requirements. This new expansion tower was initially slated to open October 2012. However, due to problems related to the concrete structure on the third and fourth floors discovered in April 2012, construction has been at a standstill. Tulare is working with the Office of Statewide Health Planning and Development in rectifying the issue to move forward on an accelerated recovery schedule. Remaining funds available include approximately $15 million from the general obligation (GO) bond financing, $2.2 million from the 2011 Bank of America loan, and $1.4 million from philanthropy. Tulare will likely need to procure resources in addition to existing funds to complete the project, but the amount remains under evaluation. As Tulare has purchased nearly all of the equipment and materials for the new tower, remaining costs are primarily labor related. Management indicated that the area's population growth and projected demand for healthcare services beyond 2030 dictate the need for a second hospital tower. Tulare is currently in the planning and design stage for the five-story tower, which Fitch does not believe is feasible given its current performance and utilization trends. A schedule or financing plan is not yet in place, however, there is no additional debt capacity at the current rating level. Aside from the first tower construction, Tulare continues to invest in its IT platform and is in the process of opening two rural clinics. Annual capital spending is budgeted at $1.5 million, addressing routine operations and maintenance needs. At Dec. 31, 2012, Tulare's revenue supported debt burden totaled $20.5 million, consisting of $15.7 million in series 2007 bonds and $4.8 million in capital leases. The bonds are all fixed rate and produces a maximum annual debt service (MADS) of $2.5 million, which declines to $1.3 million in fiscal 2017 following the final payment of the capital lease. Debt burden is relatively low, with debt to capitalization of 27%. However, MADS coverage declined to negative 1.1x in fiscal 2012 and negative 1.2x through the interim period compared to 4.4x in fiscal 2011. The alarming drop in debt service coverage is one of Fitch's main concerns, and a key driver in the rating action. Fitch does not expect Tulare to meet its debt service coverage covenant for fiscal 2012, which is not an event of default but will require a consultant call-in. Not included in Fitch's calculation of Tulare's long-term debt are $85 million in GO bonds, which are not rated by Fitch. Since Tulare's GO debt is secured by a special assessment on property taxes in the district, Fitch's calculation of financial ratios excludes Tulare's GO debt and related receipts. The Negative Outlook reflects the apparent need for additional capital expenditure in order to complete Tulare's current construction project, putting further strain on balance sheet and profitability metrics. Failure to improve its overall financial condition will lead to further negative rating action. Tulare Local Health Care District owns and operates a 112-bed hospital in the City of Tulare, California. Total revenues in fiscal 2012 were $78.5 million (exclusive of tax revenues related to GO bonds debt service). The district covenants to provide annual and quarterly disclosure through the Municipal Rule Making Board's EMMA system. UNIGENE LABORATORIES: Remains in Default of Primary Debt Terms -------------------------------------------------------------- Unigene Laboratories, Inc. on March 11 disclosed that based on management's current cash flow projections, the Company will immediately need to obtain additional financing to fund operations, address its debt and restructure its balance sheet. The Company remains in default of the terms of its primary debt. Cash and cash equivalents at December 31, 2012 totaled $3.8 million compared to $4.7 million at December 31, 2011. The Company is currently exploring various alternatives, including financing, debt restructuring and partnering options. On December 11, 2012, the Company announced that it retained Canaccord Genuity to assist with its exploration and evaluation of a broad range of strategic options, including, but not limited to, the strategic partnering of technology, the out-licensing of intellectual property and divestiture of certain assets, and the possible sale of the Company or one or more of our business units. If the Company is unable to obtain financing or implement a financially significant strategic option, it will not be able to continue as a going concern beyond March 31, 2013. Ashleigh Palmer further commented, "We are hopeful that an arrangement may be reached with a lender to further extend our cash runway to allow us to continue to explore strategic options with Canaccord. Unigene's management remains committed to our shareholders, and we continue to explore, evaluate and pursue every reasonably available opportunity to extend Unigene's cash runway and monetize our assets." Unigene's net loss for the fiscal quarter ended December 31, 2012 was $15.3 million or $(0.16) per share as compared to net income of $26.9 million or $0.18 per share for the corresponding period in 2011 on a fully diluted basis. The Company reported a net loss of $34.3 million for the full year ended December 31, 2012 or ($0.36) per share, compared to a net loss of $7.1 million or ($0.08) per share for 2011. Revenue for the fiscal quarter ended December 31, 2012 decreased to $1.5 million from $12.5 million in the comparable period in 2011. Unigene had an operating loss of $3.0 million for the three months ended December 31, 2012, a decline of $9.3 million from the operating income of $6.4 million for the three months ended December 31, 2011. Operating loss for the twelve months ended December 31, 2012 increased approximately $5.9 million, or 169%, to $9.4 million from $3.5 million in 2011. Net loss for 2012 increased $27.2 million, or 383%, to $34.3 million from $7.1 million in 2011. This was primarily due to an increase in the net change in fair value of an embedded conversion feature of $21.5 million and a decrease in revenue of $11.1 million, mainly due to a decrease in licensing revenue of $9.2 million and an increase in interest expense of $3.4 million. These items were partially offset by a decrease in operating expenses of $5.2 million and decreases in our losses from our investments in the former China Joint Venture and Tarsa of $0.8 million and $2.2 million, respectively. The Company anticipates that its independent registered public accounting firm will include an explanatory paragraph in their audit opinion to be contained in the Company's Annual Report on Form 10-K, including financial statements for the year ended December 31, 2012 that expresses substantial doubt about the Company's ability to continue as a going concern based on its current financial resources and default status on its primary debt. The disclosure was made in Unigene Laboratories' earnings release for the fourth quarter and full-year ended Dec. 31, 2012, a copy of which is available for free at http://is.gd/8fzZ1Q About Unigene Unigene Laboratories, Inc. OTCBB: UGNE) -- http://www.unigene.com/ -- is a biopharmaceutical company focusing on the oral and nasal delivery of large-market peptide drugs. WESTERN REFINING: Moody's Rates New Senior Notes Issue 'B2' ----------------------------------------------------------- Moody's Investors Service assigned a B2 rating to Western Refining's senior unsecured notes due 2021. Note proceeds will be used to refinance the $325 million senior secured notes due 2017, and pay associated tender premium and fees. The rating outlook is stable. "The $350 million senior note offering is expected to reduce Western Refining's interest expense as the coupon would be lower reflecting the robust fundamentals for refiners in the US currently. This transaction will also extend Western's debt maturity profile, "commented Arvinder Saluja, Moody's Analyst. Issuer: Western Refining, Inc. Ratings assigned: $350 million Senior Unsecured Notes due 2021, B2 (LGD4, 58%) Ratings Unchanged: Corporate Family Rating, B1 Probability of Default Rating, B1-PD $325 million Senior Secured Notes due 2017, B1 (LGD3, 46%) * * Rating to be withdrawn after the completion of the offer to tender secured notes Ratings Rationale: The B1 CFR is supported by Western's strong returns and relatively low risk growth strategy. The rating is constrained by a modest level of asset diversification with the El Paso refinery providing approximately 84% of consolidated throughput capacity and the majority of EBITDA. The B2 rating on the senior unsecured notes reflects their junior position to the company's senior secured ABL credit facility which is expected to have a borrowing base in excess of $700 million post notes issuance. The size of the ABL relative to these notes and the company's other outstanding debt creates significant subordination and results in a one notch downgrade relative to the CFR. The SGL-1 indicates very good liquidity through mid-2013. Pro forma for the notes offering, Western is expected have over $400 million availability under an estimated $700 million borrowing base credit facility after accounting for letters of credit. The company has $454 million of cash on the balance sheet as of December 31 , 2012. The sole financial covenant under the facility is a minimum fixed charge coverage ratio of at least 1.0x, which only applies when availability under the facility drops below $50 million or 12.5% of the borrowing base (whichever is greater). Moody's expects the company to remain well within compliance of this covenant through 2013. There are no debt maturities until June 2014 when $215 million of convertible notes mature. An upgrade is unlikely given Western's current scale and asset concentration. However, Moody's could consider an upgrade if there is a material improvement in operational diversity and scale that is funded conservatively. Moody's could downgrade the ratings if there is an unexpectedly severe and prolonged deterioration in sector conditions, leverage increases materially, or if the company does not maintain adequate cash balances to support good liquidity. The principal methodology used in this rating was Global Refining and Marketing published in December 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Western Refining, Inc. is an independent refining and marketing company headquartered in El Paso, Texas. WESTERN REFINING: S&P Assigns 'BB-' Rating to $350MM Debt --------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its 'BB-' issue rating to U.S refining company Western Refining Inc.'s $350 million of senior unsecured debt, and assigned a '2' recovery rating, indicating a substantial recovery (70% to 90%) in case of default. At the same time, S&P raised its rating on Western's $215 million senior unsecured debt to 'BB-' from 'B+' and changed the recovery rating to '2' from '3'. In addition, S&P affirmed its 'B+' corporate credit rating and 'BB' senior secured issue and '1' recovery rating on Western's $325 million notes, which S&P expects it to redeem as part of the current refinancing. The rating on El Paso, Texas-based Western reflects its considerable debt reduction over the past two years, its access to discounted feedstock crude oil, and its ability to benefit from currently wide crack spreads. After substantial debt reduction over the past two years, Western had adjusted debt of slightly more than $541 million, and the trailing 12-month debt to EBITDA ratio is down to about 0.5x. These strengths are somewhat offset by its small size, lack of asset and geographic diversity, exposure to the cyclical and capital-intensive refining industry, and volatile operating margins. "The stable outlook reflects the strong credit measures given the recent debt pay-down and our expectation that Western will maintain adequate liquidity despite potential volatility in refining margins," said Standard & Poor's credit analyst Manish Consul. S&P could lower the ratings if the liquidity declines throughout the refining cycle or S&P expects a considerable decline in operational performance, such that debt to EBITDA increases beyond 2.5x consistently, in mid-cycle conditions. An upgrade is unlikely given the company's small size and lack of diversity. However, S&P could consider it if the company significantly improves its business risk profile by increasing the size and diversity of its refining assets or starts to get more cash flows from stable sources such as its logistics assets. WINDSORMEADE OF WILLIAMSBURG: To Seek Plan Approval in May ---------------------------------------------------------- United Methodist Homes of Williamsburg, Inc., will seek confirmation of its reorganization plan at a hearing on May 14, 2013, at 10:00 a.m. The Debtor intends to exit bankruptcy quickly. A hearing will be held April 10, 2013, at 2:00 p.m. to consider approval of the adequacy of the information in the disclosure statement explaining the Plan. Objections to the adequacy of the information in the disclosure statement are due April 3. Notwithstanding that the Disclosure Statement has yet to be approved, the Debtor sought and obtained an order shortening the notice period with respect to scheduling the confirmation hearing. U.S. Bankruptcy Judge Kevin R. Huennekens ceded to the Debtor's request and set May 14 as the confirmation hearing. The Plan provides for the unimpaired treatment of unsecured creditors and the Plan is submitted with the approval of approximately 66% of the only impaired third-party class of creditors. Given the consensual nature of the Plan, the Debtor does not anticipate significant objections to confirmation. Before filing for bankruptcy, the Debtor negotiated the terms of the Plan with its sponsor Virginia United Methodist Homes Inc. and the secured creditors. The Plan provides for the protection of all residents' rights and payment of all trade debt. As reported in the March 6 edition of the TCR, the Debtor has signed an agreement with holders of 66% of the outstanding principal amount of the Series 2007A/B Bonds to support a restructuring of the Debtor's bond debt via a Chapter 11 plan. To facilitate the restructuring, a letter of credit from Bank of America, N.A., was drawn to pay holders of Series 2007C bonds. The Plan provides for these terms: * Holders of 2007A/B Bond Claims owed $48.3 million plus accrued interest (Class 2) are impaired under the Plan and will receive: 1. Series 2013A Senior bonds with principal amount of $30 million bearing interest at a fixed rate of 6% per annum and having a final maturity date in 2043; 2. Series 2013A Subordinated Bonds in a principal amount of the "deficiency amount", bearing interest at a fixed rate of 2% per annum and having a final maturity date in 2048. The "deficiency amount" means 50% of the total of the (i) aggregate principal and interest outstanding in respect of the Series 2007A Bonds and the Series 2007B Bonds as of the Petition Date, less (ii) the aggregate principal amount of the 2013A Senior Bonds to be issued pursuant to the Plan ($30 million). UMB Bank will receive payment of unpaid reasonable fees and expenses under the indenture. * The letter of credit reimbursement claim of $13.3 million from Bank of America (Class 3), which was purchased at a substantial discount by VUMH, is impaired, and VUMH will receive the aggregate amount of $6.5 million of Series 2013B Senior bonds, bearing a fixed interest rate of 6% per annum and having a final maturity date of 2042. * Holders of general unsecured claims expected to aggregate $200,000 will receive payment in full in cash on the third business day after the effective date of the Plan or on the date the allowed claim becomes payable in the ordinary course. * VUMH, owed $22.4 million for the management of business operations of the Debtor, will waive the manager claim and will enter into a new management agreement with the Reorganized Debtor. * VUMH, as the existing owner, will obtain all membership interests in the reorganized debtor free and clear of all liens and claims. Only the holders of the Series 2007A/B Bond claims and VUMH (on account of the letter of credit claims, its manager claims and interests) are entitled to vote on the Plan. Unsecured creditors and holders of other secured claims are unimpaired and deemed to accept the Plan. VUMH will provide $3 million of DIP financing to fund the Chapter 11 case. A copy of the Plan is available for free at: http://bankrupt.com/misc/VU_Chapter11_Plan.pdf A copy of the Disclosure Statement is available for free at: http://bankrupt.com/misc/VU_Disc_Statement.pdf About WindsorMeade of Williamsburg Virginia United Methodist Homes of Williamsburg, Inc., doing business as WindsorMeade of Williamsburg, filed a Chapter 11 petition (Bankr. E.D. Va. Case No. 13-31098) on March 1, 2013. WindsorMeade of Williamsburg is a continuing care retirement community located on a 105 acre parcel of real property leased by sponsor Virginia United Methodist Homes Inc. The facility includes 181 independent living units with an 80% occupancy rate, 14 assisted living apartments with 65% occupancy and 12 skilled nursing beds with 75% occupancy. DLA Piper LLP (US) and Hirschler Fleischer, P.C. serve as counsel to the Debtor. Deloitte Financial Advisory Services LLP serves as financial advisor. McGuire Woods LLP is special bond counsel. BMC Group Inc. is the claims agent. The prepetition lender, UMB Bank, NA, is represented by Christian & Barton, LLP. The Debtor estimated assets and debts of $100 million to $500 million. WINDSORMEADE OF WILLIAMSBURG: Taps BMC as Claims & Balloting Agent ------------------------------------------------------------------ United Methodist Homes of Williamsburg, Inc., sought and obtained approval of its application to employ BMC Group, Inc., as noticing, claims and balloting agent. BMC will undertake the tasks associated with noticing the myriad of creditors of the Debtor and processing proofs of claim that may be filed. BMC will also assist the Debtor with the solicitation and voting in respect of any plan. BMC agrees to charge the Debtor at its customary rates for services, expenses and supplies. The fee schedule was not included in filings submitted to the bankruptcy court. The Debtors paid a $10,000 retainer to BMC. About WindsorMeade of Williamsburg Virginia United Methodist Homes of Williamsburg, Inc., doing business as WindsorMeade of Williamsburg, filed a Chapter 11 petition (Bankr. E.D. Va. Case No. 13-31098) on March 1, 2013. WindsorMeade of Williamsburg is a continuing care retirement community located on a 105 acre parcel of real property leased by sponsor Virginia United Methodist Homes Inc. The facility includes 181 independent living units with an 80% occupancy rate, 14 assisted living apartments with 65% occupancy and 12 skilled nursing beds with 75% occupancy. DLA Piper LLP (US) and Hirschler Fleischer, P.C. serve as counsel to the Debtor. Deloitte Financial Advisory Services LLP serves as financial advisor. McGuire Woods LLP is special bond counsel. BMC Group Inc. is the claims agent. The prepetition lender, UMB Bank, NA, is represented by Christian & Barton, LLP. The Debtor estimated assets and debts of $100 million to $500 million. WINDSORMEADE OF WILLIAMSBURG: Wins Interim Approval of Financing ---------------------------------------------------------------- Virginia United Methodist Homes of Williamsburg, Inc., received interim approval of its request to access debtor-in-possession financing from its sole owner, Virginia United Methodist Homes Inc. Entry of the interim order allowed the Debtor to access $1 million of the $3 million in postpetition loans arranged by the owner. A hearing will be held March 26, 2013, at 2:00 p.m. (Eastern Time) to consider entry of a final financing order, which would allow the Debtor to draw on the remaining $2 million. The terms of the DIP financing have been consented to by bondholders supporting the reorganization plan and UMB Bank, the trustee under the bonds. The Debtor said it couldn't find DIP financing on better terms elsewhere. Under the Plan, VUMH has agreed to transfer ownership of the facility to the Debtor, forego existing debt owing from the Debtor, provide a revolving loan facility to supplement available liquidity after the Debtor emerges from bankruptcy, and pledge to provide the Debtor with a capital contribution of $1.5 million and a $2 million loan to fund the Debtor's operations post-bankruptcy. The DIP facility will mature Aug. 30, 2013. The DIP loans will bear interest at 4% per annum. The Bankruptcy Court also granted on an interim basis a separate motion by the Debtor to use cash collateral. The Debtor says it requires cash on hand and cash flow from operations to fund its working capital and liquidity needs. UMB Bank has agreed to the Debtor's use of collateral on terms that are "usual and customary." As adequate protection, the Debtor has agreed to provide the master trustee with replacement liens, superpriority administrative claims and expense reimbursement. Objections to final approval of the DIP financing and use of cash collateral must be filed by March 19. About WindsorMeade of Williamsburg Virginia United Methodist Homes of Williamsburg, Inc., doing business as WindsorMeade of Williamsburg, filed a Chapter 11 petition (Bankr. E.D. Va. Case No. 13-31098) on March 1, 2013. WindsorMeade of Williamsburg is a continuing care retirement community located on a 105 acre parcel of real property leased by sponsor Virginia United Methodist Homes Inc. The facility includes 181 independent living units with an 80% occupancy rate, 14 assisted living apartments with 65% occupancy and 12 skilled nursing beds with 75% occupancy. DLA Piper LLP (US) and Hirschler Fleischer, P.C. serve as counsel to the Debtor. Deloitte Financial Advisory Services LLP serves as financial advisor. McGuire Woods LLP is special bond counsel. BMC Group Inc. is the claims agent. The prepetition lender, UMB Bank, NA, is represented by Christian & Barton, LLP. The Debtor estimated assets and debts of $100 million to $500 million. * Chapter 13 Circuit Split Set for March 19 Argument ---------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that whether a split will remain among circuit courts of appeal on a question involving individual bankrupts in Chapter 13 will be decided when 11 judges on the U.S. Court of Appeals in San Francisco hear argument on March 19 in a case decided on Aug. 31 in a split opinion by a panel of three judges. The question is whether an individual in Chapter 13 with no "projected disposable income" can propose a plan shorter than the five year "applicable commitment period" stated in Section 1325(d) of the Bankruptcy Code. In the 2-1 decision in August, the panel concluded that the plan needn't be five years. Two other circuit courts ruled that a five-year plan can't be avoided. The case is Danielson v. Flores (In re Flores), 11- 55452, 9th U.S. Circuit Court of Appeals (San Francisco). * Refinancings Still High on Newer U.S. Mortgages, Fitch Reports ---------------------------------------------------------------- Prime mortgage borrowers in U.S. RMBS pools issued since the start of 2010 are still prepaying at rapid rates, reflecting the refinance incentives driven by low mortgage rates, according to Fitch Ratings. Historically, high refinance activity has left poorer quality borrowers in mortgage pools, which in turn has increased performance volatility. For recent RMBS, however, the credit implications have been modest to date due to the high overall credit quality of the original pools. Last month, prime RMBS mortgage pools issued since 2010 reported an average conditional prepayment rate (CPR) of approximately 42%. This is more than twice as fast as the rates of outstanding prime loans securitized in earlier vintages. The elevated prepayment rates have resulted in rapid declines to the mortgage pool balances. In fact, only 12% of the original balance of the sole transaction issued in 2010 remains outstanding today. Additionally, pool balances for both transactions issued in 2011 have paid down to less than half their initial amounts. The credit quality of the prepaid loans has been, on average, only marginally better than the remaining loans. When compared with the remaining loans, those that have prepaid have slightly higher FICOs (774 vs. 771) and slightly lower loan-to-values (63% vs. 66%). As expected, the prepaid loans have higher coupons (4.8% vs. 4.4%) and have a higher concentration of adjustable-rate mortgages (25% vs. 6%). Fitch does not perceive the change in the credit risk of the remaining pools as material. This is supported by the continued strong performance of the remaining borrowers. Of the more than 6,000 prime loans securitized since 2010, only one loan is seriously delinquent as of the most recent reporting date. Additionally, any potential increase in credit risk caused by prepayments has been more than offset by an increase in credit enhancement percentage due to the transactions' bond payment priority. The senior class credit enhancement percentage has more than doubled from the time of issuance for all transactions issued in 2010 and 2011. Prepayment rates for transactions issued between the start of 2010 and the middle of 2012 have remained notably high. That said, it appears unlikely that transactions issued in late 2012 and 2013 will experience similar prepayment behavior. While mortgage rates declined close to 140 basis points from early 2011 to July 2012, rates have remained relatively stable since that point. This has provided borrowers less incentive to refinance recently originated loans. The weighted-average coupons of the mortgage pools securitized in late 2012 and early 2013 are among the lowest in RMBS history. As such, it is possible that mortgage borrowers from that period never experience strong rate refinance incentives. Even a relatively modest increase in mortgage rates from today's levels could result in relatively slow prepayment behavior. This is particularly true for fixed-rate mortgages. Fixed-rated CPRs below 10% (like those observed in 1999 and again in 2006) could be experienced, potentially for a sustained period of time. A sustained period of slow prepayments could have credit implications for RMBS bonds. Prime RMBS structures typically distribute all unscheduled principal collections to the senior class during the first five years. After that, the principal distributions shift increasingly towards a pro rata share for subordinate classes. Slower prepayment rates during the initial five-year period result in increased exposure for the senior class later in the transaction's life. Fitch considers this scenario in its rating analysis and will continue to focus on the credit implications of changing prepayment behavior as the market eventually transitions into a period of slower refinancing activity. * Moody's Outlook on Worldwide Beverage Sector is Positive ---------------------------------------------------------- Moody's Investors Service changed its outlook for the global beverage industry to positive from stable, the rating agency says. The change in outlook reflects growing consumption in emerging markets and an expected easing of commodity pressures over the next 12 to 18 months. "We expect beverage makers' operating profits to grow by more than 6% through this year and into early next year, with a return to low double digit growth in several important emerging markets and moderating commodity inflation" says Senior Vice President Linda Montag in "Outlook for Global Beverage Industry Revised to Positive." A more benign commodity environment will help offset headwinds facing the industry in the next year or so, Montag says. These include slow growth or declining consumption of mainstream beers in developed markets, declining consumption of carbonated soft drinks, new excise taxes or consumption and advertising restrictions in some markets, as well as continuing economic challenges in Europe. But thanks to emerging markets, global beer consumption is growing and demand for wine and spirits is expected to remain strong. "While beer sales have declined in the UK, Australia and, until recently, the US, an expanding middle class will boost demand for premium beers, high-end wine and spirits in countries including China and parts of Latin America." Among companies, beer makers Anheuser-Busch InBev, Molson Coors, SABMiller, Heineken and Foster's Group are expected to benefit, as should wine and spirit makers Diageo, Pernod Ricard, Bacardi, Beam and Brown-Forman. Commodity cost inflation should moderate this year, easing pressures felt over the past three or four years. Hedges put in place when costs were higher have largely rolled off, while price increases will help beverage producers cover modest cost inflation more than they have in the recent past. Beverage makers instituted across-the-board price increases in most markets last year, which will lead to higher earnings this year, Montag says. "Producers of soft drinks, beer, wine and spirits have all sustained recent price increases, and can selectively continue to raise them without dramatically hurting volumes." * Moody's Forecasts Strong 2013 Revenues for US Lodging Sector -------------------------------------------------------------- The year 2013 will be another strong one for the US lodging sector, although the rate of growth will be slightly lower than in 2012, according to a new report from Moody's Investors Service, "US CMBS: 2013 Lodging Revenue to Surpass 2007 Peak, with More Room to Grow." US nominal revenue per available room (RevPAR) will reach a new high in 2013 and surpass the 2007 peak, although it will still be below the peak when adjusted for CPI. "We are anticipating RevPAR growth higher than 5%," says EJ Park, a Moody's Vice President. "We also expect RevPAR to continue to grow in 2014 and beyond, although at a slower pace." The industry has clearly reversed course since the financial crisis, when RevPAR declined by 16.5% in 2009. US RevPAR grew 6.8% in 2012, extending the positive momentum that began in 2010. "Top markets outperformed small ones in 2012 on the rebound in business travel. With occupancy levels reaching 60% for two years now, rate increases are driving RevPAR growth" added Park. RevPAR growth is credit positive for CMBS loans backed by hotels, which include single borrower/large loan transactions, which are typically backed by a pool of hotels, but also for multi-borrower conduits, in which hotel loans constitute as much as 20% of collateral. Increased RevPAR and the resulting higher bottom line boosts the cushion available to service debt, while also funding reserves or expenditures for capital projects, helping hotels maintain their revenue generating potential. However, because its ratings take into account the cyclical nature of hotel cash flows, Moody's does not expect to take many rating actions as a result of the recent improvements in revenue. * Small U.S. Banks Hit by Rising Insurance Cost ----------------------------------------------- Robin Sidel, writing for The Wall Street Journal reported that thousands of small U.S. banks are feeling a financial pinch from the government's efforts to punish executives and directors of banks that collapsed during the height of the financial crisis. WSJ related that insurance premiums that cover directors and officers are rising sharply as the Federal Deposit Insurance Corp., seeking to replenish funds paid out to depositors of collapsed banks, accelerates its legal pursuit of officials from failed community lenders. The FDIC's efforts, according to WSJ, have brought the agency hundreds of millions of dollars in legal settlements, well short of the billions in losses from bank failures, but that is cutting into banks' bottom line when many still are struggling. Insurance executives and banking-industry lawyers estimate premiums for small banks have risen at least 15% since the crisis, WSJ said. Some insurers are also boosting deductibles and writing policies that leave policyholders uncovered if regulators take future action. Chubb Corp. and Travelers Cos. are among the large companies that are raising rates for small banks, according to people who track the policies, WSJ said. * HSH Nordbank Settles 2008 CDO Suit in N.Y. Against UBS -------------------------------------------------------- Chris Dolmetsch, writing for Bloomberg News, reported that HSH Nordbank AG, the German regional lender, settled a lawsuit it filed against UBS AG (UBS) over losses on a collateralized debt obligation linked to the U.S. subprime-mortgage market. The report related that HSH Nordbank, based in Hamburg, sued UBS in February 2008 over losses on a CDO called North Street 2002-4. HSH Nordbank said in the suit that its predecessor, Landesbank Schleswig- Holstein, lost almost all of the $500 million it invested in the CDO in March 2002. The two sides have reached a settlement, the terms of which are confidential, Isaac Nesser, an attorney with Quinn Emanuel Urquhart & Sullivan LLP representing Nordbank, and Daniel J. Kramer, a lawyer with Paul Weiss Rifkind Wharton & Garrison LLP representing Zurich-based UBS, said in telephone interviews with Bloomberg. HSH Nordbank, according to Bloomberg, is one of a group of regional German lenders that have sued in New York courts over mortgage-backed securities. It sued Bank of America Corp. in New York State Supreme Court in December over $218 million in such investments, and has filed suits against Barclays Plc (BARC), Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS) in the same court. CDOs package assets such as mortgage bonds and buyout loans and use the income from that debt to pay investors in the new securities, Bloomberg related. The collapse of the U.S. market for subprime loans revealed the risk of such investments. The case is HSH Nordbank AG v. UBS AG (UBSN), 600562/2008, New York State Supreme Court, New York County (Manhattan). * Illinois Accused of Fraud, Settles with SEC --------------------------------------------- Mary Williams Walsh, writing for The New York Times, reported that for the second time in history, federal regulators have accused an American state of securities fraud, finding that Illinois misled investors about the condition of its public pension system from 2005 to 2009. In announcing a settlement with the state on Monday, the Securities and Exchange Commission accused Illinois of claiming that it had been properly funding public workers' retirement plans when it had not, the NY Times report said. In particular, it cited the period from 2005 to 2009, when Illinois also issued $2.2 billion in bonds. The NY Times noted that the growing hole in the state pension system put increasing pressure on Illinois' own finances during that time, raising the risk that at some point the state would not be able to pay for everything, and retirees and bond buyers would be competing for the same limited money. The risk grew greater every year, the S.E.C. said, but investors could not see it by looking at Illinois' disclosures. In effect, that meant investors overpaid for bonds of a lower value than they were made out to have, although the S.E.C. did not measure any loss in dollars, and it did not impose fines or penalties in Monday's settlement, the NY Times added. Illinois agreed to a cease-and-desist order without admitting or denying the accusations. The charges put the state's pension system, generally thought to be the weakest of any state, back in the national spotlight, the NY Times said. Many states, counties and cities are struggling with shortfalls in their pension systems, and because large numbers of people now qualify to draw benefits, the expense is wreaking havoc with budgets, according to the NY Times. Still, securities lawyers are not predicting a wave of S.E.C. pension enforcement actions. The states are legal sovereigns, and federal securities regulators have much more power to police corporate wrongdoing than potential violations by the states and municipalities, the NY Times noted. * USDA to Bail Out Sugar Processors ----------------------------------- Alexandra Wexler, writing for Dow Jones Newswires, reports that the U.S. Department of Agriculture is considering buying 400,000 tons of sugar to stave off a wave of defaults by sugar processors that borrowed $862 million under a government price-support program. According to Dow Jones, the action aims to prop up tumbling U.S. sugar prices, which have fallen 18% since the USDA made the nine-month operations-financing loans beginning in October. The purchases could leave the price-support program with an $80 million loss, its biggest in 13 years, said Barbara Fecso, an economist at the USDA, in an interview. Dow Jones reports the move would benefit companies that turn sugar beets and sugar cane into granulated sweetener, a business plied by American Crystal Sugar Co., Amalgamated Sugar Co. and U.S. Sugar Corp. The USDA wouldn't say how many companies have received loans, or identify them. Dow Jones notes U.S. Sugar said it doesn't have any USDA loans outstanding. American Crystal and Amalgamated didn't respond to requests for comment. According to Dow Jones, the USDA makes loans to sugar processors annually as part of a program that is rooted in the 1934 Sugar Act. The loans are secured with some 4.1 billion pounds, or 2.05 million tons, of sugar that companies expect to produce from the current harvest. That comes to almost a quarter of total U.S. output that the USDA forecasts for this year. * Hearing Today on Asbestos Trust Transparency Bill --------------------------------------------------- The Wall Street Journal's Dionne Searcey reports that a House Judiciary subcommittee will hear testimony today, March 13, on the "Furthering Asbestos Claim Transparency" bill, which would require asbestos bankruptcy trusts to submit detailed quarterly reports of claims and their disposition to the Executive Office for U.S. Trustees. A similar measure was introduced last year but failed to gain traction. According to WSJ, the measure, sponsored by Reps. Blake Farenthold (R., Texas) and Jim Matheson (D., Utah), comes as a growing portion of asbestos legal action moves out of the courtroom and into the trust system. Now numbering more than 40, the trusts were created by solvent companies that were inundated by lawsuits. A special bankruptcy law lets the companies keep operating while they shed those asbestos liabilities by setting aside money in trusts to pay claims. The report relates some politicians and defense attorneys say they suspect the money in the trusts sometimes goes to undeserving victims and worry the trusts will be drained before legitimate victims have the chance to tap them. A Wall Street Journal analysis found numerous anomalies in claims to asbestos trusts, including claimants through the years submitting exposure dates that were unlikely, such as infants claiming to be shipyard workers when exposed. The analysis also found claimants submitting conflicting diseases to separate trusts. Most trusts pay higher claims for certain categories of diseases. * Diamond McCarthy Opens Los Angeles Office; Bazoian Joins Firm --------------------------------------------------------------- Diamond McCarthy LLP on March 11 announced the opening of its Los Angeles office with respected bankruptcy litigator, Kathy Bazoian Phelps, at its helm. Ms. Phelps is a leader in handling Ponzi schemes and fraud cases of all kinds, particularly arising out of insolvency situations. As the co-author of The Ponzi Book: A Legal Resource for Unraveling Ponzi Schemes (published by LexisNexis 2012), with the Honorable Steven Rhodes, United States Bankruptcy Judge for the Eastern District of Michigan, she is a sought after speaker at national and international conferences on the subject of corporate fraud, Ponzi schemes, deepening insolvency and related matters. Ms. Phelps' litigation practice includes the representation of bankruptcy trustees, examiners, SEC and state court receivers, creditors, committees, debtors and other parties arising out financially distressed situations. She is a member of the board of directors of the National Association of Federal Equity Receivers ("NAFER") and the editor-in-chief of the "Receivership News." "Kathy's expertise is of great interest to our clients," said Allan Diamond, Diamond McCarthy managing partner. "She will further strengthen the firm's global practice and help build a formidable presence for the firm throughout the west coast and beyond, anchored by our Los Angeles office." "Diamond McCarthy's global reputation, great breadth and depth of experience in the areas of complex litigation, business, financial and accounting fraud, and insolvency matters, will be of significant value to the clients I serve," said Ms. Phelps. Diamond McCarthy has been lead counsel in some of the largest business fraud cases in the world, often involving cross-border parallel litigation and joint insolvency protocols, such as LJM2 (Enron), Livent, Parmalat, Bayou Funds, InverWorld, USA Commercial Mortgage, and Syntax-Brillian Corp, among many others. "The addition of our office in Los Angeles strategically extends the firm's physical reach from coast to coast," said Mr. Diamond. "While the firm's practice reaches most corners of the globe, we now have the ability from our U.S. based offices to better interface with our clients and colleagues across Europe, Latin America and the Pacific Rim." Ms. Phelps received her J.D. from the University Of California Los Angeles School Of Law and her B.A. from Pomona College. Diamond McCarthy's Los Angeles office is in the Sun America building at 1999 Avenue of the Stars, Los Angeles, California. Telephone: (310) 651-2997 Diamond McCarthy LLP -- http://www.diamondmccarthy.com-- is a boutique firm focused on high stakes complex litigation, corporate and financial restructuring/insolvency and commercial real estate. In addition to Los Angeles, Diamond McCarthy LLP has offices in New York City, Houston, Dallas, Austin and Denver. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Apr. 10-12, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference JW Marriott Chicago, Chicago, Ill. Contact: http://www.turnaround.org/ Apr. 18-21, 2013 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, National Harbor, Md. Contact: 1-703-739-0800; http://www.abiworld.org/ June 13-16, 2013 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, Mich. Contact: 1-703-739-0800; http://www.abiworld.org/ July 11-13, 2013 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Hyatt Regency Newport, Newport, R.I. Contact: 1-703-739-0800; http://www.abiworld.org/ July 18-21, 2013 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton Amelia Island, Amelia Island, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Aug. 8-10, 2013 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hotel Hershey, Hershey, Pa. Contact: 1-703-739-0800; http://www.abiworld.org/ Aug. 22-24, 2013 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference Hyatt Regency Lake Tahoe, Incline Village, Nev. Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 3-5, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Wardman Park, Washington, D.C. Contact: http://www.turnaround.org/ Nov. 1, 2013 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program Atlanta Marriott Marquis, Atlanta, Ga. Contact: 1-703-739-0800; http://www.abiworld.org/ Dec. 2, 2013 BEARD GROUP, INC. 20th Annual Distressed Investing Conference The Helmsley Park Lane Hotel, New York, N.Y. Contact: 240-629-3300 or http://bankrupt.com/ Dec. 5-7, 2013 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Terranea Resort, Rancho Palos Verdes, Calif. Contact: 1-703-739-0800; http://www.abiworld.org/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. Last Updated: Feb. 25, 2013 ********* 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 ***