/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/130726.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, July 26, 2013, Vol. 17, No. 205 Headlines 441 INDUSTRIAL: Case Summary & 2 Unsecured Creditors AFA INVESTMENT: GOPAC Appeals Order Approving Global Settlement AK STEEL: Moody's Reviews Ratings for Possible Downgrade ALLIED SYSTEMS: Time to Remove Civil Actions Extended to Sept. 9 ALLIED SYSTEMS: Plan Filing Period Extended Until Sept. 4 ALLIED SYSTEMS: Opposes Yucaipa Bid to Block Replacement Loans ALLIED SYSTEMS: Petitioning Creditors, Committee Oppose KEIP AMBAC FINANCIAL: AAC Hires Goldin Assoc. in Detroit Bankruptcy AMBAC FINANCIAL: Rehabilitator's 3rd Report on Segregated Acct. AMBAC FINANCIAL: Posts $282-Mil. Net Profit in First Quarter AMERICAN AIRLINES: Salt Lake, Michigan Treasurers Balk at Plan AMERICAN AIRLINES: Creditors Challenge Bid to Earmark $331MM AMERICAN AIRLINES: Wins OK for Pillsbury as Special Counsel AMERICAN AIRLINES: NY Port Authority Inks Deal to Settle Claim ARCAPITA BANK: Inks Settlement Agreement on Eurolog Expenses ASCENA RETAIL: S&P Withdraws 'BB-' Corporate Credit Rating BELLISIO FOODS: Moody's Lowers Ratings on New Sr. Debt Facilities BERWIND REALTY: Parties Correct Draft Order on Bid to Cancel Liens BIOVEST INTERNATIONAL: R. Smith Had 4.3% Equity Stake at July 18 BOMBARDIER INC: CSeries Delay No Impact on Fitch Ratings BRANDYWINE INDUSTRIAL: Case Summary & 4 Unsec. Creditors CAPITALSOURCE INC: Fitch Puts 'B' IDR on Rating Watch Pos. CAPITOL BANCORP: Procedures for Bank Unit Stock Sale Approved CAROLINA BEVERAGE: Moody's Retains B3 CFR on $10MM Debt Increase CDW LLC: S&P Retains 'B+' Rating Following Proposed $190MM Add-On CHINA NATURAL: Court Enters Order for Relief in Involuntary Case COLLEGE BOOK: May Sell Assets to CBR Funding for $4.5MM CONTINENTAL CAPITAL: Thomas Zaremba Concludes Liquidation CRM HOLDINGS: Bid to Appeal in Securities Litigation Rejected DELL INC: Price Talks Still Within Fitch Rating Guidance DETROIT, MI: Can Enjoy Protections of Bankruptcy DETROIT, MI: Did Not Bargain with All Unions, Labor Chief Says DETROIT, MI: Michigan Wins Delay of Bankruptcy Filing Challenge DEWEY STRIP: Wants to Employ NWA as Lead Counsel DEWEY STRIP: Wants to Employ Womble Carlyle as Delaware Co-Counsel DISH NETWORK: AutoHop Feature May Have Long-Term Negative Effects DOGWOOD PROPERTIES: Creditor Seeks Stay Relief; Hearing on Aug. 14 DYNEGY HOLDINGS: Plan Effectivity Deadline Again Extended EDISON MISSION: Lease Decision Period on Unexpired Leases Extended EDISON MISSION: Noteholders End EIX Transaction Support Agreement ENERGY FUTURE: Creditors Working on Debt-Reduction Plan EXCEL MARITIME: Court Denies Expedited Discovery on Plan Outline EXIDE TECHNOLOGIES: Court OKs Rejection of Shreveport Lease EXIDE TECHNOLOGIES: Wins Final Approval for $500-Mil. in Loans FOREST CITY: Fitch Rates $300MM Senior Unsecured Notes 'BB-' FREESEAS INC: Issues 625,000 Add'l Settlement Shares to Hanover GANNETT CO: S&P Assigns 'BB' Rating to $500MM Sr. Notes Due 2020 HANESBRANDS INC: S&P Retains 'BB' CCR After Maidenform Acquisition HARRISBURG, PA: Creditors Near Deal on Debt Crisis HIGHWAY TECHNOLOGIES: Files Schedules of Assets and Liabilities IGPS COMPANY: Wins Nod For $39MM Sale Despite Fierce Flak IN THE PLAY: Allen & Vellone Okayed as Bankruptcy Co-Counsel ING US: Fitch Rates Junior Subordinated Notes at 'BB' JEFFERSON COUNTY: S&P Puts 'C' Underlying Rating on Watch Negative KIDSPEACE CORP: FTI Consulting OK'd as Committee Financial Advisor KIDSPEACE CORP: Lowenstein & Fitzpatrick Okayed as Panel's Lawyers LEAR CORP: Loses Dismissal Bid in Auto Parts Antitrust Litigation LEHMAN BROTHERS: LibertyView Funds Reach Deal to Amend Claims LEHMAN BROTHERS: Court Rejects 6 Claims Totaling $3MM Against LBI LEHMAN BROTHERS: LBI Trustee Objects to Countrywide Class Claims LEHMAN BROTHERS: Increases Estimate of Cash Levels to $80.6BB LEHMAN BROTHERS: Files Updated Cash Flow Estimates LEHMAN BROTHERS: Pensions Don't Get Priority Over Creditors LIBERTY TIRE: S&P Lowers CCR to 'B-'; Outlook Stable LIFE UNIFORM: Rival to Buy After No Other Bidders Emerge LIGHTSQUARED INC: Lenders Propose Plan Based on LBAC's $2.2B Bid LIGHTSQUARED INC: Lenders Propose Reorganization Plan LORD & TAYLOR: S&P Lowers CCR to 'B'; Outlook Stable MAXCOM TELECOMUNICACIONES: Files Plan Backed by Ventura Capital METAVATION LLC: Revstone Unit Seeks Bankruptcy to Sell Assets MF GLOBAL: Corzine Asks Judge to Dismiss Trustee Freeh's Suit MI PUEBLO: Hispanic Grocery Store Chain Files Bankruptcy MICHAELS STORES: Moody's Rates New $700MM PIK Toggle Notes Caa1 MICHAELS STORES: S&P Rates New $700MM Sr. Unsecured PIK Notes CCC+ MOBILESMITH INC: Sells $200,000 Additional Convertible Note MOTORS LIQUIDATION: No Units Distribution for June 30 Quarter MOUNTAIN PROVINCE: Gahcho Kue Receives MVEIRB Approval MSR RESORT: Trades Jabs with Five Mile Over IP Assets From Sale NASH FINCH: S&P Revises Outlook to Positive & Affirms 'B+' CCR NATIONWIDE INSURANCE: A.M. Best Hikes Finc'l Strength Rating to B NEXT 1 INTERACTIVE: Incurs $1.4 Million Net Loss in May 31 Qtr. ORECK CORP: Bankruptcy Court Approves TTI Asset Acquisition ORMET CORP: Now OC Liquidation; Settlement Approved PENSON WORLDWIDE: Objections to Liquidation Plan Filed PLAYA HOTELS: S&P Assigns Preliminary 'B' CCR; Outlook Stable PLYMOUTH OIL: Plan Confirmation Hearing Taken Under Advisement POWERWAVE TECHNOLOGIES: Ch. 7 Creditor Objects to Proposed IP Sale PRIMCOGENT SOLUTIONS: July 30 Hearing on Orix's Bid to Foreclose PROMMIS HOLDINGS: Has Green Light to Terminate MHS Services Pact PWK TIMBERLAND: Wants Until Nov. 21 to Propose Chapter 11 Plan QUEBECOR MEDIA: Proposed $300MM Term Loan Gets Moody's B1 Rating RADIAN GROUP: Posts $33.2-Mil. Net Loss in Q2 Ended June 30 RANCHO CALIFORNIA: Chapter 11 Case Dismissed REALOGY CORP: Inks Underwriting Pact for Sale of 25MM Shares RENEGADE HOLDINGS: Liquidation Underway After Sale Bid Fails RESIDENTIAL CAPITAL: Deadline to Remove Actions Moved to Oct. 31 RESIDENTIAL CAPITAL: Can Use $54MM Per Month for Servicer Advances RESIDENTIAL CAPITAL: Objects to $713-Mil. Calif. Litigation Claims RESIDENTIAL CAPITAL: To Pay $230MM to Settle FRB Review Order REVSTONE INDUSTRIES: BFG Wants Subsidiaries Placed in Chapter 7 REVSTONE INDUSTRIES: Committee Plan Outline Has Aug. 21 Hearing REVSTONE INDUSTRIES: BFG Wants Subsidiaries Placed in Chapter 7 REVSTONE INDUSTRIES: Unit Files Ch. 11, Plans $25MM Sale ROBERT BAIN: Case Summary & 3 Unsecured Creditors ROTECH HEALTHCARE: Arranges $357.5MM Loans for Ch. 11 Exit ROTECH HEALTHCARE: Seeks Authority to Obtain Texas Surety Bonds ROTECH HEALTHCARE: Objects to Delay of Aug. 20 Plan Hearing ROTECH HEALTHCARE: Seeks Approval of Exit Financing RURAL/METRO CORP: S&P Lowers Corporate Credit Rating to 'SD' SCC KYLE: Court Confirms Second Amended and Modified Plan SEVEN COUNTIES SERVICES: May Hire & Pay Peritus Public Relations SEVEN SEAS: CIBC Dodges $77M Suit Over Failed Oil Well SOUTH LAKES DAIRY: Court Approves Accord With Seley and Cargill SOUTHERN MONTANA ELECTRIC: Beartooth Joins Liquidation Bid SPECIALTY PRODUCTS: Seeks Direct Appeal to 3rd Circuit STOCKTON, CA: Leaders Expect Bankruptcy-Exit Plan in September STREAMTRACK INC: Reports $27K Net Income in Third Quarter SUNSHINE HOTELS: Ordered to Make Amendments to Plans SYNAGRO TECHNOLOGIES: Confirmation Hearing Set for Aug. 20 SYNAGRO TECHNOLOGIES: Wants Stay Modified to Resolve Civil Action SYNAGRO TECHNOLOGIES: G. Villar Seeks Lift Stay Order SYNOVUS FINANCIAL: Moody's Rates New $130MM Preferred Stock Caa1 TALON INTERNATIONAL: Chairman Held 10.4% Equity Stake at July 12 TALON INTERNATIONAL: Perrtech Buys 8.3 Million Common Shares TALON INTERNATIONAL: Kutula Buys 38.8 Million Common Shares THORNBURG MORTGAGE: Liberty Mutual Pays $2.1MM to Settle Row TLO LLC: Seeks Continued Use of Cash Collateral Through Oct. 31 TLO LLC: Seeks Authority to Obtain $2-Mil. More in DIP Loans TLO LLC: Hires Lawyer for Dispute With William Price, Greencook TMT USA: U.S. Trustee Appoints Creditors' Committee TMT USA: Lenders Object to Request for Cash Collateral Use TMT USA: Judge Clears Shipper to Restructure in Chapter 11 TOUSA INC: J Beck Named as Liquidation Trustee TOUSA INC: Jefferies, Castle Creek Seek "Senior Debt" Treatment TPF II LC: S&P Assigns Preliminary 'B+' Rating to $475MM Loan TPO HESS: Wins Approval of $19.3 Million Sale TRAVELPORT: New $120MM Credit Facility Gets Moody's B1 Rating TXCO RESOURCES: Bankruptcy Court Vacates Ruling in Peregrine Suit U.S. RENAL: Moody's Rates $335MM First Lien Term Loan 'Ba3' U.S. RENAL: S&P Assigns 'B' Rating to $335MM Incremental Loan U.S. XPRESS: $250MM Sr. Notes Issuance Gets Moody's Caa1 Rating U.S. XPRESS: S&P Rates $250MM Senior Secured Notes 'B-' UNIVERSAL COMPUTER: S&P Lowers CCR to 'B'; Outlook Stable USA BROADMOOR: Files Proposed Reorganization Plan VERTIS HOLDINGS: World Graphic to Help Pursuing Insurance Claim VILLAGIO PARTNERS: Chapter 11 Reorganization Case Closed VPR CORP: Texas Judge Clears to Auction Oil and Gas Wells W.R. GRACE: Reports $82.8-Mil. Net Income in Second Quarter WALTER ENERGY: Liquidity Concern Cues Moody's to Cut CFR to Caa1 WOODSIDE HOMES: Fitch Assigns 'B' Issuer Default Rating WORLD IMPORTS: Can Use Cash Collateral Thru Aug. 2 WORLDCOM INC: Must Pay Federal Excise Taxes, 2nd Cir. Says YARWAY CORP: Wants Deadline to Remove Actions Moved Until Nov. 18 YONKERS RACING: Moody's Assigns 'Ba3' Rating to New $245MM Loan YONKERS RACING: S&P Rates $245MM First Lien Loan 'BB-' YRC WORLDWIDE: Plans to Offer $350 Million Worth of Securities * Biggest Banks Face Fed Restoring Barriers in Commodities * Calif. Court Battle Sets Stage for Pension Reform Showdown * Calls For Policy Fix Grow As NY Rulings Limit Trustee Power * CFTC Charges High-Speed Trader Under New Powers * Dealmakers Focus on Quality Execution, PwC's M&A Outlook Reveals * SEC Accuses Miami of Misleading Investors in Muni Bonds * Senate Told Federal Courts In Dire Straits Under Sequestration * Fitch: Increased Activity Diminishes US Refinancing Cliff Risk * Fitch: Charter Schools Fail to Meet Investment-Grade Expectation * S&P Applies Revised Insurance Criteria to 26 Insurance Groups * S&P Applies Revised Insurance Criteria to 14 Marine Mutuals * Delaware Slated for New Judge Amid Court Money Crunch * BOOK REVIEW: Jacob Fugger the Rich: Merchant and Banker of Augsburg, 1459-1525 ********* 441 INDUSTRIAL: Case Summary & 2 Unsecured Creditors ---------------------------------------------------- Debtor: 441 Industrial Park, Ltd. 1411 Edgewater Drive, Suite 101 Orlando, FL 32804 Bankruptcy Case No.: 13-08816 Chapter 11 Petition Date: July 18, 2013 Court: U.S. Bankruptcy Court Middle District of Florida (Orlando) Judge: Karen S. Jennemann Debtor's Counsel: Kenneth D. Herron, Jr., Esq. WOLFF, HILL, MCFARLIN & HERRON, P.A. 1851 West Colonial Drive Orlando, FL 32804 Tel: (407) 648-0058 Fax: (407) 648-0681 E-mail: kherron@whmh.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 The Company?s list of its two largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/flmb13-08816.pdf The petition was signed by Caren J. Hewitt, general partner. Affiliates that simultaneously filed Chapter 11 petitions: Entity Case No. ------ -------- HAP, Inc. 13-08817 Horizon West Properties 13-08818 AFA INVESTMENT: GOPAC Appeals Order Approving Global Settlement --------------------------------------------------------------- Greater Omaha Packing Co., Inc., and its insurers, Continental Casualty Company and its North American insurance affiliates, appeals under 28 U.S.C. Sec. 158(a) and Rules 8001 and 8002 of the Federal Rules of Bankruptcy Procedure from the order of the U.S. Bankruptcy Court for the District of Delaware approving the revised global settlement and entered in AFA Investment, Inc., et al.'s bankruptcy cases on July 2, 2013. The U.S. Bankruptcy Court for the District of Delaware approved this month a global settlement signed by (A) AFA Investment Inc., et al.; (B) the Official Committee of Unsecured Creditors; (C) Term B Loan Lenders; (D) the agent for the second lien lenders; (E) Beef Products Inc.; (F) American Capital Limited; (G) other prepetition second lien lenders; and (H) Nelia Sanchez, on behalf of herself and others similarly situated. The settlement provides that: -- the Term B Loan Claim and the Second Lien Claim are deemed allowed secured claims against the Debtors' estates in an amount no less than $1,400,000 and $74,595,210, respectively. -- the ACAS Claims are deemed an allowed secured Second Lien Claim against the Debtors' estates in the amount of $3,100,000 -- which claim is part of the $71,559,210 in Second Lien Obligations ? and will be paid on the terms set forth in the Settlement Term Sheet and the Third Amendment. -- The Second Lien Agent is awarded a superpriority adequate protection claim in the amount of $2,250,000 as adequate protection for the diminution in value of its security interest consistent. A copy of the order approving the Revised Global Settlement is available at http://bankrupt.com/misc/afainvestment.doc1114.pdf About AFA Foods King of Prussia, Pennsylvania-based AFA Foods Inc. was one of the largest processors of ground beef products in the United States. AFA had seven facilities capable of producing 800 million pound of ground beef annually. Revenue in 2011 was $958 million. Yucaipa Cos. acquired the business in 2008 and currently owns 92% of the common stock and all of the preferred stock. AFA Foods, AFA Investment Inc. and other affiliates filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-11127) on April 2, 2012, after recent changes in the market for its ground beef products and the impact of negative media coverage related to boneless lean beef trimmings (BLBT) affected sales. Judge Mary Walrath presides over the case. Laura Davis Jones, Esq., Timothy P. Cairns, Esq., and Peter J. Keane, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware; Tobias S. Keller, Esq., at Jones Day, in San Francisco; and Jeffrey B. Ellman, Esq., and Brett J. Berlin, Esq., at Jones Day, in Atlanta, Georgia, represent the Debtors. FTI Consulting Inc. serves as the Debtors' financial advisors and Imperial Capital LLC serves as marketing consultants. Kurtzman Carson Consultants LLC serves as noticing and claims agent. As of Feb. 29, 2012, the Debtors' books and records on a consolidated basis, reflected approximately $219 million in assets and $197 million in liabilities. AFA Foods, Inc., disclosed $615,859,574 in assets and $544,499,689 in liabilities as of the Petition Date. Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed seven members to the official committee of unsecured creditors in the Debtors' cases. The Committee has obtained approval to hire McDonald Hopkins LLC as lead counsel and Potter Anderson & Corroon LLP serves as co-counsel. The Committee also obtained approval to retain J.H. Cohn LLP as its financial advisor. AFA, in its Chapter 11 case, sold plants and paid off the first- lien lenders and the loan financing the Chapter 11 effort. Remaining assets are $14 million cash and the right to file lawsuits. General Electric Capital Corp. and Bank of America Corp. provided about $60 million in DIP financing. The loan was paid off in July 2012. In October 2012, the Bankruptcy Court denied a settlement that would have released Yucaipa Cos., the owner and junior lender to AFA Foods, from claims and lawsuits the creditors might otherwise bring, in exchange for cash to pay unsecured creditors' claims under a liquidating Chapter 11 plan. Under the deal, Yucaipa would receive $11.2 million from the $14 million, with the remainder earmarked for unsecured creditors. Asset recoveries above $14 million would be split with Yucaipa receiving 90% and creditors 10%. Proceeds from lawsuits would be divided roughly 50-50. AK STEEL: Moody's Reviews Ratings for Possible Downgrade -------------------------------------------------------- Moody's Investors Service placed AK Steel Corporation's B2 corporate family rating, B2-PD probability of default rating, B1 senior secured first lien debt rating and B3 senior unsecured notes and revenue bond ratings under review for downgrade. The revenue bonds, which have separate loan agreements with AK Steel Corporation, are guaranteed by AK Steel Holding Corporation and are ultimately obligations of the company. The company's Speculative Grade Liquidity rating remains at SGL-3. On Review for Possible Downgrade: Issuer: AK Steel Corporation Probability of Default Rating, Placed on Review for Possible Downgrade, currently B2-PD Corporate Family Rating, Placed on Review for Possible Downgrade, currently B2 Senior Secured Regular Bond/Debenture Dec 1, 2018, Placed on Review for Possible Downgrade, currently B1 Senior Unsecured Conv./Exch. Bond/Debenture Nov 15, 2019, Placed on Review for Possible Downgrade, currently B3 Senior Unsecured Regular Bond/Debenture May 15, 2020, Placed on Review for Possible Downgrade, currently B3 Senior Unsecured Regular Bond/Debenture Apr 1, 2022, Placed on Review for Possible Downgrade, currently B3 Issuer: Butler County Industrial Dev. Auth., PA Senior Unsecured Revenue Bonds Jun 1, 2024, Placed on Review for Possible Downgrade, currently B3 Issuer: Ohio Air Quality Development Authority Senior Unsecured Revenue Bonds Jun 1, 2024, Placed on Review for Possible Downgrade, currently B3 Issuer: Rockport (City of) IN Senior Unsecured Revenue Bonds Jun 1, 2028, Placed on Review for Possible Downgrade, currently B3 Outlook Actions: Issuer: AK Steel Corporation Outlook, Changed To Rating under Review from Negative Ratings Rationale: The review for downgrade reflects Moody's belief that AK Steel's operating performance will remain challenged by the fundamental weaknesses affecting the steel industry and that a recovery of debt protection metrics to levels that are more appropriate for a B2 rating within the medium term has become increasingly unlikely. The review also incorporates the tightening in AK Steel's liquidity position given the cash requirements in the second quarter 2013 and the reduction in the company's cash position to approximately $58 million at June 30, 2013 from $192 million at March 31, 2013 although the company continues to have meaningful availability under its $1.1 billion asset backed revolving credit facility ($858 million available at June 30, 2013). Moody's estimates that for the 12 months ending June 30, 2013, key metrics such as debt/EBITDA and EBIT/interest (including Moody's standard accounting adjustments) will approximate more than 10.7x and below 0.2x, respectively -- levels that it has indicated would exert downward pressure on AK Steel's ratings. The review will focus on the potential for AK Steel to improve performance with respect to tons shipped, realized prices, costs, and operating and free cash flow generation capability and whether credit metrics over the next 12 to 18 months could improve to and be sustained at levels that are appropriate for a B2 rating. The review will also consider the outlook for steel prices and the end markets served, capital expenditure requirements, including for Magnetation LLC, funding of pension contributions, and liquidity available to meet ongoing requirements. The principal methodology used in this rating was the Global Steel Industry Methodology published in October 2012. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in West Chester, Ohio, AK Steel Corporation ranks as a middle tier integrated steel producer in the United States, operating seven steelmaking and finishing plants in Indiana, Kentucky, Ohio and Pennsylvania. The company produces flat-rolled carbon steels, including coated, cold-rolled and hot-rolled products, as well as specialty stainless and electrical steels. Principal end markets include automotive, steel service centers, appliance, industrial machinery, infrastructure, construction and distributors and converters. The company also holds a 49.9% interest in Magnetation LLC, a company that produces iron ore concentrate from previously mined ore and through its AK Coal subsidiary is a developing metallurgical coal mines. Revenues for the twelve months ending June 30, 2013 were approximately $5.7 billion and steel shipments were approximately 5.4 million tons. ALLIED SYSTEMS: Time to Remove Civil Actions Extended to Sept. 9 ---------------------------------------------------------------- On July 11, 2013, the U.S. Bankruptcy Court for the District of Delaware entered a fourth order extending the time by which Allied Systems Holdings, Inc., et al., must file notices of removal of civil actions pursuant to 28 U.S.C. Sec. 1452 and Bankruptcy Rule 9027, through Sept. 9, 2013. About Allied Systems BDCM Opportunity Fund II, LP, Spectrum Investment Partners LP, and Black Diamond CLO 2005-1 Adviser L.L.C., filed involuntary petitions for Allied Systems Holdings Inc. and Allied Systems Ltd. (Bankr. D. Del. Case Nos. 12-11564 and 12-11565) on May 17, 2012. The signatories of the involuntary petitions assert claims of at least $52.8 million for loan defaults by the two companies. Allied Systems, through its subsidiaries, provides logistics, distribution, and transportation services for the automotive industry in North America. Allied Holdings Inc. previously filed for chapter 11 protection (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537) on July 31, 2005. Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represented the Debtors in the 2005 case. Allied won confirmation of a reorganization plan and emerged from bankruptcy in May 2007 with $265 million in first-lien debt and $50 million in second- lien debt. The petitioning creditors said Allied has defaulted on payments of $57.4 million on the first lien debt and $9.6 million on the second. They hold $47.9 million, or about 20% of the first-lien debt, and about $5 million, or 17%, of the second-lien obligation. They are represented by Adam G. Landis, Esq., and Kerri K. Mumford, Esq., at Landis Rath & Cobb LLP; and Adam C. Harris, Esq., and Robert J. Ward, Esq., at Schulte Roth & Zabel LLP. Allied Systems Holdings Inc. formally put itself and 18 subsidiaries into bankruptcy reorganization June 10, 2012, following the filing of the involuntary Chapter 11 petition. The Company is being advised by the law firms of Troutman Sanders, Gowling Lafleur Henderson, and Richards Layton & Finger. The bankruptcy court process does not include captive insurance company Haul Insurance Limited or any of the Company's Mexican or Bermudan subsidiaries. The Company also announced that it intends to seek foreign recognition of its Chapter 11 cases in Canada. An official committee of unsecured creditors has been appointed in the case. The Committee consists of Pension Benefit Guaranty Corporation, Central States Pension Fund, Teamsters National Automobile Transporters Industry Negotiating Committee, and General Motors LLC. The Committee is represented by Sidley Austin LLP. Yucaipa Cos. has 55 percent of the senior debt and took the position it had the right to control actions the indenture trustee would take on behalf of debt holders. The state court ruled in March 2013 that the loan documents didn't allow Yucaipa to vote. In March, the bankruptcy court also gave the official creditors' committee authority to sue Yucaipa. The suit includes claims that the debt held by Yucaipa should be treated as equity or subordinated so everyone else is paid before the Los Angeles-based owner. The judge is allowing Black Diamond to participate in the lawsuit against Yucaipa and Allied directors. ALLIED SYSTEMS: Plan Filing Period Extended Until Sept. 4 --------------------------------------------------------- The Hon. Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware has extended Allied Systems Holdings, Inc., et al.'s exclusive periods to file and obtain acceptances of a plan through and including Sept. 4, 2013, and Nov. 4, 2013, respectively. The Debtors say they need the additional time to continue the negotiations, including mediation, with parties-in-interest who objected the Debtors' plan to implement an exit strategy by selling substantially all of their assets pursuant to a sale under Section 363 of the Bankruptcy Code. The Debtors will continue to confer with their major constituencies to ascertain whether common ground can be reached in this regard. About Allied Systems BDCM Opportunity Fund II, LP, Spectrum Investment Partners LP, and Black Diamond CLO 2005-1 Adviser L.L.C., filed involuntary petitions for Allied Systems Holdings Inc. and Allied Systems Ltd. (Bankr. D. Del. Case Nos. 12-11564 and 12-11565) on May 17, 2012. The signatories of the involuntary petitions assert claims of at least $52.8 million for loan defaults by the two companies. Allied Systems, through its subsidiaries, provides logistics, distribution, and transportation services for the automotive industry in North America. Allied Holdings Inc. previously filed for chapter 11 protection (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537) on July 31, 2005. Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represented the Debtors in the 2005 case. Allied won confirmation of a reorganization plan and emerged from bankruptcy in May 2007 with $265 million in first-lien debt and $50 million in second- lien debt. The petitioning creditors said Allied has defaulted on payments of $57.4 million on the first lien debt and $9.6 million on the second. They hold $47.9 million, or about 20% of the first-lien debt, and about $5 million, or 17%, of the second-lien obligation. They are represented by Adam G. Landis, Esq., and Kerri K. Mumford, Esq., at Landis Rath & Cobb LLP; and Adam C. Harris, Esq., and Robert J. Ward, Esq., at Schulte Roth & Zabel LLP. Allied Systems Holdings Inc. formally put itself and 18 subsidiaries into bankruptcy reorganization June 10, 2012, following the filing of the involuntary Chapter 11 petition. The Company is being advised by the law firms of Troutman Sanders, Gowling Lafleur Henderson, and Richards Layton & Finger. The bankruptcy court process does not include captive insurance company Haul Insurance Limited or any of the Company's Mexican or Bermudan subsidiaries. The Company also announced that it intends to seek foreign recognition of its Chapter 11 cases in Canada. An official committee of unsecured creditors has been appointed in the case. The Committee consists of Pension Benefit Guaranty Corporation, Central States Pension Fund, Teamsters National Automobile Transporters Industry Negotiating Committee, and General Motors LLC. The Committee is represented by Sidley Austin LLP. Yucaipa Cos. has 55 percent of the senior debt and took the position it had the right to control actions the indenture trustee would take on behalf of debt holders. The state court ruled in March 2013 that the loan documents didn't allow Yucaipa to vote. In March, the bankruptcy court also gave the official creditors' committee authority to sue Yucaipa. The suit includes claims that the debt held by Yucaipa should be treated as equity or subordinated so everyone else is paid before the Los Angeles-based owner. The judge is allowing Black Diamond to participate in the lawsuit against Yucaipa and Allied directors. ALLIED SYSTEMS: Opposes Yucaipa Bid to Block Replacement Loans -------------------------------------------------------------- Allied Systems Holdings, Inc., et al., object to Yucaipa American Alliance Fund I, L.P.'s and Yucaipa American Alliance (Parallel) Fund I., L.P's motion to reconsider and/or amend the U.S. Bankruptcy Court for the District of Delaware's final order granting the Debtors authorization to obtain postpetition secured replacement DIP Financing and related relief, entered June 21, 2013. The Replacement DIP Facility was linked to bidding procedures, also approved by the Court with the consent of the major creditor constituencies other than Yucaipa, for a sale of the Debtors' assets under Section 363 of the Bankruptcy Code. The sale is scheduled for Aug. 14, 2013, with bids due on Aug. 8, 2013. According to the Debtors, Yucaipa is not specific as to the relief it is seeking, but the practical consequence of granting the Motion Reconsideration would be to deprive the Debtors of the funds needed to maintain their operations until the sale process scheduled for August 2013 can be completed and a sale of the Debtors' assets closed. Thus, instead of completing the orderly sales process that the Court, the Debtors and the Official Committee of Unsecured Creditors, among others, agreed would be the best path forward for the Debtors and their constituents, Yucaipa seeks relief that would result in a forced liquidation, to the detriment of the Debtors' 1,800 employees and its lenders, customers, vendors, and stakeholders. The Debtors cited: 1. First, Yucaipa is precluded under the First Lien Agreement from filing a motion asserting a purported right, in its capacity as Lender thereunder, to adequate protection 2. Second, Yucaipa is precluded from filing a motion asserting a right to adequate protection under the Requisite Lender provisions of the First Lien Credit Agreement. 3. Third, Yucaipa is precluded, by virtue of Bankruptcy Code Section 364(c), from obtaining the relief sought in the Motion for Reconsideration. Yucaipa did not seek a stay of the Replacement DIP Order. Further, not only have the parties closed the Replacement DIP Loan in good faith reliance on the Court's order, but the majority of its proceeds have been disbursed, mostly to pay off the 2012 Yucaipa DIP Facility. Although some of the proceeds remain undisbursed, the entire Replacement DIP Facility was entered in order to maintain the Debtors' operations through the 363 sale process ? a process that would be de-railed if the Replacement DIP Order were withdrawn or modified after the fact. 4. Fourth, even if Yucaipa were not precluded, in the three ways set forth above, from seeking the relief sought in the Motion for Reconsideration, Yucaipa would not be entitled to this relief, because the Court did not commit "clear error" in finding that the interest of Yucaipa, in its capacity as Lender, was adequately protected in the Replacement DIP Order. A copy of the Debtors' objection is available at: http://bankrupt.com/misc/alliancesystems.doc1427.pdf DIP Financing As reported in the TCR on July 16, 2013, Yucaipa filed a motion asking the Bankruptcy Court to reconsider its order authorizing the Debtors to obtain a replacement DIP financing. According to Yucaipa, which holds $134.8 million in principal amount of first lien debt and $20 million in principal amount of second lien debt, the Court should reconsider its order because the Debtors did not present any evidence -- and could not present that evidence -- demonstrating that they met their burden of providing adequate protection to non-consenting holders of Prepetition First Lien Debt and Prepetition Second Lien Debt. Yucaipa's counsel, Michael R. Nestor, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, argued that the Debtors failed to prove that the Prepetition First Lien Lenders and Prepetition Second Lien Lenders -- Yucaipa included -- would be adequately protected against the diminution in the value of the Prepetition Lenders' collateral in light of the senior priming liens granted in that collateral by the Replacement DIP Order. Accordingly, the Replacement DIP Order contravenes the protections afforded to Prepetition First Lien Lenders and Prepetition Second Lien Lenders under Section 364 of the Bankruptcy Code and should reconsidered and then reversed and/or modified, as applicable, Yucaipa asserted. Yucaipa Balks at Adjournment Yucaipa opposes the motion of petitioning creditors BDCM Opportunity Fund II, LP, Black Diamond CLO 2005-1 Ltd. and Spectrum Investment Partners, L.P. to adjourn the hearing on Yucaipa's motion for reconsideration. In their motion filed July 12, the Petitioning Creditors told the Court that there is no urgency or exigency that requires the Court to hear the Motion to Reconsider on July 19th instead of July 30th. About Allied Systems BDCM Opportunity Fund II, LP, Spectrum Investment Partners LP, and Black Diamond CLO 2005-1 Adviser L.L.C., filed involuntary petitions for Allied Systems Holdings Inc. and Allied Systems Ltd. (Bankr. D. Del. Case Nos. 12-11564 and 12-11565) on May 17, 2012. The signatories of the involuntary petitions assert claims of at least $52.8 million for loan defaults by the two companies. Allied Systems, through its subsidiaries, provides logistics, distribution, and transportation services for the automotive industry in North America. Allied Holdings Inc. previously filed for chapter 11 protection (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537) on July 31, 2005. Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represented the Debtors in the 2005 case. Allied won confirmation of a reorganization plan and emerged from bankruptcy in May 2007 with $265 million in first-lien debt and $50 million in second- lien debt. The petitioning creditors said Allied has defaulted on payments of $57.4 million on the first lien debt and $9.6 million on the second. They hold $47.9 million, or about 20% of the first-lien debt, and about $5 million, or 17%, of the second-lien obligation. They are represented by Adam G. Landis, Esq., and Kerri K. Mumford, Esq., at Landis Rath & Cobb LLP; and Adam C. Harris, Esq., and Robert J. Ward, Esq., at Schulte Roth & Zabel LLP. Allied Systems Holdings Inc. formally put itself and 18 subsidiaries into bankruptcy reorganization June 10, 2012, following the filing of the involuntary Chapter 11 petition. The Company is being advised by the law firms of Troutman Sanders, Gowling Lafleur Henderson, and Richards Layton & Finger. The bankruptcy court process does not include captive insurance company Haul Insurance Limited or any of the Company's Mexican or Bermudan subsidiaries. The Company also announced that it intends to seek foreign recognition of its Chapter 11 cases in Canada. An official committee of unsecured creditors has been appointed in the case. The Committee consists of Pension Benefit Guaranty Corporation, Central States Pension Fund, Teamsters National Automobile Transporters Industry Negotiating Committee, and General Motors LLC. The Committee is represented by Sidley Austin LLP. Yucaipa Cos. has 55 percent of the senior debt and took the position it had the right to control actions the indenture trustee would take on behalf of debt holders. The state court ruled in March 2013 that the loan documents didn't allow Yucaipa to vote. In March, the bankruptcy court also gave the official creditors' committee authority to sue Yucaipa. The suit includes claims that the debt held by Yucaipa should be treated as equity or subordinated so everyone else is paid before the Los Angeles-based owner. The judge is allowing Black Diamond to participate in the lawsuit against Yucaipa and Allied directors. ALLIED SYSTEMS: Petitioning Creditors, Committee Oppose KEIP ------------------------------------------------------------ Creditors who signed the involuntary Chapter 11 petition for Allied Systems Holdings, Inc., et al., -- namely, BCDM Opportunity Fund II, LP, Black Diamond CLO 2005-1 LTD, and Spectrum Investment Partners, L.P. -- object to the Debtors' motion for authority to pay incentive bonuses to seven insiders of the Debtors in an aggregate amount of between $1.235 million to $2.85 million, citing: * First, the Incentive Plan is not necessary because each of the Participants is already incentivized to effectuate a sale of the Debtors' assets by virtue of the Retention Agreement to which such Participant is a party. * Second, the Participants already have a fiduciary obligation to maximize the value of the Debtors' assets in a Sale. No additional incentives should be required. * Third, the Bid Deadline in August 8th and the auction (if one is necessary) is scheduled for August 14th. At this juncture, there is little, if anything, that the Participants can do to influence the level of Sale Proceeds to be received by the Debtors pursuant to a Sale. * Fourth, the bonuses contemplated are grossly disproportionate to those provided to other key employees of the Debtors pursuant to the Key Employee Retention Program previously approved by the Court. * Fifth, the design of the proposed incentive Plan (which required the Participant to remain in the Debtors' employ in order to receive payment) and the arguments presented by Mercer in support (i.e., the Incentive Plan is necessary to bring the Participants' compensation in line with "market") evidence that the proposed plan is really a retention plan rather than an incentive plan. In any event, according to the Petitioning Creditors, comparisons to "market" are inapplicable based on the facts and circumstances of the Debtors' cases. The Official Committee of Unsecured Creditors of the Debtors also opposes the payment of incentive bonuses to certain of the Debtors' senior management, mirroring the same arguments described by the Petitioning Creditors in their objection. Moreover, the Teamsters National Automobile Industry Negotiating Committee ("TNATINC"), a creditor, party in interest, and the national negotiating committee of local unions affiliated with the International Brotherhood of Teamsters ("IBT") which are the exclusive collective bargaining representatives of over 1000 bargaining unit employees of the Debtors, also objects to the KEIP. TNATINC says that the Court should be particularly sensitive to the impact any approval of such a plan would have on the bargaining unit employees represented by TNATINC. The morale and continuing commitment and work of the Debtors' bargaining unit employees is essential to maintaining the Debtors' viability through the current restructuring process. This is no time for unjustified and inappropriate giveaways to insiders. About Allied Systems BDCM Opportunity Fund II, LP, Spectrum Investment Partners LP, and Black Diamond CLO 2005-1 Adviser L.L.C., filed involuntary petitions for Allied Systems Holdings Inc. and Allied Systems Ltd. (Bankr. D. Del. Case Nos. 12-11564 and 12-11565) on May 17, 2012. The signatories of the involuntary petitions assert claims of at least $52.8 million for loan defaults by the two companies. Allied Systems, through its subsidiaries, provides logistics, distribution, and transportation services for the automotive industry in North America. Allied Holdings Inc. previously filed for chapter 11 protection (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537) on July 31, 2005. Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represented the Debtors in the 2005 case. Allied won confirmation of a reorganization plan and emerged from bankruptcy in May 2007 with $265 million in first-lien debt and $50 million in second- lien debt. The petitioning creditors said Allied has defaulted on payments of $57.4 million on the first lien debt and $9.6 million on the second. They hold $47.9 million, or about 20% of the first-lien debt, and about $5 million, or 17%, of the second-lien obligation. They are represented by Adam G. Landis, Esq., and Kerri K. Mumford, Esq., at Landis Rath & Cobb LLP; and Adam C. Harris, Esq., and Robert J. Ward, Esq., at Schulte Roth & Zabel LLP. Allied Systems Holdings Inc. formally put itself and 18 subsidiaries into bankruptcy reorganization June 10, 2012, following the filing of the involuntary Chapter 11 petition. The Company is being advised by the law firms of Troutman Sanders, Gowling Lafleur Henderson, and Richards Layton & Finger. The bankruptcy court process does not include captive insurance company Haul Insurance Limited or any of the Company's Mexican or Bermudan subsidiaries. The Company also announced that it intends to seek foreign recognition of its Chapter 11 cases in Canada. An official committee of unsecured creditors has been appointed in the case. The Committee consists of Pension Benefit Guaranty Corporation, Central States Pension Fund, Teamsters National Automobile Transporters Industry Negotiating Committee, and General Motors LLC. The Committee is represented by Sidley Austin LLP. Yucaipa Cos. has 55 percent of the senior debt and took the position it had the right to control actions the indenture trustee would take on behalf of debt holders. The state court ruled in March 2013 that the loan documents didn't allow Yucaipa to vote. In March, the bankruptcy court also gave the official creditors' committee authority to sue Yucaipa. The suit includes claims that the debt held by Yucaipa should be treated as equity or subordinated so everyone else is paid before the Los Angeles-based owner. The judge is allowing Black Diamond to participate in the lawsuit against Yucaipa and Allied directors. AMBAC FINANCIAL: AAC Hires Goldin Assoc. in Detroit Bankruptcy -------------------------------------------------------------- Ambac Assurance Corporation believes that the proposal put forth by the City of Detroit's state-appointed emergency manager, as well as the failure on the part of the State of Michigan to protect the status of General Obligation bonds, is harmful to Detroit and the interests of taxpayers in Michigan. A successful revitalization of the City will be dependent upon its ability to access cost-effective financing in the future, including General Obligation funding, the Company said in a July 8, 2013 public statement. Such access will be needlessly imperiled as a result of the emergency manager's approach and the State's apparent support thereof. Ambac has hired Harrison J. Goldin of Goldin Associates, LLC to help advise Ambac on Detroit. Mr. Goldin helped lead New York City through its fiscal crisis and revitalization as the elected Comptroller of The City of New York. Mr. Goldin commented: "The State of Michigan is making a grave error in its support for the proposed treatment of the General Obligation bonds previously issued by the City of Detroit that are backed by a pledge of the City's full faith and credit. The revitalization of Detroit depends on its ability to re-access the credit markets in order to finance critical improvements to its infrastructure. It is short-sighted to signal to lenders that they cannot trust the City's unconditional pledge to repay its general obligation debts, especially given that the General Obligation bonds in question comprise less than 3% of the City's estimate of its liabilities." Additionally, in response to investor inquiries on the matter, Ambac confirms that the liabilities associated with its Detroit insured exposure are obligations of Ambac's general account. Ambac honors general account claims with full, timely payments in accordance with the terms of such policies. Ambac's current insured exposure is summarized below: Type of Exposure Outstanding Net Par Detroit Limited Tax GO $92.7 million Detroit Unlimited Tax GO $77.6 million About Ambac Financial Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provided financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac Financial filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-15973) in Manhattan on Nov. 8, 2010. Ambac's bond insurance unit, Ambac Assurance Corp., is being restructured by state regulators in Wisconsin. AAC is domiciled in Wisconsin and regulated by the Office of the Commissioner of Insurance of the State of Wisconsin. The parent company is not regulated by the OCI. Bank of New York Mellon Corp., as trustee to seven different types of notes, is listed as the largest unsecured creditor, with claims totaling about US$1.62 billion. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. KPMG LLP is tax consultant to the Debtor. Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller, Esq., at Morrison & Foerster LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Lazard Freres & Co. LLC is the Committee's financial advisor. Bankruptcy Judge Shelley C. Chapman entered an order confirming the Fifth Amended Plan of Reorganization of Ambac Financial Group, Inc. on March 14, 2012. The Plan provides for the full payment of secured claims and 8.5% to 13.2% recovery for general unsecured claims. The second modified version of the confirmed Plan was declared effective on May 1, 2013, with Ambac obtaining bankruptcy court approval of a $100+ million claims settlement with the Internal Revenue Service. Bankruptcy Creditors' Service, Inc., publishes AMBAC BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Ambac Financial Group and the restructuring proceedings of Ambac Assurance Corp. (http://bankrupt.com/newsstand/or 215/945- 7000). AMBAC FINANCIAL: Rehabilitator's 3rd Report on Segregated Acct. --------------------------------------------------------------- The Rehabilitator of the Segregated Account of Ambac Assurance Corporation filed the third Annual Report on the Rehabilitation of the Segregated Account of Ambac Assurance Corporation on June 5, 2013. The Report was filed in the Circuit Court for Dane County, Wisconsin, the Honorable William D. Johnston presiding, and in the U.S. District Court for the Western District of Wisconsin, the Honorable Barbara B. Crabb presiding. Dual filings were made at the time of filing in light of a pending removal action and motion to remand. The third Annual Report summarizes and describes certain events and developments in the rehabilitation proceeding that have occurred since the filing of the previous Annual Report on May 24, 2012. The Report discloses that the total claims-paying resources are estimated at approximately $5.3 billion as of Dec. 31, 2012, a $1 billion increase from estimated claims-paying resources of $6.3 billion as of Dec. 31, 2011. The primary components of claims-paying resources are: (i) $4.7 billion of investment portfolio assets at statutory carrying value, (ii) $0.4 billion in net present value of future installment premiums, and (iii) $0.2 billion of statutory value comprising (a) investments in, and loss on guarantees of, subsidiaries, (b) intercompany loans, and (c) miscellaneous assets. A full-text copy of the Third Annual Report of the Segregated Account is available at http://is.gd/4uCVJM About Ambac Financial Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provided financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac Financial filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-15973) in Manhattan on Nov. 8, 2010. Ambac's bond insurance unit, Ambac Assurance Corp., is being restructured by state regulators in Wisconsin. AAC is domiciled in Wisconsin and regulated by the Office of the Commissioner of Insurance of the State of Wisconsin. The parent company is not regulated by the OCI. Bank of New York Mellon Corp., as trustee to seven different types of notes, is listed as the largest unsecured creditor, with claims totaling about US$1.62 billion. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. KPMG LLP is tax consultant to the Debtor. Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller, Esq., at Morrison & Foerster LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Lazard Freres & Co. LLC is the Committee's financial advisor. Bankruptcy Judge Shelley C. Chapman entered an order confirming the Fifth Amended Plan of Reorganization of Ambac Financial Group, Inc. on March 14, 2012. The Plan provides for the full payment of secured claims and 8.5% to 13.2% recovery for general unsecured claims. The second modified version of the confirmed Plan was declared effective on May 1, 2013, with Ambac obtaining bankruptcy court approval of a $100+ million claims settlement with the Internal Revenue Service. Bankruptcy Creditors' Service, Inc., publishes AMBAC BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Ambac Financial Group and the restructuring proceedings of Ambac Assurance Corp. (http://bankrupt.com/newsstand/or 215/945- 7000). AMBAC FINANCIAL: Posts $282-Mil. Net Profit in First Quarter ------------------------------------------------------------ Ambac Financial Group, Inc., in May 2013, posted a first quarter 2013 net profit of $282.3 million, as compared to a first quarter 2012 net profit of $253.3 million. Relative to first quarter 2012, the improvement in first quarter 2013 results was primarily driven by lower loss and loss expenses, higher net realized investment gains, and income from variable interest entities (VIE's), partially offset by lower net investment income, derivative product revenues, and other income. In addition, a reduction to the credit valuation adjustment ("CVA"), resulting from the improved perception of Ambac Assurance's credit quality, lowered net income by $99.6 million and $138.1 million for the three months ending March 31, 2013 and 2012, respectively. First Quarter 2013 Summary Relative to the first quarter of 2012, * Net premiums earned increased $5.3 million to $100.3 million * Net investment income decreased $27.0 million to $85.1 million * Net realized investment gains increased $45.7 million to $46.1 Million * Other income decreased $55.3 million to $9.5 million * Derivative product revenue decreased $47.5 million to a loss of $0.6 million * Income on VIEs increased $23.1 million to $38.3 million * Loss and loss expenses decreased $48.8 million to a net benefit of $51.1 million * Operating and interest expense decreased $12.8 million to $57.6 million Financial Results Net Premiums Earned Net premiums earned for the first quarter of 2012 were $100.3 million, up 6% from $95.0 million earned in the first quarter of 2012. Net premiums earned include accelerated premiums which result from calls and other policy accelerations recognized during the quarter. Accelerated premiums were $29.4 million in the first quarter of 2013, up 86% from $15.8 million in the first quarter of 2012. The increase in accelerated premiums was primarily the result of a negative acceleration on a structured finance policy that was terminated during the first quarter of 2012. Normal net premiums earned, which exclude accelerated premiums, were $70.9 million in the first quarter of 2013, down 10% from $79.2 million in the first quarter of 2012. The decline in normal net premiums earned was primarily due to the continued run-off of the insured portfolio. Net Investment Income Net investment income for the first quarter of 2013 was $85.1 million, a decrease of 24% from $112.1 million earned in the first quarter of 2012. Financial Guarantee net investment income declined 20% to $83.9 million from $105.2 million which was largely attributable to a lower overall invested asset base, partially offset by a greater percentage of higher yielding assets, including residential mortgage backed securities ("RMBS") insured by Ambac Assurance Corporation ("Ambac Assurance"). Additionally, investment income for the first quarter of 2012 benefited from the favorable impact of actual and projected cash flows on certain Ambac Assurance insured RMBS. Since the first quarter of 2012, the collection of installment premiums and interest on invested assets was more than offset by claims payments, including partial claim payments on Segregated Account policies, commutation payments, and the repurchase of surplus notes in the second quarter of 2012. Financial Services investment income for the three months ended March 31, 2013 was $1.2 million compared to $6.8 million for the first quarter of 2012. The decline in Financial Services investment income was driven primarily by sales of securities to fund payments under investment agreements and the partial repayment of intercompany loans from Ambac Assurance. Net Realized Investment Gains Net realized investment gains were $46.1 million for the three months ended March 31, 2013, as compared to $0.4 million for the three months ended March 31, 2012. The gains were primarily related to recoveries received from a litigation settlement associated with a previously written off investment in the financial services business. Derivative Products For the first quarter of 2013, the derivative products business produced a net loss of $0.6 million compared to net gains of $47.0 million for the first quarter of 2012. The derivative products portfolio has been positioned to record gains in a rising interest rate environment in order to provide a hedge against the impact of rising rates on certain exposures within the financial guarantee insurance portfolio. While results in both periods were primarily attributable to mark-to-market gains in the portfolio due to rising interest rates, partially offset by mark-to-market losses resulting from the more favorable view of Ambac Assurance, the favorable impact of rising interest rates was greater in the first quarter of 2012. Changes in the CVA included in the fair value of financial services derivative liabilities contributed losses of $30.1 million and $35.3 million for the first quarter of 2013 and 2012, respectively. Other Income Other income for the three months ending March 31, 2013 was $9.5 million as compared to $64.8 million for the three months ended March 31, 2012. The change in other income was primarily due to market-to-market gains of $61.7 million recognized during the first quarter of 2012 relating to Ambac's option to call certain surplus notes issued by Ambac Assurance. Ambac called these surplus notes in the second quarter of 2012. Income on Variable Interest Entities Income on variable interest entities for the three months ended March 31, 2013 was $38.3 million compared to $15.2 million for the three months ending March 31, 2012. The gain in both periods was the result of positive changes in the fair value of VIE net assets. Financial Guarantee Loss Reserves Loss and loss expenses for the first quarter of 2013 were a net benefit of $51.1 million compared to a net benefit of $2.3 million for the first quarter of 2012. The net benefit for the three months ended March 31, 2013 was driven by lower estimated losses in the first lien RMBS portfolio. Loss and loss expenses paid, net of recoveries and reinsurance from all policies, amounted to a net recovery of $12.3 million during the first quarter of 2013. The amount of actual claims paid during the period was impacted by the claims payment moratorium imposed on March 24, 2010 as part of the Segregated Account rehabilitation proceedings. On September 20, 2012, in accordance with certain rules published by the rehabilitator of the Segregated Account (the "Policy Claim Rules"), the Segregated Account commenced paying 25% of each permitted policy claim that arose since the commencement of the claims payment moratorium. Claims permitted in accordance with the Policy Claim Rules in the first quarter of 2013 were $418.6 million, including $89.5 million relating to the moratorium period, March 24, 2010 through July 31, 2012. At March 31, 2013, a total of $3.6 billion of presented claims remain unpaid because of the Segregated Account rehabilitation proceedings and related court orders. Loss reserves (gross of reinsurance and net of subrogation recoveries) as of March 31, 2013 were $6.0 billion, down 1% from $6.1 billion at December 31, 2012. The following table provides loss reserves by bond type: ($ in millions) Mar. 31, 2013 Dec. 31, 2012 ------------- ------------- RMBS $3,425 $3,560 Student Loans 1,081 1,041 Public Finance 185 205 Ambac UK (including loss adjustment expenses) 657 619 All other credits 565 563 Loss adjustment expenses (excluding Ambac UK) 132 134 ------------- ------------- Total $6,045 $6,122 RMBS loss reserves, including unpaid claims, declined 4% to $3.4 billion at March 31, 2013 from $3.6 billion at December 31, 2012. Reserves as of March 31, 2013, are net of $2.5 billion of estimated representation and warranty breach remediation recoveries, substantially unchanged from December 31, 2012. Ambac Assurance is pursuing remedies and enforcing its rights, through lawsuits and other methods, to seek redress for breaches of representations and warranties and fraud related to various RMBS transactions. Expenses Underwriting and operating expenses for the three months ended March 31, 2013 were $34.4 million, as compared to $36.5 million for the three months ended March 31, 2012. Underwriting and operating expenses for the three months ended March 31, 2013 were driven by lower consulting costs, legal fees, and reinsurance commissions paid, partially offset by higher premium taxes and compensation expenses. Interest expense was $23.2 million during the first quarter of 2013 versus $33.8 million in the first quarter of 2012. The decrease in interest expense during the first quarter of 2013 was primarily attributable to the lower par amount of surplus notes outstanding following Ambac's exercise of certain call options on surplus notes in June 2012, and lower investment agreement liabilities outstanding during the period. Reorganization Items, Net For purposes of presenting an entity's financial evolution during a Chapter 11 reorganization, the financial statements for periods including and after filing the Chapter 11 petition distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Reorganization items during the three months ended March 31, 2013 were $2.1 million as compared to $2.5 million for the three months ending March 31, 2012. The decrease was due to lower professional fees incurred following the confirmation of the bankruptcy plan of reorganization in March 2012. Balance Sheet and Liquidity Total assets decreased during the first quarter of 2013 to $26.2 billion from $27.1 billion at December 31, 2012. The decrease in total assets was due to declines in VIE assets to $16.8 billion from $17.8 billion and premium receivables to $1.5 billion from $1.6 billion, partially offset by an increase in the consolidated non-VIE investment portfolio to $6.5 billion from $6.3 billion. During the first quarter of 2013, the fair value of the financial guarantee non-VIE investment portfolio increased by $183.1 million to $6.1 billion, as of March 31, 2013. The portfolio consists primarily of high quality municipal and corporate bonds, asset backed securities, and non-agency RMBS, including Ambac Assurance guaranteed RMBS. The increase in fair value between periods reflects higher valuations, particularly with respect to Ambac Assurance guaranteed RMBS, partially offset by the use of assets to fund the partial payment of Segregated Account permitted policy claims. The fair value of the financial services investment portfolio was substantially unchanged during the first quarter. In accordance with ASC Topic 852 -- Reorganizations, fresh start accounting principles are to be applied once a company's reorganization plan is confirmed by the bankruptcy court, and there are no remaining material contingencies to complete implementation of the plan. All conditions required for the adoption of fresh start accounting principles were satisfied by Ambac on April 30, 2013. The financial statements as of May 1, 2013 and for subsequent periods will report the results of the reorganized company with no beginning retained earnings. A pro- forma balance sheet, with the application of fresh start accounting principles as of March 31, 2013, is presented in Ambac's quarterly report on Form 10-Q for the quarter ended March 31, 2013. Segregated Account Rehabilitation The Rehabilitator of the Segregated Account has informed Ambac that it intends to seek rulings from the IRS as to certain tax issues associated with potential amendments to the Segregated Account Rehabilitation Plan. Pursuant to such amendments, surplus notes would not be issued with respect to the unpaid balance of permitted policy claims, but such balance would be recorded by the Segregated Account as outstanding policy obligations which would accrue interest at a rate of 5.1%, compounded annually until paid. If favorable rulings are received by the Rehabilitator from the IRS as to such tax issues, then the Rehabilitator would likely file amendments to the Segregated Account Rehabilitation Plan to effect such changes. Additionally, the Rehabilitator is considering seeking approval from the Rehabilitation Court for the Segregated Account to make cash payments in excess of 25% of the permitted policy claim amount ("Supplemental Payments") with respect to certain insured securities so that cash flow in the related securitization trusts that would have been available to reimburse Ambac Assurance had it paid claims in full is not diverted to uninsured holders who would not have received such cash flow if claims had been paid in full. Without making such Supplemental Payments, Ambac Assurance would likely realize lower levels of reimbursements than currently contemplated by our reserves in the relevant transactions. It is presently anticipated that the Rehabilitator will initially identify approximately 14 transactions on which the Segregated Account would make Supplemental Payments. Overview of Ambac Assurance Statutory Results During the first quarter of 2013, Ambac Assurance generated statutory net income of $202.8 million. First quarter 2013 results were primarily attributable to premiums earned of $95.2 million, net investment income of $92.4 million, and net loss and loss expenses (benefit) of ($59.0) million, partially offset by an increase in impairments of $20.8 million relating to intercompany loans and guarantees of subsidiary liabilities, plus other expenses of $24.3 million. As of March 31, 2013, Ambac Assurance reported policyholder surplus of $159.5 million, up from $100.0 million at December 31, 2012. Pursuant to a prescribed accounting practice, the results of the Segregated Account are not included in Ambac Assurance's financial statements if Ambac Assurance's surplus is (or would be) less than $100.0 million. As of December 31, 2012, Ambac Assurance's General Account (the "General Account") did not assume $163.7 million of the Segregated Account insurance liabilities under the Segregated Account reinsurance agreement. Since the General Account's surplus grew in the three months ending March 31, 2013, the amount of liabilities assumed by the General Account from the Segregated Account during the first quarter of 2013 was not capped. The Segregated Account reported statutory policyholder surplus of $101.5 million as of March 31, 2013, up from ($61.8) million as of December 31, 2012. Ambac Assurance's claims-paying resources amounted to approximately $5.6 billion as of March 31, 2013, up approximately $0.1 billion from $5.5 billion at December 31, 2012. This excludes Ambac Assurance UK Limited's ("Ambac UK") claims-paying resources of approximately $1.1 billion. The increase in claims paying resources was primarily attributable to net insurance loss recoveries, premium collections, and principal and interest received on investments. About Ambac Financial Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provided financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac Financial filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-15973) in Manhattan on Nov. 8, 2010. Ambac's bond insurance unit, Ambac Assurance Corp., is being restructured by state regulators in Wisconsin. AAC is domiciled in Wisconsin and regulated by the Office of the Commissioner of Insurance of the State of Wisconsin. The parent company is not regulated by the OCI. Bank of New York Mellon Corp., as trustee to seven different types of notes, is listed as the largest unsecured creditor, with claims totaling about US$1.62 billion. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. KPMG LLP is tax consultant to the Debtor. Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller, Esq., at Morrison & Foerster LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Lazard Freres & Co. LLC is the Committee's financial advisor. Bankruptcy Judge Shelley C. Chapman entered an order confirming the Fifth Amended Plan of Reorganization of Ambac Financial Group, Inc. on March 14, 2012. The Plan provides for the full payment of secured claims and 8.5% to 13.2% recovery for general unsecured claims. The second modified version of the confirmed Plan was declared effective on May 1, 2013, with Ambac obtaining bankruptcy court approval of a $100+ million claims settlement with the Internal Revenue Service. Bankruptcy Creditors' Service, Inc., publishes AMBAC BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Ambac Financial Group and the restructuring proceedings of Ambac Assurance Corp. (http://bankrupt.com/newsstand/or 215/945- 7000). AMERICAN AIRLINES: Salt Lake, Michigan Treasurers Balk at Plan -------------------------------------------------------------- The Michigan Department of Treasury and The Salt Lake County Treasurer are opposing confirmation of the Chapter 11 reorganization plan proposed by AMR Corp. and its subsidiaries to get out of bankruptcy protection. Salt Lake County Deputy District Attorney Zachary Shaw said it is "unclear" from the proposed plan whether the company intends to pay its claim as a secured or priority tax claim. "The county objects to the plan to the extent that it classifies the county's claim as a priority tax claim and not a secured claim," Mr. Shaw said in a court filing. The Salt Lake County Treasurer asserts a $83,710 claim against American Airlines Inc., AMR's regional carrier. It holds a lien on a property owned by the carrier for unpaid property taxes for tax year 2001. As of Aug. 15, 2013, the delinquent taxes will total $90,561, according to the filing. AMR filed on April 15 its restructuring plan, which sets out how much creditors will recover on their claims. Under the plan, AMR unsecured creditors with $2.6 billion in claims and creditors with $6.8 billion in claims backed by aircraft will receive a full recovery. The company's shareholders will get a 3.5% stake in a combined company with the potential for additional shares. The plan is based on AMR's $11 billion merger with US Airways Group Inc. Under the merger, equity in the combined company will be split, with 72% to AMR's stakeholders and creditors and 28% to US Airways shareholders. Judge Sean Lane of U.S. Bankruptcy Court for the Southern District of New York will hold a hearing on Aug. 15 to consider approval of the plan. Separately, Richard Golden, an AMR creditor and trustee for the Elsie Z. Golden Trust, asked Judge Lane to temporarily allow his claims for the purpose of voting on the restructuring plan. Mr. Richard Golden can be reached at: Golden & Golden, P.C. 10627 Jones Street, Ste 101B Fairfax, Virginia 22030 Tel: (703) 691-0117 Mr. Zachary Shaw can be reached at: 2001 South State Street #S3600 Salt Lake City, Utah 84114-4575 Telephone: (801) 468-2684 Fax: (801) 468-2646 Michigan Dept. of Treasury The Michigan Department of Treasury questioned certain provisions of the Plan that may prevent it from collecting tax debt from non- debtors in violation of Tax Injunction Act. Specifically, the agency is opposing Articles 10.7 and 10.8, which clear and release non-debtors from liabilities, and Article 10.11, which is a special provision for governmental units. The Department further said approval of the plan under the Bankruptcy Code is precluded by the treatment proposed for the agency's claims. "The plan fails to meet all the applicable provisions of Section 1129(a) and fails to meet the fair and equitable standard required for impaired classes," the agency said. AMR filed on April 15 its restructuring plan, which is based on its $11 billion merger with US Airways Group Inc. Under the deal, equity in the merged company will be split, with 72% to AMR's shareholders and creditors and 28% to US Airways shareholders. The plan sets out how much creditors will recover on their claims. AMR unsecured creditors with $2.6 billion in claims and creditors with $6.8 billion in claims backed by aircraft will receive a full recovery. The company's shareholders will get a 3.5% stake in a merged company with the potential for additional shares. 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. The Retiree Committee is represented by Jenner & Block LLP's Catherine L. Steege, Esq., Charles B. Sklarsky, Esq., and Marc B. Hankin, Esq. 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. In April 2013, AMR filed a Chapter 11 plan of reorganization that will carry out the merger. By distributing stock in the merged airlines, the plan is designed to pay all creditors in full, with interest. The hearing before the Court to consider confirmation of the Plan is scheduled for Aug. 15, 2013. 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: Creditors Challenge Bid to Earmark $331MM ------------------------------------------------------------ AMR Corp.'s bid to establish a $331 million reserve for disputed claims is being met with opposition from Mission Funding Epsilon and several other creditors. The company on July 1 asked for approval from the U.S. Bankruptcy Court in Manhattan to establish a reserve for disputed claims, which assert almost $5 billion. AMR estimates that the allowed amount of the disputed claims subject to the reserve won't exceed $113 million. In a July 18 filing, Mission Funding said the amount of the pool suggested is "inadequate and unfair" to holders of disputed claims. Mission Funding, which asserts $123 million in claims, said the total amount of its claims alone exceeds by over $10 million what AMR predicts will be the ultimate allowed amount of disputed claims. "Approval of the $331 million cap would mean any claim subject thereto may not receive its full allowed amount," it said. AWAS Aviation Services Inc., Manufacturers and Traders Trust Co. and UnionBanCal Leasing Corp. raised similar concerns, saying the amount of funds that AMR proposed to allocate for the reserve is "preposterously low " and "may inevitably deprive creditors of their ability to recover on their claims." Meanwhile, the committee of retired AMR workers questioned the exclusion from the reserve of its claims against the company and its regional carrier, American Airlines Inc. AMR excluded the claims of the committee, which it says, won't have a claim against its estate regardless of whether the committee wins or loses the lawsuit filed against it by the company. AMR also drew flak from U.S. Bank Trust N.A., Bridgestone Aircraft Tire (USA) Inc., SKF USA Inc., Wells Fargo Bank and a group of creditors led by AT&T Credit Holdings Inc. U.S. Bank asked the bankruptcy court to deny AMR's request to the extent that it prevents the establishment of a reserve for the so-called make-whole amount. U.S. Bank and AMR have been fighting in court over whether the company owes its bondholders, who are represented by the bank, a penalty fee in connection with the prepayment of more than $1.3 billion in debt. To recall, the bankruptcy court ruled in January that the debt could be repaid without the make-whole. U.S. Bank 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. The term, which is derived from Section 1110 of the Bankruptcy Code, requires an airline to decide within 60 days of bankruptcy whether to retain aircraft. If the airline elects to keep aircraft, it must agree to "perform all obligations" under the loan documents. Judge Sean Lane was slated to hold a hearing on July 25 to consider approval of the proposed $331 million reserve. AT&T group is represented by: Scott D. Talmadge, Esq. Jonathan M. Agudelo, Esq. Neal R. Hampton, Esq. KAYE SCHOLER LLP 425 Park Avenue New York, NY 10022-3598 Tel: (212) 836-8000 Email: scott.talmadge@kayescholer.com jonathan.agudelo@kayescholer.com neal.hampton@kayescholer.com AWAS, M&T and UnionBanCal are represented by: David A. Rosenzweig, Esq. FULBRIGHT & JAWORSKI LLP 666 Fifth Avenue New York, NY 10103 Tel: (212) 318-3000 Email: david.rosenzweig@nortonrosefulbright.com Bridgestone Aircraft Tire (USA) Inc. is represented by: Julie Cvek Curley, Esq. DELBELLO DONNELLAN WEINGARTEN WISE & WIEDERKEHR, LLP One North Lexington Avenue, 11th Floor White Plains, NY 10601 Tel: (914) 681-0200 Email: jcvek@ddw-law.com Mission Funding Epsilon is represented by: David R. Seligman, P.C., Esq. Jeffrey W. Gettleman, Esq. KIRKLAND & ELLIS LLP 300 North LaSalle Chicago, IL 60654-3406 Tel: (312) 862-2000 Fax: (312) 862-2200 Email: david.seligman@kirkland.com jeffrey.gettleman@kirkland.com -- and -- James H.M. Sprayregen, P.C., Esq. KIRKLAND & ELLIS LLP 601 Lexington Avenue New York, NY 10022-4611 Tel: (212) 446-4800 Fax: (212) 446-4900 Email: james.sprayregen@kirkland.com The retirees' committee is represented by: Catherine L. Steege, Esq. Charles B. Sklarsky, Esq. Melissa M. Hinds, Esq. JENNER & BLOCK LLP 353 North Clark Street Chicago, IL 60654-3456 Tel: (312) 222-9350 Fax: (312) 527-0484 Email: csteege@jenner.com csklarsky@jenner.com mhinds@jenner.com SKF USA Inc. is represented by: Henry Jaffe, Esq. James C. Carignan, Esq. PEPPER HAMILTON LLP Hercules Plaza, Suite 5100 1313 Market Street, P.O. Box 1709 Wilmington, DE 19899-1709 Tel: (302) 777-6500 Fax: (302) 421-8390 E-mail: jaffeh@pepperlaw.com carignanj@pepperlaw.com U.S. Bank Trust N.A. is represented by: Ira H. Goldman, Esq. Kathleen M. LaManna, Esq. SHIPMAN & GOODWIN LLP One Constitution Plaza Hartford, CT 06103-1919 Tel: (860) 251-5000 Fax: (860) 251-5218 Wells Fargo Bank N.A. is represented by: Amy M. Tonti, Esq. REED SMITH LLP 225 Fifth Avenue, Suite 1200 Pittsburgh, PA 15222 Tel: (412) 288-3247 Fax: (412) 288-3063 Email: atonti@reedsmith.com About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Wins OK for Pillsbury as Special Counsel ----------------------------------------------------------- The U.S. Bankruptcy Court in Manhattan gave AMR Corp. and its affiliated debtors the go-signal to hire Pillsbury Winthrop Shaw Pittman LLP as their special counsel. Pillsbury will assist the company's regional carrier American Airlines Inc. in connection with the new financing obtained by the carrier from major banks to get out of bankruptcy, which was approved by the court in May. 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. The Retiree Committee is represented by Jenner & Block LLP's Catherine L. Steege, Esq., Charles B. Sklarsky, Esq., and Marc B. Hankin, Esq. 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. In April 2013, AMR filed a Chapter 11 plan of reorganization that will carry out the merger. By distributing stock in the merged airlines, the plan is designed to pay all creditors in full, with interest. The hearing before the Court to consider confirmation of the Plan is scheduled for Aug. 15, 2013. 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: NY Port Authority Inks Deal to Settle Claim -------------------------------------------------------------- AMR Corp. signed an agreement to settle the claim of the Port Authority of New York and New Jersey tied to 12 lease contracts that will be assumed by the company. Under the deal, both sides agreed to reduce the claim from $1,496,610 to $350,296, and to increase by $160,947 the amount that should be paid to the port authority to cure AMR's default under the lease contracts. A copy of the agreement is available for free at http://is.gd/Qw7e6u Margaret Taylor Finucane, Esq., and James Begley, Esq., represent the Port Authority of New York and New Jersey. The lawyers can be reached at: 225 Park Ave. South, 13th Floor New York, NY 11001 Telephone: (212) 435-3462 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. The Retiree Committee is represented by Jenner & Block LLP's Catherine L. Steege, Esq., Charles B. Sklarsky, Esq., and Marc B. Hankin, Esq. 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. In April 2013, AMR filed a Chapter 11 plan of reorganization that will carry out the merger. By distributing stock in the merged airlines, the plan is designed to pay all creditors in full, with interest. The hearing before the Court to consider confirmation of the Plan is scheduled for Aug. 15, 2013. 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 ARCAPITA BANK: Inks Settlement Agreement on Eurolog Expenses ------------------------------------------------------------ On July 23, 2013, the U.S. Bankruptcy Court for the Southern District of New York approved a stipulation and agreed order entered into by and among the Arcapita Bank B.S.C.(c) and its affiliated debtors, the Official Committee of Unsecured Creditors, and Freshfields Bruckhaus Deringer LLP, which settles all issues related to the payment of the Freshfields Invoices (for legal fees and expenses incurred in connection with the Eurolog IPO) without further litigation. Pursuant to the Stipulation and Order, the Debtors are authorized and directed to pay the Settlement Amount of GBP750,231 to Freshfields on the Effective Date of the Second Amended Joint Plan of Reorganization of the Debtors, representing a 15% reduction in fees from that requested in the Fee Motion. The Settlement Amount will be an Allowed Administrative Expense Claim (as defined in the Plan) upon entry of this Stipulation and Order. Under the Stipulation and Order, Freshfields agrees to waive any claim against the Debtors and each of the EuroLog Affiliates for fees and expenses incurred by Freshfields due and owing under the Engagement Letter through the date of this Order, even if such amounts exceed the amounts set forth in the Freshfields Invoices. Further, Freshfields will not seek payment from any of the Debtors or their successors, including the Reorganized Debtors (as defined in the Plan), on account of fees or expenses incurred after the date of this Order for any services rendered by Freshfields that relate to (i) the Engagement Letter, or (ii) any transactions involving the EuroLog IPO or the EuroLog Assets. Within ten (10) business days following entry of the Stipulation and Order, the Debtors will use their best efforts to enter into the Reimbursement Agreement, which will be in form and substance acceptable to the Committee, which will obligate certain owners of the EuroLog Assets (as defined in the Fee Motion) to reimburse the Settlement Amount to the Debtors; provided, however, that the Debtors' obligation to pay the Settlement Amount to Freshfields as an Allowed Administrative Expense Claim will be absolute and not conditioned upon the Reimbursement Agreement in any way. As reported in the TCR on March 22, 2013, the Debtors seek to provide approximately $10.2 million in funding to certain non- Debtor affiliates. Specifically, the Debtors request the Court to confirm their authority to lend certain amount to their non-Debtor EuroLog Affiliates in accordance with Section 363(c) of the Bankruptcy Code. The Company said that as an investment bank, funding investments in portfolio companies fits squarely within the Debtors' ordinary course of business, and that even if the Court disagrees, there is ample support to loan the funds needed to pay the IPO Fees pursuant to Section 363(b) of the Bankruptcy Code because doing so constitutes a sound exercise of business judgment. The EuroLog Affiliates own and operate a variety of warehousing assets located throughout Europe, which assets consist of (1) 46 warehouse properties with a gross leasable area of approx. 15 million square feet that are located in seven countries across Europe; (2) six undeveloped real estate parcels located in four countries that are suitable for development of approximately 6.6 million square feet of additional leasable area; and (3) a group of real estate asset management companies with nearly 70 employees in eight offices. According to papers filed with the Court, even though the EuroLog IPO was not completed after launch, each of the IPO Professionals provided valuable services that inured to the benefit of the Debtors' estates. Arcapita says that without their efforts, the EuroLog Affiliates would not have been able to file the Intention to Float and would not have even had the opportunity to launch the EuroLog IPO. The fact that the EuroLog IPO was not completed does not in any way detract from the quality and importance of the services rendered, Arcapita said. About Arcapita Bank Arcapita Bank B.S.C., also known as First Islamic Investment Bank B.S.C., along with affiliates, filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 12-11076) in Manhattan on March 19, 2012. The Debtors said they do not have the liquidity necessary to repay a US$1.1 billion syndicated unsecured facility when it comes due on March 28, 2012. Falcon Gas Storage Company, Inc., filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-11790) on April 30, 2012. Falcon Gas is an indirect wholly owned subsidiary of Arcapita that previously owned the natural gas storage business NorTex Gas Storage Company LLC. In early 2010, Alinda Natural Gas Storage I, L.P. (n/k/a Tide Natural Gas Storage I, L.P.), Alinda Natural Gas Storage II, L.P. (n/k/a Tide Natural Gas Storage II, L.P.) acquired the stock of NorTex from Falcon Gas for $515 million. Arcapita guaranteed certain of Falcon Gas' obligations under the NorTex Purchase Agreement. The Debtors tapped Gibson, Dunn & Crutcher LLP as bankruptcy counsel, Linklaters LLP as corporate counsel, Towers & Hamlins LLP as international counsel on Bahrain matters, Hatim S Zu'bi & Partners as Bahrain counsel, KPMG LLP as accountants, Rothschild Inc. and financial advisor, and GCG Inc. as notice and claims agent. Milbank, Tweed, Hadley & McCloy LLP represents the Official Committee of Unsecured Creditors. Houlihan Lokey Capital, Inc., serves as its financial advisor and investment banker. Founded in 1996, Arcapita is a global manager of Shari'ah- compliant alternative investments and operates as an investment bank. Arcapita is not a domestic bank licensed in the United States. Arcapita is headquartered in Bahrain and is regulated under an Islamic wholesale banking license issued by the Central Bank of Bahrain. The Arcapita Group employs 268 people and has offices in Atlanta, London, Hong Kong and Singapore in addition to its Bahrain headquarters. The Arcapita Group's principal activities include investing on its own account and providing investment opportunities to third-party investors in conformity with Islamic Shari'ah rules and principles. The Arcapita Group had roughly US$7 billion in assets under management. On a consolidated basis, the Arcapita Group owns assets valued at roughly US$3.06 billion and has liabilities of roughly US$2.55 billion. The Debtors owe US$96.7 million under two secured facilities made available by Standard Chartered Bank. Arcapita explored out-of-court restructuring scenarios but was unable to achieve 100% lender consent required to effectuate the terms of an out-of-court restructuring. Subsequent to the Chapter 11 filing, Arcapita Investment Holdings Limited, a wholly owned Debtor subsidiary of Arcapita in the Cayman Islands, issued a summons seeking ancillary relief from the Grand Court of the Cayman Islands with a view to facilitating the Chapter 11 cases. AIHL sought the appointment of Zolfo Cooper as provisional liquidator. As reported in the TCR on Jun 19, 2013, the Bankruptcy Court for the Southern District of New York entered its Findings of Fact, Conclusions of Law, and Order confirming the Second Amended Joint Chapter 11 Plan of Reorganization of Arcapita Bank B.S.C.(c) and Related Debtors with respect to teach Debtor other than Falcon Gas Storage Company, Inc. A copy of the Confirmed Second Amended Joint Plan (With First Technical Modifications) is available at: http://bankrupt.com/misc/arcapita.doc1265.pdf ASCENA RETAIL: S&P Withdraws 'BB-' Corporate Credit Rating ---------------------------------------------------------- Standard & Poor's Ratings Services said it withdrew its 'BB-' corporate credit rating on Suffern, N.Y.-based specialty apparel retailer Ascena Retail Group Inc., at the company's request. BELLISIO FOODS: Moody's Lowers Ratings on New Sr. Debt Facilities ----------------------------------------------------------------- Moody's Investors Service downgraded the ratings to B2 from B1 on Bellisio Foods, Inc.'s newly proposed senior secured credit facilities, consisting of a $30 million revolver, a $162 million term loan, $20 million CAD term loan and up to $133 million delayed draw term loan (DDTL). Concurrently, Moody's affirmed the company's Corporate Family Rating and Probability of Default rating at B2 and B2-PD, respectively. The downgrade of the proposed credit facility instrument ratings was prompted by a change in the proposed capital structure whereby $25 million of unrated mezzanine notes will now be repaid concurrent with the closing of this financing. The repayment reflects a material reduction of subordinated debt cushion that was provided by the mezzanine notes. The proposed term loans and revolver are expected to refinance the company's existing senior secured credit facilities and repay a portion of the existing unrated mezzanine notes, while the DDTL is expected to provide acquisition financing for the purchase of Overhill Farms at close. Moody's notes that the DDTL may also be drawn, subject to certain conditions, for the repayment of the remainder of the company's existing unrated mezzanine notes and to make permitted acquisitions. The rating outlook is maintained at stable. The following ratings have been downgraded subject to Moody's review of final documentation: Proposed $30 million senior secured revolving credit facility due 2018 to B2 (47%, LGD3) from B1 (42%, LGD3); Proposed $162 million (originally $155 million) senior secured term loan due 2019 to B2 (47%, LGD3) from B1 (42%, LGD3); Proposed $133 million (originally $160 million) senior secured term loan due 2019 to B2 (47%, LGD3) from B1 (42%, LGD3); Proposed $20 million CAD senior secured term loan due 2019 at B2 (47%, LGD3). (Formerly part of senior secured term loan due 2019). The following ratings have been affirmed: B2 Corporate Family Rating; and B2-PD Probability of Default Rating. The following ratings will be withdrawn upon completion of the transaction: $170 million first lien term loan due 2017 at B1 (42%, LGD3); and $30 million first lien revolving credit facility due 2016 at B1 (42%, LGD3). The outlook is maintained at stable Ratings Rationale: The B2 Corporate Family Rating reflects Bellisio's relatively small scale, moderately high leverage, narrow product focus, and exposure to commodity input prices. However, the rating benefits from the company's relatively stable cash flow generation and well-established market position in the value segment of the frozen dinner and entree market. While the company continues to have a meaningful dependence on its primary manufacturing location, this risk is partially mitigated by the presence of newly acquired facilities that enhance the company's geographic reach. The rating also incorporates Bellisio's potential for modest organic growth stemming from new licensing arrangements, growth in its co-packing and private label businesses, and further expansion into the premium segment of dinners and entrees related to the Boston Market brand, which increases penetration beyond the value segment. The rating also derives support from Bellisio's good liquidity profile, which is bolstered by Moody's expectation for modest free cash flow generation in the next 12 to 18 months. The B2 ratings on the company's proposed $162 million term loan, $20 million CAD term loan, $133 million DDTL (assuming $101 million drawn) and $30 million revolving credit facility reflect their first priority lien status on substantially all assets of the company and upstream guarantees by all existing and future subsidiaries. The CAD facility has a 100% security interest in the Canadian assets of the company and a guarantee from the US borrower. The ratings also benefit from the expected loss absorption that would be provided by $32 million of mezzanine notes due 2020 (unrated). The stable outlook reflects Moody's expectation that financial leverage will moderately improve during the next twelve months. While operating margins remain exposed to commodity price volatility, Moody's believes Bellisio will continue to focus on cost management efforts and organic growth initiatives to help offset the potential impact of any future cost pressures. The stable outlook also assumes the company will have limited integration issues associated with the acquisition of Overhill. Upward ratings momentum is currently viewed as unlikely prior to a sustained reduction in leverage to 3.0 times, given Moody's view that the company's rating is limited by its scale and product diversification relative to other packaged food companies as well as its private equity ownership. The ratings could be downgraded if Bellisio's profitability materially declines, resulting in a debt-to-EBITDA ratio sustained above 5.0 times, or if the company's liquidity profile deteriorates. Potential causes include the tightening of margins as a result of the company's inability to pass through large commodity cost increases or significant missteps in integration efforts or in implementing new product initiatives. The principal methodology used in this rating was the Global Packaged Goods published in June 2013. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Bellisio Foods, Inc. produces more than 200 frozen entrees and snacks in the value segment under the Michelina's brand, including Authentico, Traditional, Lean Gourmet and Zap'Ems Gourmet. The company also has a more limited though increasing presence in the premium frozen entree arena, in large part due to the Boston Market brand it has been distributing on behalf of Overhill for the past two years, and full control of which will come through the Overhill acquisition. In addition, the company generates roughly 20% of its revenues from producing co-packed and private label frozen foods. Centre Partners Management, LLC and affiliates acquired Bellisio in December 2011. Revenues for the twelve months ending April 21, 2013 were roughly $370 million. BERWIND REALTY: Parties Correct Draft Order on Bid to Cancel Liens ------------------------------------------------------------------ Berwind Realty, LLC, and Banco Popular de Puerto Rico, creditor, ask the U.S. Bankruptcy Court for the District of Puerto Rico to (i) enter an amended order and writ for cancellation of liens, and (ii) order the Puerto Rico Property Registrar, the executive director of the Municipal Revenue Collection Center, and the secretary of the Puerto Rico Treasury Department to perform the actions necessary in the records under their custody to cancel all pre-consummation date liens that appear over the property. The Debtor and BPPR filed their motion for cancellation of pre-consummation date liens on June 3, 2013, along with a draft proposed order and writ for cancellation. The parties were made aware on June 24, that the proposed order and writ for cancellation of liens contained certain deficiencies which needed to be corrected. In this relation, BPPR submits the proposed amended order and writ for cancellation of pre-transfer date liens for the Court's analysis and consideration. About Berwind Realty Berwind Realty, LLC, filed a Chapter 11 petition (Bankr. D.P.R. Case No. 12-02701) in Old San Juan, Puerto Rico, on April 5, 2012. Berwind Realty, a real estate firm, scheduled assets of $53.8 million and liabilities of $58.1 million. Berwind Realty's president, Saleh Yassin signed the petition. Charles A. Cuprill, PSC Law Offices, serves as bankruptcy counsel. Judge Brian K. Tester of the U.S. Bankruptcy Court for the District of Puerto Rico signed off on an order dated March 28, 2013, confirming Berwind's Plan of Reorganization. BIOVEST INTERNATIONAL: R. Smith Had 4.3% Equity Stake at July 18 ---------------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Russell Smith and his affiliates disclosed that as of July 18, 2013, they beneficially owned 4,257,506 shares of common stock of Biovest International, Inc., representing 4.26 percent of the shares outstanding. A copy of the regulatory filing is available for free at http://is.gd/DTVCYB About Biovest International Biovest International, Inc. -- http://www.biovest.com/-- is an emerging leader in the field of active personalized immunotherapies. In collaboration with the National Cancer Institute, Biovest has developed a patient-specific, cancer vaccine, BiovaxID(R), with three clinical trials completed, including a Phase III study, demonstrating evidence of safety and efficacy for the treatment of indolent follicular non-Hodgkin's lymphoma. Headquartered in Tampa, Florida, with its bio-manufacturing facility based in Minneapolis, Minnesota, Biovest is publicly- traded on the OTCQB(TM) Market with the stock-ticker symbol "BVTI", and is a majority-owned subsidiary of Accentia Biopharmaceuticals, Inc. (OTCQB: "ABPI"). Biovest, along with its subsidiaries, Biovax, Inc., AutovaxID, Inc., Biolender, LLC, and Biolender II, LLC, filed for Chapter 11 bankruptcy protection (Bankr. M.D. Fla. Case No. 08-17796) on Nov. 10, 2008. Biovest emerged from Chapter 11 protection, and its reorganization plan became effective, on Nov. 17, 2010. Biovest International Inc., filed a petition for Chapter 11 reorganization (Bankr. M.D. Fla. Case No. 13-02892) on March 6, 2013, in Tampa, Florida. The new bankruptcy case was accompanied by a proposed reorganization plan supported by secured lenders owed about $38.5 million. Total debt is $44.9 million, with assets listed in a court filing as being valued at $4.7 million. About $5.4 million is owing to unsecured creditors, according to a court paper. BOMBARDIER INC: CSeries Delay No Impact on Fitch Ratings -------------------------------------------------------- Bombardier Inc. (BBD) announced July 24, 2013 that first flight of its CSeries aircraft would be delayed beyond the revised July timeframe and now is expected to occur in the coming weeks. The delay reflects additional time needed for testing and software integration. BBD's ratings are not immediately affected by the delay as the ratings incorporate risks inherent in the development of the CSeries and other new programs, according to Fitch Ratings. BBD previously delayed first flight from the end of 2012 to the end of July. Entry into service for the CS100 is expected to occur approximately one year later; entry into service for the CS300 is scheduled by the end of 2014. Fitch does not expect the delays to add substantially to development costs, but BBD may incur some penalties, and the delay slightly extends the negative cash cycle. The ratings and Outlook could be negatively affected if there are significant future delays or if the aircraft provides lower-than- anticipated benefits related to fuel efficiency, emissions, and noise which could reduce demand for the aircraft. Such developments could impair BBD's long-term competitive position and slow the company's return to positive free cash flow which has been negative due largely to high capital spending for the CSeries program. There are currently 177 firm orders for the CSeries compared to BBD's target of 300 orders by the time the CSeries enters service. The level of new orders during the next year will be important for the success of the aircraft and BBD's ability to develop a viable market for the aircraft. Other development programs include the Learjet 85 and Global 7000 and 8000 aircraft scheduled for entry into service in 2013 and 2016 -2017, respectively. Fitch currently rates BBD as follows: --IDR 'BB'; --Senior unsecured revolving credit facility 'BB'; --Senior unsecured debt 'BB'; --Preferred stock 'B+'. The rating Outlook is Stable. BRANDYWINE INDUSTRIAL: Case Summary & 4 Unsec. Creditors -------------------------------------------------------- Debtor: Brandywine Industrial Paper Corp. 139 Wallace Avenue Downingtown, PA 19335 Bankruptcy Case No.: 13-16289 Chapter 11 Petition Date: July 18, 2013 Court: U.S. Bankruptcy Court Eastern District of Pennsylvania (Philadelphia) Judge: Bruce I. Fox Debtor's Counsel: Robert M. Greenbaum, Esq. SMITH KANE, LLC 112 Moores Road, Suite 300 Malvern, PA 19355 Tel: (610) 407-7216 E-mail: rgreenbaum@sgllclaw.com - and ? David B. Smith, Esq. SMITH KANE, LLC 112 Moores Road, Suite 300 Malvern, PA 19355 Tel: (610) 407-7217 Fax: (610) 407-7218 E-mail: dsmith@smithkanelaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/paeb13-16289.pdf The petition was signed by Donald B. Ramaley, president. CAPITALSOURCE INC: Fitch Puts 'B' IDR on Rating Watch Pos. ---------------------------------------------------------- Fitch Ratings has placed CapitalSource Inc. (CSE) and CapitalSource Bank's (CSB) ratings, including their respective 'BB' long-term Issuer Default Ratings (IDR) and CSB's 'B' short- term IDR on Rating Watch Positive. The action follows the announcement that PacWest Bancorp (PACW) and CSE have entered into a definitive agreement and plan of merger. The merger is expected to be completed in the first quarter of 2014 and Fitch would expect to resolve the Rating Watch by the end of first quarter 2014. PACW is acquiring CSE for approximately $2.3 billion. CSE shareholders will receive a combination of $2.47 per share in cash and .2837 shares of PACW common stock. The combined company is expected to be approximately double the size of CSE. Pro forma at June 30, 2013, the combined consolidated company had approximately $15.4 billion in assets. Five representatives from CSE will be on the board of the combined company, which will have 13 total directors. KEY RATING DRIVERS Fitch currently only rates CSE and the ratings were last affirmed in April 2013 (see Fitch press release, 'Fitch Takes Rating Action on U.S. Niche Real Estate Banks Following Industry Peer Review' dated April 10, 2013). The agency has previously noted an improvement in asset quality, a return to profitability in 2012 and CSB's solid capital base as key credit strengths. At June 30, 2013, CSB had Tier 1 leverage and total risk based capital ratios of 13.51%, and 16.18%, respectively. CSE's primary rating constraint has been the company's funding profile, which is somewhat limited since its deposit base is primarily comprised of retail time deposits. These deposits are generally rate-sensitive and shorter-term relative to its loan book. RATING SENSITIVITIES The merger is subject to approval by bank regulatory authorities and the stockholders of both companies. The ratings of CSE, upon completion of the merger, will be driven by the combined pro forma financials of CSE and PACW. Fitch believes positive ratings momentum for CSE could be driven by the potential for an improved funding profile, improved loan portfolio diversification, profitability of the combined companies, and a broader and more diversified franchise. Despite the aforementioned attributes of the merger, ratings uplift could be mitigated by weakness or deterioration in asset quality performance at the two companies, further compression of net interest margin (NIM) beyond expectations resulting in negative operating performance, as well as lower capital levels on a tangible and risk-adjusted basis. The TCE ratio for CSE at June 30, 2013 was 12.97% and is expected to be 10.4%-10.6% on a combined pro forma consolidated basis at 2013 year end. In addition, integration risk associated with the transaction could negatively impact operating results and yield negative rating actions. Fitch has placed the following ratings on Rating Watch Positive: CapitalSource Inc. -- Long-term IDR 'BB'. CapitalSource Bank -- Long-term IDR 'BB'; -- Short-term IDR 'B'; -- Viability Rating 'bb'; -- Short-term deposits 'B'; -- Long-term deposits 'BB+'. Fitch has affirmed the following ratings: CapitalSource Bank -- Support at '5'; -- Support Floor at 'NF'. CAPITOL BANCORP: Procedures for Bank Unit Stock Sale Approved ------------------------------------------------------------- Michael Bathon, substituting for Bloomberg News bankruptcy columnist Bill Rochelle, reports that Capitol Bancorp Ltd., a bank holding company owning the former Michigan Commerce Bancorp Ltd., won court approval of procedures that will govern the sale of stock in its remaining bank subsidiaries. According to the report, U.S. Bankruptcy Judge Marci B. McIvor in Detroit granted the company's request to divest its interest in the banks and other assets through one or more sales, according to court documents filed July 15. "Time is of the essence," Judge McIvor wrote in an order approving Capitol Bancorp's request. The approved procedures "will ensure a competitive and efficient bidding process and they will enhance the debtor's ability to maximize the value of their assets for the benefit of creditors," she said. The report discloses that any competing bidders would have to submit an offer within 10 days of when a sale hearing is scheduled to seek approval of a sale. About Capitol Bancorp Capitol Bancorp Ltd. and Financial Commerce Corporation filed voluntary Chapter 11 bankruptcy petitions (Bankr. E.D. Mich. Case Nos. 12-58409 and 12-58406) on Aug. 9, 2012. Capitol Bancorp -- http://www.capitolbancorp.com/-- is a community banking company with a network of individual banks and bank operations in 10 states and total consolidated assets of roughly $2.0 billion as of June 30, 2012. CBC owns roughly 97% of FCC, with a number of CBC affiliates owning the remainder. FCC, in turn, is the holding company for five of the banks in CBC's network. CBC is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended, 12 U.S.C. Sec. 1841, et seq., and trades on the OTCQB under the symbol "CBCR." Lawyers at Honigman Miller Schwartz and Cohn LLP represent the Debtors as counsel. John A. Simon, Esq., at Foley & Lardner LLP, represents the Official Committee of Unsecured Creditors as counsel. In its petition, Capitol Bancorp scheduled $112,634,112 in total assets and $195,644,527 in total liabilities. The petitions were signed by Cristin K. Reid, corporate president. The Company's balance sheet at Sept. 30, 2012, showed $1.749 billion in total assets, $1.891 billion in total liabilities, and a stockholders' deficit of $141.8 million. Prepetition, the Debtor arranged a reorganization plan that was accepted by the requisite majorities of creditors and equity holders in all classes. Problems arose when affiliates of Valstone Partners LLC declined to proceed with a tentative agreement to fund the reorganization by paying $50 million for common and preferred stock while buying $207 million in face amount of defaulted commercial and residential mortgages. CAROLINA BEVERAGE: Moody's Retains B3 CFR on $10MM Debt Increase ---------------------------------------------------------------- Moody's Investors Service said that the upsizing of Carolina Beverage Group's new secured notes from $120 million to $130 million is a credit negative but has no effect on the B3 Corporate Family Rating, Caa1 2nd lien note rating or stable outlook. Carolina Beverage Group, LLC has upsized its senior secured notes by $10 million and will use the proceeds to increase the size of its dividend and repurchase stock from minority equity partners. Upsizing the deal by a modest amount is a credit negative because it will increase leverage (debt to EBITDA). As a result, Moody's anticipates that leverage will now be in the high 4 times range over the next twelve to eighteen months rather than the low to mid 4 times range originally expected. However, increased financial leverage is unlikely to put downward pressure on the rating unless it approaches 5.5 times. Therefore, the B3 CFR, Caa1 note rating and stable outlook all remain unchanged. However, as a result of the $10 million increase in the 2nd lien notes, the loss-given- default (LGD) point estimate of the notes changed from LGD4 (62%) to LGD4 (61%). Rating Rationale: CBG's B3 corporate family rating reflects its small scale as a beverage co-packer with approximately $100 million revenue in fiscal year 2012, and significant customer concentration as the company's top two customers accounted for approximately 90% of CBG's sales. Magnifying the customer concentration risk, the energy drink category has been subject to ongoing negative press and lawsuits alleging that energy drinks pose a major health risk. The stable outlook reflects Moody's expectation that CBG's small scale and high customer concentration will limit upward rating momentum for some time. However, Moody's expects that credit metrics will improve after the plant expansion and that debt to EBITDA, which is around five times pro forma for the transaction, will decline to the mid to high four times range in the next twelve-to-eighteen months. The rating may be upgraded if the company gains greater scale, as well as greater customer and geographic diversification. An upgrade would also require CBG to sustain positive free cash flow and de-lever such that debt/EBITDA is sustained below 4.0 times and EBIT to interest exceeds 2.0 times. A downgrade could occur if operating performance deteriorates such that sales growth weakens materially, free cash flow is negative, debt to EBITDA is sustained materially above 5.5 times, or EBIT to interest approaches one times. Aggressive shareholder returns, debt-financed acquisitions, a loss of a key customer, or weakened liquidity could also lead to a downgrade. Carolina Beverage Group, LLC ("CBG"), majority owned by SunTx Capital Partners, is a leading manufacturer of specialty and functional beverages in North America. Its two largest customers constitute approximately 90% of CBG's volume. The principal methodology used in this rating was the Global Soft Beverage Industry published in May 2013. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. CDW LLC: S&P Retains 'B+' Rating Following Proposed $190MM Add-On ----------------------------------------------------------------- Standard & Poor's Ratings Services said that its 'B+' issue-level rating on CDW LLC's term loan B facility maturing April 2020 is unchanged following the proposed $190 million add-on. The recovery rating remains '3', reflecting S&P's expectation of meaningful (50% to 70%) recovery for senior secured debtholders in the event of default. The company intends to use the proceeds from the term loan add-on to partially pay down its senior subordinated notes due 2017, and pay related fees and expenses. S&P's 'B+' corporate credit rating and stable outlook on CDW are unchanged. The ratings reflects S&P's view of CDW's "fair" business risk profile and "aggressive" financial risk profile. S&P believes the company's good market position and consistent EBITDA margins will enable the company to maintain leverage at or below the mid-4x level over the next 12 months. Although CDW recently completed an initial public offering (IPO), in S&P's view the 'B+' rating cap for financial sponsor-owned companies will continue to apply. RATINGS LIST CDW LLC Corporate Credit Rating B+/Stable/-- Ratings Unchanged CDW LLC Senior Secured Term Loan B Due April 2020 B+ Recovery Rating 3 CHINA NATURAL: Court Enters Order for Relief in Involuntary Case ---------------------------------------------------------------- The Hon. James M. Peck of the U.S. Bankruptcy Court for the Southern District of New York, on July 9, 2013, entered an order for relief placing China Natural Gas, Inc., under bankruptcy protection. As reported by the Troubled Company Reporter on July 2, 2013, the Debtor finally consented to the entry of an order for relief under Chapter 11 of the U.S. Bankruptcy Code. On Feb. 8, 2013, an involuntary petition for bankruptcy was filed against China Natural Gas by three alleged creditors of the Company, namely Abax Lotus Ltd., Abax Nai Xin A Ltd., and Lake Street Fund LP. The Petition was filed in the United States Bankruptcy Court, Southern District of New York. The Petitioners have claimed in the Involuntary Petition that they have debts totaling $42,218,956 as a result of the Company's failure to make payments on the 5 Percent Guaranteed Senior Notes issued in 2008. The Company previously asked the Court to dismiss the Involuntary Petition claiming that it has not been served with valid summons. The Company's board of directors approved the consent to the entry of an order for relief in response to the Involuntary Petition. About China Natural Headquartered in Xi'an, Shaanxi Province, P.R.C., China Natural Gas, Inc., was incorporated in the State of Delaware on March 31, 1999. The Company through its wholly owned subsidiaries and variable interest entity, Xi';an Xilan Natural Gas Co., Ltd., and subsidiaries of its VIE, which are located in Hong Kong, Shaanxi Province, Henan Province and Hubei Province in the People's Republic of China ("PRC"), engages in sales and distribution of natural gas and gasoline to commercial, industrial and residential customers through fueling stations and pipelines, construction of pipeline networks, installation of natural gas fittings and parts for end-users, and conversions of gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles at 0ptmobile conversion sites. On Feb. 8, 2013, an involuntary petition for bankruptcy was filed against the Company by three of the Company's creditors, Abax Lotus Ltd., Abax Nai Xin A Ltd., and Lake Street Fund LP (Bankr. S.D.N.Y. Case No. 13-10419). The Petitioners claimed that they have debts totaling $42,218,956.88 as a result of the Company's failure to make payments on the 5% Guaranteed Senior Notes issued in 2008. The Company says it intends to oppose the motion. Adam P. Strochak, Esq., at Weil, Gotshal & Manges, LLP, in Washington, D.C., represents the Petitioners as counsel. COLLEGE BOOK: May Sell Assets to CBR Funding for $4.5MM ------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Tennessee authorized College Book Rental Company, LLC to sell certain assets to CBR Funding, LLC. According to the Debtor, no other party has made a competitive bid for those assets, such that CBR Funding was the only bidder, and the objections of McGraw-Hill Companies and the other publishers are not well-founded and overruled. The purchaser, pursuant to an asset purchase agreement, agreed to acquire the assets for $4,500,000 consisting of (i) $4,100,000 in the form of a credit bid and (ii) the assumed liabilities. About College Book Four creditors filed an involuntary Chapter 11 bankruptcy petition against Murray, Kentucky-based College Book Rental Company, LLC (Bankr. M.D. Ky. Case No. 12-09130) in Nashville on Oct. 4, 2012. Bankruptcy Judge Marian F. Harrison oversees the case. The petitioning creditors are represented by Joseph A. Kelly, Esq., at Frost Brown Todd LLC. The petitioning creditors are David Griffin, allegedly owed $15 million for money loaned; Commonwealth Economics, allegedly owed $15,000 for unpaid services provided; John Wittman, allegedly owed $158 for unpaid services provided; and CTI Communications, allegedly owed $21,793 for unpaid services provided. The owners of College Book Rental consented to the Chapter 11 case and the appointment of a Chapter 11 trustee to run CBR. CBR is co-owned by Chuck Jones of Murray and David Griffin of Nashville, Tenn. An agreed order for relief under Chapter 11 was entered on Oct. 15, 2012. Robert H. Waldschmidt was appointed as trustee the next day. The Trustee employed Robert H. Waldschmidt, Esq. at Howell & Fisher, PLLC as his counsel. The Debtor disclosed $17,913,543 in assets and $25,322,442 in liabilities as of the Chapter 11 filing. CONTINENTAL CAPITAL: Thomas Zaremba Concludes Liquidation --------------------------------------------------------- Roetzel & Andress LPA on July 25 disclosed that Thomas S. Zaremba, partner with Roetzel & Andress LPA, has successfully concluded his duties as Trustee for the liquidation of Continental Capital Investment Services and Continental Capital Securities (Continental Capital) pursuant to the Securities Investor Protection Act (SIPA), which resulted in a 100% recovery by protected customers of the failed brokerage firms. The liquidation was necessitated by the Ponzi and other fraudulent schemes conducted by William C. Davis, who is currently serving a 188-month federal prison term. Congress enacted SIPA to protect customers of failed brokerage firms. The Act is primarily administered by the Securities Investor Protection Corporation (SIPC), and is the U.S. investor's first line of defense in the event of the failure of a brokerage firm owing customers cash and securities that are missing from customer accounts. SIPA provides that customers of a failed brokerage firm receive a pro rata share of all funds recovered by a trustee for customers to satisfy claims for cash and/or securities that were held in custody with the broker. In addition, if necessary, funds from the SIPC reserve, up to a maximum of $500,000 per customer, are available to satisfy the remaining claims. In the case of Continental Capital, Trustee Zaremba, and his counsel, Roetzel & Andress, worked successfully to recover more than $5 million that was owed to customers, satisfying all customer claims in full. The Trustee and his counsel engaged in various matters in litigation before Bankruptcy Judge Mary Ann Whipple of the U.S. Bankruptcy Court for the Northern District of Ohio that resulted in the substantial recoveries for Continental Capital's customers. Mr. Zaremba, whose 35-year career has included significant civil litigation and insolvency proceedings, has served as Trustee for the liquidation since his appointment by Judge James G. Carr of the United States District Court for the Northern District of Ohio on September 29, 2003. He was assisted throughout the litigation by lead counsel and Roetzel partner Patricia B. Fugee, who is certified by the American Board of Certification in Creditors' Rights, as well as numerous other partners, associates and staff members with the firm. About Roetzel Roetzel -- http://ralaw.com-- is a full-service law firm with more than 220 attorneys in offices located throughout Ohio and Florida and in Chicago, New York and Washington, D.C. The firm provides comprehensive legal services to national and international corporations, closely held and family-run businesses, institutions, organizations and individuals. CRM HOLDINGS: Bid to Appeal in Securities Litigation Rejected ------------------------------------------------------------- On September 19, 2010, Brent Brandes, Beverly L. Munter, and B&B Investors LP (Plaintiffs), a proposed class of stockholders in CRM Holdings, Ltd., filed a Consolidated Amended Complaint against CRM and also against CRM fiduciaries Daniel G. Hickey, Jr., Daniel G. Hickey, Sr., Martin D. Rakoff, and James J. Scardino (the Individual Defendants). The Complaint alleged one cause of action against both the Individual Defendants and CRM under Section 10(b) of the Securities Exchange Act, 15 U.S.C. Section 78, and two additional Securities Exchange Act claims against the Individual Defendants alone. The Plaintiffs' claims against the Individual Defendants were dismissed by Court Order on May 10, 2012. The Court's "decision [wa]s confined to the claims levied against the Individual Defendants" because the action against CRM had been stayed when CRM filed a petition for relief under Chapter 11 of the Bankruptcy Code. Thereafter, Plaintiffs filed a motion for reconsideration pursuant to Rule 6.3 of the Local Civil Rules of the Southern District of New York, and also a motion for reconsideration pursuant to Rule 59(e) of the Federal Rules of Civil Procedure. The Court denied both of these motions in an Opinion dated March 4, 2013. The Plaintiffs now seek to appeal the Court's decision dismissing their claims against the Individual Defendants. In a revised motion for entry of Rule 54(b) Judgment, the Plaintiffs argue that there is no just reason to delay their appeal of the Court's decision to dismiss their claims against the Individual Defendants. In consideration of the strong prescription against the potential for piecemeal appeals discussed in Rule 54(b) and by controlling legal precedent, and in consideration of the Plaintiffs' representations that a stipulation withdrawing their Proof of Claim from Bankruptcy Court is forthcoming, District Judge Robert P. Patterson, Jr., denied the Plaintiffs' Rule 54(b) motion without prejudice to counsel submitting such a motion after the filing of a stipulation withdrawing their bankruptcy claim against CRM. The case is IN RE CRM HOLDINGS, LTD. SECURITIES LITIGATION, NO. 10 CIV 00975 (RPP), (S.D.N.Y.). A copy of the District Court's June 14, 2013 Opinion & Order is available at http://is.gd/xOsWK1from Leagle.com. Beverly L. Munter, Plaintiff, represented by Brian Philip Murray, Murray Frank LLP, Gregory Bradley Linkh, Murray, Frank & Sailer, LLP, Howard G. Smith, Smith & Smith & Lionel Z. Glancy, Glancy & Binkow Goldberg LLP. Beverly L. Munter, Lead Plaintiff, represented by Brian Philip Murray, Murray Frank LLP & Gregory Bradley Linkh, Murray Frank LLP. Beverly L. Munter, on behalf of all others similalrly situated, Lead Plaintiff, represented by Howard G. Smith, Smith & Smith. Beverly L. Munter, Lead Plaintiff, represented by Lionel Z. Glancy, Glancy & Binkow Goldberg LLP. Brett Brandes, Lead Plaintiff, represented by Lionel Z. Glancy, Glancy & Binkow Goldberg LLP & Gregory Bradley Linkh, Murray, Frank & Sailer, LLP. B&B Investors, LP, Plaintiff, represented by Ex Kanos S Sams, II, Glancy Binkow & Goldberg, LLP (CA), Gregory Bradley Linkh, Murray, Frank & Sailer, LLP, Kevin F. Ruf, Glancy Binkow & Goldberg LLP & Lionel Z. Glancy, Glancy & Binkow Goldberg LLP. CRM Holdings, Ltd., Defendant, represented by Arthur Harlod Aufses, III, Kramer Levin Naftalis & Frankel, LLP, Jonathan Louis Fried, Kramer Levin Naftalis & Frankel, LLP & Marjorie E. Sheldon, Kramer, Levin, Naftalis & Frankel, LLP. Daniel G. Hickey, Jr., Defendant, represented by Arthur Harlod Aufses, III, Kramer Levin Naftalis & Frankel, LLP, Jonathan Louis Fried, Kramer Levin Naftalis & Frankel, LLP & Marjorie E. Sheldon, Kramer, Levin, Naftalis & Frankel, LLP. Martin D. Rakoff, Defendant, represented by Arthur Harlod Aufses, III, Kramer Levin Naftalis & Frankel, LLP, Jonathan Louis Fried, Kramer Levin Naftalis & Frankel, LLP & Marjorie E. Sheldon, Kramer, Levin, Naftalis & Frankel, LLP. James J. Scardino, Defendant, represented by Arthur Harlod Aufses, III, Kramer Levin Naftalis & Frankel, LLP, Jonathan Louis Fried, Kramer Levin Naftalis & Frankel, LLP & Marjorie E. Sheldon, Kramer, Levin, Naftalis & Frankel, LLP. Daniel G. Hickey, Sr., Defendant, represented by Arthur Harlod Aufses, III, Kramer Levin Naftalis & Frankel, LLP, Jonathan Louis Fried, Kramer Levin Naftalis & Frankel, LLP & Marjorie E. Sheldon, Kramer, Levin, Naftalis & Frankel, LLP. DELL INC: Price Talks Still Within Fitch Rating Guidance -------------------------------------------------------- The increased proposal of $13.75 per share for Dell Inc. from Michael Dell and Silver Lake would be accommodated at the current ratings guidance range of 'B+' to 'BB-', Fitch Ratings says. The higher price would have minimal impact on leverage. A rumored increase to $14 per share would also be unlikely to impact the ratings guidance range of 'B+' to 'BB-'. However, this price would make the possibility of achieving a 'BB-' much more remote. Given our expectations for weak results in the upcoming reporting quarter, Fitch expects pro forma leverage to increase to or above 4.5 times (x) under both scenarios. Should the deal fall through, current proposals from Carl Icahn and affiliates contemplate gross leverage in the 3.5x to 4.0x range. They also expect to use a large portion of Dell's cash balances. Fitch has always been concerned about this prospect given Dell's large negative working capital balances and the potential need for future M&A. We would expect an ultimate rating in the 'B+' to 'BB-' range under an Icahn (or similar) recapitalization proposal, subject to ultimate details and no change to long-term business strategy. Fitch believes it is highly unlikely that the deal will fall through with no subsequent recapitalization. Fitch moved Dell out of investment grade when the going-private transaction was first proposed. Under the scenario of no LBO and no recapitalization, ratings would remain out of investment grade at 'BB+'. This reflects skepticism that the balance sheet would remain conservative as well as the risks that fixed-income investors would assume should management once again change course. DETROIT, MI: Can Enjoy Protections of Bankruptcy ------------------------------------------------ Michael Bathon, substituting for Bloomberg bankruptcy columnist Bill Rochelle, reports that Detroit can enjoy the protections of bankruptcy, including immunity from lawsuits related to the case, a federal judge ruled, extending that shield to Michigan Governor Rick Snyder. According to the report, U.S. Bankruptcy Judge Steven Rhodes July 24 in Detroit blocked lawsuits by public employee groups and pension funds who alleged the state overreached in seeking court protection from creditors. Such claims must be heard in bankruptcy court, Judge Rhodes said. His ruling gives the city the opportunity it said it needs to address $18 billion in debt without disruptions. Mr. Kevyn Orr, the city's emergency manager, said that six decades of economic decline had left Detroit unable to both pay creditors, including retired city workers, in full and provide residents necessary services. Bond prices after the ruling indicated that investors are still debating the debt's fate in bankruptcy. Detroit general obligation bonds maturing April 2028 traded after the ruling at 81.7 cents on the dollar, the lowest this year, data compiled by Bloomberg show. Other Detroit general-obligation bonds maturing April 2015 traded as high as 93 cents on the dollar, the highest since March 18. As public workers protested outside the courthouse July 24, Detroit's attorneys argued that halting current and future lawsuits against the city, its officials and the Republican governor will provide needed breathing room to reorganize operations and debts. The report says that city unions and pension officials claim Gov. Snyder, 54, violated Michigan's constitution by authorizing Mr. Orr to file for bankruptcy. Pension funds for retired city workers sued in state court to have the filing declared illegal. Rhodes said that granting the stay on litigation "assists the court in making the bankruptcy process more efficient and gives the court control over all of the issues that will have to be resolved through the course of the bankruptcy." According to the report, the July 24 hearing was held in Detroit's 80-year-old federal district courthouse rather than the bankruptcy court to accommodate the crowds of lawyers, spectators and reporters the case has drawn. Two protesters outside held a yellow banner that said "Cancel Detroit's Debt." In Chapter 9, a city gains court protection first and later must convince a judge that the filing was proper. To be eligible, a municipality must show that it can't pay its debts, wants to implement a plan to adjust its debts and has negotiated in good faith with creditors when possible. About Detroit, Michigan The city of Detroit, Michigan, weighed down by more than $18 billion in accrued obligations, sought municipal bankruptcy protection on July 18, 2013, by filing a voluntary Chapter 9 petition (Bankr. E.D. Mich. Case No. 13-53846). Detroit listed more than $1 billion in both assets and debts. Kevyn Orr, who was appointed in March 2013 as Detroit's emergency manager, signed the petition. Detroit is represented by lawyers at Jones Day and Miller Canfield Paddock and Stone PLC. Michigan Governor Rick Snyder authorized the bankruptcy filing. The filing makes Detroit the largest American city to seek bankruptcy, in terms of population and the size of the debts and liabilities involved. The city's $18 billion in debt includes $5.85 billion in special revenue obligations, $6.4 billion in post-employment benefits, $3.5 billion for underfunded pensions, $1.13 billion on secured and unsecured general obligations, and $1.43 billion on pension- related debt, according to a court filing. Debt service consumes 42.5 percent of revenue. The city has 100,000 creditors and 20,000 retirees. The Debtor is represented by David G. Heiman, Esq., and Heather Lennox, Esq., at Jones Day, in Cleveland, Ohio; Bruce Bennett, Esq., at Jones Day, in Los Angeles, California; and Jonathan S. Green, Esq., and Stephen S. LaPlante, Esq., at Miller Canfield Paddock and Stone PLC, in Detroit, Michigan. DETROIT, MI: Did Not Bargain with All Unions, Labor Chief Says -------------------------------------------------------------- Reuters reported that the head of a Detroit labor union said the city's state-appointed emergency manager did not negotiate with all of the 33 unions in a coalition representing most of the city's civilian workforce. According to the report, Al Garrett, president of the American Federation of State, County and Municipal Employees Council 25, contested statements by Emergency Manager Kevyn Orr that he bent over backwards to work with creditors, including the city's pension funds, before filing a bankruptcy petition for Detroit in federal court. About Detroit, Michigan The city of Detroit, Michigan, weighed down by more than $18 billion in accrued obligations, sought municipal bankruptcy protection on July 18, 2013, by filing a voluntary Chapter 9 petition (Bankr. E.D. Mich. Case No. 13-53846). Detroit listed more than $1 billion in both assets and debts. Kevyn Orr, who was appointed in March 2013 as Detroit's emergency manager, signed the petition. Detroit is represented by lawyers at Jones Day and Miller Canfield Paddock and Stone PLC. Michigan Governor Rick Snyder authorized the bankruptcy filing. The filing makes Detroit the largest American city to seek bankruptcy, in terms of population and the size of the debts and liabilities involved. The city's $18 billion in debt includes $5.85 billion in special revenue obligations, $6.4 billion in post-employment benefits, $3.5 billion for underfunded pensions, $1.13 billion on secured and unsecured general obligations, and $1.43 billion on pension- related debt, according to a court filing. Debt service consumes 42.5 percent of revenue. The city has 100,000 creditors and 20,000 retirees. The Debtor is represented by David G. Heiman, Esq., and Heather Lennox, Esq., at Jones Day, in Cleveland, Ohio; Bruce Bennett, Esq., at Jones Day, in Los Angeles, California; and Jonathan S. Green, Esq., and Stephen S. LaPlante, Esq., at Miller Canfield Paddock and Stone PLC, in Detroit, Michigan. DETROIT, MI: Michigan Wins Delay of Bankruptcy Filing Challenge --------------------------------------------------------------- Michael Bathon, substituting for Bloomberg News bankruptcy columnist Bill Rochelle, reports that Michigan officials won a postponement of a state judge's ruling that Detroit's bankruptcy filing in federal court violated the state's constitution, pending a consideration of Michigan's appeal. Detroit on July 18 filed for Chapter 9 bankruptcy, the biggest by a U.S. city. According to the report, Michigan Circuit Court Judge Rosemarie E. Aquilina in Lansing ruled minutes after the filing that Governor Rick Snyder couldn't authorize further actions that would impair or diminish public pension benefits, citing the Michigan constitution. The next day, Judge Aquilina further ordered Snyder to direct Detroit emergency manager Kevyn Orr to immediately withdraw the bankruptcy petition. The report notes that state officials appealed the orders and the Michigan Court of Appeals granted their motion for immediate consideration July 23. "The circuit court's July 18, 2013, and July 19, 2013, temporary restraining orders and all further proceedings are stayed pending resolution of this appeal or further order of this court," a three-judge panel said in the ruling. An initial hearing in the bankruptcy case is scheduled for July 24 in U.S. Bankruptcy Court in Detroit. The report relates that traditionally, a bankruptcy filing stops litigation against a debtor or attempts to seek payment, and a federal judge wouldn't be required to defer to a state court ruling. Judge Aquilina's orders came in response to three lawsuits in Michigan state court seeking a finding that a bankruptcy filing would conflict with the state's constitutional protection of public retirees' rights. The report discloses that under the U.S. Bankruptcy Code, the city and its officials are entitled to halt most court proceedings against them during the bankruptcy case. U.S. Bankruptcy Judge Steven W. Rhodes in Detroit agreed to consider the city's request to extend the protection to unspecified "state entities." The challenges include General Retirement System of Detroit v. Emergency Manager of Detroit, 317284, Court of Appeals, State of Michigan. Jim Millstein, chairman and chief executive officer of Millstein & Co. and former chief restructuring officer at the U.S. Treasury, says he expects Detroit's bankruptcy to take a long time. About Detroit, Michigan The city of Detroit, Michigan, weighed down by more than $18 billion in accrued obligations, sought municipal bankruptcy protection on July 18, 2013, by filing a voluntary Chapter 9 petition (Bankr. E.D. Mich. Case No. 13-53846). Detroit listed more than $1 billion in both assets and debts. Kevyn Orr, who was appointed in March 2013 as Detroit's emergency manager, signed the petition. Detroit is represented by lawyers at Jones Day and Miller Canfield Paddock and Stone PLC. Michigan Governor Rick Snyder authorized the bankruptcy filing. The filing makes Detroit the largest American city to seek bankruptcy, in terms of population and the size of the debts and liabilities involved. The Debtor is represented by David G. Heiman, Esq., and Heather Lennox, Esq., at JONES DAY, in Cleveland, Ohio; Bruce Bennett, Esq., at JONES DAY, in Los Angeles, California; and Jonathan S. Green, Esq., and Stephen S. LaPlante, Esq., at MILLER CANFIELD PADDOCK AND STONE PLC, in Detroit, Michigan. DEWEY STRIP: Wants to Employ NWA as Lead Counsel ------------------------------------------------ Dewey Strip Holdings, LLC, et al., ask the U.S. Bankruptcy Court for the District of Delaware for authorization to employ Neal Wolf & Associates, LLC, as restructuring and bankruptcy counsel, effective retroactive to the Petition Date. NW&A will provide these services, among others: -- Advise the Debtors with respect to their rights, powers, and duties as debtors-in-possession; -- Advise the Debtors with respect to such matters as, without limitation, the automatic stay, obtaining of credit, use of property of the estate, assumption and/or rejection of executory contracts and unexpired leases, avoidance actions, sales of assets, claims belonging to and against the estate, and formulation of a plan of reorganization; -- Attend meetings and negotiate with representatives of creditors and other parties-in-interest; and -- Take all appropriate action to protect and preserve the Debtors' estates, including, without limitation, prosecuting actions on the Debtors' behalf, defending any action commenced against the debtors, and representing the Debtors' interest in negotiations concerning litigation in which the Debtors are or become involved, including objections to claims filed against the Debtors' estate. NW&A and the Debtors have agreed upon an aggregate "flat fee" of $350,000, for work done pre-petition and post-petition, for the prosecution to completion of both Chapter 11 cases. According to papers filed with the Court, over one year prior to the commencement of the Chapter 11 cases, on Feb. 16, 2012, International Power Syndications, Ltd., an affiliate and sole member of each of the Debtors, provided NW&A with an initial payment of $250,000 for services performed both pre-petition and post-petition relating to the Debtors. The remaining $100,000 is to be paid by IPS at the conclusion of the Chapter 11 cases. This fee agreement is not in any way tied to, or contingent upon, the results obtained in the Chapter 11 cases, according to the Debtors. The current standard hourly rates of NW&A are: Neal L. Wolf, Esq. Partner $695 Mohsin N. Khambati, Esq. Counsel $525 John A. Benson, Jr., Esq. Associate $350 Michael R. Wanser, Esq. Associate $350 Sandy Holstrom, Esq. Paralegal $175 To the best of the Debtors' knowledge, NW&A is a "disinterested person" as that term id denied in Section 101(14) of the Bankruptcy Code. About Dewey Strip Las Vegas, Nevada-based Dewey Strip Holdings LLC and Las Vegas North Strip Holdings Syndications Group LLC sought Chapter 11 protection (Bankr. D. Del. Case Nos. 13-11479 and 13-11480) on June 7 in Delaware, without stating a reason. Each debtor, a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101(51B), estimated at least $10 million in assets and at least $100 million in liabilities. In its schedules, Dewey Strip Holdings disclosed $35,000,000 and $243,573,461 in liabilities as of the Petition Date. Mohsin N. Khambati, Esq., and Neal L. Wolf, Esq., at Neal Wolf & Associates, LLC, in Chicago, Illinois; and Ericka Fredricks Johnson, Esq., and Steven K. Kortanek, Esq., at Womble Carlyle Sandridge & Rise, LLP, in Wilmington, Del., represent the Debtor as counsel. The petitions were signed by Martin H. Walrath, IV, vice-president of International Property Syndications, Ltd., as manager and sole member. DEWEY STRIP: Wants to Employ Womble Carlyle as Delaware Co-Counsel ------------------------------------------------------------------ Dewey Strip Holdings, LLC, et al., ask the U.S. Bankruptcy Court for the District of Delaware for authorization to employ Womble Carlyle Sandridge & Rice, LLP, as Delaware co-counsel, nunc pro tunc to the Petition Date. Womble Carlyle will provide these services, among others: -- Providing legal advice regarding the Debtors' powers and duties as debtors in possession under the Bankruptcy Code; -- Preparing on behalf of the Debtors, as debtors in possession, all necessary or appropriate motions, applications, answers, orders, reports, and other papers in connection with the administration of the Debtors' estates; -- Appearing in Court on behalf of the Debtors; and -- Taking all necessary or appropriate actions to protect and preserve the Debtors' estates, including the protection of actions on the Debtors' behalf, the defense of any anctions commenced against the Debtors, the negotiation of disputes in which the Debtors are involved. To the best of the Debtors' knowledge, Womble Carlyle is a "disinterested person" as that term id denied in Section 101(14) of the Bankruptcy Code. The Debtors initially paid Womble Carlyle the amount of a $50,000 retainer and advance. Womble Carlyle applied a portion of the Retainer to the Firm's pre-petition fees and expenses. The remainder of the Retainer will be held as security for post- petition payment of fees and expenses allowed by the Court in the Chapter 11 cases. Womble Carlyle's current hourly rates are: Steven K. Kortanek, Esq. Partner $610 Thomas M. Horan, Esq. Associate $380 Ericka F. Johnson, Esq. Associate $315 Paraprofessionals $65 - $295 About Dewey Strip Las Vegas, Nevada-based Dewey Strip Holdings LLC and Las Vegas North Strip Holdings Syndications Group LLC sought Chapter 11 protection (Bankr. D. Del. Case Nos. 13-11479 and 13-11480) on June 7 in Delaware, without stating a reason. Each debtor, a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101(51B), estimated at least $10 million in assets and at least $100 million in liabilities. In its schedules, Dewey Strip Holdings disclosed $35,000,000 and $243,573,461 in liabilities as of the Petition Date. Mohsin N. Khambati, Esq., and Neal L. Wolf, Esq., at Neal Wolf & Associates, LLC, in Chicago, Illinois; and Ericka Fredricks Johnson, Esq., and Steven K. Kortanek, Esq., at Womble Carlyle Sandridge & Rise, LLP, in Wilmington, Del., represent the Debtor as counsel. The petitions were signed by Martin H. Walrath, IV, vice-president of International Property Syndications, Ltd., as manager and sole member. DISH NETWORK: AutoHop Feature May Have Long-Term Negative Effects ----------------------------------------------------------------- Moody's Investors Service said that the Ninth Circuit Court of Appeals' upholding of the prior ruling denying an injunction against DISH Network's (Ba3 CFR, negative outlook) AutoHop feature, is favorable to DISH in the short term, but the disruptive nature of the ad-skipping feature may ultimately hurt DISH in the long-run when it faces affiliate agreement renewals with broadcasters. The case remains open pending the trial. AutoHop is disruptive to the core revenue model of broadcast and cable television networks, which rely on advertising for over 40- 60% of their total revenue. If the feature becomes widespread amongst other pay-TV distributors, networks will not be sufficiently compensated for their content, the cost of which is currently subsidized by advertising revenue. Therefore, Moody's believes that the networks will likely seek to make up for lost revenue by asking for higher fees than typical in the next round of distribution negotiations, at a time when pay-TV distributors are struggling to contain programming costs which they can no longer pass off to their customers. Or they will seek to limit the use of AutoHop, which will cause any rulings allowing it to become irrelevant. By disturbing the content distribution eco-system that it is a part of, DISH may end up facing contentious retransmission and distribution negotiations and have to pay higher fees, which may bear a greater cost than the benefit provided by the AutoHop feature. While DISH may seek to improve its subscriber additions and retention in the near term by providing consumer friendly features, if already difficult retransmission negotiations become more challenging, result in higher programming fees and result in more stations temporarily going off DISH's service, Moody's has concerns that this may hamper its value proposition for customers who prioritize continuous service over disrupted service with extra bells and whistles. DISH is the third largest pay television provider in the United States, operating satellite services with approximately 14.1 million On June 27, 2013, Moody's confirmed DISH Network Corporation's wholly owned subsidiary, DISH DBS Corporation's Ba3 Corporate Family Rating, and Ba2-PD Probability of Default Rating, following DISH's announcement that its wholly-owned subsidiary, DISH Acquisition Holding Corporation, is withdrawing its tender offer to acquire all of the outstanding shares of Class A Common Stock of Clearwire Corporation. DOGWOOD PROPERTIES: Creditor Seeks Stay Relief; Hearing on Aug. 14 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Western District of Tennessee continued until Aug. 14, 2013, at 10 a.m., the hearing to consider the motion for relief from stay in the Chapter 11 case of Dogwood Properties, G.P., filed by creditor RREF RB etc. In a separate filing, the Court approved a consent order between the Debtor and Paragon National Bank terminating the automatic stay regarding certain properties. The Debtor said that it has no equity in the collateral and is not necessary to the Debtor's reorganization. The subject obligations of the Debtor are also personally guaranteed by John McCreery and Phil Chamberlain. Pursuant to the consent order, Paragon agreed to release the guarantors of their obligations on the Debtor's debt. Guarantors, Messrs. McCreery and Chamberlain have other obligations with creditor that will not be affected by the agreement. R. Lee Webber, Esq., at Morton & Germany, PLLC represents Paragon National Bank as counsel. About Dogwood Dogwood Properties, G.P., owns and operates 110 single-family rental homes, all located in Shelby and DeSoto counties in Tennessee. The total value of its real estate holdings is estimated to be $9,985,000. Dogwood has nine secured lenders who are owed a total of approximately $14,486,000. Dogwood Properties filed a Chapter 11 petition (Bankr. W.D. Tenn. Case No. 13-21712) on Feb. 16, 2013. Judge Jennie D. Latta presides over the case. Russell W. Savory, Esq. at Gotten, Wilson, Savory & Beard, PLLC, serves as the Debtor's counsel. The Plan filed in the Debtor's case provides that the Debtor continue operating under existing management. Brad Rainey, individually, will remain the president of the Debtor. The Debtor's property will be managed by Reed & Associates and members of the Debtor's staff. The Plan provides that claims will be paid from future operations and the collection of rents. DYNEGY HOLDINGS: Plan Effectivity Deadline Again Extended --------------------------------------------------------- The deadline by which operating debtors Dynegy Northeast Generation, Inc.; Hudson Power, LLC, Dynegy Danskammer, LLC, and Dynegy Roseton, LLC L.L.C. must fully consummate their confirmed Plan has been further extended to July 26, 2013. The Operating Debtors are subsidiaries of Dynegy Inc. who obtained confirmation of their Joint Plan of Liquidation on March 15, 2013. Brian J. Lohan, Esq., James F. Conlan, Esq., Paul S. Caruso, Esq., Joel G. Samuels, Esq., of Sidley Austin LLP, in New York, represent the Debtors. About Dynegy Through its subsidiaries, Houston, Texas-based Dynegy Inc. (NYSE: DYN) -- http://www.dynegy.com/-- produces and sells electric energy, capacity and ancillary services in key U.S. markets. The power generation portfolio consists of approximately 12,200 megawatts of baseload, intermediate and peaking power plants fueled by a mix of natural gas, coal and fuel oil. Dynegy Holdings LLC and four other affiliates of Dynegy Inc. sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-38111) on Nov. 7, 2011, to implement an agreement with a group of investors holding more than $1.4 billion of senior notes issued by Dynegy's direct wholly-owned subsidiary, Dynegy Holdings, regarding a framework for the consensual restructuring of more than $4.0 billion of obligations owed by DH. If this restructuring support agreement is successfully implemented, it will significantly reduce the amount of debt on the Company's consolidated balance sheet. Dynegy Holdings disclosed assets of $13.77 billion and debt of $6.18 billion. Dynegy Inc. on July 6, 2012, filed a voluntary petition to reorganize under Chapter 11 (Bankr. S.D.N.Y. Case No. 12-36728) to effectuate a merger with Dynegy Holdings, pursuant to Holdings' Chapter 11 plan. Dynegy Holdings and its affiliated debtor-entities are represented in the Chapter 11 proceedings by Sidley Austin LLP as their reorganization counsel. Dynegy and its other subsidiaries are represented by White & Case LLP, who is also special counsel to the Debtor Entities with respect to the Roseton and Danskammer lease rejection issues. The financial advisor is FTI Consulting. The Official Committee of Unsecured Creditors in Holdings' cases has tapped Akin Gump Strauss Hauer & Feld LLP as counsel. Dynegy Holdings and its parent, Dynegy Inc., completed their Chapter 11 reorganization and emerged from bankruptcy Oct. 1, 2012. Under the terms of the DH/Dynegy Plan, DH merged with and into Dynegy, with Dynegy, Inc., remaining as the surviving entity. Dynegy Northeast Generation, Inc., Hudson Power, L.L.C., Dynegy Danskammer, L.L.C. and Dynegy Roseton, L.L.C., won confirmation of their plan of liquidation in March 2013, allowing the former operating units of Dynegy to consummate a settlement agreement resolving some lease trustee claims and sell their facilities. EDISON MISSION: Lease Decision Period on Unexpired Leases Extended ------------------------------------------------------------------ On July 17, 2013, the U.S. Bankruptcy Court for the Northern District of Illinois entered an order authorizing (a) agreed upon extensions of time for Edison Mission Energy, et al.'s to assume or reject certain unexpired leases of nonresidential property through the applicable Extension Dates; and (b) the Debtors' entry into and performance of all obligations under the Santa Ana Amendment to the Santa Ana Lease. A copy of The Extended Leases and The Form of the Santa Ana Lease Amendment is available at: http://bankrupt.com/misc/edisonmission.doc1027.pdf About Edison Mission Santa Ana, California-based Edison Mission Energy is a holding company whose subsidiaries and affiliates are engaged in the business of developing, acquiring, owning or leasing, operating and selling energy and capacity from independent power production facilities. EME also engages in hedging and energy trading activities in power markets through its subsidiary Edison Mission Marketing & Trading, Inc. EME was formed in 1986 and is an indirect subsidiary of Edison International. Edison International also owns Southern California Edison Company, one of the largest electric utilities in the United States. EME and its affiliates sought Chapter 11 protection (Bankr. N.D. Ill. Lead Case No. 12-49219) on Dec. 17, 2012. EME has reached an agreement with the holders of a majority of EME's $3.7 billion of outstanding public indebtedness and its parent company, Edison International EIX, that, pursuant to a plan of reorganization and pending court approval, would transition Edison International's equity interest to EME's creditors, retire existing public debt and enhance EME's access to liquidity. The Company's balance sheet at Sept. 30, 2012, showed $8.17 billion in total assets, $6.68 billion in total liabilities and $1.48 billion in total equity. In its schedules, Edison Mission Energy disclosed total assets of assets of $5,721,559,170 and total liabilities of $6,202,215,094 as of the Petition Date. Kirkland & Ellis LLP is serving as legal counsel to EME, Perella Weinberg Partners, LP is acting as financial advisor and McKinsey Recovery & Transformation Services U.S., LLC is acting as restructuring advisor. GCG, Inc., is the claims and notice agent. An official committee of unsecured creditors has been appointed in the case and is represented by the law firms Akin Gump and Perkins Coie. The Committee also has tapped Blackstone Advisory Partners as investment banker and FTI Consulting as financial advisor. EME said it doesn't plan to emerge from Chapter 11 until December 2014 to receive benefits from a tax-sharing agreement with parent Edison International Inc. EDISON MISSION: Noteholders End EIX Transaction Support Agreement ----------------------------------------------------------------- The Committee of Senior Noteholders of Edison Mission Energy on July 25 disclosed that a group of senior unsecured noteholders of Edison Mission Energy ("EME") delivered a notice of termination of the Transaction Support Agreement, dated December 16, 2012, by and among Edison International ("EIX"), EME and certain holders of EME's senior unsecured notes, to EIX and EME. According to the Termination Notice, the Transaction Support Agreement will automatically terminate and be of no further force and effect as to the Consenting Noteholders, effective as of August 1, 2013 at 11:59 p.m. (prevailing Eastern Time). Contact: Tim Larimer Ropes & Gray LLP 1211 Avenue of the Americas New York, New York 10036 Telephone: (212) 596-9414 July 25, 2013 BY FACSIMILE AND E-MAIL Munger Tolles & Olson LLP 355 South Grand Ave. Attn.: Thomas B. Walper Los Angeles, California 90071 Fax: (213) 687-3702 Kirkland & Ellis LLP 300 North LaSalle Street Chicago, Illinois 60654 Attn: James H.M. Sprayregen, P.C. David R. Seligman, P.C. Fax: (312) 862-2200 Kirkland & Ellis LLP 601 Lexington Avenue New York, New York 10022 Attn.: Joshua A. Sussberg Fax: (212) 446-4900 Re: Notice of Termination Gentlemen: Reference is made to that certain Transaction Support Agreement, dated December 16, 2012, by and among Edison Mission Energy, Edison International ("EIX"), and the holders of the Company's senior unsecured notes party thereto. Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to such terms in the Transaction Support Agreement. The undersigned Consenting Noteholders hereby deliver this Notice of Required Consenting Noteholder Termination Events pursuant to Section 8 of the Transaction Support Agreement (the "Termination Notice"). Among other things, the undersigned Consenting Noteholders hereby notify EIX and the Company of certain Required Consenting Noteholder Termination Events under Section 8 of the July 25, 2013 Transaction Support Agreement have occurred. Pursuant to Section 8(h) of the Transaction Support Agreement, (i) the Parties have not agreed to the terms of the MRA and MRA Agreements within one- hundred fifty (150) calendar days after the Petition Date, and (ii) an order of the Bankruptcy Court approving the Settlement Transaction has not been entered by two-hundred ten (210) days after the Petition Date. The undersigned Consenting Noteholders have neither waived nor consented to the foregoing Required Consenting Noteholder Termination Events. Accordingly, as a result of this Termination Notice, the Transaction Support Agreement will automatically terminate pursuant to Section 8 thereof, and all obligations of the Consenting Noteholders will immediately terminate and be of no further force and effect as to the Consenting Noteholders effective as of 11:59 p.m., prevailing Eastern Time, on the date that is five (5) business days from the date hereof--i.e., August 1, 2013. This Termination Notice is without prejudice to the rights of the Consenting Noteholders to give notice of other termination events, whether before or after the date of this Termination Notice, and without prejudice to other rights and remedies of the Consenting Noteholders under the Transaction Support Agreement with respect to any breach or termination thereunder, all of which rights are expressly reserved. Regards, [Consenting Noteholder signatures follow] cc: James Savin Ira Dizengoff About Edison Mission Santa Ana, California-based Edison Mission Energy is a holding company whose subsidiaries and affiliates are engaged in the business of developing, acquiring, owning or leasing, operating and selling energy and capacity from independent power production facilities. EME also engages in hedging and energy trading activities in power markets through its subsidiary Edison Mission Marketing & Trading, Inc. EME was formed in 1986 and is an indirect subsidiary of Edison International. Edison International also owns Southern California Edison Company, one of the largest electric utilities in the United States. EME and its affiliates sought Chapter 11 protection (Bankr. N.D. Ill. Lead Case No. 12-49219) on Dec. 17, 2012. EME has reached an agreement with the holders of a majority of EME's $3.7 billion of outstanding public indebtedness and its parent company, Edison International EIX, that, pursuant to a plan of reorganization and pending court approval, would transition Edison International's equity interest to EME's creditors, retire existing public debt and enhance EME's access to liquidity. The Company's balance sheet at Sept. 30, 2012, showed $8.17 billion in total assets, $6.68 billion in total liabilities and $1.48 billion in total equity. In its schedules, Edison Mission Energy disclosed total assets of assets of $5,721,559,170 and total liabilities of $6,202,215,094 as of the Petition Date. Kirkland & Ellis LLP is serving as legal counsel to EME, Perella Weinberg Partners, LP is acting as financial advisor and McKinsey Recovery & Transformation Services U.S., LLC is acting as restructuring advisor. GCG, Inc., is the claims and notice agent. An official committee of unsecured creditors has been appointed in the case and is represented by the law firms Akin Gump and Perkins Coie. The Committee also has tapped Blackstone Advisory Partners as investment banker and FTI Consulting as financial advisor. EME said it doesn't plan to emerge from Chapter 11 until December 2014 to receive benefits from a tax-sharing agreement with parent Edison International Inc. ENERGY FUTURE: Creditors Working on Debt-Reduction Plan ------------------------------------------------------- Michael Bathon, substituting for Bloomberg bankruptcy columnist Bill Rochelle, reports that creditors of Energy Future Holdings Corp.'s regulated-unit holding company are working on a debt reduction plan as part of a broader restructuring being negotiated at the former TXU Corp., people with knowledge of the matter said. According to the report, junior bondholders at Energy Future Intermediate Holding Co., which holds most of regulated Oncor Electric Delivery Co. and its almost $8 billion in debt, hired Centerview Partners LLC and Akin Gump Strauss Hauer & Feld LLP to advise on deleveraging the unit's obligations, said the people, who asked not to be named because the matter is private. The report notes that TXU, Texas's largest electricity provider, was taken private for $48 billion in 2007 by KKR & Co., TPG Capital and Goldman Sachs Capital Partners in the largest-ever leveraged buyout. The company has struggled to generate profits as wholesale electricity prices have dropped on a decline in natural gas costs, which have plunged more than 70 percent from a 2008 high. EFIH's plan expected in August or September, the people said -- may help smooth the way for a companywide agreement after senior creditors at Energy Future's unregulated unit scuttled a prepackaged bankruptcy proposal from the company, according to an April regulatory filing. The report relates that those lenders cited the need for the Dallas-based energy producer to restructure the balance sheet at money-losing EFIH first. Creditors to both businesses must reach agreement on valuations to deliver a group resolution, or may decide to pursue separate restructurings, said the people. The report discloses that the objective is to get senior creditors already in talks to reduce $32 billion in borrowings at the unregulated businesses to reach a deal that would give lenders majority ownership of the parent in exchange for some debt. About Energy Future Holdings, fka TXU Corp. Energy Future Holdings Corp., formerly known as TXU Corp., is a privately held diversified energy holding company with a portfolio of competitive and regulated energy businesses in Texas. Oncor, an 80%-owned entity within the EFH group, is the largest regulated transmission and distribution utility in Texas. The Company delivers electricity to roughly three million delivery points in and around Dallas-Fort Worth. EFH Corp. was created in October 2007 in a $45 billion leverage buyout of Texas power company TXU in a deal led by private-equity companies Kohlberg Kravis Roberts & Co. and TPG Inc. Energy Future incurred a net loss of $3.36 billion on $5.63 billion of operating revenues for 2012. This follows net losses of $1.91 billion in 2011 and $2.81 billion in 2010. The Company's balance sheet at Dec. 31, 2012, showed $40.97 billion in total assets, $51.89 billion in total liabilities and a $10.92 billion total deficit. Restructuring Talks With Creditors In April 2013, Energy Future Holdings Corp., Energy Future Competitive Holdings Company, Texas Competitive Electric Holdings Company LLC, and Energy Future Intermediate Holding Company LLC confirmed in a regulatory filing that they are in restructuring talks with certain unaffiliated holders of first lien senior secured claims concerning the Companies' capital structure. The Companies expect to continue to explore all available restructuring alternatives to facilitate the creation of sustainable capital structures for the Companies and to otherwise attempt to address the Creditors' concerns with the Restructuring Proposal and Sponsor Proposal. The Companies have retained Kirkland & Ellis LLP and Evercore Partners to advise the Companies with respect to the potential changes to the Companies' capital structure and to assist in the evaluation and implementation of other potential restructuring options. The Creditors have retained Paul, Weiss, Rifkind, Wharton & Garrison LLP and Millstein & Co., L.P. to advise the Creditors and to assist in the Creditors' evaluation of potential restructuring options involving the Companies. According to a Wall Street Journal report, people familiar with the matter said Apollo Global Management LLC, Oaktree Capital Management, Centerbridge Partners and GSO Capital Partners, the credit arm of buyout firm Blackstone Group LP, all hold large chunks of Energy Future Holdings' senior debt. Many of these firms belong to a group being advised by Jim Millstein, a restructuring expert who helped the U.S. government revamp American International Group Inc. According to the Journal, people familiar with Apollo's thinking said Apollo recently enlisted investment bank Moelis & Co. for additional advice to ensure it gets as much attention as possible on the case given its large debt holdings. * * * In the Feb. 1, 2013, edition of the TCR, Fitch Ratings lowered the Issuer Default Ratings (IDR) of Energy Future Holdings Corp (EFH) and Energy Future Intermediate Holding Company LLC (EFIH) to 'Restricted Default' (RD) from 'CCC' on the conclusion of the debt exchange and removed the Rating Watch Negative. As reported by the TCR on Feb. 4, 2013, Standard & Poor's Ratings Services said it raised its corporate credit ratings on EFH, EFIH, TCEH, and Energy Future Competitive Holdings Co. (EFCH) to 'CCC' from 'D' following the completion of several debt exchanges, each of which S&P considers distressed. In February 2013, Moody's Investors Service withdraw Energy Future Holdings Corp.'s Caa3 Corporate Family Rating, Caa3-PD Probability of Default Rating, SGL-4 Speculative Grade Liquidity Rating and developing rating outlook. At the same time, Moody's assigned a Ca CFR to Energy Future Competitive Holdings Company and a B3 CFR to Energy Future Intermediate Holdings Company LLC. Both EFCH and EFIH are intermediate subsidiary holding companies wholly-owned by EFH. EFCH's rating outlook is negative. EFIH's rating outlook is negative. "We see different default probabilities between EFCH and EFIH," said Jim Hempstead, senior vice president. "We believe EFCH has a high likelihood of default over the next 6 to 12 months, because it is projected to run out of cash in early 2014. EFIH has a much lower likelihood of default owing to the credit separateness that EFH is creating between EFIH and Texas Competitive Electric Holdings Company LLC along with EFIH's reliance on stable cash flows from its regulated transmission and distribution utility, Oncor Electric Delivery Company." EXCEL MARITIME: Court Denies Expedited Discovery on Plan Outline ---------------------------------------------------------------- Robertson Maritime Investors, LLC failed to convince a Southern New York bankruptcy court to expedite discovery related to Excel Maritime Carriers, Ltd., et al.'s Disclosure Statement. The Debtors were to produce, as scheduled, documents evidencing (a) the July 2012 transfer of Excel's interest in Christine Shipco from Bird Acquisition Corp. to Excel; and (b) the July 2013 intra- corporate transfer of the Debtors' 71.4% interest in Christine Shipco from Excel to its wholly-owned subsidiary, Christine Shipco Holding Corp. As previously reported in the July 18, 2013 edition of the Troubled Company Reporter, Excel Maritime Carriers, Ltd.'s, et al.'s Joint Pre-Negotiated Chapter 11 Plan of Reorganization and Disclosure Statement was filed with the U.S. Bankruptcy Court for the Southern District of New York on July 15, 2013. The Plan documents were signed by Pavlos Kanellopoulos, chief financial officer. Full-text copies of the Excel Maritime Plan, Disclosure Statement as well as plan exhibits are available for free at: http://bankrupt.com/misc/EXCELMARITIME_DSJul15.PDF The TCR related, citing Bloomberg News, that the plan will give ownership to secured lenders owed $771 million, although the lenders will allow current owner Gabriel Panayotides to keep control, at least initially. Unsecured creditors with claims totaling $163 million will receive a $5 million, eight percent note for a predicted recovery of 3 percent. Holders of $150 million in unsecured convertible notes make up the bulk of the unsecured-claim pool. Unsecured creditors are to receive the note only if the class votes in favor of the plan. Trade suppliers owed $16.5 million will be paid in full in the ordinary course of business to avoid having the vessels seized, the company previously said. In addition to the stock, the plan gives secured lenders new restructured secured notes for $771 million. Outside the plan, the lenders will allow Mr. Panayotides to buy 60 percent of the stock from them for a $10 million unsecured note and the turnover to the company of a $20 million escrow account. He will have the right to buy another 15 percent by March 2015 for $20 million. If he doesn't buy the additional stock, the lenders' equity ownership will rise to 75 percent. Mr. Panayotides will control a majority of the board initially. If he doesn't buy the additional stock, he loses control. If he purchases the additional stock, the new notes will mature in 2018. Otherwise, they mature a year earlier. A Sept. 30 hearing date has been set for approval of the Disclosure Statement. About Excel Maritime Based in Athens, Greece, Excel Maritime Carriers Ltd. -- http://www.excelmaritime.com/-- is an owner and operator of dry bulk carriers and a provider of worldwide seaborne transportation services for dry bulk cargoes, such as iron ore, coal and grains, as well as bauxite, fertilizers and steel products. Excel owns a fleet of 40 vessels and, together with 7 Panamax vessels under bareboat charters, operates 47 vessels (5 Capesize, 14 Kamsarmax, 21 Panamax, 2 Supramax and 5 Handymax vessels) with a total carrying capacity of approximately 3.9 million DWT. Excel Class A common shares have been listed since Sept. 15, 2005, on the New York Stock Exchange (NYSE) under the symbol EXM and, prior to that date, were listed on the American Stock Exchange (AMEX) since 1998. The company blamed financial problems on low charter rates. The balance sheet for December 2011 had assets of $2.72 billion and liabilities totaling $1.16 billion. Excel owes $771 million to secured lenders with liens on almost all assets. There is $150 million owing on 1.875 percent unsecured convertible notes. Excel Maritime, filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 13-bk- 23060) on July 1, 2013, in New York after signing an agreement where secured lenders owed $771 million support a reorganization plan filed alongside the petition. Excel, which sought bankruptcy with a number of affiliates, has tapped Skadden, Arps, Slate, Meagher & Flom LLP, as counsel; Miller Buckfire & Co. LLC, as investment banker; and Global Maritime Partners Inc., as financial advisor. A five-member official committee of unsecured creditors was appointed by the U.S. Trustee. EXIDE TECHNOLOGIES: Court OKs Rejection of Shreveport Lease ----------------------------------------------------------- Judge Kevin Carey authorized Exide Technologies, Inc. to reject an unexpired non-residential real property lease known as Shreveport Lease and two executory contracts referred to as the Shreveport Shoring Contract and Shreveport Security Contract as of June 26, 2013. The Debtor is conditionally authorized to abandon any and all property located at the premises. About Exide Technologies Headquartered in Princeton, New Jersey, Exide Technologies (NASDAQ: XIDE) -- http://www.exide.com/-- manufactures and distributes lead acid batteries and other related electrical energy storage products. Exide first sought Chapter 11 protection (Bankr. Del. Case No. 02-11125) on April 14, 2002 and exited bankruptcy two years after. Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, and James E. O'Neill, Esq., at Pachulski Stang Ziehl & Jones LLP represented the Debtors in their successful restructuring. Exide Technologies returned to Chapter 11 bankruptcy (Bankr. D. Del. Case No. 13-11482) on June 10, 2013. For the new case, Exide has tapped Anthony W. Clark, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, and Pachulski Stang Ziehl & Jones LLP as counsel; Alvarez & Marsal as financial advisor; Sitrick And Company Inc. as public relations consultant and GCG as claims agent. The Debtor disclosed $1.89 billion in assets and $1.14 billion in liabilities as of March 31, 2013. Exide's international operations were not included in the filing and will continue their business operations without supervision from the U.S. courts. Robert A. DeAngelis, the U.S. Trustee for Region 3, appointed seven creditors to serve in the Official Committee of Unsecured Creditors in the Debtor's case. EXIDE TECHNOLOGIES: Wins Final Approval for $500-Mil. in Loans -------------------------------------------------------------- Michael Bathon, substituting for Bloomberg bankruptcy columnist Bill Rochelle, reports that Exide Technologies, the 125-year-old battery maker, won final court approval to borrow as much as $500 million to help fund operation while it reorganizes in bankruptcy. According to the report, U.S. Bankruptcy Judge Kevin Carey approved the financing at a hearing July 24 in Wilmington, Delaware, the company said in a statement July 24. The judge previously granted the company access to $395 million of the loan on an interim basis at a June 11 hearing. "We are very pleased to have arranged financing that is sufficient to enable us to continue operations uninterrupted while we proceed with our restructuring," Exide Chief Executive Officer James R. Bolch said in the statement. "We are grateful for the support of our lenders and the confidence they have displayed in Exide by meeting our funding needs." The report notes that about $225 million of the new debt will go to pay off and replace a $160 million revolving credit line, with any money left over used for operations, according to court papers. The other $275 million will be partly supplied by a group of noteholders that holds 45 percent of the company's bonds that mature in 2018. About Exide Technologies Headquartered in Princeton, New Jersey, Exide Technologies (NASDAQ: XIDE) -- http://www.exide.com/-- manufactures and distributes lead acid batteries and other related electrical energy storage products. Exide first sought Chapter 11 protection (Bankr. Del. Case No. 02-11125) on April 14, 2002 and exited bankruptcy two years after. Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, and James E. O'Neill, Esq., at Pachulski Stang Ziehl & Jones LLP represented the Debtors in their successful restructuring. Exide Technologies returned to Chapter 11 bankruptcy (Bankr. D. Del. Case No. 13-11482) on June 10, 2013. For the new case, Exide has tapped Anthony W. Clark, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, and Pachulski Stang Ziehl & Jones LLP as counsel; Alvarez & Marsal as financial advisor; Sitrick And Company Inc. as public relations consultant and GCG as claims agent. The Debtor disclosed $1.89 billion in assets and $1.14 billion in liabilities as of March 31, 2013. Exide's international operations were not included in the filing and will continue their business operations without supervision from the U.S. courts. Robert A. DeAngelis, the U.S. Trustee for Region 3, appointed seven creditors to serve in the Official Committee of Unsecured Creditors in the Debtor's case. FOREST CITY: Fitch Rates $300MM Senior Unsecured Notes 'BB-' ------------------------------------------------------------ Fitch Ratings has assigned a credit rating of 'BB-' to the $300 million convertible senior unsecured notes due 2020 issued by Forest City Enterprises, Inc. (NYSE: FCEA, NYSE: FCEB, collectively 'FCE'). The notes will pay interest semiannually at a rate of 3.625% per annum and are convertible into shares of Forest City's Class A common stock at a 35% premium to the closing price on July 15, 2013. Use of proceeds will include the redemption of the $132 million of 6.5% Senior Notes due 2017 currently outstanding. Fitch currently rates FCE as follows: -- Issuer Default Rating (IDR) 'BB-'; -- Bank revolving credit facility 'BB-'; -- Senior unsecured notes 'BB-'; -- Convertible senior unsecured notes 'BB-'. The Rating Outlook is Stable. Key Rating Drivers The 'BB-' IDR centers on FCE's high leverage and lack of unencumbered assets. FCE's corporate financing strategy emphasizes secured debt to isolate refinancing and operating risks to individual properties as opposed to the general corporate credit and equity holders. Credit strengths include the quality of FCE's portfolio, strong relative operating performance, adequate fixed charge coverage, a manageable debt maturity schedule and sufficient internal liquidity. The IDR also reflects FCE's significant equity cushion after adjusting for secured debt that partially mitigates the lack of an unencumbered asset pool. Further, FCE's REOC structure is worth a one-notch uplift relative to a comparable REIT, due to FCE's ability to retain cash for development and other corporate uses. High Leverage FCE's leverage was high at 11.8x for the trailing 12 months ended April 30, 2013 pro forma for recently announced conversions of convertible notes. FCE has made demonstrable progress in its efforts to delever, as leverage was 13.0x at Jan. 31, 2011. Fitch projects leverage will improve further to below 11.0x over the next 24 months, driven by modest same-store net operating income (SSNOI) growth. Fitch defines leverage as net debt to recurring operating EBITDA. Lack of Unencumbered Assets FCE does not maintain a pool of unencumbered assets which typically serves as support for IDRs of higher-rated REITs and REOCs and a source of contingent liquidity. The lack of unencumbered assets is a material rating constraint partially mitigated by the existence of a post-secured debt equity cushion. High-Quality Albeit Idiosyncratic Portfolio Since its founding, FCE has grown its expertise in developing large, mixed-use master planned communities, notably those in densely populated markets. Year-to-date (YTD) pro-rata net operating income (NOI) was well-diversified by segment (36% retail, 33% office, 24% multifamily) and located in strong markets (30% in New York City with Washington, D.C., Los Angeles, Boston, San Francisco, Denver, Chicago and Philadelphia each comprising 3%-10%). Strong Operating Performance FCE's operating performance has been strong on an absolute basis and relative to its underlying markets and select public peers, evidencing durable operating cash flows. FCE's SSNOI growth has averaged 1.9% from 2003 through 2012 and FCE weathered the recent downturn with only a single-year decline of 0.8% in 2009. SSNOI in the first quarter turned negative at -1.9%, driven in large part by decreased occupancy at One Pierrepont Plaza. Fitch expects SSNOI growth will be in the low single digits over the next 12-24 months driven by positive leasing spreads and incremental occupancy gains. Proven Track Record Developing Large, Mixed-Use Sites The company has a proven capacity to acquire, aggregate and entitle adjoining plots of land and to work with local municipalities, community groups and government agencies to receive requisite approvals and tax credit financings. Going forward, Fitch expects development to be significantly smaller, due mostly to the Multifamily Development Fund which will allow FCE to develop off balance sheet and limit its equity requirements to contributing entitled land. At April 30, 2013, FCE's remaining development commitments of $250 million represent 2% of total undepreciated assets and can be funded through internal liquidity. Manageable Debt Maturity Schedule / Sufficient Liquidity Liquidity coverage of 0.7x pro forma for the note issuance's net proceeds after the redemption of the 6.5% senior notes is adequate for the rating for the period May 1, 2013-Jan. 31, 2015 and improves to 2.8x assuming 90% of secured debt is refinanced. Notably, internal liquidity covers unsecured debt obligations maturing through FY2015 by 7.3x, thereby limiting the likelihood of a corporate default. In addition, the covenants under the company's credit facility that limit cash distributions and share buybacks facilitate financial flexibility. Fitch defines liquidity coverage as sources of liquidity (unrestricted cash, availability under the revolving credit facility, committed but undrawn project financing) divided by uses (unsecured debt maturities, secured debt maturities, pro-rata unconsolidated debt maturities, maintenance capital expenditures and committed development expenditures). Adequate Fixed Charge Coverage Fitch projects fixed charge coverage will improve to 1.5x from 1.3x for FY2011 over the next 12-24 months driven by lower fixed charges from the retirement of all outstanding preferred stock. Fixed charge coverage excluding certain capitalized interest costs was 1.2x for the TTM ended April 30, 2013 and 1.1x on an all-in basis. Fitch defines fixed charge coverage as recurring operating EBITDA less straight line rent adjustments and recurring maintenance capital expenditures divided by total interest incurred and preferred stock dividends. Ratings Sensitivities Although Fitch does not anticipate positive ratings momentum in the near to medium term, the following factors may result in positive momentum on the rating and/or Outlook: -- The maintenance of a sizable unencumbered asset pool; -- Fitch's expectation of leverage sustaining below 10.0x (leverage was 11.8x as of April 30, 2013). The following factors may have a negative impact on Forest City's ratings or outlook: -- Fitch's expectation of leverage sustaining above 13.0x; -- Fitch's expectation of fixed charge coverage sustaining below 1.0x (fixed charge coverage was 1.2x YTD); -- Material growth in on-balance sheet development projects; -- A material investment in a non-real estate project or entity. FREESEAS INC: Issues 625,000 Add'l Settlement Shares to Hanover --------------------------------------------------------------- FreeSeas, Inc., issued and delivered to Hanover Holdings I, LLC, 625,000 additional settlement shares on July 22, 2013. The Supreme Court of the State of New York, County of New York, entered an order approving, among other things, the settlement between FreeSeas and Hanover in the matter entitled Hanover Holdings I, LLC v. FreeSeas Inc., Case No. 651950/2013. Hanover commenced the Action against the Company on May 31, 2013, to recover an aggregate of $5,331,011 of past-due accounts payable of the Company, plus fees and costs. The Order provides for the full and final settlement of the Claim and the Action. The Settlement Agreement became effective and binding upon the Company and Hanover upon execution of the Order by the Court on June 25, 2013. Pursuant to the terms of the Settlement Agreement approved by the Order, the Company issued and delivered to Hanover 890,000 shares of the Company's common stock, $0.001 par value, and between July 2, 2013, and July 17, 2013, the Company issued and delivered to Hanover an aggregate of 3,183,000 additional settlement shares. Hanover demonstrated to the Company's satisfaction that it was entitled to receive 625,000 additional settlement shares based on certain adjustment formula. A copy of the Form 6-K is available for free at: http://is.gd/YZhQCf About FreeSeas Inc. Headquartered in Athens, Greece, FreeSeas Inc., formerly known as Adventure Holdings S.A., was incorporated in the Marshall Islands on April 23, 2004, for the purpose of being the ultimate holding company of ship-owning companies. The management of FreeSeas' vessels is performed by Free Bulkers S.A., a Marshall Islands company that is controlled by Ion G. Varouxakis, the Company's Chairman, President and CEO, and one of the Company's principal shareholders. The Company's fleet consists of six Handysize vessels and one Handymax vessel that carry a variety of drybulk commodities, including iron ore, grain and coal, which are referred to as "major bulks," as well as bauxite, phosphate, fertilizers, steel products, cement, sugar and rice, or "minor bulks." As of Oct. 12, 2012, the aggregate dwt of the Company's operational fleet is approximately 197,200 dwt and the average age of its fleet is 15 years. Freeseas disclosed a net loss of US$30.88 million in 2012, a net loss of US$88.19 million in 2011, and a net loss of US$21.82 million in 2010. The Company's balance sheet at Dec. 31, 2012, showed US$114.35 million in total assets, $106.55 million in total liabilities and US$7.80 million in total shareholders' equity. RBSM LLP, in New York, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has incurred recurring operating losses and has a working capital deficiency. In addition, the Company has failed to meet scheduled payment obligations under its loan facilities and has not complied with certain covenants included in its loan agreements. It has also failed to make required payments to Deutsche Bank Nederland as agreed to in its Sept. 7, 2012, amended and restated facility agreement and received notices of default from First Business Bank. Furthermore, the vast majority of the Company's assets are considered to be highly illiquid and if the Company were forced to liquidate, the amount realized by the Company could be substantially lower that the carrying value of these assets. These conditions, among others, raise substantial doubt about the Company's ability to continue as a going concern. GANNETT CO: S&P Assigns 'BB' Rating to $500MM Sr. Notes Due 2020 ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned McLean, Va.-based newspaper publisher and TV broadcaster Gannett Co. Inc.'s proposed issuance of $500 million senior notes due 2020 an issue-level rating of 'BB', with a recovery rating of '3'. The '3' recovery rating indicates S&P's expectation for meaningful (50% to 70%) recovery in the event of a payment default. Gannett plans to use the proceeds to repay outstanding borrowings under its revolving credit facility. Any remaining proceeds may be used to repay the company's outstanding unsecured notes and/or for general corporate purposes The rating on Gannett Co. reflects its exposure to unfavorable secular trends affecting newspaper advertising and circulation, and the more stable trends of TV broadcasting, notwithstanding the shift of viewers to alternative media for news and entertainment. The rating also reflects S&P's expectation for steadily declining leverage after Gannett closes on its proposed acquisition of Belo Corp. in late 2013. S&P views Gannett's business risk profile as "fair," according to its criteria, largely because of its expectation that the declines in high-margin newspaper advertising revenue will continue for the foreseeable future as a result of unfavorable industry fundamentals. S&P views Gannett's financial risk profile as "significant," because of elevated pro forma debt leverage, incorporating the proposed debt-financed acquisition of Belo. In June 2013, Gannett entered into a definitive agreement to acquire Belo Corp. for $2.2 billion, including the assumption of $715 million in debt. S&P believes that the debt-financed purchase will slightly improve the company's business position because of its higher proportion of pro forma cash flow from broadcasting operations. Gannett will become the fourth largest owner of major network-affiliated TV stations, and S&P expects the EBITDA contribution from the broadcasting and digital segments will approach two-thirds of the pro forma total in 2013, reducing the exposure to the newspaper business. The transaction is subject to Department of Justice, FCC, and Belo shareholder approval. The rating outlook is positive, reflecting S&P's expectation that the Gannett reduces debt leverage as the company gradually realizes acquisition synergies and lowers debt levels. S&P could raise its rating on the company to 'BB+' if it become convinced that the company will be able to reduce pro forma debt to trailing-eight-quarter average EBITDA (adjusted for operating leases and underfunded pension obligations and excluding revenue and cost synergies) from the high-3x area to below 3x in 2014 and maintain that level; that the pace of erosion of newspaper revenue will not markedly accelerate; and that Gannett will balance shareholder returns and acquisitions with debt repayment. RATINGS LIST Gannett Co. Inc. Corporate Credit Rating BB/Positive/-- New Rating Gannett Co. Inc. $500M sr notes due 2020 BB Recovery Rating 3 HANESBRANDS INC: S&P Retains 'BB' CCR After Maidenform Acquisition ------------------------------------------------------------------ Standard & Poor's Rating Services said that it assigned its 'BBB-' rating to N.C.-based Hanesbrands Inc.'s proposed $1.1 billion senior secured revolving credit facility due 2018. The recovery rating on the secured credit facility is '1', indicating S&P's expectation for very high (90%-100%) recovery in the event of a default. S&P also revised its unsecured recovery rating to '4' from '3' as a result of the increased size of the secured revolving credit facility. The 'BB' corporate credit rating and 'BB' unsecured debt ratings remain unchanged. The outlook is stable. "We expect the company to use the new $1.1 billion revolving credit facility for acquisitions and working capital needs. This includes incremental debt to fund Hanesbrands' acquisition of Maidenform Brands Inc. for approximately $575 million in cash. Pro forma for the acquisition of Maidenform, and based on our expectation that the company will repay the remaining $250 million of its 8% senior notes later this year, we estimate the ratio of adjusted total debt to EBITDA will be approximately 3.5x by the end of 2013, compared to leverage of about 3.3x through the 12 months ended March 31, 2013,", S&P said. "The ratings on Hanesbrands reflect our view that the company's financial risk profile will continue to be "significant" given improved credit metrics following debt reduction, an "adequate" liquidity profile, and our view that the company's financial policy will remain "modest." Also, we believe the company's business risk profile will remain "fair," reflecting our view the company will maintain its good market position and operating scale in the highly competitive apparel sector and the commodity-like nature of some of its products," S&P added. RATINGS LIST Hanesbrands Inc. Corporate credit rating BB/Stable/-- Ratings assigned Hanesbrands Inc. Senior secured $1.1 bil. revolver due 2018 BBB- Recovery rating 1 Issue rating affirmed; recovery rating revised To From Hanesbrands Inc. Senior unsecured BB BB Recovery rating 4 3 HARRISBURG, PA: Creditors Near Deal on Debt Crisis -------------------------------------------------- Michael Bathon, substituting for Bloomberg bankruptcy columnist Bill Rochelle, reports that William B. Lynch, the state-appointed receiver of Pennsylvania's capital, said "a deal is imminent" with creditors on resolving an incinerator debt burden of about $345 million that has left Harrisburg insolvent. According to the report, the revised fiscal rescue involves the sale of the trash-to-energy plant and the lease of city parking facilities, Mr. Lynch said in a statement July 24. The transaction will remove future liabilities for the incinerator, which hasn't generated enough revenue to cover its costs. Mr. Lynch's success with creditors would avert bankruptcy for the city, whose incinerator debt amounts to almost seven times its annual general-fund budget. He said he plans to submit his proposal late next month to Pennsylvania's Commonwealth Court, which must approve it. "All stakeholders" have agreed to his plan, Mr. Lynch said. "While they realize this may be an imperfect situation for each of them, everyone understands a cooperative solution is most certainly in everyone's best interests." The report notes that the crisis in Harrisburg, a community of almost 50,000 residents, stemmed from financing an overhaul of the incinerator. Surrounding Dauphin County and bond insurer Assured Guaranty Municipal, a unit of Hamilton, Bermuda-based Assured Guaranty Ltd., have covered skipped debt payments since 2009. The report discloses that under his plan, the Lancaster County Solid Waste Management Authority would buy the incinerator, which a unit of Covanta Holding Corp. runs. Mr. Lynch said July 24 that other claims, such as those from Assured Guaranty and Dauphin County, must be resolved before the sale, which may be late this year. The relief from future liability for Harrisburg residents after the transaction was described by Mr. Lynch as a "critical step" for the city's recovery. He said his blueprint would stabilize the municipal budget through 2016. About Harrisburg, Pennsylvania The city of Harrisburg, in Pennsylvania, is coping with debt related to a failed revamp of an incinerator. The city is $65 million in default on $242 million owing on bonds sold to finance an incinerator that converts trash to energy. The Harrisburg city council voted 4-3 on Oct. 11, 2011, to authorize the filing of a Chapter 9 municipal bankruptcy (Bankr. M.D. Pa. Case No. 11-06938). The city claims to be insolvent, unable to pay its debt and in imminent danger of having tax revenue seized by holders of defaulted bonds. Judge Mary D. France presided over the Chapter 9 case. Mark D. Schwartz, Esq. and David A. Gradwohl, Esq., served as Harrisburg's counsel. The petition estimated $100 million to $500 million in assets and debts. Susan Wilson, the city's chairperson on Budget and Finance, signed the petition. Harrisburg said in court papers it is in imminent jeopardy through six pending legal actions by creditors with respect to a number of outstanding bond issues relating to the Harrisburg Materials, Energy, Recycling and Recovery Facilities, which processes waste into steam and electrical energy. The owner and operator of the incinerator is The Harrisburg Authority, which is unable to pay the bond issues. The city is the primary guarantor under each bond issue. The lawsuits were filed by Dauphin County, where Harrisburg is located, Joseph and Jacalyn Lahr, TD Bank N.A., and Covanta Harrisburg Inc. The Commonwealth of Pennsylvania, the County of Dauphin, and Harrisburg city mayor Linda D. Thompson and other creditors and interested parties objected to the Chapter 9 petition. The state later adopted a new law allowing the governor to appoint a receiver. Kenneth W. Lee, Esq., Christopher E. Fisher, Esq., Beverly Weiss Manne, Esq., and Michael A. Shiner, Esq., at Tucker Arensberg, P.C., represented Mayor Thompson in the Chapter 9 case. Counsel to the Commonwealth of Pennsylvania was Neal D. Colton, Esq., Jeffrey G. Weil, Esq., Eric L. Scherling, Esq., at Cozen O'Connor. In November 2011, the Bankruptcy Judge dismissed the Chapter 9 case because (1) the City Council did not have the authority under the Optional Third Class City Charter Law and the Third Class City Code to commence a bankruptcy case on behalf of Harrisburg and (2) the City was not specifically authorized under state law to be a debtor under Chapter 9 as required by 11 U.S.C. Sec. 109(c)(2). Dismissal of the Chapter 9 petition was upheld in a U.S. District Court. That same month, the state governor appointed David Unkovic as receiver for Harrisburg. Mr. Unkovic is represented by the Municipal Recovery & Restructuring group of McKenna Long & Aldridge LLP, led by Keith Mason, Esq., co-chair of the group. Mr. Unkovic resigned as receiver March 30, 2012. Mr. Unkovic was replaced by William Lynch as receiver. HIGHWAY TECHNOLOGIES: Files Schedules of Assets and Liabilities --------------------------------------------------------------- Highway Technologies, Inc., filed with the Bankruptcy Court its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $0 B. Personal Property $41,350,616 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $67,109,036 E. Creditors Holding Unsecured Priority Claims $1,228,316 F. Creditors Holding Unsecured Non-priority Claims $24,185,587 ----------- ----------- TOTAL $41,350,616 $92,522,939 Affiliate HTS Acquisition, Inc., scheduled $0 assets and $67,109,035 in liabilities. About Highway Technologies Highway Technologies Inc. and affiliate HTS Acquisition Inc. sought Chapter 11 protection (Bankr. D. Del. Case No. 13-11325 to 13-11326) on May 22, 2013, to conduct an orderly liquidation. Richard M. Pachulski, Esq., at Pachulski Stang Ziehl & Jones LLP serve as counsel to the Debtors. Imperial Capital, LLC, serves as financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. The prepetition lenders are represented by David M. Hillman, Esq., at Schulte Roth & Zabel, in New York. The company's balance sheet as of March 31, 2013, showed $55 million in total assets and $102 million in liabilities. The Official Committee of Unsecured Creditors tapped Richards, Layton & Finger, P.A., as its counsel, and Gavin/Solmonese LLC as its financial advisor. IGPS COMPANY: Wins Nod For $39MM Sale Despite Fierce Flak --------------------------------------------------------- Jamie Santo of BankruptcyLaw360 reported that plastic pallet leaser iGPS Co. got the green light for its $39 million sale to a consortium of private equity firms and other investors as a Delaware bankruptcy judge overruled objections that the deal left hundreds of millions of dollars on the table. According to the report, U.S. Bankruptcy Judge Kevin Gross' decision to approve the deal came on the third day of a sale hearing, a contentious affair that included nearly two full days of testimony and pitted iGPS against a tag-team of the U.S. trustee and the company's founder and former chief executive officer, who argued that the $36 million auction floor is too low for a debtor they say could have more than $500 million in assets. U.S. Trustee Roberta A. DeAngelis and former iGPS CEO Bobby L. Moore argue that when the value of all of the company's pallets is factored, the debtor has assets of between $400 million and $590 million. The Company maintained that the $39 million sale to a consortium of private equity firms and other investors is a fair deal. About iGPS Co. iGPS Company LLC filed a Chapter 11 bankruptcy petition (Bankr. D. Del. Case No. 13-11459) on June 4, 2013, to sell its assets to a group led by Balmoral Funds LLC, absent higher and better offers. iGPS Company -- http://www.igps.net-- is the first and only plastic pallet pooling rental and leasing company in the U.S. It offers plastic pallets with embedded radio frequency identification (RFID) tags. Founded in 2006, the company is headquartered in Orlando, Florida, and has a sales and innovation center in Bentonville, Arkansas. The Debtor estimated $100 million to $500 million in assets and liabilities in its Chapter 11 petition. According to the board resolution authorizing the bankruptcy, Pegasus IGPS LLC owns 12.55% of the company; iGPS Co-Investment LLC owns 18.75%; Kia VIII (iGPS Sub), LLC owns 30.74%; and KIA VIII iGPS Blocker, LLC, owns 12.27%. IN THE PLAY: Allen & Vellone Okayed as Bankruptcy Co-Counsel ------------------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of Pennsylvania authorized the employment of Allen & Vellone, P.C. as co-counsel to In The Play, Inc. As reported by the Troubled Company Reporter on July 24, 2013, the Court has authorized the Debtor to employ Morris James, LLP as counsel. About In The Play Three alleged creditors filed an involuntary Chapter 11 petition for Lansdale, Pennsylvania-based In The Play, Inc., (Bankr. E.D. Pa. Case No. 13-11666) in Philadelphia on Feb. 27, 2013. The petitioners are Richard Strauss (with $479,443 in claims), JAAZ, LLC ($409,166) and Andrew Michelin ($157,522). Garabed Kendikian, Esq., at the Law Offices of Charles Kendikian, LLC, serves as counsel to the petitioners. On May 10, 2013, the Court entered an order for relief placing In the Play under bankruptcy protection. The Debtor tapped Jeffrey R. Waxman, Esq., at Morris James LLP as counsel. Gavin/Solmonese, LLC's Edward T. Gavin serves as chief restructuring officer. The Debtor filed schedules of assets and liabilities, declaring $4,640 in total assets and $4,589,397 in liabilities. ING US: Fitch Rates Junior Subordinated Notes at 'BB' ----------------------------------------------------- Fitch Ratings expects to assign a 'BBB-' rating to ING U.S., Inc. (ING U.S.) $400 million planned issuance of 5.7% senior notes due 2043. The transaction is expected to close on July 26, 2013. Key Rating Drivers The rating reflects standard notching under Fitch's rating methodology. The net proceeds of this offering will be used for general corporate purposes, including the retirement of debt. Pro forma financial leverage is expected to remain near 25%. On July 8, 2013, Fitch affirmed all of its ratings for ING U.S. and its subsidiaries with a Stable Outlook. RATING SENSITIVITIES The key rating triggers that could result in a downgrade include: -- A decline in reported RBC below 385%; -- Financial leverage exceeding 30%; -- Significant adverse operating results; -- Further material reserve charges required in its insurance/variable annuity books or a significant weakening of distribution channel or scale advantages. The key rating triggers that could result in an upgrade include: -- Increased operating profitability and generation of consistent statutory capital; -- Sustained maintenance of GAAP interest coverage over 10x and statutory interest coverage over 4x; -- A reported RBC above 450%, and financial leverage below 25%; -- Private sale of closed block book at good value with boost to capitalization and reduction in volatility and risk. Fitch expects to assign: ING U.S., Inc. -- 5.7% senior notes due July 15, 2043 'BBB-'. Fitch currently rates the ING U.S. entities as follows: ING U.S., Inc. -- Long-term IDR 'BBB'; -- 5.5% senior notes due July 15, 2022 'BBB-'; -- 2.9% senior notes due Feb. 15, 2018 'BBB-'; -- 5.65% fixed-to-floating junior subordinated notes due May 15, 2053 'BB'. ING Life Insurance and Annuity Company ING USA Annuity and Life Insurance Company ReliaStar Life Insurance Co. ReliaStar Life Insurance Company of New York Security Life of Denver Insurance Company --Insurer Financial Strength (IFS) 'A-'. Equitable of Iowa Companies, Inc. -- Long-term IDR 'BBB'. Equitable of Iowa Companies Capital Trust II -- 8.424% Trust Preferred Stock 'BB'. JEFFERSON COUNTY: S&P Puts 'C' Underlying Rating on Watch Negative ------------------------------------------------------------------ Standard & Poor's Ratings Services has placed on CreditWatch with negative implications its 'C' underlying rating (SPUR) on various issuers' series 2000 limited-tax GO school warrants and series 2006 lease revenue warrants issued for Jefferson County, Ala. This action follows repeated attempts by Standard & Poor's to obtain timely information of satisfactory quality to maintain S&P's ratings on the securities in accordance with its applicable criteria and policies. Failure to receive the requested information by Aug. 5, 2013 will likely result in S&P's suspension of the affected ratings, preceded, in accordance with its policies, by any change to the ratings that it considers appropriate given available information. Standard & Poor's also withdrew its SPUR on the county's series 2003A general obligation (GO) capital improvement and refunding warrants and series 2004A GO capital improvement warrants, which we had rated 'D' because of the county's failure to make a principal payment on the GO warrants when due on April 1, 2012. KIDSPEACE CORP: FTI Consulting OK'd as Committee Financial Advisor ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of Pennsylvania authorized the Official Committee of Unsecured Creditors in the Chapter 11 cases of KidsPeace Corporation, et al., to retain FTI Consulting, Inc. as its financial advisor. As reported by the Troubled Company Reporter on July 10, 2013, FTI will, among other things, assist in the review of financial related disclosures required by the Court, including the schedules of assets and liabilities, the statements of financial affairs, and the monthly operating reports. FTI has agreed with the Committee to seek payment for compensation on a fixed monthly basis of $60,000 for the first two months and $45,000 per month thereafter, plus reimbursement of actual and necessary expenses incurred. In addition, FTI will be compensated at its customary hourly rates for services related to expert valuation services: Senior Managing Directors $790-$895 Directors/Managing Directors $570-$755 Consultants/Senior Consultants $290-$540 Administrative/Paraprofessionals/Associates $120-$250 The firms assured the Court that they are disinterested persons as defined in the Bankruptcy Code and do not represent any interest adverse to the Committee's. About KidsPeace Corp. KidsPeace Corp., a provider of behavioral services for children, filed a petition for Chapter 11 reorganization (Bankr. E.D. Pa. Case No. 13-14508) on May 21, 2013, in Reading, Pennsylvania. KidsPeace operates a 96-bed pediatric psychiatric hospital in Orefield, Pennsylvania. Assets are $86.7 million, and debt on the books is $158.6 million, according to a court filing. The Debtor, which sought bankruptcy protection with eight affiliates, tapped Norris McLaughlin & Marcus, P.A. as counsel; EisnerAmper LLP as financial advisor, and Rust Omni as claims and notice agent. Assets total $158,587,999 at the end of 2012. The Debtors owe approximately $56,206,821 in bond debt, and they have been told that their pension liability is allegedly about $100,000,000 of which the Debtors currently reflect $83,049,412 on their books. KidsPeace sought Chapter 11 (i) as a means to implement a negotiated restructuring of bond debt currently aggregating approximately $51,310,000 plus accrued interest to a reduced amount of approximately $24 million in new 30-year bonds with interest at 7.5 percent, and (ii) to continue on-going negotiations with the Pension Benefit Guaranty Corporation in hopes of reducing the PBGC asserted obligation of $100+ million to an amount that the Debtors can reasonably expect to satisfy. The Debtor disclosed $157,930,467 in assets and $168,768,207 in liabilities as of the Chapter 11 filing. Since March 2012, MK has been exploring possible affiliation or acquisition opportunities; however, no offer of an affiliation or acquisition has been presented to the Debtors. Gemino Healthcare Finance, LLC, the prepetition revolving lender, is represented by James S. Rankin, Jr., Esq., at Parker, Hudson, Rainer & Dobbs LLP; and Weir & Partners LLP's Walter Weir, Jr., Esq. UMB Bank, N.A., on behalf of bondholders, Performance Food Group d/b/a AFI, W.B. Mason Co., Inc., Pension Benefit Guaranty Corporation, and Teresa Laudenslager were appointed to an official committee of unsecured creditors in the Debtors' cases. The Official Committee of Unsecured Creditors is represented by Fitzpatrcik Lentz & Bubba, P.C., and Lowenstein Sandler LLP as counsel. FTI Consulting, Inc. serves as the panel's financial advisor. KIDSPEACE CORP: Lowenstein & Fitzpatrick Okayed as Panel's Lawyers ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of Pennsylvania authorized the Official Committee of Unsecured Creditors in the Chapter 11 cases of KidsPeace Corporation, et al., to retain Lowenstein Sandler LLP as its counsel and Fitzpatrick Lentz & Bubba, P.C., as its co-counsel. To the best of the Committee's knowledge, Lowenstein Sandler and Fitzpatrick Lentz are "disinterested persons" as that term is defined in Section 101(14) of the Bankruptcy Code. As reported by the Troubled Company Reporter on July 10, 2013, the Committee sought authority to retain Lowenstein Sandler, as lead counsel, to, among other things, provide legal advice, address issues raised by any DIP financing, and participate in the formulation of a chapter 11 plan. Lowenstein will be paid at these hourly rates: Partners $475 - $945 Counsel $385 - $685 Associates $250 - $495 Paralegals and Assistants $155 - $260 Norman N. Kinel, Esq. -- nkinel@lowenstein.com -- a partner at Lowenstein Sandler LLP, in New York, will take a lead role in representing the Creditors' Committee. Fitzpatrick Lentz, as co-counsel, will, among other things, assist Lowenstein in its representation of the Committee. FLB will be paid these hourly rates: $300 Douglas J. Smillie, Esq. -- dsmillie@flblaw.com $195 Joshua A. Gildea, Esq. -- jgildea@flblaw.com $120 Carolyn Charlton, paralegal About KidsPeace Corp. KidsPeace Corp., a provider of behavioral services for children, filed a petition for Chapter 11 reorganization (Bankr. E.D. Pa. Case No. 13-14508) on May 21, 2013, in Reading, Pennsylvania. KidsPeace operates a 96-bed pediatric psychiatric hospital in Orefield, Pennsylvania. Assets are $86.7 million, and debt on the books is $158.6 million, according to a court filing. The Debtor, which sought bankruptcy protection with eight affiliates, tapped Norris McLaughlin & Marcus, P.A. as counsel; EisnerAmper LLP as financial advisor, and Rust Omni as claims and notice agent. Assets total $158,587,999 at the end of 2012. The Debtors owe approximately $56,206,821 in bond debt, and they have been told that their pension liability is allegedly about $100,000,000 of which the Debtors currently reflect $83,049,412 on their books. KidsPeace sought Chapter 11 (i) as a means to implement a negotiated restructuring of bond debt currently aggregating approximately $51,310,000 plus accrued interest to a reduced amount of approximately $24 million in new 30-year bonds with interest at 7.5 percent, and (ii) to continue on-going negotiations with the Pension Benefit Guaranty Corporation in hopes of reducing the PBGC asserted obligation of $100+ million to an amount that the Debtors can reasonably expect to satisfy. The Debtor disclosed $157,930,467 in assets and $168,768,207 in liabilities as of the Chapter 11 filing. Since March 2012, MK has been exploring possible affiliation or acquisition opportunities; however, no offer of an affiliation or acquisition has been presented to the Debtors. Gemino Healthcare Finance, LLC, the prepetition revolving lender, is represented by James S. Rankin, Jr., Esq., at Parker, Hudson, Rainer & Dobbs LLP; and Weir & Partners LLP's Walter Weir, Jr., Esq. UMB Bank, N.A., on behalf of bondholders, Performance Food Group d/b/a AFI, W.B. Mason Co., Inc., Pension Benefit Guaranty Corporation, and Teresa Laudenslager were appointed to an official committee of unsecured creditors in the Debtors' cases. The Official Committee of Unsecured Creditors is represented by Fitzpatrcik Lentz & Bubba, P.C., and Lowenstein Sandler LLP as counsel. FTI Consulting, Inc. serves as the panel's financial advisor. LEAR CORP: Loses Dismissal Bid in Auto Parts Antitrust Litigation ----------------------------------------------------------------- District Judge Marianne O. Battani issued an opinion and order denying Lear Corporation's motion to dismiss claims against it in IN RE: AUTOMOTIVE PARTS ANTITRUST LITIGATION, NO. 2:12-CV-00100, (E.D. Mich.). The opinion relates to all Wire Harness Cases. Judge Battani denied Lear's Fed.R.Civ.Proc. Rule 12(b)(6) Motion to Dismiss (Case No. 12-02311) all claims advanced against it in the Direct Purchasers Plaintiffs' (DPPs) Consolidated Amended Class Action Complaint, the Automobile Dealer Plaintiffs' (ADPs) Consolidated Class Action Complaint, and the End-Payor Plaintiffs' (EPPs) Corrected Consolidated Amended Class Action Complaint. Plaintiffs allege that Lear engaged in overt acts by selling wire harness systems after it emerged from bankruptcy in November 2009 at supracompetitive prices. "Each sale after November 2009 allegedly involved an unlawfully inflated price, so conduct by Lear after bankruptcy confirmation may fall within the ambit of the conspiracy. If Plaintiffs succeed in proving these allegations, Lear's conduct post-bankruptcy cannot be protected by the discharge. Therefore, the Court denies Lear's request for dismissal," rules Judge Battani. A copy of the District Court's June 6, 2013 Opinion and Order is available at http://is.gd/86iUTqfrom Leagle.com. Court Also Denies Bid to Dismiss Dealership Actions In a separate ruling, District Judge Battani denied Kyungshin- Lear's motion to dismiss all complaints in IN RE: AUTOMOTIVE PARTS ANTITRUST LITIGATION. This pertains to the Dealership Actions End-Payor Actions in the Wire Harness Cases. In support of its Motion to Dismiss all Complaints (Case No. 12-02311), Defendant Kyungshin-Lear Sales and Engineering, LLC (KL Sales) asserted that Direct Purchaser Plaintiffs (DPPs), Automobile Dealer Plaintiffs (ADPs) and End-Payor Plaintiffs (EPPs) failed to set forth sufficient facts to meet their pleading requirements under Rule 12(b)(6). After briefing was completed, DPPs filed Notice of Voluntary Dismissal (Case No. 12-00101). Accordingly, the Court limited its consideration to the arguments advanced relative to Automobile Dealers' Consolidated Amended Class Action Complaint (Case No. 12-02311), and End-Payors' Corrected Consolidated Amended Class Action Complaint (Case No. 12-02311). According to Judge Battani, dismissal is not required merely because Plaintiffs did not name each Defendant in the allegations pleaded in support of their Sherman Act claim. "Even though neither Lear nor KL Sales has pleaded guilty, IPPs have included allegations that render KP Sales' involvement plausible when viewed in light of the allegations of market conditions that show a concentration of market shares, high barriers to entry, and the capability of producing products for use in any vehicle, as well as opportunities to conspire at auto and industry trade," she said. A copy of the District Court's June 6, 2013 Opinion and Order is available at http://is.gd/ByTk57from Leagle.com. In re Wire Harness - End-Payor Actions, represented by Adam T. Schnatz, The Miller Law Firm, Bernard Persky, Robins, Kaplan, Miller & Ciresi L.L.P., Brendan H. Frey, Mantese and Rossman, PC, Daniel E. Gustafson, Gustafson Gluek PLLC, Darryl Bressack, Fink Associates Law, David H. Fink, David F. Hansma, Mantese and Rossman, E. Powell Miller, The Miller Law Firm, Gerard V. Mantese, Mantese Assoc., Hollis L Salzman, Robins, Kaplan, Miller & Ciresi LLP, Jonathan M Jagher, Spector Roseman Kodroff & Willis, P.C., Marc M. Seltzer, Susman Godfrey, L.L.P., Sheldon L. Miller, W. Joseph Bruckner, Lockridge Grindal Nauen & William Reiss, Robins, Kaplan, Miller & Ciresi L.L.P.. Susan Lacava, Plaintiff, represented by E. Powell Miller, The Miller Law Firm, Seth R. Gassman, Labaton Sucharow LLP, Todd F. Flood, Flood Lanctot Connor Stablein, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Meredith Heller, Plaintiff, represented by Paul F. Novak, Milberg LLP, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Halley Ascher, Plaintiff, represented by Patrick E. Cafferty, Cafferty Clobes Meriwether & Sprengel LLP, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Carol Ann Kashishian, Plaintiff, represented by Adam T. Schnatz, The Miller Law Firm. Carol Ann Kashishian, Plaintiff, represented by E. Powell Miller, The Miller Law Firm. Carol Ann Kashishian, Plaintiff, represented by S. Thomas Wienner, Weinner, Gould,, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Meetesh Shah, Plaintiff, represented by Sheldon L. Miller, Adam J. Zapala, Cotchett, Pitre & McCarthy, Frank C. Damrell, Cotchett, Pitre & McCarthy LLP, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios, Steven N. Williams, Cotchett, Pitre & McCarthy, LLP & Warren T. Burns, Susman Godfrey, LLP. Ellis Winton McInnis, Plaintiff, represented by David E. Plunkett, Williams, Williams,, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Gary Arthur Herr, Plaintiff, represented by Patrick E. Cafferty, Cafferty Clobes Meriwether & Sprengel LLP, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Michael Tracy, Plaintiff, represented by Sheldon L. Miller. Michael Tracy, Plaintiff, represented by Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP. Michael Tracy, Plaintiff, represented by James L. Kauffman, Levin Papantonio Thomas Mitchell Rafferty & Proctor PA. Michael Tracy, Plaintiff, represented by Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Ifeoma Adams, Plaintiff, represented by Patrick E. Cafferty, Cafferty Clobes Meriwether & Sprengel LLP, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP & Randall B. Weill, Preti Flaherty Beliveau & Pachios. Ifeoma Adams, Plaintiff, represented by Warren T. Burns, Susman Godfrey, LLP. Jennifer Chase, Plaintiff, represented by Anthony L. DeLuca, Anthony L. DeLuca, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Curtis Gunnerson, Plaintiff, represented by Anthony L. DeLuca, Anthony L. DeLuca, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Kelly Klosterman, Plaintiff, represented by Anthony L. DeLuca, Anthony L. DeLuca, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP & Randall B. Weill, Preti Flaherty Beliveau & Pachios. Kelly Klosterman, Plaintiff, represented by Warren T. Burns, Susman Godfrey, LLP. Darrel Senior, Plaintiff, represented by Anthony L. DeLuca, Anthony L. DeLuca, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Curtis P. Boudreaux, Plaintiff, represented by E. Powell Miller, The Miller Law Firm, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Tommy N. Wilson, Plaintiff, represented by E. Powell Miller, The Miller Law Firm, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Tenisha Burgos, Plaintiff, represented by Patrick E. Cafferty, Cafferty Clobes Meriwether & Sprengel LLP, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Jason Grala, Plaintiff, represented by Patrick E. Cafferty, Cafferty Clobes Meriwether & Sprengel LLP, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Darcy Sherman, Plaintiff, represented by Alyson L. Oliver, Daniel E. Gustafson, Gustafson Gluek PLLC, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. RD Automotive, Inc., Plaintiff, represented by Alyson L. Oliver, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Lucha Bott, Plaintiff, represented by Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Jane M Taylor, Plaintiff, represented by Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Jude Anheluk, Plaintiff, represented by Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Margaret A Sirmon, Plaintiff, represented by Hugh P. Lambert, Lambert & Nelson, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. John R Janes, Plaintiff, represented by Hugh P. Lambert, Lambert & Nelson, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Scott M Quinn, Plaintiff, represented by Hugh P. Lambert, Lambert & Nelson, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Bradford Brewer, Plaintiff, represented by Hugh P. Lambert, Lambert & Nelson, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Sam Davis, Jr, Plaintiff, represented by Hugh P. Lambert, Lambert & Nelson. Sam Davis, Jr, Plaintiff, represented by Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. John Hollingsworth, Plaintiff, represented by Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Tony Maravilla, Plaintiff, represented by Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Gretha Wilkerson, Plaintiff, represented by Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Gary Brock, Plaintiff, represented by Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Zahira Crespo, Plaintiff, represented by John F. Nevares, John Nevares and Associates PSC, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Stacey R Nickell, Plaintiff, represented by Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Robert Rice, Plaintiff, represented by Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Janne Rice, Plaintiff, represented by Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Roger D. Olson, Plaintiff, represented by Anthony L. DeLuca, Anthony L. DeLuca, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Susan B. Olson, Plaintiff, represented by Anthony L. DeLuca, Anthony L. DeLuca, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Phillip G. Young, Plaintiff, represented by Anthony L. DeLuca, Anthony L. DeLuca, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Kathleen Tawney, Plaintiff, represented by Mark J. Schirmer, Straus & Bois, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Paul Gustafson, Plaintiff, represented by Mark J. Schirmer, Straus & Bois, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Michael Wick, Plaintiff, represented by Paul F. Novak, Milberg LLP, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Alena Farrell, Plaintiff, represented by Paul F. Novak, Milberg LLP, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Melissa Barron, Plaintiff, represented by Terry Gross, Rabinowitz, Boudin, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Cindy Prince, Plaintiff, represented by Hassan A. Zavareei, Tycko & Zavareei LLP, Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP, Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. Scott Lamson, Plaintiff, represented by Gregory P. Hansel, Preti Flaherty Beliveau & Pachios, LLP. Scott Lamson, Plaintiff, represented by Randall B. Weill, Preti Flaherty Beliveau & Pachios & Warren T. Burns, Susman Godfrey, LLP. End-Payor Plaintiffs, Plaintiff, represented by Steven N. Williams, Cotchett, Pitre & McCarthy, LLP. Furukawa Electric Company, Limited, Defendant, represented by Craig D. Bachman, Lane Powell PC, Kenneth R. Davis, II, Lane Powell PC, Larry S. Gangnes, Lane Powell PC, Connor B. Shively, Lane Powell, Darin Sands - NOT SWORN, Lane Powell PC, Masayuki Yamaguchi, Lane Powell PC, Richard D. Bisio, Kemp, Klein, & Ronald S. Nixon, Kemp, Klein,. Lear Corporation, Defendant, represented by Howard B. Iwrey, Dykema Gossett, Andrew Marovitz, Mayer Brown LLP & Dante A. Stella, Dykema Gossett. Sumitomo Electric Industries, Limited, Defendant, represented by Daniel M. Wall, Latham & Watkins, Daniel Glad, Latham & Watkins LLP, Elizabeth A. Favaro, Giarmarco, Mullins,, Marguerite M. Sullivan, Latham & Watkins & William H. Horton, Giarmarco, Mullins & Horton, P.C.. Yazaki Corporation, Defendant, represented by John V. Biernacki, Jones Day, John M. Majoras, Jones Day & Michelle K. Fischer, Jones Day. Yazaki North America, Incorporated, Defendant, represented by John M. Majoras, Jones Day & Michelle K. Fischer, Jones Day. American Furukawa, Inc., Defendant, represented by Craig D. Bachman, Lane Powell PC, Kenneth R. Davis, II, Lane Powell PC, Larry S. Gangnes, Lane Powell PC, Connor B. Shively, Lane Powell, Masayuki Yamaguchi, Lane Powell PC, Richard D. Bisio, Kemp, Klein, & Ronald S. Nixon, Kemp, Klein,. Denso International America, Incorporated, Defendant, represented by David P. Donovan, Wilmer Cutler Pickering Hale and Dorr LLP, Stephanie K. Wood, Wilmer Cutler Pickering Hale and Door LLP, Steven F. Cherry, Wilmer Cutler Pickering Hale and Dorr LLP & Steven M. Zarowny, Denso International America, Inc.. TRAM, Incorporated, Defendant, represented by David F. DuMouchel, Butzel Long, George B. Donnini, Butzel Long & W. Todd Miller, Baker & Miller PLLC. Denso Corporation, Defendant, represented by David P. Donovan, Wilmer Cutler Pickering Hale and Dorr LLP, Stephanie K. Wood, Wilmer Cutler Pickering Hale and Door LLP & Steven F. Cherry, Wilmer Cutler Pickering Hale and Dorr LLP. Fujikura Ltd., Defendant, represented by James L. Cooper, Arnold & Porter LLP , Joanne G. Swanson, Kerr, Russell, Matthew L. Powell, Kerr, Russell & William A. Sankbeil, Kerr, Russell. Leoni Wiring Systems, Inc., Defendant, represented by Michael R. Turco, Brooks Wilkins Sharkey & Turco & Michael F. Tubach, O'Melveny & Myers LLP . Leonische Holding, Inc., Defendant, represented by Michael R. Turco, Brooks Wilkins Sharkey & Turco. Sumitomo Wiring Systems, Ltd, Defendant, represented by Daniel Glad, Latham & Watkins LLP, Daniel M. Wall, Latham & Watkins, Elizabeth A. Favaro, Giarmarco, Mullins,, Marguerite M. Sullivan, Latham & Watkins & William H. Horton, Giarmarco, Mullins & Horton, P.C.. Sumitomo Electric Wiring Systems, Inc., Defendant, represented by Daniel Glad, Latham & Watkins LLP, Daniel M. Wall, Latham & Watkins, Elizabeth A. Favaro, Giarmarco, Mullins,, Marguerite M. Sullivan, Latham & Watkins & William H. Horton, Giarmarco, Mullins & Horton, P.C.. K&S Wiring Systems, Inc., Defendant, represented by Daniel Glad, Latham & Watkins LLP, Daniel M. Wall, Latham & Watkins, Elizabeth A. Favaro, Giarmarco, Mullins,, Marguerite M. Sullivan, Latham & Watkins & William H. Horton, Giarmarco, Mullins & Horton, P.C.. Sumitomo Wiring Systems (U.S.A.) Inc., Defendant, represented by Daniel Glad, Latham & Watkins LLP, Daniel M. Wall, Latham & Watkins, Elizabeth A. Favaro, Giarmarco, Mullins,, Marguerite M. Sullivan, Latham & Watkins & William H. Horton, Giarmarco, Mullins & Horton, P.C.. Leonische Holding Inc., Defendant, represented by Michael F. Tubach, O'Melveny & Myers LLP & Michael R. Turco, Brooks Wilkins Sharkey & Turco. Sumitomo Electric Wintec America, Inc., Defendant, represented by Daniel Glad, Latham & Watkins LLP, Daniel M. Wall, Latham & Watkins, Elizabeth A. Favaro, Giarmarco, Mullins,, Marguerite M. Sullivan, Latham & Watkins & William H. Horton, Giarmarco, Mullins & Horton, P.C.. Tokai Rika Co., Ltd., Defendant, represented by David F. DuMouchel, Butzel Long, George B. Donnini, Butzel Long & W. Todd Miller, Baker & Miller PLLC. G.S. Electech, Inc., Defendant, represented by Donald M. Barnes, Porter Wright Morris & Arthur LLP, John Monica, Jr., Porter Wright Morris & Arthur LLP, Molly Crabtree, Porter Wright Morris & Arthur & Salvatore A. Romano, Porter Wright Morris & Arthur LLP. G.S. Wiring Systems, Inc., Defendant, represented by Donald M. Barnes, Porter Wright Morris & Arthur LLP, John Monica, Jr., Porter Wright Morris & Arthur LLP, Molly Crabtree, Porter Wright Morris & Arthur & Salvatore A. Romano, Porter Wright Morris & Arthur LLP. G.S.W. Manufacturing, Inc., Defendant, represented by Donald M. Barnes, Porter Wright Morris & Arthur LLP, John Monica, Jr., Porter Wright Morris & Arthur LLP, Molly Crabtree, Porter Wright Morris & Arthur & Salvatore A. Romano, Porter Wright Morris & Arthur LLP. LEHMAN BROTHERS: LibertyView Funds Reach Deal to Amend Claims ------------------------------------------------------------- The U.S. Bankruptcy Court in Manhattan approved an agreement between Lehman Brothers Holdings Inc. and a group of funds led by LibertyView Funds L.P. Under the deal, both sides agreed to amend the claims of the funds by withdrawing those portions that assert a liability or seek a recovery arising from or related to a claim other than the so-called "best claims" asserted by the group against Lehman's European unit. A full-text copy of the agreement is available for free at http://is.gd/vL8y1G About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012 and a second payment of $10.2 billion on Oct. 1. A third distribution is set for around March 30, 2013. The brokerage is yet to make a first distribution to non-customers. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. LEHMAN BROTHERS: Court Rejects 6 Claims Totaling $3MM Against LBI ----------------------------------------------------------------- Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York granted the objection of James W. Giddens, the trustee for the SIPA liquidation of Lehman Brothers Inc., to claims filed by six creditors against the brokerage. In a 15-page memorandum decision dated July 11, 2013, the bankruptcy judge disallowed the claims of Aaron Akman, Grace Gathungu, Dean Monksfield, Stephen Thomas, Andre Verderame and Mario Monello, who, together, assert more than $3 million. The LBI Trustee proposed the disallowance of the claims early this year on grounds that they were filed after the June 1, 2009 deadline. The claimants defended their claims, saying they did not receive a notice of the deadline from the Lehman brokerage. "The six-month time limitation for filing claims in SIPA cases is mandatory and must be strictly construed," Judge Peck said. "It would be an abuse of discretion for the court to grant the exceptional relief sought." "The aim of a SIPA case is not reorganization but the prompt return of customer property, and that goal, like the goal of prompt closure and distribution in chapter 7, justifies a strict six-month time limitation for filing claims against the debtor broker-dealer, a limitation period that by design may be extended only in those circumstances that are specified in the SIPA statute," Judge Peck continued. A full-text copy of Judge Peck's Decision is available for free at http://bankrupt.com/misc/LBI_28thOOOPN0711.pdf About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012 and a second payment of $10.2 billion on Oct. 1. A third distribution is set for around March 30, 2013. The brokerage is yet to make a first distribution to non-customers. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. LEHMAN BROTHERS: LBI Trustee Objects to Countrywide Class Claims ---------------------------------------------------------------- James W. Giddens, the trustee for the SIPA liquidation of Lehman Brothers Inc. ask the U.S. Bankruptcy Court for the Southern District of New York to disallow and expunge the general creditor claim filed by Thomas DiNapoli and others as "Lead Plaintiffs" on behalf of a putative class represented by Claim No. 5528. The Claimant filed a general creditor proof of claim against the LBI estate on behalf of a putative class "of all persons who purchased or otherwise acquired the publicly traded securities of Countrywide Financial Corporation between March 12, 2004 and March 7, 2008." The Claim seeks an unliquidated amount, "for damages resulting from violations of certain federal securities laws" arising from LBI's role in the purchase of certain CFC securities. The LBI Trustee has determined that there is no legal or factual justification for the Claim, pointing out that the Claimant has settled its claims in the CFC Litigation through the June 29, 2010, settlement agreement. The purpose of the settlement agreement is stated to be "to fully and finally compromise, resolve, discharge, release and settle," all claims alleged in the CFC Litigation for $624 million. LBI was dropped from the CFC Litigation due to the automatic stay and the Lead Plaintiffs and all class members (except for 41 who opted out) released their CFC claims. The CFC Litigation is In re: Countrywide Financial Corp. Sec. Litig., Lead Case No. CV-07-CIV-05295-MRP (MANx) (C.D. Cal.) Mr. DiNapoli is the New York State Comptroller. A hearing on the objection will be held on Aug. 21, 2013, at 10:00 a.m. (Prevailing Eastern Time). Responses are due July 24. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012 and a second payment of $10.2 billion on Oct. 1. A third distribution is set for around March 30, 2013. The brokerage is yet to make a first distribution to non-customers. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. LEHMAN BROTHERS: Increases Estimate of Cash Levels to $80.6BB ------------------------------------------------------------- Joseph Checkler writing for Dow Jones' DBR Small Cap reports that recent settlements have led Lehman Brothers Holdings Inc. to increase estimates of its cash levels to $80.6 billion, $15.8 billion more than it said at this time last year. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012 and a second payment of $10.2 billion on Oct. 1. A third distribution is set for around March 30, 2013. The brokerage is yet to make a first distribution to non-customers. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. LEHMAN BROTHERS: Files Updated Cash Flow Estimates -------------------------------------------------- Michael Bathon, substituting for Bloomberg bankruptcy columnist Bill Rochelle, reports Lehman Brothers Holdings Inc. said cash from operations for itself and controlled affiliates rose to an estimated $80.6 billion, more than the defunct firm previously predicted. According to the report, the estimate increased about $15.8 billion from one submitted a year ago to the U.S. Bankruptcy Court in Manhattan, according to a statement issued July 23. Lehman attributed the increase to recoveries from completed settlements, rising asset values and "positive execution results." About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 08-13555) on Sept. 15, 2008. Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012, a second payment of $10.2 billion on Oct. 1, 2012, and a third distribution of $14.2 billion on April 4, 2013. The brokerage is yet to make a first distribution to non-customers, although customers are being paid in full. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. LEHMAN BROTHERS: Pensions Don't Get Priority Over Creditors ----------------------------------------------------------- Michael Bathon, substituting for Bloomberg bankruptcy columnist Bill Rochelle, reports that the U.K. Supreme Court said that about 43,000 former employees with pensions at Lehman Brothers Holdings Inc. and Nortel Networks Corp. should be treated the same as other unsecured creditors of the bankrupt firms. According to the report, the ruling overturned a lower court verdict that pension holders should get priority over unsecured creditors in the insolvency cases. The U.K. pension regulator sought 125 million pounds ($192 million) from Lehman and 2.1 billion pounds from Nortel to cover shortfalls in their plans. "There seems no particular sense" in a pension plan's trustees "having any greater or any lesser priority than the rights of any other unsecured creditor," Judge David Neuberger said in a ruling July 24 in London. The report relates that Lehman Brothers filed the largest bankruptcy in U.S. history in September 2008, and its U.K. unit is being liquidated by PricewaterhouseCoopers LLP. Internet provider Nortel and affiliates filed for bankruptcy in January 2009. PwC, which has a role in both companies' administrations, said in a statement that the ruling was the "fairest result." "This is also a great result for members of pension schemes and in some cases will make a real difference to their pension in the case of an administration," Jonathon Land, partner at PwC and adviser to the trustees of the Nortel Networks UK Pension Trust Ltd., said in the statement. The report says that the Supreme Court ruling in favor of the Lehman and Nortel administrators will help companies, lenders and insolvency experts, said Devi Shah, a lawyer at Mayer Brown LLP in London. Previously, restructuring professionals "had to consider potentially large pension deficits when assessing the prospects of companies on the verge of insolvency, making rescue of the enterprise a risky and uncertain business." About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 08-13555) on Sept. 15, 2008. Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012, a second payment of $10.2 billion on Oct. 1, 2012, and a third distribution of $14.2 billion on April 4, 2013. The brokerage is yet to make a first distribution to non-customers, although customers are being paid in full. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation and its various affiliated entities provided next-generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel did business in more than 150 countries around the world. Nortel Networks Limited was the principal direct operating subsidiary of Nortel Networks Corporation. On Jan. 14, 2009, Nortel Networks Inc.'s ultimate corporate parent Nortel Networks Corporation, NNI's direct corporate parent Nortel Networks Limited and certain of their Canadian affiliates commenced a proceeding with the Ontario Superior Court of Justice under the Companies' Creditors Arrangement Act (Canada) seeking relief from their creditors. Ernst & Young was appointed to serve as monitor and foreign representative of the Canadian Nortel Group. That same day, the Monitor sought recognition of the CCAA Proceedings in U.S. Bankruptcy Court (Bankr. D. Del. Case No. 09-10164) under Chapter 15 of the U.S. Bankruptcy Code. That same day, NNI and certain of its affiliated U.S. entities filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 09-10138). In addition, the High Court of England and Wales placed 19 of NNI's European affiliates into administration under the control of individuals from Ernst & Young LLP. Other Nortel affiliates have commenced and in the future may commence additional creditor protection, insolvency and dissolution proceedings around the world. On May 28, 2009, at the request of administrators, the Commercial Court of Versailles, France, ordered the commencement of secondary proceedings in respect of Nortel Networks S.A. On June 8, 2009, Nortel Networks UK Limited filed petitions in U.S. Bankruptcy Court for recognition of the English Proceedings as foreign main proceedings under Chapter 15. U.S. Bankruptcy Judge Kevin Gross presides over the Chapter 11 and 15 cases. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. In the Chapter 11 case, James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as the U.S. Debtors' general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The United States Trustee appointed an Official Committee of Unsecured Creditors in respect of the U.S. Debtors. An ad hoc group of bondholders also was organized. Fred S. Hodara, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, and Christopher M. Samis, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, represent the Official Committee of Unsecured Creditors. An Official Committee of Retired Employees and the Official Committee of Long-Term Disability Participants tapped Alvarez & Marsal Healthcare Industry Group as financial advisor. The Retiree Committee is represented by McCarter & English LLP as Delaware counsel, and Togut Segal & Segal serves as the Retiree Committee. The Committee retained Alvarez & Marsal Healthcare Industry Group as financial advisor, and Kurtzman Carson Consultants LLC as its communications agent. Several entities, particularly, Nortel Government Solutions Incorporated and Nortel Networks (CALA) Inc., have material operations and are not part of the bankruptcy proceedings. As of Sept. 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of Sept. 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Since the commencement of the various insolvency proceedings, Nortel has sold its business units and other assets to various purchasers. Nortel has collected roughly $9 billion for distribution to creditors. Of the total, $4.5 billion came from the sale of Nortel's patent portfolio to Rockstar Bidco, a consortium consisting of Apple Inc., EMC Corporation, Telefonaktiebolaget LM Ericsson, Microsoft Corp., Research In Motion Limited, and Sony Corporation. The consortium defeated a $900 million stalking horse bid by Google Inc. at an auction. The deal closed in July 2011. Nortel has filed a proposed plan of liquidation in the U.S. Bankruptcy Court. The Plan generally provides for full payment on secured claims with other distributions going in accordance with the priorities in bankruptcy law. Judge Gross and the court in Canada scheduled trials in 2014 on how to divide proceeds among creditors in the U.S., Canada, and Europe. LIBERTY TIRE: S&P Lowers CCR to 'B-'; Outlook Stable ---------------------------------------------------- Standard & Poor's Rating Services said it lowered its corporate credit rating on Liberty Tire Recycling Holdco LLC (Liberty) to 'B-' from 'B'. The outlook is stable. In addition, S&P lowered the rating on the company's $200 million senior unsecured notes maturing in October 2016 to 'B-' from 'B'. The recovery rating, which remains unchanged at '4', indicates S&P's expectation for average (30% to 50%) recovery in the event of a payment default. "Our downgrade on Liberty reflects challenging conditions for scrap tire collections in parts of Texas and Ontario that have offset some of its gains from having the Lockport, N.Y. and Brantford, Ont. processing facilities fully operational," said Standard & Poor's credit analyst Pranay Sonalkar. "While we expect operating performance to improve in the second half of 2013 as a result of cost reductions and productivity improvements, we forecast funds from operations (FFO) to debt to be about 8% at year-end 2013, which is below the 10% we had required for the previous rating. We project the company will generate moderate free operating cash flow (FOCF) and use it to pay down borrowings under the revolving credit facility. We currently view liquidity as less than adequate, primarily as a result of the October 2014 maturity on the revolving credit facility," S&P added. The outlook is stable. In S&P's view, stable sales volume and lower expenses will help improve Liberty's earnings and cash flow in the second half of 2013. S&P believes Liberty will be able to maintain an FFO to debt of about 8.0% S&P could lower ratings if the company does not extend the maturity on its revolving credit facility beyond 2014 by October 2013. S&P could also lower the rating if an unexpected deterioration of EBITDA margins resulted in the company's free operating cash flow turning negative. Although it is not likely in the next 12 months, S&P may consider a modest upgrade if Liberty continues to exhibit steady growth in revenues and profitability while reducing costs, improving its cash flow generation and improving its debt maturity profile. This would like be consistent with an FFO to debt ratio of about 10%. LIFE UNIFORM: Rival to Buy After No Other Bidders Emerge -------------------------------------------------------- Marie Beaudette writing for Dow Jones' DBR Small Cap reports that Life Uniform Holding Corp. said it will move forward with its sale to rival chain Scrubs and Beyond LLC after no other bidders stepped up to challenge the $22 million bid. The July 24 auction was cancelled because no other bidders emerged. The Debtors negotiated a stalking horse asset purchase agreement dated May 29, 2013 for sale to Scrubs for $22.6 million, absent higher and better offers. A sale hearing is scheduled for July 26, 2013, at 10:00 a.m. prevailing Eastern Time. About Life Uniform Life Uniform was founded in 1965 when Angelica Corporation decided to enter the retail uniform industry. The first Life Uniform store opened in 1965 in Clayton, Missouri. At present, Life Uniform is the nation's largest independently owned medical professional supplier. Sun Uniform LLC acquired Life Uniform in July 2004. Since the acquisition by Sun the company addressed sagging profitability and overhead issues and quickly drove increases in profitability through a combination of store rationalization and sensible corporate overhead initiatives. However, recent performance has been declining in terms of revenue. This is due to the company's liquidity issues, which prevented the company from completing its e-commerce system upgrade, encourage better pricing from vendors, and maintain sufficient capital. Life Uniform Holding Corp., Healthcare Uniform Company, Inc., and Uniform City National Inc. filed Chapter 11 petitions (Bankr. D. Del. Case Nos. 13-11391 to 13-11393) on May 29, 2013. The petitions were signed by Bryan Graiff, COO, CFO, VP, secretary, and treasurer. The lead debtor estimated assets and debts of at least $10 million. The company has signed a deal to sell all assets to Scrubs and Beyond, LLC for $22.625 million, absent higher and better offers at a court-sanctioned auction in July. First lien lender CapitalSource Finance LLC is owed on a $11.5 million revolver and $26 million term loan. CapitalSource is represented by Brian T. Rice, Esq., at Brown Rudnick LLP; and Jeffrey C. Wisler, Esq., at Connolly Gallagher LLP. Sun Uniforms Finance LLC is owed $6.1 million in principal on a second lien note and holds two additional notes, each in the original principal of $1.08 million. Angelica Corp. holds an unsecured junior subordinate not in the principal amount of $5.48 million. Klehr Harrison Harvey Branzburg, LLP, serves as the Debtors' counsel. Epiq Bankruptcy Solutions acts as the Debtors' claims and noticing agent. The Debtors' financial advisor is Capstone Advisory Group, LLC. LIGHTSQUARED INC: Lenders Propose Plan Based on LBAC's $2.2B Bid ---------------------------------------------------------------- A group of LightSquared's lenders filed Tuesday a Chapter 11 reorganization plan based largely on a $2.2 billion offer from Dish Network Corp.'s subsidiary. The lenders' proposed plan is a joint plan for LightSquared LP, ATC Technologies LLC, LightSquared Inc. of Virginia, LightSquared Corp., LightSquared Subsidiary LLC, Sky Terra Holdings (Canada) Inc., SkyTerra (Canada) Inc., LightSquared Finance Co., LightSquared Network LLC and LightSquared Bermuda Ltd. LightSquared Inc., the holding company largely owned by Phil Falcone and his Harbinger Capital Partners hedge fund, is not included in the offer. The plan proposes to sell substantially all of LightSquared's so- called "LP" assets at auction, with L-Band Acquisition Corp.'s offer serving as the lead bid. The $2.2 billion bid from L-Band would pay in full those holding LightSquared's $1.7 billion secured bank loan. Holders of $235.6 in LightSquared LP's preferred shares would receive little or nothing, according to the proposed plan. Meanwhile, each holder of general unsecured claims against the LP units would receive a pro rata share of the total amount that would be allocated for payment of those claims. The plan proposes to allocate $10 million to pay general unsecured claims estimated at $7.6 million. Under the plan, a distribution account will be established. Cash proceeds from the sale of the LP assets will be transferred to and vested in the distribution account. Full-text copies of the proposed Chapter 11 plan and the outline of the plan are available for free at: http://bankrupt.com/misc/LightSquared_Plan072313.pdf http://bankrupt.com/misc/LightSquared_DS072313.pdf The lenders sponsoring the plan include Capital Research and Management Co., Cyrus Capital Partners L.P., Intermarket Corp., UBS AG, and SP Special Opportunities LLC, a fund owned by Dish Network Chairman Charlie Ergen. The group owns $1.3 billion of the $1.7 billion secured bank loan. The group's filing came after LightSquared lost its exclusive right to control its reorganization on July 15. Judge Chapman Joseph Checkler, writing for the Wall Street Journal, reported that U.S. Bankruptcy Judge Shelley Chapman was disappointed when lawyers for the lenders presented the plan without informing her in advance that they would do so. "The level of my voice is not reflective of the level of my frustration," the news agency quoted Judge Chapman as saying during the hearing held on Tuesday to consider a timeline for LightSquared to receive proposals. The group's lawyers apologized for the timing of the filing but said their negotiations on the proposal didn't start until after a hearing last week, according to the report. At the hearing, Judge Chapman approved a timeline that requires competing bids by the end of the day on December 6 and sets a hearing to confirm a final plan to begin December 10, according to a July 23 report by Tiffany Kary of Bloomberg News. Mr. Ergen, Dish Network's chairman, initially made a $2 billion offer for LightSquared in the spring. LightSquared didn't negotiate with Mr. Ergen after his bid in the spring, presumably because Mr. Falcone hopes to keep control of the company, The Journal reported. About LightSquared Inc. LightSquared Inc. and 19 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on May 14, 2012, to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network. LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements. LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties. Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to the Debtors. Alvarez & Marsal North America, LLC, is the financial advisor. Kurtzman Carson Consultants LLC serves as claims and notice agent. LIGHTSQUARED INC: Lenders Propose Reorganization Plan ----------------------------------------------------- Michael Bathon, substituting for Bloomberg News bankruptcy columnist Bill Rochelle, reports that a group of lenders to Philip A. Falcone's LightSquared Inc. proposed a reorganization plan for the company, saying its LP unit should be sold at auction with a lead offer from an entity owned by Dish Network Corp. According to the report, L-Band Acquisition LLC, wholly owned by Dish, raised its offer for LightSquared's assets to $2.2 billion by adding $220 million in cash under certain conditions, Tom Lauria, a lawyer for the lenders, said July 23 in U.S. Bankruptcy Court in Manhattan. LightSquared has refused to meet with L-Band. U.S. Bankruptcy Judge Shelley Chapman approved a timeline that requires competing bids by Dec. 6 and sets a hearing to confirm a final plan to begin Dec. 10. The report notes that LightSquared had said it expected competing proposals to reorganize its assets. The broadband-network services provider lost the exclusive right to control its reorganization July 15. The lender group, which owns debt in the LP unit, includes Capital Research & Management Co., Cyrus Capital Partners LP, Intermarket Corp., UBS AG and SP Special Opportunities LLC, a fund owned by Dish Chairman Charlie Ergen. Their plan would split the LP unit from LightSquared's Inc. unit. The report discloses that Rachel Strickland, a lawyer for SP Special and L-Band, told Judge Chapman that LightSquared has refused to meet with its potential acquirer, even though a "bag of $2 billion in cash" has been sitting at its doorstep for more than 45 days. Falcone's Harbinger Capital Partners LLC is "trying desperately" to keep ownership of LightSquared in the face of debt-buying by SP Special, at the expense of creditors, lenders have said. The Ergen fund joined the lender group on June 13. About LightSquared Inc. LightSquared Inc. and 19 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on May 14, 2012, to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network. LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements. LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties. Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to the Debtors. Alvarez & Marsal North America, LLC, is the financial advisor. Kurtzman Carson Consultants LLC serves as claims and notice agent. LORD & TAYLOR: S&P Lowers CCR to 'B'; Outlook Stable ---------------------------------------------------- Standard & Poor's Ratings Services said it lowered its corporate credit rating on New York City-based Lord & Taylor Holdings LLC to 'B' from 'B+'. The outlook is stable. The downgrade reflects S&P's opinion that credit protection measures will not strengthen meaningfully from current levels. It also incorporates S&P's view that performance gains will be minimal given a more difficult consumer environment. S&P anticipates some recovery in the fourth quarter because of easier period-over-period comparisons as the company's operations were negatively affected by Superstorm Sandy last year. However, S&P do not believe it will be sufficient to reduce leverage below the mid-6x area. Concurrently, S&P withdrew its issue-level and recovery ratings on the term loan B since it has been repaid in full. "The ratings on Lord & Taylor reflect our assessment that its financial risk profile is "highly leveraged" because of the substantial amount of debt and forecasted thin cash flow protection measures," said credit analyst David Kuntz. "Our assessment of the company's "weak" business risk profile incorporates our view of its participation in the highly competitive department store industry, its geographic concentration, and its relatively small size compared with its peers." The stable outlook reflects S&P's expectation that credit metrics will remain relatively stable over the next year despite its forecast for reduced consumer spending and an increasingly promotional environment. S&P believes there could be some positive gains in fourth-quarter 2013 and first-quarter 2014 given the easier comparables following Superstorm Sandy and the late arrival of spring temperatures in the northeast this year. S&P could raise the rating if Lord & Taylor can strengthen performance ahead of its expectations. The company would demonstrate strong same-store sales, a meaningful increase in full price sales, and good cost controls. Under this scenario, same- store sales would be in the mid- to upper-single digits and margins would be about 100 basis points (bps) ahead of S&P's expectations. This would result in leverage under 5.0x. S&P could lower the rating if merchandise missteps or a further weakening of consumer spending results in moderately negative same-store sales and margins erode further because of substantial markdowns. Under this scenario, sales would be in the negative mid-single digits and margins would fall by about 50 bps. At that ime, leverage would increase to above 7.5x and interest coverage would decline to the mid-1x area. MAXCOM TELECOMUNICACIONES: Files Plan Backed by Ventura Capital --------------------------------------------------------------- Michael Bathon, substituting for Bloomberg bankruptcy columnist Bill Rochelle, reports that Maxcom Telecomunicaciones SAB, a Mexico City-based phone company, filed bankruptcy with a plan backed by Ventura Capital Privado SA in hopes of emerging in less than two months. According to the report, Maxcom was unable to get the required support from noteholders to restructure out of court. Maxcom requested a Sept. 10 hearing to seek court approval for its plan to exit bankruptcy, according to court documents. The plan was supported by more than 98 percent of the holders of the company's $200 million in 11 percent senior secured bonds who voted on it before the bankruptcy filing. Under the proposal, all creditors except the senior noteholders will be paid in full, according to court documents. Ventura Capital agreed to make a $45 million capital infusion and offered to buy outstanding shares for 2.90 pesos each. Senior noteholders would get $200 million in new notes with reduced interest and extended maturities, according to the statement. They will also have the right to buy equity that isn't subscribed in the offering, worth as much as 15 percent of the value of their notes. The report discloses the company said liquidity constraints prevented it from spending capital upgrading and expanding its network to keep pace with advances in technology. Maxcom said it was also hurt by a transition to mobile phones from landlines. About Maxcom Maxcom Telecomunicaciones, S.A.B. de C.V., headquartered in Mexico City, Mexico, is a facilities-based telecommunications provider using a "smart-build" approach to deliver last-mile connectivity to micro, small and medium-sized businesses and residential customers in the Mexican territory. Maxcom launched commercial operations in May 1999 and is currently offering local, long distance, data, value-added, paid TV and IP-based services on a full basis in greater metropolitan Mexico City, Puebla, Tehuacan, San Luis, and Queretaro, and on a selected basis in several cities in Mexico. In June 2013, Maxcom didn't make an $11 million interest payment on the notes. Maxcom sought bankruptcy protection (Bankr. D. Del. Case No. 13- bk-11839) in Wilmington, Delaware, on July 23, 2013. Maxcom listed $11.1 billion in assets and $402.3 million in debt. The company had assets valued at 4.98 billion pesos ($394 million) in the quarter ended March 31, according to an April 26 regulatory filing. The company reached a restructuring agreement with Ventura Capital, a group holding about $86 million, or 48.7 percent, of the senior notes and about 44 percent of its equity holders, court papers show. Ventura Capital Privado, S.A. de C.V., is represented in the case by G. Alexander Bongartz, Esq., Luc A. Despins, Esq., and Marc J. Carmel, Esq., at Paul Hastings LLP; and Morris Nichols Arsht & Tunnel LLP's Robert J. Dehney, Esq., and Daniel B. Butz, Esq. METAVATION LLC: Revstone Unit Seeks Bankruptcy to Sell Assets ------------------------------------------------------------- Metavation LLC, a unit of bankrupt auto-parts maker Revstone Industries LLC, sought bankruptcy protection from creditors (Bankr. D. Del. Case No. 13-11831) to ease a sale of its assets. Michael Bathon, substituting for Bloomberg News bankruptcy columnist Bill Rochelle, reports the company, based in Southfield, Michigan, listed as much as $50 million in both assets and debt in Chapter 11 documents filed July 22 in U.S. Bankruptcy Court in Wilmington, Delaware. According to the report, Revstone is seeking to sell the Metavation assets for about $25.1 million after reaching an agreement with a unit of Mark IV LLC to serve as the stalking- horse, or initial, bidder, according to court filings. The offer would be tested at a bankruptcy auction should it receive any competing bids, which would have to be $1.5 million higher than the initial offer. "Metavation has determined that an expedited process for the sale of its assets to the stalking horse bidder or to another successful bidder, while the business is still operating as a going concern, will maximize the return to creditors," lawyers for the company said in court documents. The report notes that the company said in court papers that it needs to have procedures to govern the auction approved within 16 days of Metavation's bankruptcy filing. A hearing to approve the sale would have to be scheduled within 16 days of the bidding procedures being approved. Metavation manufactures precision-machined components and assemblies, including engine components and driveline products for the automotive industry, according to court documents. The report discloses that the auto-parts maker, founded as Hillsdale Tool & Manufacturing in 1940, counts General Motors Co. and Chrysler Group LLC as customers. About Revstone Industries, Greenwood Forgings, & US Tool & Engineering Lexington, Kentucky-based Revstone Industries LLC, a maker of truck parts, filed for Chapter 11 bankruptcy (Bankr. D. Del. Case No. 12-13262) on Dec. 3, 2012. Judge Brendan Linehan Shannon oversees the case. In its petition, Revstone estimated under $50 million in assets and debts. Affiliate Spara LLC filed its Chapter 11 petition (Bankr. D. Del. Case No. 12-13263) on Dec. 3, 2012. Lexington-based Greenwood Forgings, LLC (Bankr. D. Del. Case No. 13-10027) and US Tool & Engineering LLC (Bankr. D. Del. Case No. 13-10028) filed separate Chapter 11 petitions on Jan. 7, 2013. Judge Shannon also oversees the cases. A motion for joint administration of the cases has been filed. Duane David Werb, Esq., at Werb & Sullivan, serves as bankruptcy counsel to Greenwood and US Tool. Greenwood estimated $1 million to $10 million in assets and $10 million to $50 million in debts. US Tool & Engineering estimated under $1 million in assets and $1 million to $10 million in debts. The petitions were signed by George S. Homeister, chairman. MF GLOBAL: Corzine Asks Judge to Dismiss Trustee Freeh's Suit ------------------------------------------------------------- Michael Bathon, substituting for Bloomberg News bankruptcy columnist Bill Rochelle, reports that Jon Corzine, the former head of MF Global Holdings Ltd., said a lawsuit brought by the firm's trustee should be dismissed because he can't be sued for what turned out to be a failed business strategy. According to the report, the trustee, Louis Freeh, sued Mr. Corzine and senior executives Bradley Abelow and Henri Steenkamp in April, accusing them of failing to oversee the futures broker, leading to its bankruptcy. Lawyers for the defendants countered in court papers filed July 22 in U.S. Bankruptcy Court in Manhattan that they "were at all times working to transform MF Global into a profitable business." The report notes that the Freeh lawsuit is based on hindsight and can't overcome the presumption that corporate officers in making business decisions act on an informed basis and in good faith, the defendants said in their court filing. The parent company of brokerage MF Global Inc. filed for bankruptcy in October 2011 after a wrong-way $6.3 billion trade on bonds of some of Europe's most-indebted nations. The report discloses that a report by Mr. Freeh blamed Mr. Corzine and his management team for bungling an expansion of the company's traditional business model while ignoring deficiencies in its risk controls. Mr. Corzine, a Democrat and former governor and senator from New Jersey, once served as co-chairman of Goldman Sachs Group Inc. He was sued in June by the Commodity Futures Trading Commission, which accused him of failing to supervise employees. The case is Freeh v. Corzine, 13-01333, U.S. Bankruptcy Court, Southern District of New York (Manhattan). About MF Global New York-based MF Global -- http://www.mfglobal.com/-- was 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 also was 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. On Oct. 31, 2011, 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), 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. On Nov. 7, 2011, the United States Trustee appointed the statutory creditors' committee in the Debtors' cases. At the behest of the Statutory Creditor's Committee, the Court directed the U.S. Trustee to appoint a chapter 11 trustee. On Nov. 28, 2011, the Bankruptcy Court entered an order approving the appointment of Louis J. Freeh, Esq., of Freeh Group International Solutions, LLC, as Chapter 11 trustee. On Dec. 19, 2011, MF Global Capital LLC, MF Global Market Services LLC and MF Global FX Clear LLC filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15808, 11-15809 and 11-15810). On Dec. 27, the Court entered an order installing Mr. Freeh as Chapter 11 Trustee of the New Debtors. On March 2, 2012, MF Global Holdings USA Inc. filed a voluntary Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-10863), and Mr. Freeh also was installed as its Chapter 11 Trustee. 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 Chapter 11 Trustee has tapped (i) Freeh Sporkin & Sullivan LLP, as investigative counsel; (ii) FTI Consulting Inc., as restructuring advisors; (iii) Morrison & Foerster LLP, as bankruptcy counsel; and (iv) Pepper Hamilton as special counsel. The Official Committee of Unsecured Creditors has retained Capstone Advisory Group LLC as financial advisor, while lawyers at Proskauer Rose LLP serve as counsel. 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. In April 2013, the Bankruptcy Court approved MF Global Holdings' plan to liquidate its assets. Bloomberg News reported that the court-approved disclosure statement initially told creditors with $1.134 billion in unsecured claims against the parent holding company why they could expect a recovery of 13.4% to 39.1% from the plan. As a consequence of a settlement with JPMorgan, supplemental materials informed unsecured creditors their recovery was reduced to the range of 11.4% to 34.4%. Bank lenders will have the same recovery on their $1.174 billion claim against the holding company. As a consequence of the settlement, the predicted recovery became 18% to 41.5% for holders of $1.19 billion in unsecured claims against the finance subsidiary, one of the companies under the umbrella of the holding company trustee. Previously, the predicted recovery was 14.7% to 34% on bank lenders' claims against the finance subsidiary. MI PUEBLO: Hispanic Grocery Store Chain Files Bankruptcy -------------------------------------------------------- Mi Pueblo San Jose Inc., the operator of 21 grocery stores serving the Hispanic community, sought court protection (Bankr. N.D. Cal. Case No. 13-53893) due to a dispute with its lender Wells Fargo Bank NA. Michael Bathon, substituting for Bloomberg News bankruptcy columnist Bill Rochelle, reports that the company, based in San Jose, California, estimated both debt and assets of as much as $50 million in Chapter 11 documents filed July 22 in U.S. Bankruptcy Court in its home town. An affiliate, Cha Cha Enterprises LLC, also sought court protection listing the same amount in debt and assets. The report notes that the grocer said in court filings it hasn't defaulted on any of its obligations to Wells Fargo but has missed a covenant related to profitability ratios due to higher payroll expenses. Wells Fargo is owed $19.6 million in secured debt, on a revolving loan, a term loan and letters of credit, court papers show. Vendors are owed about $10.8 million. The report discloses that Mi Pueblo, founded as a single store in 1991 by immigrant Juvenal Chavez, has become "the fastest-growing independent supermarket chain in Northern California," according to court documents. The grocer has 15 stores in the Bay area, three in the Central Coast and three in Central Valley areas. Mi Pueblo offers bilingual employees in its stores and imports recognized brands from Mexico, Central and South America. The supermarket chain had more than 3,200 employees and over $413 million in sales in 2012, court papers show. MICHAELS STORES: Moody's Rates New $700MM PIK Toggle Notes Caa1 --------------------------------------------------------------- Moody's Investors Service assigned a Caa1 rating to Michaels FinCo Holdings, LLC proposed offering of $700 million senior unsecured PIK Toggle notes. The rating outlook was revised to stable from positive. Moody's also upgraded the rating assigned to Michael's Stores' senior secured term loan due 2020 to Ba3 from B1. All other ratings, including the B2 Corporate Family Rating, were affirmed. The rating assigned is subject to receipt and review of final documentation. Should the transaction close substantially on the terms and conditions outlined the Corporate Family and Probability of Default Ratings will be moved to Michaels Holdings from Michaels Stores, Inc. The revision in the rating outlook to stable from positive reflects the sizable increase in debt following this offering. In view of the increase in debt and shift toward a more aggressive financial policy, Moody's does not anticipate an upgrade is now likely. Proceeds from the new note offering will be used to fund a distribution to Michaels Holdings' current owners. The Caa1 rating assigned to the Michaels Holdings notes reflect that they are an obligation of the newly-formed holding company and will not be guaranteed by Michaels Stores Inc. (a wholly owned subsidiary of Michaels Holdings and the principal operating company). These notes thus rank junior to the significant amount of debt and non- debt liabilities of Michaels Stores Inc. The following ratings were affirmed, and LGD assessments amended: Michaels Stores, Inc. Corporate Family Rating at B2 Probability of Default Rating at B2-PD $1.0 billion senior unsecured notes due 2018 at B3 (LGD 4, 67% from LGD 5, 77%) $256 million senior subordinated notes due 2016 at Caa1 (LGD 5, 86% from LGD 6, 94%) Speculative Grade Liquidity rating at SGL-2 The following rating was upgraded: $1.64 billion senior secured term loan due 2020 to Ba3 (LGD 2, 26%) from B1 (LGD 3, 33%) The following rating was assigned: Michaels FinCo Holdings, LLC/Michaels FinCo, Inc. $700 million senior unsecured PIK Toggle notes due 2018 at Caa1 (LGD 6, 93%) Ratings Rationale: Michaels' B2 Corporate Family Rating reflects the company's high leverage with debt/EBITDA in the low six times range and interest coverage near two times following this transaction. The rating reflects the company's owner's aggressive financial policies, evidenced by this debt financed distribution. Michaels has a strong market position in the arts and craft segments, as evidenced in its high operating margins and a track record of driving higher sales. While the arts and craft segment has generally stable demand, the company does participate in some segments, such as seasonal decor and custom framing that are more sensitive to economic conditions. The rating also takes into consideration the company's good liquidity position, with no near dated debt maturities, no financial maintenance covenants in its debt arrangements and access to a sizable asset-based revolver to fund seasonal working capital requirements. The stable rating outlook reflects Moody's expectations that the company will maintain modest growth in revenues and sustain its high operating margins, reflecting its leadership position in the arts and craft segment. The stable outlook also reflects the aggressive financial policies of its current owners, reflected in the proposed debt financed dividend. Ratings could be upgraded over time if Michaels Holdings continues to generate positive revenue growth and operating margins are sustained in the low teens. Quantitatively, ratings could be upgraded if the company made a sustained commitment to reduce leverage with debt/EBITDA sustained below 5.25 times and EBITA/interest expense was sustained above 2.25 times while maintaining good overall liquidity. Ratings could be lowered if the company were to see a sustained reversal of recent positive trends in sales or if operating margins were to erode, indicating that the company's competitive profile was weakening. Ratings could also be lowered if the company's financial policies became more aggressive. Quantitatively, ratings could be lowered if debt/EBITDA was above 6.5 times. Michaels Stores, Inc., a wholly owned subsidiary of Michaels FinCo Holdings, LLC is the largest dedicated arts and crafts specialty retailer in North America. The company operated 1,173 Michaels stores in 49 states and Canada and 122 Aaron Brothers stores as of May 4, 2013. The company primarily sells general and children's crafts, home decor and seasonal items, framing and scrapbooking products. Total sales are in excess of $4.4 billion. The company is controlled by affiliates of Bain Capital Partners, LLC and The Blackstone Group, L.P. who acquired Michaels in 2006. The principal methodology used in this rating was the Global Retail Industry Methodology published in June 2011. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. MICHAELS STORES: S&P Rates New $700MM Sr. Unsecured PIK Notes CCC+ ------------------------------------------------------------------ Standard & Poor's Ratings Services said it revised its outlook on Irving, Texas-based arts and crafts retailer Michaels Stores Inc. to stable from positive. S&P affirmed its ratings on Michaels Stores, including the 'B' corporate credit rating. In addition, S&P is assigning its 'B' corporate credit rating to Michaels FinCo Holdings LLC and Michaels FinCo Inc. At the same time, S&P assigned a 'CCC+' issue-level rating to the company's proposed $700 million senior unsecured PIK notes due 2018. The recovery rating is '6', indicating S&P's expectation of negligible (0% to 10%) recovery for noteholders in the event of a payment default. The company plans to use proceeds from the debt transaction to fund a dividend to its financial sponsors, Bain Capital and The Blackstone Group, Highfields and internal equity holders. "The outlook revision reflects our view that the company's credit protection measures will moderately weaken following the proposed debt issuance," said credit analyst Kristina Koltunicki. "We expect financial ratios to remain indicative of a highly leveraged profile absent the pay down of debt or a substantial improvement to operating performance over the next year." The stable outlook on Michaels Stores Inc. reflects S&P's view that the proposed debt issuance will impede any meaningful improvement to the company's financial risk profile over the next 12 months, despite S&P's forecast for modest operating performance improvements. S&P could raise its ratings if ratios reach levels indicative of an aggressive financial risk profile, including leverage below 5x on a sustained basis. Based on first-quarter fiscal 2013 results, pro-forma for the proposed transaction, debt reduction of more than $1 billion or EBITDA growth exceeding 25% is necessary for leverage to decline below 5x. S&P could lower the rating if operating performance stalls, likely from poor holiday season results, which could cause leverage to increase to about 7x. Under this scenario, gross margins would deteriorate by approximately 230 basis points and comparable-store sales would be flat over the next 12 months. MOBILESMITH INC: Sells $200,000 Additional Convertible Note ----------------------------------------------------------- Pursuant to the Amended and Restated Motors Liquidation Company GUC Trust Agreement dated as of June 11, 2012, as amended, Wilmington Trust Company, acting solely in its capacity as trust administrator and trustee of the Motors Liquidation Company GUC Trust, is required to file certain GUC Trust Reports with the Bankruptcy Court for the Southern District of New York. In addition, pursuant to that certain Bankruptcy Court Order Authorizing the GUC Trust Administrator to Liquidate New GM Securities for the Purpose of Funding Fees, Costs and Expenses of the GUC Trust and the Avoidance Action Trust, dated March 8, 2012, the GUC Trust Administrator is required to file certain quarterly variance reports. The GUC Trust Administrator on July 22, 2013, filed the GUC Trust Report required by Section 6.2(c) of the GUC Trust Agreement together with the Budget Variance Report, each for the quarter ended June 30, 2013. In addition, the Motors Liquidation Company GUC Trust announced that no distribution in respect of its Units is anticipated for the fiscal quarter ended June 30, 2013. A copy of the GUC Trust Report is available for free at: http://is.gd/0eJYhh About Motors Liquidation General Motors Corporation 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. On Dec. 15, 2011, Motors Liquidation Company was dissolved. On the Dissolution Date, pursuant to the Plan and the Motors Liquidation Company GUC Trust Agreement, dated March 30, 2011, between the parties thereto, the trust administrator and trustee -- GUC Trust Administrator -- of the Motors Liquidation Company GUC Trust, assumed responsibility for the affairs of and certain claims against MLC and its debtor subsidiaries that were not concluded prior to the Dissolution Date. MOTORS LIQUIDATION: No Units Distribution for June 30 Quarter ------------------------------------------------------------- MobileSmith, Inc., sold an additional convertible secured subordinated note due Nov. 14, 2016, amounting to $200,000 to a current noteholder upon substantially the same terms and conditions as the Company's previously issued notes. The Company is obligated to pay interest on the New Note at an annualized rate of 8 percent payable in quarterly installments commencing Oct. 22, 2013. As with the existing notes, the Company is not permitted to prepay the New Note without approval of the holders of at least a majority of the aggregate principal amount of the Notes then outstanding. The Company plans to use the proceeds to meet ongoing working capital and capital spending requirements. About MobileSmith MobileSmith, Inc., formerly Smart Online, Inc., develops and markets a ranges of mobile application software products and services that are delivered via a Software-as-a-Service (SaaS), model. The Company also provides Website and mobile consulting services to businesses and not-for-profit organizations. Its principal products and services include SaaS applications for business management, Web marketing, and e-commerce; Software business tools that assist customers in developing written content; Services that are designed to complement its product offerings and allows it to create custom business solutions that fit its end users' and channel partners' needs; Services that assist not-for-profit organizations in their fundraising efforts, and Mobile phone applications used to provide specialized communications and e-commerce opportunities for businesses and not-for-profit organizations. Smart Online disclosed a net loss of $4.39 million in 2012, as compared with a net loss of $3.54 million in 2011. The Company's balance sheet at March 31, 2013, showed $1.24 million in total assets, $29.82 million in total liabilities, and a $28.57 million total stockholders' deficit. Cherry Bekaert LLP, in Raleigh, North Carolina, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has suffered recurring losses from operations and has a working capital deficiency as of Dec. 31, 2012, which conditions raise substantial doubt about the Company's ability to continue as a going concern. MOUNTAIN PROVINCE: Gahcho Kue Receives MVEIRB Approval ------------------------------------------------------ De Beers Canada and Mountain Province Diamonds said that the Mackenzie Valley Environmental Impact Review Board (MVEIRB) has concluded the Gahcho Kue Environmental Impact Assessment and has recommended approval of the proposed Gahcho Kue diamond mine subject to measures and follow-up programs. In a July 19, 2013, letter to the Minister of Aboriginal Affairs and Northern Development Canada, the Honourable Bernard Valcourt, the MVEIRB stated: "The Gahcho Kue Panel recommends, pursuant to sub-section 134(2) of the Mackenzie Valley Resource Management Act, that this development be allowed to proceed subject to implementation of the measures and follow-up programs described in this Report which are necessary to prevent potentially significant adverse impacts on the environment." A full copy of the Report of Environmental Impact Review and Reasons for Decision is available at http://www.reviewboard.ca/ Glen Koropchuk, De Beers Canada chief operating officer, stated: "We are pleased to receive the Report of Environmental Impact Review and Reasons for Decision by the Mackenzie Valley Environmental Impact Review Board on the proposed Gahcho Ku� diamond mine. This represents an important step forward for the proposed new diamond mine. We are reviewing the Report to better understand the implications of the measures and follow-up programs recommended by MVEIRB. We look forward to proceeding to the next stages in the regulatory approval process. "We want to thank the Panel and staff of the MVEIRB for considering all of the evidence in preparing the Report. We also appreciate the continued participation by Aboriginal parties and other community and regulatory stakeholders as the Gahcho Ku� Project moves ahead." Patrick Evans, Mountain Province Diamonds President and CEO, added: "The Gahcho Kue joint venture has successfully demonstrated to the Review Board that the Gahcho Kue diamond mine can be successfully constructed and operated. Completion of the environmental review is a significant milestone". The Gahcho Kue Project is a joint venture between De Beers (51 percent) and Mountain Province Diamonds (49 percent). Located at Kennady Lake, 280 km northeast of Yellowknife, the Gahcho Ku� Project will recover an average of 4.5 million carats of diamonds annually over an 11 year life of mine. The Gahcho Kue diamond mine will employ up to 700 people during construction and between 360 and 380 during operations. About Mountain Province Headquartered in Toronto, Canada, Mountain Province Diamonds Inc. (TSX: MPV, NYSE AMEX: MDM) -- http://www.mountainprovince.com/-- is a Canadian resource company in the process of permitting and developing a diamond deposit known as the "Gahcho Kue Project" located in the Northwest Territories of Canada. The Company's primary asset is its 49 percent interest in the Gahcho Kue Project. Mountain Province disclosed a net loss of C$3.33 million for the year ended Dec. 31, 2012, a net loss of C$11.53 million in 2011, and a net loss of C$14.53 million in 2010. "The Company's primary mineral asset is in the exploration and evaluation stage and, as a result, the Company has no source of revenues. In each of the years December 31, 2012, 2011 and 2010, the Company incurred losses, and had negative cash flows from operating activities, and will be required to obtain additional sources of financing to complete its business plans going into the future. Although the Company had working capital of $46,653,539 at December 31, 2012, including $47,693,693 of cash and cash equivalents and short-term investments, the Company has insufficient capital to finance its operations and the Company?s costs of the Gahcho Kue Project (Note 7) over the next 12 months. The Company is currently investigating various sources of additional funding to increase the cash balances required for ongoing operations over the foreseeable future. These additional sources include, but are not limited to, share offerings, private placements, credit and debt facilities, as well as the exercise of outstanding options. However, there is no certainty that the Company will be able to obtain financing from any of those sources. These conditions indicate the existence of a material uncertainty that results in substantial doubt as to the Company's ability to continue as a going concern," according to the Company's annual report for the period ended Dec. 31, 2012. MSR RESORT: Trades Jabs with Five Mile Over IP Assets From Sale --------------------------------------------------------------- Maria Chutchian of BankruptcyLaw360 reported that attorneys for MSR Hotels & Resorts Inc. and alternative investment fund Five Mile Capital Partners LLC took turns attacking each other with respect to some intellectual property assets that Five Mile says were mismanaged in a $1.5 billion sale earlier this year. According to the report, the lawsuit was originally filed as a derivative action in New York state court accusing executives of Paulson & Co., which owns the real estate investment trust, of failing to charge Government of Singapore Investment Corp., which purchased most of MSR's hotel assets. About MSR Hotels MSR Hotels & Resorts, Inc., returned to Chapter 11 by filing a voluntary bankruptcy petition (Bankr. S.D.N.Y. Case No. 13-11512) on May 8, 2013 in Manhattan. MSR Hotels & Resorts, formerly known as CNL Hospitality Properties, Inc., and as CNL Hotels & Resorts, Inc., listed $500,001 to $1 million in assets, and $50 million to $100 million in liabilities in its petition. Paul M. Basta, Esq., at Kirkland & Ellis, LLP, represents the Debtor. MSR Resorts sought Chapter 11 bankruptcy to thwart a lawsuit by lender Five Mile Capital Partners that claims it is owed tens of millions of dollars related to the recent sale of several luxury resorts. MSR Hotels will seek to sell its remaining assets and wind down. MSR Hotels, formerly known as CNL Hotels & Resorts Inc., owned a portfolio of eight luxury hotels with over 5,500 guest rooms. On Jan. 28, 2011, CNL-AB LLC acquired the equity interests in the portfolio through a foreclosure proceeding. CNL-AB LLC is a joint venture consisting of affiliates of Paulson & Co. Inc., a joint venture affiliated with Winthrop Realty Trust, and affiliates of Capital Trust, Inc. Morgan Stanley's CNL Hotels & Resorts Inc. owned the resorts before the Jan. 28 foreclosure. Following the acquisition, five of the resorts with mortgage debt scheduled to mature on Feb. 1, 2011, were sent to Chapter 11 bankruptcy by the Paulson and Winthrop joint venture affiliates. Then known as MSR Resort Golf Course LLC, the company and its affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 11-10372) in Manhattan on Feb. 1, 2011. The resorts subject to the 2011 filings were Grand Wailea Resort and Spa, Arizona Biltmore Resort and Spa, La Quinta Resort and Club and PGA West, Doral Golf Resort and Spa, and Claremont Resort and Spa. In the 2011 petitions, the five resorts had $2.2 billion in assets and $1.9 billion in debt as of Nov. 30, 2010. In its 2011 schedules, MSR Resort disclosed $59,399,666 in total assets and $1,013,213,968 in total liabilities. In the 2011 bankruptcy, James H.M. Sprayregen, P.C., Esq., Paul M. Basta, Esq., Edward O. Sassower, Esq., and Chad J. Husnick, Esq., at Kirkland & Ellis, LLP, served as the Debtors' bankruptcy counsel. Houlihan Lokey Capital, Inc., acted as the Debtors' financial advisor. Kurtzman Carson Consultants LLC acted as the Debtors' claims agent. The Official Committee of Unsecured Creditors in the 2011 case was represented by Martin G. Bunin, Esq., and Craig E. Freeman, Esq., at Alston & Bird LLP, in New York. In March 2012, the Debtors won Court approval to sell the Doral Golf Resort to Trump Endeavor 12 LLC, an affiliate of Donald Trump's Trump Organization LLC, for $150 million. An auction was held in February that year but no other bids were received. The 2011 Debtors won approval of a bankruptcy-exit plan in February this year. That plan was predicated on the sale of the remaining four resorts by the Government of Singapore Investment Corp. -- the world's eighth-largest sovereign wealth fund, according to the Sovereign Wealth Fund Institute -- for $1.5 billion. U.S. Bankruptcy Judge Sean Lane, who oversaw the 2011 cases, overruled Plan objections by the U.S. Internal Revenue Service and investor Five Mile. The IRS and Five Mile alleged that the sale created a tax liability of as much as $331 million that may not be paid. Bloomberg News reported that the exit plan provides for repayment of 96% of secured debt and 100% of general unsecured debt. Five Mile stood to lose about $58 million, including investments by pension funds and other parties, David Friedman, Esq., a lawyer for Five Mile, said during the Plan approval hearing, according to Bloomberg. That Plan was declared effective on Feb. 28, 2013. On April 9, 2013, Five Mile sued Paulson & Co. executives and MSR Hotels in New York state court, alleging they (i) mishandled the company's intellectual property and other assets in a bankruptcy sale, and failed to get the best price for the assets, and (ii) owe Five Mile $58.7 million on a loan. According to a Reuters report, Five Mile seeks $58.7 million representing sums owed, including interest and costs, plus at least $100 million for breach of fiduciary duty, gross negligence and corporate waste. NASH FINCH: S&P Revises Outlook to Positive & Affirms 'B+' CCR -------------------------------------------------------------- Standard & Poor's Ratings Services said it revised its outlook on the Minneapolis-based Nash Finch Co. to positive from stable and affirmed the 'B+' corporate credit rating. "The outlook revision comes after Nash Finch announced a definitive agreement to merge with Spartan Stores Inc. in an all- stock transaction. The transaction will be financed with no additional debt and Nash Finch shareholders will receive 1.2 shares of Spartan stock," said credit analyst Charles Pinson-Rose. "Currently, Nash Finch's adjusted leverage is 4.5x and funds from operations (FFO)/debt is about 15.0%. Spartan has roughly the same EBITDA base and leverage of 2.3x and FFO/debt of 36.5%. On a pro forma basis, we expect leverage to be about 3.3x and FFO/debt to be near 25%. This marks a considerable improvement, and credit metrics could improve further as the combined company realizes potential cost saving opportunities. However, both companies face a difficult industry environment, as discounters and nontraditional food retailers enter the food retail industry, which could strain sales and profits in both the retail and distribution operations and counteract the cost saving opportunities," S&P added. "The outlook is positive and incorporates the possibility that the combined company could have materially better credit protection measures. We expect pro-forma leverage to be approximately 3.3x, but we believe that there could be profit pressures at Nash Finch over the near term. If the operating trends stabilize and we expect the combined company to maintain leverage below 3.6x, we may consider a higher rating following the completion of the merger transaction. This means that we would not forecast the combined company's EBITDA to be lower than $190 million -- roughly 9% lower than current pro-forma EBITDA levels. As part of the review for an upgrade, we would also want to assess the combined company's business risk profile and its profit growth prospects. However, given the nature of industry, we currently do not expect to revise the weak business risk assessment. Conversely, we would likely revise the outlook to stable if performance continues to decline at Nash Finch and operating trends worsen at Spartan over the next couple of quarters, and we did not believe the combined company would maintain EBITDA above $190 million," S&P noted. NATIONWIDE INSURANCE: A.M. Best Hikes Finc'l Strength Rating to B ----------------------------------------------------------------- A.M. Best Co. has upgraded the financial strength rating to B (Fair) from B- (Fair) and issuer credit rating to "bb" from "bb-" of Nationwide Insurance Company of Florida (NICOF) (Columbus, OH). The outlook for both ratings has been revised to stable from positive. The rating upgrades reflect NICOF's improved level of risk- adjusted capitalization (when stress tested) as a result of its previous coastal reduction initiatives and improved operating results over the last couple of years. The ratings also continue to consider the risk inherent in NICOF's remaining, smaller property book of business in Florida. Regarding future rating movement for NICOF, if underwriting performance can improve and stabilize, with projections on operating performance being met or exceeded, A.M. Best would again consider upward rating movement. Conversely, an active and severe hurricane season could lead to downward pressure on the company's ratings. NEXT 1 INTERACTIVE: Incurs $1.4 Million Net Loss in May 31 Qtr. --------------------------------------------------------------- Next 1 Interactive, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $1.40 million on $495,441 of total revenues for the three months ended May 31, 2013, as compared with a net loss of $714,913 on $168,396 of total revenues for the same period during the prior year. As of May 31, 2013, the Company had $4.32 million in total assets, $13.06 million in total liabilities and a $8.74 million total stockholders' deficit. A copy of the Form 10-Q is available for free at: http://is.gd/LBVfJw Amends Certificate of Designation The Company filed a Certificate of Amendment to the Certificate of Designations with the Nevada Secretary of State to amend and restate the Certificate of Designations of the Company's Series A 10 percent Cumulative Convertible Preferred Stock, $0.01 par value per share. The Series A Amendment amends and restates the voting powers, designations, preferences, limitations restrictions and relative rights of the Series A Preferred Stock to clarify the conversion price and to grant to a holder of the Series A Preferred Stock the option to elect to convert all or any part of that holder's shares of Series A Preferred Stock into shares of the Company's Series C Convertible Preferred Stock, par value $0.00001 per share, at a conversion rate of five shares of Series A Preferred Stock for every one share of Series C Preferred Stock. A copy of the Amendment is available for free at: http://is.gd/6HqXgc About Next 1 Interactive Weston, Fla.-based Next 1 Interactive, Inc., is the parent company of RRTV Network (formerly Resort & Residence TV), Next Trip -- its travel division, and Next One Realty -- its real estate division. The Company is positioning itself to emerge as a multi revenue stream "Next Generation" media-company, representing the convergence of TV, mobile devices and the Internet by providing multiple platform dynamics for interactivity on TV, Video On Demand (VOD) and web solutions. The Company has worked with multiple distributors beta testing its platforms as part of its roll out of TV programming and VOD Networks. The list of multi- system operators the Company has worked with includes Comcast, Cox, Time Warner and Direct TV. At present the Company operates the Home Tour Network through its minority owned/joint venture real estate partner -- RealBiz Media. As of July 17, 2012, the Home Tour Network features over 4,300 home listings in four cities on the Cox Communications network. Next 1 Interactive disclosed a net loss attributable to the Company of $4.19 million on $987,115 of total revenues for the year ended Feb. 28, 2013, as compared with a net loss attributable to the Company of $13.65 million on $1.29 million of total revenues for the year ended Feb. 29, 2012. D'Arelli Pruzansky, P.A., in Boca Raton, Florida, issued a "going concern" qualification on the consolidated financial statements for the year ended Feb. 28, 2013. The independent auditors noted that the Company has incurred losses of $4,233,102 for the year ended Feb. 28, 2013, and the Company had an accumulated deficit of $71,193,862 and a working capital deficit of $13,371,094 at Feb. 28, 2013. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Bankruptcy Warning "If we continue to experience liquidity issues and are unable to generate revenue, we may be unable to repay our outstanding debt when due and may be forced to seek protection under the federal bankruptcy laws," according to the Company's annual report for the year ended Feb. 28, 2013. ORECK CORP: Bankruptcy Court Approves TTI Asset Acquisition ----------------------------------------------------------- Royal Appliance Mfg. Co. (RAM), a subsidiary of the TTI Group, on July 25 disclosed that the purchase of the assets of the Oreck Corporation has been finalized. The agreement was formally approved by the United States Bankruptcy Court, Middle District of Tennessee on July 16. TTI will retain all employees and continue manufacturing operations in Cookeville, TN and will continue to have a small presence in Nashville. The Oreck brand, founded 50 years ago, earned category leading consumer loyalty by delivering high quality premium products and backing up those products with unbeatable customer service. About Oreck Corp. Oreck Corporation and eight affiliates sought Chapter 11 protection (Bankr. M.D. Tenn. Lead Case No. 13-04006) in Nashville, Tennessee, on May 6, 2013, with plans to sell the business as a going concern. Oreck has been in the business of manufacturing, marketing and selling vacuum cleaners and related products since the late 1960s. The corporate offices are located in Nashville, and the manufacturing and call center is located in Cookeville, Tennessee. Oreck has 70 employees in Nashville, 250 employees at its plant in Cookeville and 325 employees operating 96 company-owned and managed retail stores. The Debtor estimated at least $10 million in assets and liabilities as of the Chapter 11 filing. William L. Norton III, Esq., and Alexandra E. Dugan, Esq., at Bradley Arant Boult Cummings LLP, serve as counsel to the Debtor. BMC Group Inc. is the claims and notice agent. Sawaya Segalas & Co., LLC serves as financial advisor. The U.S. Trustee appointed six creditors to the Official Committee of Unsecured Creditors. Daniel H. Puryear, Esq., at Puryear Law Group, and Sharon L. Levine, Esq., and Kenneth A. Rosen, Esq., at Lowenstein Sandler LLP represent the Committee. The Committee tapped to retain Gavin/Solmonese LLC as it financial advisor. ORMET CORP: Now OC Liquidation; Settlement Approved --------------------------------------------------- BankruptcyData reported that the U.S. Bankruptcy Court approved Ormet's motion to change its name and modify the caption in the Debtors' jointly-administered cases. Promptly upon closing of the sale, the Debtors are authorized and directed to change their corporate names and to file the appropriate amendments with the appropriate government agencies in the jurisdictions of formation and incorporation, the report related. Ormet Corporation will now be known as OC Liquidation, Inc. Separately, the Court also approved a motion filed by Ormet and its official committee of unsecured creditors for an order approving settlement, pursuant to Bankruptcy Code Section 105(A) and Bankruptcy Rule 9019. As previously reported, "Under the proposed settlement,...the buyer will issue to Ormet's general unsecured creditor trust a $2 million Unsecured Note due 2019 for the benefit of the estate's general unsecured creditors. This note represents an increase of $1 million over the amount of the buyer securities consideration originally provided for in the APA." Operations Cut Matt Chiappardi of BankruptcyLaw360 reported that a Delaware bankruptcy judge allowed aluminum smelter Ormet Corp. to curtail operations at both of its facilities as it waits for a decision from Ohio utility regulators on a power agreement crucial to closing its $130 million sale to private equity firm Wayzata Investment Partners LLC. According to the report, U.S. Bankruptcy Judge Mary F. Walrath said from the bench Ormet had persuaded her it had an immediate need to cut operations at its Ohio and Louisiana facilities because it needs to stretch its funds. About Ormet Corp. Aluminum producer Ormet Corporation, along with affiliates, filed for Chapter 11 protection (Bankr. D. Del. Case No. 13-10334) on Feb. 25, 2013, with a deal to sell the business to a portfolio company owned by private investment funds managed by Wayzata Investment Partners LLC. Headquartered in Wheeling, West Virginia, Ormet -- http://www.ormet.com/-- is a fully integrated aluminum manufacturer, providing primary metal, extrusion and thixotropic billet, foil and flat rolled sheet and other products. Ormet disclosed assets of $406.8 million and liabilities totaling $416 million. Secured debt of about $180 million includes $139.5 million on a secured term loan and $39.3 million on a revolving credit. Attorneys at Dinsmore & Shohl LLP and Morris, Nichols, Arsht & Tunnell LLP serve as counsel to the Debtors. Kurtzman Carson Consultants is the claims and notice agent. Evercore's Lloyd Sprung and Paul Billyard serve as investment bankers to the Debtor. PENSON WORLDWIDE: Objections to Liquidation Plan Filed ------------------------------------------------------ BankruptcyData reported that multiple parties -- including the Internal Revenue Service (IRS), George E. Morris Revocable Trust and Grace Financial Group -- filed with the U.S. Bankruptcy Court separate objections to Penson Worldwide's Fourth Amended Joint Plan of Liquidation. The IRS states, "IRS is a creditor and party in interest, IRS has asserted a general unsecured pre-petition claim against Penson Worldwide, in the amount of $99,599.73 and an estimated priority claim in the amount of $100.00. IRS has also asserted a secured claim against Penson Futures in the amount of $100.00. IRS has also asserted a secured claim against Penson Futures in the amount of $34,190.81 and a general unsecured claim in the amount of $211.06. Penson Worldwide has not filed its corporate federal Form 1120 for the 2012 tax year. This return is out on extension until September 15, 2013. IRS objects to the confirmation of the Plan unless and until all outstanding federal tax returns are filed." Grace Financial Group asserts, "...[T]he Plan does not establish a sufficient reserve for Disputed Claims, and instead gives PTL discretion to unilaterally estimate the amount of each Disputed Claim and only reserve that estimated amount, rather than set aside a reserve that includes the amounts of each Disputed Claim as filed." About Penson Worldwide Plano, Texas-based Penson Worldwide Inc. and its affiliates filed for Chapter 11 bankruptcy (Bankr. D. Del. Lead Case No. 13-10061) on Jan. 11, 2013. Founded in 1995, Penson Worldwide is provider of a range of critical securities and futures processing infrastructure products and services to the global financial services industry. The company's products and services include securities and futures clearing and execution, financing and cash management technology and other related offerings, and it provides tools and services to support trading in multiple markets, asset classes and currencies. Penson was one of the top two clearing brokers overall in the United States. Its foreign-based subsidiaries were some of the largest independent clearing brokers in Canada and Australia and the second largest independent clearing broker in the United Kingdom as of Dec. 31, 2010. In 2012, the company sold its futures division to Knight Capital Group Inc. and its broker-deal subsidiary to Apex Clearing Corp. But the company was unable to successfully streamline is business after the asset sales. Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Young, Conaway, Stargatt & Taylor serve as counsel to the Debtors. Kurtzman Carson Consultants LLC is the claims and notice agent. The U.S. Trustee for Region 3 appointed three members to the Official Committee of Unsecured Creditors: (i) Schonfeld Group Holdings LLC; (ii) SunGard Financial Systems LLC; and (iii) Wells Fargo Bank, N.A., as Indenture Trustee. The Committee selected Hahn & Hessen LLP and Cousins Chipman & Brown, LLP to serve as its co-counsel, and Capstone Advisory Group, LLC, as its financial advisor. Kurtzman Carson Consultants LLC serves as its information agent. The company estimated $100 million to $500 million in assets and liabilities in its Chapter 11 petition. The last publicly filed financial statements as of June 30 showed assets of $1.17 billion and liabilities totaling $1.227 billion. PLAYA HOTELS: S&P Assigns Preliminary 'B' CCR; Outlook Stable ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'B' corporate credit rating to parent guarantor Playa Hotels & Resorts B.V. The rating outlook is stable. At the same time, S&P assigned its preliminary 'B+' issue-level rating and preliminary '2' recovery rating to borrower Playa Resorts Holdings B.V.'s proposed $375 million senior secured credit facility (consisting of a $25 million revolver due 2018 and a $350 million term loan due 2019). The preliminary '2' recovery rating on the proposed facility reflects S&P's expectation for substantial (70% to 90%) recovery for lenders in the event of a payment default. S&P also assigned its preliminary 'B' issue-level and preliminary '4' recovery rating to Playa Resorts Holdings B.V.'s proposed $300 million senior unsecured notes due 2020. The preliminary '4' recovery rating reflects S&P's expectation for average (30% to 50%) recovery for lenders in the event of a payment default. Proceeds from the proposed debt issuances, along with a $325 million preferred and common equity investment by Hyatt Hotels Corp., a $50 million preferred equity investment by a current shareholder of BD Real Resorts, and more than $400 million in common equity contributed by certain predecessor company shareholders, will be used to acquire eight all-inclusive resorts from Playa's predecessor company, four all-inclusive resorts and a management company from BD Real Resorts, and one resort in Jamaica. Proceeds will also repay debt and other obligations at predecessor companies, pay transaction fees and expenses, and place cash on the balance sheet to finance resort renovations through 2015. The 'B' preliminary corporate credit rating reflects S&P's assessment of Playa's financial risk as "highly leveraged" and its assessment of the company's business risk as "weak," according to its criteria. The stable outlook reflects S&P's expectation that EBITDA coverage of cash interest expense will be in the 2x area over the next two years, which is good for the rating. The stable outlook also reflects S&P's expectation that Playa will have adequate liquidity in the form of cash flow from operations and pro forma cash balances to complete significant renovation expenditures through 2015. "Ratings upside is limited at this time, given integration, renovation, and brand launch risk over the next few years," said Standard & Poor's credit analyst Emile Courtney. PLYMOUTH OIL: Plan Confirmation Hearing Taken Under Advisement -------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Iowa stated that the hearing to consider confirmation of Plymouth Oil Company, LLC's Chapter 11 Plan, and motion to dismiss the Debtor's case is taken under advisement. As reported by the Troubled Company Reporter on May 28, 2013, the Debtor's Plan will be implemented in a variety of ways, including restructuring various secured debts, issuing membership units of the Reorganized Debtor in return for the satisfaction of certain claims, through new equity investment by various new investors in the Reorganized Debtor, through the sale of certain of its assets including but not necessarily limited to the sale of the Feed Mill and the acreage. Payments and distributions under the Plan will be funded by funds on hand, collection of accounts receivables, new equity investment, net proceeds from the sale of assets, and recoveries from avoidance actions and other actions. A copy of the Amended Pan is available for free at http://bankrupt.com/misc/PLYMOUTH_OIL_1amendedplan.pdf About Plymouth Oil Plymouth Oil Company, LLC, filed a bare-bones Chapter 11 petition (Bankr. N.D. Iowa Case No. 12-01403) in Sioux City on July 23, 2012. In its amended schedules, the Debtor disclosed $21,623,349 in total assets and $12,891,586 in total liabilities. Plymouth Oil -- http://www.plymouthoil.com-- has a $30 million extraction plant located at 22058 K-42 Merrill, Iowa, directly across from the new Plymouth Energy Ethanol Plant. Founded by local investors, Plymouth Oil Company, LLC started operations in February 2010 purchasing raw corn germ and refining this material into de-oiled germ meal and kosher food-grade cooking oil. The plant has the capability of pumping out 90 tons of corn oil each day and about 300 tons of DCGM (defatted corn germ meal) daily, which is used for hog, poultry and dairy feed. Bankruptcy Judge Thad J. Collins presides over the case. Bradley R. Kruse, Esq., and Adam J. Freed, Esq., at Brown, Winick, Graves, Gross, Baskerville and Schoenebaum, P.L.C., represent the Debtor as counsel. The petition was signed by David P. Hoffman, president. Secured creditors Arlon Sandbulte, Ryan Lake, Dirk Dorn, Steven Vande Brake, and Iowa Corn Opportunities, LLC, are represented by lawyers at Baird Holm LLP in Omaha, Nebraska. POWERWAVE TECHNOLOGIES: Ch. 7 Creditor Objects to Proposed IP Sale ------------------------------------------------------------------ Daniel Wilson of BankruptcyLaw360 reported that an investment fund objected to the proposed sale of bankrupt Powerwave Technologies Inc.'s remaining intellectual property, arguing the sale process had been unfairly tilted in favor of private equity-owned P-Wave Holdings LLC, owner of the rest of Powerwave's IP. According to the report, Spectrum Master Fund Ltd., a creditor of the wireless communications equipment company, said that Chapter 7 trustee Charles A. Stanziale Jr. had failed to properly define which IP the proposed sale actually covers and other key terms of the deal, thus subverting any proposed competitive sale. About Powerwave Technologies Powerwave Technologies Inc. (NASDAQ: PWAV) filed for Chapter 11 bankruptcy (Bankr. D. Del. Case No. 13-10134) on Jan. 28, 2013. Powerwave Technologies, headquartered in Santa Ana, Cal., is a global supplier of end-to-end wireless solutions for wireless communications networks. The Company has historically sold the majority of its product solutions to the commercial wireless infrastructure industry. The Company's balance sheet at Sept. 30, 2012, showed $213.45 million in total assets, $396.05 million in total liabilities and a $182.59 million total shareholders' deficit. Aside from a $35 million secured debt to P-Wave Holdings LLC, the Debtor owes $150 million in principal under 3.875% convertible subordinated notes and $106 million in principal under 2.5% convertible senior subordinated notes where Deutsche Bank Trust Company Americas is the indenture trustee. In addition, as of the Petition Date, the Debtor estimates that between $15 and $25 million is outstanding to its vendors. The Debtor is represented by attorneys at Proskauer Rose LLP and Potter Anderson & Corroon LLP. Prepetition secured lender, P-Wave Holdings LLC, is represented by Martin A. Sosland, Esq., and Joseph H. Smolinsky, Esq., at Weil Gotshal & Manges LLP; and Mark D. Collins, Esq., and John H. Knight, Esq., at Richards Layton & Finger. The Official Committee of Unsecured Creditors retained Sidley Austin LLP; Young Conaway Stargatt & Taylor LLP; and Zolfo Cooper, LLC. The Debtor's patent portfolio, accounts receivable, and intangible assets were purchased by secured lender P-Wave Holdings LLC in exchange for $10.25 million in secured debt. A consortium of Counsel RB Capital LLC, The Branford Group and Maynards Industries bought the machinery and equipment for $6.6 million. Teak Capital Partners Ltd. bought affiliate Powerwave Technologies (Thailand) Ltd. for $50,000. PRIMCOGENT SOLUTIONS: July 30 Hearing on Orix's Bid to Foreclose ---------------------------------------------------------------- The Bankruptcy Court continued until July 30, 2013, at 10 a.m., the hearing to consider secured lender ORIX Ventures LLC's motion for relief from the automatic stay in the Chapter 11 cases of Primcogent Solutions, LLC, to foreclose upon prepetition collateral. According to ORIX, the Debtor has commenced an adversary proceeding against Erchonia Corporation, which sought, among other things: (i) judgment declaring that the Erchonia Agreements had not been terminated, or alternatively, that certain post- termination provisions of the Erchonia Agreements remained in effect; and (ii) a temporary restraining order and preliminary injunction preventing Erchonia from terminating the Erchonia Agreements or taking actions as if such agreements were terminated. ORIX said the Debtor concedes that viability of its business is dependent upon the Debtor's relationship with Erchonia. Without the right to license certain crucial intellectual property from Erchonia, the value of the Debtor's inventory will be reduced to "mere scrap." The Debtor also requested authorization to use ORIX's cash collateral to maintain business operations, consisting primarily of litigating with Erchonia and liquidating ORIX's collateral, just as if the Debtor was continuing full scale operations prior to the purported termination of the Erchonia Agreements. As of the Petition Date, the Debtor was indebted to ORIX in an approximate amount not less than $11.3 million, plus accrued unpaid interest, fees and other charges. In this relation, the Debtor and ORIX reached a consensual resolution providing for the limited use of cash collateral. Additionally, the Debtor would waive its right to a preliminary lift stay hearing, and agree to hold a final, evidentiary hearing regarding the relief from the automatic stay requested by ORIX herein on the Hearing Date. Robert W. Jones, Esq., at Patton Boggs LLP, represents ORIX Ventures, LLC as counsel. About Primcogent Solutions Primcogent Solutions, LLC, is a supplier and distributor of medical equipment and services in North America. Primcogent operates as the exclusive North American (and, through its European subsidiaries, Western European) seller or distributor of equipment manufactured by Erchonia Corporation, pursuant to exclusive license and supply agreements. Products sold include Erchonia's non-invasive body-contouring laser technology trademarked under the name Zerona(R), including the Zerona Body Laser. Primcogent was formed in late 2011 following the acquisition of the business of Santa Barbara Medical Innovations LLC for $18 million. Although the Erchonia agreement gave Primcogent perpetual rights to sell Erchonia products, Erchonia declared in March 2013 that the agreement has been terminated due to Primcogent's alleged failure to perform and starting that time stopped servicing Primcogent's products. Primcogent, on the other hand, claims Erchonia has committed fraud, breached the agreement and tortiously interfered with Primcogent's business. Primcogent cites, among other things, Erchonia's failure to obtain FDA clearance of Lunula, a laser technology used to treat or cure toe fungus. Primcogent also claims ORIX, its secured lender, is working in concert with Erchonia. A default in the Erchonia agreement triggered a cross-default in the credit agreement, and the secured lender has already seized control of Primcogent's cash account and is attempting to control warehouse inventory. Primcogent filed a bare-bones Chapter 11 petition (Bankr. N.D. Tex. Case No. 13-42368) in Ft. Worth, Texas, on May 20, 2013. The petition was signed by David Boris, chairman of board of managers of managing member. The Debtor disclosed $82,490,751 in assets and $27,236,020 in liabilities as of the Chapter 11 filing. Judge Michael Lynn presides over the case. Jason Napoleon Thelen, Esq.,at Andrews Kurth, LLP, serves as the Debtor's counsel. ORIX is represented by Robert W. Jones, Esq., and Brian Smith, Esq., at Patton Boggs, LLP. Erchonia is represented by Ira M. Schwartz, Esq., and Lawrence D. Hirsh, Esq., at Deconcini McDonald Yetwin & Lacy, P.C., and J. Michael Sutherland, Esq., and Lisa M. Lucas, Esq., at Carrington, Coleman, Sloman & Blumenthal, LLP. The Official Committee of Unsecured Creditors is represented by Looper Reed & McGraw P.C., as counsel. PROMMIS HOLDINGS: Has Green Light to Terminate MHS Services Pact ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved a stipulation terminating the services agreement between Prommis Holdings, LLC, LLC, et al., and Morris Hardwick & Schneider LLC. On Feb. 2, 2007, Prommis Solutions, LLC formerly known as MR Default Services LLC, and MHS entered into a services and technology agreement whereby Prommis was the exclusive provided of non-legal support services to MHS. Pursuant to the service agreement, Prommis is obligated to perform services for the benefit of MHS and MHS is obligated accept and compensate Prommis for the performance for a period of 20 years. The Debtors said they have realized significant value for a substantial portion of their assets through sales to McCalla Raymer, LLC Johnson & Freedman, L.L.C., and Pite Duncan, LLP. As the Debtors wind down their operations, the Debtors determined that it is in the best interests of the estates to cease performance under the service agreement. About Prommis Holdings Atlanta, Georgia-based Prommis Holdings, LLC, and its 10 affiliates delivered their petitions for voluntary bankruptcy under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 13-10551) on March 18, 2013. Three subsidiaries -- EC Closing Corp., EC Closing Corp. of Washington, and EC Posting Closing Corp. -- sought Chapter 11 protection (Bankr. D. Del. Case Nos. 13-11619 to 13-11621) on June 25, 2013. Judge Brendan Linehan Shannon presides over the case. Steven K. Kortanek, Esq., at Womble Carlyle Sandridge & Rice, LLP, serves as the Debtors' counsel, while David S. Meyer at Kirkland & Ellis LLP serves as co-counsel. The Debtors' restructuring advisor is Huron Consulting Services, LLC. Donlin Recano & Company, Inc., is the Debtors' claims agent. The petition estimated the lead Debtors' assets to range between $10 million and $50 million and the lead Debtor's debts between $50 million and $100 million. Prommis Solutions, LLC, a debtor- affiliate disclosed $18,488,803 in assets and $260,232,313 in liabilities as of the Chapter 11 filing. The petitions were signed by Charles T. Piper, chief executive officer. The U.S. Trustee for Region 3 appointed three creditors to serve in the Official Committee of Unsecured Creditors. The Committee tapped Saul Ewing LLP and Hahn & Hessen as its co-counsels, and FTI Consulting, Inc., as its financial advisor. PWK TIMBERLAND: Wants Until Nov. 21 to Propose Chapter 11 Plan -------------------------------------------------------------- PWK Timberland, LLC asks the U.S. Bankruptcy Court for the Western District of Louisiana to extend its exclusive periods to file a proposed chapter 11 plan until Nov. 21, 2013, and solicit acceptances for that plan until Jan. 21, 2014, respectively. The Debtor said it needed more time to negotiate a settlement and propose a plan of reorganization without interference from creditors and other interests. An Aug. 15, hearing at 10:30 a.m. has been set. About PWK Timberland Lake Charles, Louisiana-based PWK Timberland LLC sought Chapter 11 protection (Bankr. W.D. La. Case No. 13-20242) on March 22, 2013. Gerald J. Casey, Esq., serves as counsel to the Debtor. The Debtor disclosed $15,038,448 in assets and $1,792,957 in liabilities as of the Chapter 11 filing. The Debtor's Chapter 11 plan is due Sept. 18, 2013. No committee has been appointed in the Chapter 11 case. QUEBECOR MEDIA: Proposed $300MM Term Loan Gets Moody's B1 Rating ---------------------------------------------------------------- Moody's Investors Service rated Quebecor Media, Inc.'s new $300 million senior secured term loan B1. At the same time, Moody's affirmed the company's Ba3 corporate family (CFR), Ba3-PD probability of default rating (PDR), B2 senior unsecured notes, Ba2 senior unsecured notes at Videotron (a wholly-owned subsidiary of QMI), SGL-2 speculative grade liquidity (SGL) rating with stable rating outlook. Since, when other concurrent transactions are accounted-for, the company's debt balance will be substantially unchanged, the transaction has no implications for existing ratings and the new notes are rated B1, one notch higher than QMI's existing senior unsecured notes. The following summarizes the rating action and QMI's existing ratings: Issuer: Quebecor Media Inc. Senior Secured Term Loan B, rated B1 (LGD4, 62%) Corporate Family Rating, affirmed at Ba3 Probability of Default Rating, affirmed at Ba3-PD Speculative Grade Liquidity Rating, affirmed at SGL-2 Outlook, maintained at Stable Senior Unsecured Regular Bond/Debenture, affirmed at B2 (LGD5, 81%) Issuer: Videotron Ltee Senior Unsecured Regular Bond/Debenture, affirmed at Ba2 (LGD2, 29%) Ratings Rationale: QMI's Ba3 corporate family rating balances the sustainability and recession-resistance of the cable-based broadband communications cash flow of its Videotron subsidiary, against the potential of debt-financing to buy-out QMI's minority shareholder. Financial performance is also constrained by elevated capital spending and start-up losses related to launching a facilities-based wireless product, fixed-line margin pressure from increasing IPTV competition and secular pressures in the newspaper publishing business. However, down-side risks are somewhat mitigated given guidance that QMI would not exceed company-defined TD/EBITDA of 4x (Moody's adjustments add approximately 0.6x to company-reported figures); Moody's expects QMI's consolidated Debt/EBITDA to be maintained in the low-4x/high-3x range (as adjusted by Moody's; March 31, 2013's measure was 4.0x). Rating Outlook The outlook is stable since QMI has stated that it will not operate beyond company-defined TD/EBITDA of 4x. The stable outlook also reflects Moody's expectation that QMI will maintain solid liquidity and be free cash flow positive after 2014 as a period of elevated capital spending ends. What Could Change the Rating - UP For an upgrade to be considered, it would be preferable that QMI have a stable business platform with growth expected to come primarily from organic sources. With that and were TD/EBITDA expected to be in the sub 3.5x range, FCF/TD over 5%, RCF/TD maintained in excess of 15%, and (EBITDA-CapEx)/Interest improved to above 2.25x (incorporating Moody's standard adjustments) - in all cases on a sustainable basis - a ratings upgrade may be considered. What Could Change the Rating - DOWN Should TD/EBITDA not decline towards pre-CDP buy-out levels and remain in the mid-to-low 4x range, FCF/TD be close to break even and RCF/TD trending towards 10%, in all cases on a sustainable basis, the ratings may be subject to downwards pressure (incorporating Moody's standard adjustments). As well, significant debt-financed acquisition or share buy-back activity or adverse liquidity events may prompt an adverse ratings adjustment. The principal methodology used in this rating was Global Pay Television - Cable and Direct-to-Home Satellite Operators published in April 2013. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. RADIAN GROUP: Posts $33.2-Mil. Net Loss in Q2 Ended June 30 ----------------------------------------------------------- Radian Group Inc. on July 24 reported a net loss for the quarter ended June 30, 2013, of $33.2 million, or $0.19 per diluted share, which included net losses on investments of $130.3 million and combined net gains from the change in fair value of derivatives and other financial instruments of $87.7 million. This compares to a net loss for the quarter ended June 30, 2012, of $119.3 million, or $0.90 per diluted share, which included net gains on investments of $26.4 million and combined net losses from the change in fair value of derivatives and other financial instruments of $95.0 million. Book value per share at June 30, 2013, was $5.22. "We are pleased with our improved financial results in the quarter and the first half of the year," said Chief Executive Officer S.A. Ibrahim. "Compared to the second quarter of last year, our new mortgage insurance business written grew 60% and we reduced our inventory of primary delinquent loans by 21%. The loss ratio for our mortgage insurance business was approximately 70% for the second consecutive quarter, and the mortgage insurance loss provision for the first half of 2013 reached its lowest level since the first half of 2007." Mr. Ibrahim continued, "Also in the second quarter, we achieved an important milestone with our high quality, profitable new business written after 2008 now representing 53% of our primary risk in force, outweighing our legacy mortgage insurance book. This improved composition has helped our mortgage insurance business achieve profitability, absent the impact of fair value gains and losses, for the quarter and six months." CAPITAL AND LIQUIDITY UPDATE -- Radian Guaranty's risk-to-capital ratio was 19.7:1 as of June 30, 2013. -- The increase in the risk-to-capital ratio from March 31, 2013, was primarily driven by the increase to the company's net risk in force resulting from strong volume of new, high-quality mortgage insurance business. -- In 2012, Radian Guaranty entered into two quota share reinsurance agreements with the same third-party reinsurance provider, in order to proactively manage its risk-to-capital position. On April 1, 2013, Radian reduced the amount of new business ceded to the reinsurer on a prospective basis from 20 percent to 5 percent. As of June 30, 2013, a total of $2.5 billion of risk in force had been ceded under those agreements. On December 31, 2014, and on December 31, 2015, Radian will have the option to recapture a portion of the business that has been reinsured. -- As of June, 2013, Radian Guaranty's statutory capital was $1.2 billion compared to $1.1 billion at March 31, 2013, and $0.9 billion a year ago. -- Radian Group maintains approximately $816 million of currently available liquidity. SECOND QUARTER HIGHLIGHTS -- New mortgage insurance written (NIW) grew to $13.4 billion during the quarter, compared to $10.9 billion in the first quarter of 2013 and $8.3 billion in the second quarter of 2012. -- The Home Affordable Refinance Program (HARP) accounted for $2.4 billion of insurance not included in Radian Guaranty's NIW total for the quarter. This compares to $2.5 billion in the first quarter of 2013, and $2.4 billion in the second quarter of 2012. -- NIW continued to consist of loans with excellent risk characteristics. -- The net loss for the second quarter was $33.2 million which included net losses on investments of $130.3 million and combined net gains from the change in fair value of derivatives and other financial instruments of $87.7 million. Included in the net losses on investments were net unrealized losses of $139.1 million, driven by rising interest rates, which reduced the market value of the company's fixed-income portfolio. -- The mortgage insurance provision for losses was $136.4 million in the second quarter of 2013, compared to $132.0 million in the first quarter of 2013, and $208.1 million in the second quarter of 2012. The loss ratio in the second quarter for Radian Guaranty was 68.9 percent, compared to 72.1 percent in the first quarter of 2013, and 121.9 percent in the second quarter of 2012. Mortgage insurance loss reserves were approximately $2.7 billion as of June 30, 2013, which decreased from $2.9 billion in the first quarter of 2013, and from $3.2 billion a year ago. First-lien reserves per primary default were $30,932 as of June 30, 2013, compared to $30,426 as of March 31, 2013, and $28,410 as of June 30, 2012. -- The total number of primary delinquent loans decreased by 8 percent in the second quarter from the first quarter of 2013, and by 21 percent from the second quarter of 2012. The primary mortgage insurance delinquency rate decreased to 9.7 percent in the second quarter of 2013, compared to 10.9 percent in the first quarter of 2013, and 13.3 percent in the second quarter of 2012. -- Total mortgage insurance claims paid were $326.4 million, compared to $309.9 million in the first quarter of 2013, and $263.4 million in the second quarter of 2012. The company continues to expect mortgage insurance net claims paid of approximately $1.4 billion for the full-year 2013. -- $19.0 million of other operating expenses in the second quarter represented long-term incentive compensation, compared to $38.0 million in the first quarter of 2013. The expense in both periods was impacted by an increase in the liability for cash-settled awards, which was driven primarily by an increase in the company's stock price and represented $7.0 million in the second quarter, compared to $32.3 million in the first quarter of 2013. -- Radian Asset Assurance Inc. serves as an important source of capital support for Radian Guaranty and is expected to continue to provide Radian Guaranty with dividends over time. -- As of June 30, 2013, Radian Asset had approximately $1.2 billion in statutory surplus with an additional $0.4 billion in claims-paying resources. -- In July 2013, Radian Asset paid a dividend of $36 million to Radian Guaranty. Since 2008, Radian Asset has paid a total of $420 million in dividends to Radian Guaranty. -- Since June 30, 2008, Radian Asset has successfully reduced its total net par exposure by 76 percent to $27.3 billion as of June 30, 2013, including large declines in the riskier segments of the portfolio. About Radian Group Headquartered in Philadelphia, Radian Group Inc. -- http://www.radian.biz-- provides private mortgage insurance and related risk mitigation products and services to mortgage lenders nationwide through its principal operating subsidiary, Radian Guaranty Inc. These services help promote and preserve homeownership opportunities for homebuyers, while protecting lenders from default-related losses on residential first mortgages and facilitating the sale of low-downpayment mortgages in the secondary market. * * * As reported by the Troubled Company Reporter on March 4, 2013, Standard & Poor's Ratings Services said that it has affirmed all of its ratings on Radian Group Inc. At the same time, S&P revised the outlook to stable from negative. S&P also assigned its 'CCC+' senior unsecured debt rating to the company's proposed $350 million convertible senior notes. As reported by the Troubled Company Reporter on Oct. 17, 2012, Standard & Poor's Rating Services raised its long-term issuer credit ratings on Radian Group Inc. (RDN) to 'CCC+' from 'CCC-' and MGIC Investment Corp. (MTG) to 'CCC+' from 'CCC'. The financial strength ratings for both RDN's and MTG's respective operating companies are unchanged. The outlook on both companies is negative. "The outlook for each company is negative, reflecting the continuing risk of significant adverse reserve development; the current trajectory of operating performance; and the expected impact ongoing losses will have on their capital positions," S&P said in October 2012. "We expect operating performance to deteriorate for the rest of the year for both companies, reflecting the affect of normal adverse seasonality on new notices of delinquency and cure rates, and the lack of greater improvement in the job markets." RANCHO CALIFORNIA: Chapter 11 Case Dismissed -------------------------------------------- Judge Louise DeCarl Adler of the U.S. Bankruptcy Court for the Southern District of California dismissed Rancho California Center, d/b/a North View Business Center's Chapter 11 case and barred the Debtor and any of its affiliates from re-filing bankruptcy under any Chapter of the Bankruptcy Code pending payment in full to Nationwide Life Insurance Company of all obligations under the documents governing the $3,240,000 loans as they come due and owing, either voluntarily by the March 1, 2014, Maturity Date, or involuntarily thereafter by way of any sale of the Debtor's real property. Thomas B. Gorrill, Esq., at the Law Office of Thomas Gorill, in San Diego, California, represents the Debtor. About Rancho California Rancho California Center, doing business as North View Business Center, filed a bare-bones Chapter 11 petition (Bankr. S.D. Cal. Case No. 12-16157) on Dec. 10, 2012. The Debtor, a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101(51B), filed schedules disclosing $11.3 million in assets and $3.13 million in liabilities. The Debtor owns a 92,000-square feet industrial building at 4665 North Avenue, in Oceanside, California. The property is valued at $11 million and secures a $3.05 million debt to Nationwide Life Insurance Co. A plan of reorganization was filed on March 12, 2013. REALOGY CORP: Inks Underwriting Pact for Sale of 25MM Shares ------------------------------------------------------------ Realogy Holdings Corp. on July 16, 2013, entered into an underwriting agreement with Goldman, Sachs & Co. and J.P. Morgan Securities LLC, as underwriter, and certain selling stockholders relating to the public offering of 25,125,070 shares of the Company's common stock, par value $0.01 per share, by the Selling Stockholders at an offering price of $47.57 per share. The Underwriting Agreement includes customary representations, warranties and covenants by the Company and the Selling Stockholders. It also provides for customary indemnification by each of the Company, the Selling Stockholders and the Underwriters against certain liabilities and customary contribution provisions in respect of those liabilities. The Company will not receive any proceeds from the sale of shares by the Selling Stockholders. The Company will pay the expenses, other than underwriting discounts and commissions, associated with the sale of shares by the selling stockholders. The offering is being made pursuant to the Company's effective shelf registration statement on Form S-3, as amended, initially filed with the Securities and Exchange Commission on April 9, 2013, and the related prospectus supplement and accompanying prospectus. The offering is expected to close on or about July 22, 2013, subject to customary closing conditions. A copy of the Underwriting Agreement is available at: http://is.gd/wM62zB In connection with the offering, on July 16, 2013, Travis W. Hennings and M. Ali Rashid resigned from the Board of Directors of the Company, subject to and effective upon the closing of the offering. Mr. Hennings, who was appointed by funds affiliated with Apollo Global Management LLC, served as a director of the Company since October 2012. Mr. Rashid, who was appointed by funds affiliated with Apollo Global Management LLC, served as a Director of the Company since April 2007. As a result, the Board of Directors of the Company will consist of five independent directors, the Company's Chairman and Chief Executive Officer, and one non-management director who is not independent. The Company continues to consider potential candidates for inclusion on its Board of Directors as additional independent directors. About Realogy Corp. Realogy Corp. -- http://www.realogy.com/-- a global provider of real estate and relocation services with a diversified business model that includes real estate franchising, brokerage, relocation and title services. Realogy's world-renowned brands and business units include Better Homes and Gardens Real Estate, CENTURY 21, Coldwell Banker, Coldwell Banker Commercial, The Corcoran Group, ERA, Sotheby's International Realty, NRT LLC, Cartus and Title Resource Group. Collectively, Realogy's franchise systems have around 15,000 offices and 270,000 sales associates doing business in 92 countries around the world. Headquartered in Parsippany, N.J., Realogy is owned by affiliates of Apollo Management, L.P., a leading private equity and capital markets investor. Realogy fully supports the principles of the Fair Housing Act. Realogy Holdings Corp. and Realogy Group LLC reported a net loss attributable to the Companies of $543 million on $4.67 billion of net revenues for the year ended Dec. 31, 2012. Realogy Holdings and Realogy Group incurred a net loss of $441 million on $4.09 billion of net revenues in 2011, following a net loss of $99 million on $4.09 billion of net revenues for 2010. The Company's balance sheet at March 31, 2013, showed $7.41 billion in total assets, $5.97 billion in total liabilities and $1.44 billion in total equity. Bankruptcy Warning "Our ability to make scheduled payments or to refinance our debt obligations depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We cannot assure you that we will maintain a level of cash flows from operating activities and from drawings on our revolving credit facilities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness or meet our operating expenses. If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness. We cannot assure you that we would be able to take any of these actions, that these actions would be successful and permit us to meet our scheduled debt service obligations or that these actions would be permitted under the terms of our existing or future debt agreements. If we cannot make scheduled payments on our debt, we will be in default and, as a result: * our debt holders could declare all outstanding principal and interest to be due and payable; * the lenders under our senior secured credit facility could terminate their commitments to lend us money and foreclose against the assets securing their borrowings; and * we could be forced into bankruptcy or liquidation," the Company said in its annual report for the period ended Dec. 31, 2012. * * * In the Dec. 12, 2012, edition of the TCR, Moody's Investors Service upgraded Realogy Group LLC's Corporate Family and Probability of Default ratings to B3. The B3 Corporate Family rating (CFR) incorporates Moody's view that Realogy's capital structure has made meaningful progress towards being stabilized following the issuance of primary equity, and is therefore more sustainable although still highly leveraged. As reported by the TCR on Feb. 18, 2013, Standard & Poor's Ratings Services raised its corporate credit rating on Realogy Corp. to 'B+' from 'B'. "The one notch upgrade in the corporate credit rating to 'B+' reflects an increase in our expectation for operating performance at Realogy in 2013, and S&P's expectation that total lease adjusted debt to EBITDA will improve to the low-6x area and funds from operations (FFO) to total adjusted debt will be improve to the high-single-digits percentage area in 2013, mostly due to EBITDA growth in the low- to mid-teens percentage area in 2013," S&P said. RENEGADE HOLDINGS: Liquidation Underway After Sale Bid Fails ------------------------------------------------------------ Matt Evans at The Business Journal reports that the liquidation of bankrupt Renegade Holdings, Renegade Tobacco Co. and Alternative Brands Inc. is underway following the failure of a last-minute attempt at a sale. Accordingt to the Business Journal, Winston-Salem Journal reported that a French buyer was not able to come to terms with a creditor of the Mocksville companies, which have been in Chapter 11 since 2009. Trustee Peter Tourtellot said about 83 employees were told July 17 that plans were being made to shut down operations and liquidate remaining assets, the Business Journal adds. About Renegade Holdings Renegade Holdings and two subsidiaries -- Alternative Brands, Inc. and Renegade Tobacco Company -- filed for Chapter 11 protection (Bankr. M.D.N.C. Lead Case No. 09-50140) on Jan. 28, 2009, and exited bankruptcy on June 1, 2010. They were put back into bankruptcy July 19, 2010, when Judge William L. Stocks vacated the reorganization plan, in part because of a criminal investigation of owner Calvin Phelps and the companies regarding what authorities called "unlawful trafficking of cigarettes." Alternative Brands is a federally licensed manufacturer of tobacco products consisting primarily of cigarettes and cigars. Renegade Tobacco distributes the tobacco products produced by ABI through wholesalers and retailers in 19 states and for export. ABI also is a contract fabricator for private label brands of cigarettes and cigars which are produced for other licensed tobacco manufacturers. The stock of RHI is owned indirectly by Calvin A. Phelps through his ownership of the stock of Compliant Tobacco, LLC which, in turn, owns all of the stock of RHI which in turn owns all of the stock of RTC and ABI. Mr. Phelps was the chief executive officer of all three companies. All three of the Debtors' have their offices and production facilities in Mocksville, North Carolina. In August 2010, the Bankruptcy Court approved the appointment of Peter Tourtellot, managing director of turnaround-management company Anderson Bauman Tourtellot Vos & Co., as Chapter 11 trustee. In a May 29, 2013 decision, Judge Stocks rejected the Second Amended and Restated Joint Plan of Reorganization dated January 31, 2013, Modified February 18, 2013, filed by Mr. Tourtellot for Renegade Holdings, Alternative Brands, and Renegade Tobacco. The Plan contemplated that the Debtors will continue in business following confirmation. Under the Plan, all of the assets in the estate vest in the Reorganized Debtors on the Effective Date of the Plan except for the Debtors' causes of action. Also, on the Effective Date, the Reorganized Debtors would assume the leases for the premises where their office and plant are located, enter into a new lease for the machinery and equipment they were utilizing pre-confirmation, and continue to fabricate and market tobacco products as they have in the past. RESIDENTIAL CAPITAL: Deadline to Remove Actions Moved to Oct. 31 ---------------------------------------------------------------- Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York extended the time for Residential Capital, LLC, and its debtor affiliates to file notices of removal of civil actions, and thereby remove those Civil Actions to the appropriate bankruptcy court or district court, until the later of (a) October 31, 2013, or (b) should the Court enter an order terminating the automatic stay as to a particular Civil Action, for that Civil Action, 30 days after the entry of the order terminating the automatic stay. About Residential Capital Residential Capital LLC, the unprofitable mortgage subsidiary of Ally Financial Inc., filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012. Neither Ally Financial nor Ally Bank is included in the bankruptcy filings. ResCap, one of the country's largest mortgage originators and servicers, was sent to Chapter 11 with 50 subsidiaries amid "continuing industry challenges, rising litigation costs and claims, and regulatory uncertainty," according to a company statement. ResCap disclosed $15.68 billion in assets and $15.28 billion in liabilities at March 31, 2012. Centerview Partners LLC and FTI Consulting are acting as financial advisers to ResCap. Morrison & Foerster LLP is acting as legal adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is the conflicts counsel. Rubenstein Associates, Inc., is the public relations consultants to the Company in the Chapter 11 case. Morrison Cohen LLP is advising ResCap's independent directors. Kurtzman Carson Consultants LLP is the claims and notice agent. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves as counsel to Ally Financial. ResCap sold most of the businesses for a combined $4.5 billion. The Bankruptcy Court in November 2012 approved ResCap's sale of its mortgage servicing and origination platform assets to Ocwen Loan Servicing, LLC and Walter Investment Management Corporation for $3 billion; and its portfolio of roughly 50,000 whole loans to Berkshire Hathaway for $1.5 billion. Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Residential Capital LLC and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). RESIDENTIAL CAPITAL: Can Use $54MM Per Month for Servicer Advances ------------------------------------------------------------------ In a court-approved stipulation, Residential Capital LLC, Ally Financial Inc. and Ally Bank, and the Ad Hoc Group of Holders of Junior Secured Notes agree to limit the Debtors' rights to use cash collateral. Specifically, the parties agree that the Debtors' rights to use Cash Collateral that is an asset or proceeds of an asset under the columns "Ally Revolver," "Blanket" and "Ally LOC" -- as the terms are defined in the AFI DIP and Cash Collateral Order -- are terminated effective as of July 11, 2013. The Junior Secured Noteholders will no longer be entitled to the Adequate Protection Payments or the Additional Adequate Protection under the AFI DIP and Cash Collateral Order; provided, that the Debtors will make Adequate Protection Payments for (a) all fees and expenses incurred through May 31, 2013, without regard to when an invoice or statement is or has been submitted, and (b) all fees and expenses for which an invoice is due and payable pursuant to the AFI DIP and Cash Collateral Order on or before the Termination Date, the Debtors shall be authorized to use Cash Collateral for the limited purpose of making those payments. However, the Debtors are given the right to use Cash Collateral for the period beginning on July 11, 2013 and ending on December 15, 2013, to fund servicer advance obligations solely to the extent the funding creates a receivable that is the collateral of the Junior Secured Parties and AFI in the same amount of the funding and any cash collected on account of those receivable will be the Cash Collateral; provided that the maximum amount of Stipulated Cash Collateral that may be used to fund gross servicer advance obligations will not exceed $54 million for each calendar month. Gary S. Lee, Esq., and Todd M. Goren, Esq., at MORRISON & FOERSTER LLP, in New York, for the Debtors. Richard M. Cieri, Esq., Ray C. Schrock, Esq., and Stephen E. Hessler, Esq., at KIRKLAND & ELLIS LLP, in New York, for AFI. J. Christopher Shore, Esq., and Harrison Denman, Esq., at WHITE & CASE LLP, in New York; and Gerard Uzzi, Esq., at MILBANK , TWEED, HADLEY & MCCLOY LLP, in New York, for the Ad Hoc Group. About Residential Capital Residential Capital LLC, the unprofitable mortgage subsidiary of Ally Financial Inc., filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012. Neither Ally Financial nor Ally Bank is included in the bankruptcy filings. ResCap, one of the country's largest mortgage originators and servicers, was sent to Chapter 11 with 50 subsidiaries amid "continuing industry challenges, rising litigation costs and claims, and regulatory uncertainty," according to a company statement. ResCap disclosed $15.68 billion in assets and $15.28 billion in liabilities at March 31, 2012. Centerview Partners LLC and FTI Consulting are acting as financial advisers to ResCap. Morrison & Foerster LLP is acting as legal adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is the conflicts counsel. Rubenstein Associates, Inc., is the public relations consultants to the Company in the Chapter 11 case. Morrison Cohen LLP is advising ResCap's independent directors. Kurtzman Carson Consultants LLP is the claims and notice agent. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves as counsel to Ally Financial. ResCap sold most of the businesses for a combined $4.5 billion. The Bankruptcy Court in November 2012 approved ResCap's sale of its mortgage servicing and origination platform assets to Ocwen Loan Servicing, LLC and Walter Investment Management Corporation for $3 billion; and its portfolio of roughly 50,000 whole loans to Berkshire Hathaway for $1.5 billion. Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Residential Capital LLC and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). RESIDENTIAL CAPITAL: Objects to $713-Mil. Calif. Litigation Claims ------------------------------------------------------------------ Residential Capital LLC and its affiliates object to, and ask the U.S. Bankruptcy Court for the Southern District of New York to disallow and expunge, claims filed by 61 individuals who are plaintiffs in a litigation pending in a California court on the grounds that the claimants fail to state a claim against the Debtors. Each of the 61 individual claimants, through purported counsel Brookstone Law, P.C., filed against the Debtors' estates identical claims, each in the amount of $1.3 million, totaling $713.7 million. According to the Debtors, each of these claims should be disallowed and expunged pursuant to Section 502(b) of the Bankruptcy Code on, among others, the ground that they fail to state a single, colorable claim against any of the Debtors under applicable law. Moreover, the Debtors assert that the California Litigation fail to: (1) adequately allege any wrongdoing by a specific Debtor entity; and (2) provide any objective basis to substantiate such purported damages. The California Litigation was filed days before the Petition Date. The Claimants filed a complaint against a multitude of Debtors and non-debtor defendants, which sought monetary damages because a group of California homeowners believe they were allegedly harmed by the defendants' home lending practices in California between 2003 and 2008 when the individuals obtained loans from one or more of the named defendants. A hearing on the objection will be held on Aug. 28, 2013 at 10:00 a.m. (ET). Objections are due Aug. 9. Gary S. Lee, Esq., Norman S. Rosenbaum, Esq., and Jordan A. Wishnew, Esq., at MORRISON & FOERSTER LLP, in New York; and Regina J. McClendon, Esq., at LOCKE LORD LLP, in San Francisco, California, represent the Debtors. About Residential Capital Residential Capital LLC, the unprofitable mortgage subsidiary of Ally Financial Inc., filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012. Neither Ally Financial nor Ally Bank is included in the bankruptcy filings. ResCap, one of the country's largest mortgage originators and servicers, was sent to Chapter 11 with 50 subsidiaries amid "continuing industry challenges, rising litigation costs and claims, and regulatory uncertainty," according to a company statement. ResCap disclosed $15.68 billion in assets and $15.28 billion in liabilities at March 31, 2012. Centerview Partners LLC and FTI Consulting are acting as financial advisers to ResCap. Morrison & Foerster LLP is acting as legal adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is the conflicts counsel. Rubenstein Associates, Inc., is the public relations consultants to the Company in the Chapter 11 case. Morrison Cohen LLP is advising ResCap's independent directors. Kurtzman Carson Consultants LLP is the claims and notice agent. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves as counsel to Ally Financial. ResCap sold most of the businesses for a combined $4.5 billion. The Bankruptcy Court in November 2012 approved ResCap's sale of its mortgage servicing and origination platform assets to Ocwen Loan Servicing, LLC and Walter Investment Management Corporation for $3 billion; and its portfolio of roughly 50,000 whole loans to Berkshire Hathaway for $1.5 billion. Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Residential Capital LLC and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). RESIDENTIAL CAPITAL: To Pay $230MM to Settle FRB Review Order ------------------------------------------------------------- Residential Capital LLC and its affiliates seek the Bankruptcy Court's authority to enter into and perform under an amendment to the consent order with the Federal Reserve Board and the Federal Deposit Insurance Corporation, dated April 13, 2011. Judge Glenn previously authorized Debtors GMAC Mortgage, LLC, and Residential Capital, LLC, to execute a term sheet and deposit into a segregated escrow account established with an escrow agent reasonably acceptable to GMAC Mortgage and the Federal Reserve Board an amount up to $230 million, which will be used to fund a Qualified Settlement Fund to replace the FRB Foreclosure Review obligations. The Debtors previously asked the Court for authority to terminate the FRB Foreclosure Review, stating that the expenditure, which amounts to approximately $300,000 per day, represents the single most costly administrative expense of the Debtors' estates. The Debtors estimated that, as of the Petition Date, the performance of the FRB Foreclosure Review may cost as much as $180 million. By August, the Debtors' estimate of the cost of the FRB Foreclosure Review had risen to $250 million. Through the Amendment, the Debtors have agreed to make a one-time payment to a borrower fund in the amount of approximately $230 million, in satisfaction of the Consent Order's FRB Foreclosure Review requirement. The Settlement Amount consists of a cash payment in the amount of $198,077,499 from which payments will be made to borrowers. Additionally, the Amendment requires ResCap and GMAC Mortgage to provide loss mitigation or other foreclosure prevention actions that total $316,923,998. The Debtors and the FRB have agreed that the Debtors may make an additional cash payment in the amount of $31,692,400 in satisfaction of their Foreclosure Prevention obligations. The total cash consideration to be paid to the FRB in satisfaction of the Consent Order is $229,769,899, plus interest accruing on escrowed funds. According to Gary S. Lee, Esq., at Morrison & Foerster LLP, in New York, the Amendment obviates the enormous payments to consultants for work that, if completed, almost certainly would result in lower total restitution payments to borrowers than what is being paid under the Amendment. Moreover, the Settlement Amount is less than the projected total cost of the FRB Foreclosure Review, including any associated restitution payments, Mr. Lee says. Reducing this administrative expense will result in a greater distribution to the Debtors' creditors, he tells the Court. A hearing on the motion will be held on July 26, 2013, at 10:00 a.m. (ET). Objections were due July 19. Lorenzo Marinuzzi, Esq., Naomi Moss, Esq., and James A. Newton, Esq., at MORRISON & FOERSTER LLP, in New York, also represent the Debtors. About Residential Capital Residential Capital LLC, the unprofitable mortgage subsidiary of Ally Financial Inc., filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012. Neither Ally Financial nor Ally Bank is included in the bankruptcy filings. ResCap, one of the country's largest mortgage originators and servicers, was sent to Chapter 11 with 50 subsidiaries amid "continuing industry challenges, rising litigation costs and claims, and regulatory uncertainty," according to a company statement. ResCap disclosed $15.68 billion in assets and $15.28 billion in liabilities at March 31, 2012. Centerview Partners LLC and FTI Consulting are acting as financial advisers to ResCap. Morrison & Foerster LLP is acting as legal adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is the conflicts counsel. Rubenstein Associates, Inc., is the public relations consultants to the Company in the Chapter 11 case. Morrison Cohen LLP is advising ResCap's independent directors. Kurtzman Carson Consultants LLP is the claims and notice agent. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves as counsel to Ally Financial. ResCap sold most of the businesses for a combined $4.5 billion. The Bankruptcy Court in November 2012 approved ResCap's sale of its mortgage servicing and origination platform assets to Ocwen Loan Servicing, LLC and Walter Investment Management Corporation for $3 billion; and its portfolio of roughly 50,000 whole loans to Berkshire Hathaway for $1.5 billion. Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Residential Capital LLC and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). REVSTONE INDUSTRIES: BFG Wants Subsidiaries Placed in Chapter 7 --------------------------------------------------------------- Boston Finance Group, LLC, asks the U.S. Bankruptcy Court for the District of Delaware to enter an order converting the Chapter 11 cases of Greenwood Forgings, LLC, and US Tool & Engineering, LLC, to cases under Chapter 7 of the Bankruptcy Code. According to BFG, the Greenwood estate has incurred substantial and ongoing losses during the course of its Chapter 11 case and the estate will continue to be diminished by professional fees necessarily incurred as a result of maintaining the Greenwood estate on an ongoing basis. BFG adds that Greenwood has no remaining business, and therefore has no likelihood of rehabilitation, and will not be able to propose a confirmable Chapter 11 plan. Thus, "cause" exists under Bankruptcy Code section 1112(b)(4)(A) to convert Greenwood's Chapter 11 case to a case under Chapter 7 of the Bankruptcy Code. As to US Tool, BFG says that US Tool ceased operations as of Nov. 30, 2012, prior to filing its Chapter 11 voluntary petition for relief, and never resumed operations. Further, pursuant to the US Tool Stay Order, substantially all of US Tool's assets were liquidated at an auction conducted on April 16, 2013. As US Tool has no physical assets to maintain and no operations to administer, its continued time in Chapter 11, according to BFG, serves only to unnecessarily increase the professional fees and other administrative expenses incurred by this insolvent Debtor. Further, as US Tool has now liquidated all of its assets, no business remains to rehabilitate. BFG adds that a Chapter 7 trustee could liquidate US Tool's few remaining assets with significantly fewer expenses and may actually be able to provide a greater recovery to creditors. Counsel for BFG can be reached at: Stuart M. Brown, Esq. DLA PIPER LLP (US) 919 N. Market Street, 15th Floor Wilmington, DE 19801 Tel: (302) 468-5700 Fax: (302) 394-2341 E-mail: stuart.brown@dlapiper.com - and - Gregg M. Galardi, Esq. Sarah E. Castle, Esq. DLA PIPER LLP (US) 1251 Avenue of the Americas New York, NY 10020-1104 Tel: (212) 335-4500 Fax: (212) 335-4501 E-mail: gregg.galardi@dlapiper.com sarah.castle@dlapiper.com About Revstone Industries Lexington, Kentucky-based Revstone Industries LLC, a maker of truck parts, filed for Chapter 11 bankruptcy (Bankr. D. Del. Case No. 12-13262) on Dec. 3, 2012. Judge Brendan Linehan Shannon oversees the case. In its petition, Revstone estimated under $50 million in assets and debts. Affiliate Spara LLC filed its Chapter 11 petition (Bankr. D. Del. Case No. 12-13263) on Dec. 3, 2012. Lexington-based Greenwood Forgings, LLC (Bankr. D. Del. Case No. 13-10027) and US Tool & Engineering LLC (Bankr. D. Del. Case No. 13-10028) filed separate Chapter 11 petitions on Jan. 7, 2013. Judge Shannon also oversees the cases. The cases are jointly administered for procedural purposes only under Case No. 12-13262. Laura Davis Jones, Esq., David M. Bertenthal, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, represent the Debtors as counsel. Duane David Werb, Esq., at Werb & Sullivan, represents Greenwood Forgings as temporary bankruptcy counsel. Greenwood estimated $1 million to $10 million in assets and $10 million to $50 million in debts. US Tool & Engineering estimated under $1 million in assets and $1 million to $10 million in debts. The petitions were signed by George S. Homeister, chairman. Mark L. Degrosseilliers, Esq., Matthew P. Ward, Esq., and Steven K. Kortanek, Esq., at Womble Carlyle Sandridge & Rice, LLP, in Wilmington, Delaware, represent the Official Committee of Unsecured Creditors of Revstone Industries, LLC. The assets of Greenwood Forgings LLC and US Tool & Engineering LLC, have both been sold pursuant to orders of the Bankruptcy Court. REVSTONE INDUSTRIES: Committee Plan Outline Has Aug. 21 Hearing --------------------------------------------------------------- The hearing date to consider the adequacy of the disclosure statement regarding the Plan of Reorganization proposed by the Official Committee of Unsecured Creditors of Revstone Industries, LLC, dated July 8, 2013, is scheduled for Aug. 21, 2013, at 11:00 a.m. Objections are due by Aug. 14, 2013, at 4:00 p.m. As reported in the TCR on July 11, 2013, the creditors' committee filed a Chapter 11 plan after the company violated an agreement extending the exclusive right to propose its own reorganization plan. The bankruptcy judge signed an order in mid-May providing that the committee could file a plan of its own only if Revstone didn't comply with specified "milestones." The committee said in the disclosure statement filed alongside the plan on July 8 that Revstone violated one of the milestones. The committee filed the plan in response. The committee's plan would give ownership to unsecured creditors, wiping out existing equity holdings. The disclosure statement has blanks were the total of unsecured claims later will be shown. Similarly, the disclosure statement doesn't give the estimated percentage recovery. A copy of the Disclosure Statement is available at: http://bankrupt.com/misc/revstoneindustries.doc736.pdf About Revstone Industries Lexington, Kentucky-based Revstone Industries LLC, a maker of truck parts, filed for Chapter 11 bankruptcy (Bankr. D. Del. Case No. 12-13262) on Dec. 3, 2012. Judge Brendan Linehan Shannon oversees the case. In its petition, Revstone estimated under $50 million in assets and debts. Affiliate Spara LLC filed its Chapter 11 petition (Bankr. D. Del. Case No. 12-13263) on Dec. 3, 2012. Lexington-based Greenwood Forgings, LLC (Bankr. D. Del. Case No. 13-10027) and US Tool & Engineering LLC (Bankr. D. Del. Case No. 13-10028) filed separate Chapter 11 petitions on Jan. 7, 2013. Judge Shannon also oversees the cases. The cases are jointly administered for procedural purposes only under Case No. 12-13262. Laura Davis Jones, Esq., David M. Bertenthal, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, represent the Debtors as counsel. Duane David Werb, Esq., at Werb & Sullivan, represents Greenwood Forgings as temporary bankruptcy counsel. Greenwood estimated $1 million to $10 million in assets and $10 million to $50 million in debts. US Tool & Engineering estimated under $1 million in assets and $1 million to $10 million in debts. The petitions were signed by George S. Homeister, chairman. Mark L. Degrosseilliers, Esq., Matthew P. Ward, Esq., and Steven K. Kortanek, Esq., at Womble Carlyle Sandridge & Rice, LLP, in Wilmington, Delaware, represent the Official Committee of Unsecured Creditors. The assets of Greenwood Forgings LLC and US Tool & Engineering LLC, have both been sold pursuant to orders of the Bankruptcy Court. REVSTONE INDUSTRIES: BFG Wants Subsidiaries Placed in Chapter 7 --------------------------------------------------------------- Boston Finance Group, LLC, asks the U.S. Bankruptcy Court for the District of Delaware to enter an order converting the Chapter 11 cases of Greenwood Forgings, LLC, and US Tool & Engineering, LLC, to cases under Chapter 7 of the Bankruptcy Code. According to BFG, the Greenwood estate has incurred substantial and ongoing losses during the course of its Chapter 11 case and the estate will continue to be diminished by professional fees necessarily incurred as a result of maintaining the Greenwood estate on an ongoing basis. BFG adds that Greenwood has no remaining business, and therefore has no likelihood of rehabilitation, and will not be able to propose a confirmable Chapter 11 plan. Thus, "cause" exists under Bankruptcy Code section 1112(b)(4)(A) to convert Greenwood's Chapter 11 case to a case under Chapter 7 of the Bankruptcy Code. As to US Tool, BFG says that US Tool ceased operations as of Nov. 30, 2012, prior to filing its Chapter 11 voluntary petition for relief, and never resumed operations. Further, pursuant to the US Tool Stay Order, substantially all of US Tool's assets were liquidated at an auction conducted on April 16, 2013. As US Tool has no physical assets to maintain and no operations to administer, its continued time in Chapter 11, according to BFG, serves only to unnecessarily increase the professional fees and other administrative expenses incurred by this insolvent Debtor. Further, as US Tool has now liquidated all of its assets, no business remains to rehabilitate. BFG adds that a Chapter 7 trustee could liquidate US Tool's few remaining assets with significantly fewer expenses and may actually be able to provide a greater recovery to creditors. Counsel for BFG can be reached at: Stuart M. Brown, Esq. DLA PIPER LLP (US) 919 N. Market Street, 15th Floor Wilmington, DE 19801 Tel: (302) 468-5700 Fax: (302) 394-2341 E-mail: stuart.brown@dlapiper.com - and - Gregg M. Galardi, Esq. Sarah E. Castle, Esq. DLA PIPER LLP (US) 1251 Avenue of the Americas New York, NY 10020-1104 Tel: (212) 335-4500 Fax: (212) 335-4501 E-mail: gregg.galardi@dlapiper.com sarah.castle@dlapiper.com About Revstone Industries Lexington, Kentucky-based Revstone Industries LLC, a maker of truck parts, filed for Chapter 11 bankruptcy (Bankr. D. Del. Case No. 12-13262) on Dec. 3, 2012. Judge Brendan Linehan Shannon oversees the case. In its petition, Revstone estimated under $50 million in assets and debts. Affiliate Spara LLC filed its Chapter 11 petition (Bankr. D. Del. Case No. 12-13263) on Dec. 3, 2012. Lexington-based Greenwood Forgings, LLC (Bankr. D. Del. Case No. 13-10027) and US Tool & Engineering LLC (Bankr. D. Del. Case No. 13-10028) filed separate Chapter 11 petitions on Jan. 7, 2013. Judge Shannon also oversees the cases. The cases are jointly administered for procedural purposes only under Case No. 12-13262. Laura Davis Jones, Esq., David M. Bertenthal, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, represent the Debtors as counsel. Duane David Werb, Esq., at Werb & Sullivan, represents Greenwood Forgings as temporary bankruptcy counsel. Greenwood estimated $1 million to $10 million in assets and $10 million to $50 million in debts. US Tool & Engineering estimated under $1 million in assets and $1 million to $10 million in debts. The petitions were signed by George S. Homeister, chairman. Mark L. Degrosseilliers, Esq., Matthew P. Ward, Esq., and Steven K. Kortanek, Esq., at Womble Carlyle Sandridge & Rice, LLP, in Wilmington, Delaware, represent the Official Committee of Unsecured Creditors of Revstone Industries, LLC. The assets of Greenwood Forgings LLC and US Tool & Engineering LLC, have both been sold pursuant to orders of the Bankruptcy Court. REVSTONE INDUSTRIES: Unit Files Ch. 11, Plans $25MM Sale -------------------------------------------------------- Jamie Santo of BankruptcyLaw360 reported that auto parts manufacturer Metavation LLC joined parent Revstone Industries LLC in Delaware bankruptcy court, filing for Chapter 11 with a $25 million stalking horse agreement in hand to to sell the bulk of its assets to industry rival Dayco. According to the report, the fifth Revstone entity to seek court protection in Delaware, Metavation listed assets and liabilities of between $10 million and $50 million on its voluntary petition. Metavation is looking to wrap up its proposed Section 363 sale in little more than a month, the report said. About Revstone Industries, Greenwood Forgings, & US Tool & Engineering Lexington, Kentucky-based Revstone Industries LLC, a maker of truck parts, filed for Chapter 11 bankruptcy (Bankr. D. Del. Case No. 12-13262) on Dec. 3, 2012. Judge Brendan Linehan Shannon oversees the case. In its petition, Revstone estimated under $50 million in assets and debts. Affiliate Spara LLC filed its Chapter 11 petition (Bankr. D. Del. Case No. 12-13263) on Dec. 3, 2012. Lexington-based Greenwood Forgings, LLC (Bankr. D. Del. Case No. 13-10027) and US Tool & Engineering LLC (Bankr. D. Del. Case No. 13-10028) filed separate Chapter 11 petitions on Jan. 7, 2013. Judge Shannon also oversees the cases. A motion for joint administration of the cases has been filed. Duane David Werb, Esq., at Werb & Sullivan, serves as bankruptcy counsel to Greenwood and US Tool. Greenwood estimated $1 million to $10 million in assets and $10 million to $50 million in debts. US Tool & Engineering estimated under $1 million in assets and $1 million to $10 million in debts. The petitions were signed by George S. Homeister, chairman. ROBERT BAIN: Case Summary & 3 Unsecured Creditors ------------------------------------------------- Joint Debtors: Robert S. Bain Kimberly W. Bain 3931 Indian Springs Rd. Panama City, FL 32404 Bankruptcy Case No.: 13-51766 Chapter 11 Petition Date: July 18, 2013 Court: U.S. Bankruptcy Court Eastern District of Kentucky (Lexington) Judge: Tracey N. Wise Debtors? Counsel: E. David Marshall, Esq. 120 North Upper Street Lexington, KY 40507 Tel: (859) 253-0708 E-mail: edavidm@iglou.com Scheduled Assets: $2,284,673 Scheduled Debts: $2,474,000 A copy of the Debtors' list of its three unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/kyeb13-51766.pdf ROTECH HEALTHCARE: Arranges $357.5MM Loans for Ch. 11 Exit ---------------------------------------------------------- Rotech Healthcare Inc., et al., seek authority from the U.S. Bankruptcy Court for the District of Delaware to obtain $357.5 million in exit loan financing. The exit loan financing includes a first lien senior secured revolving credit facility in an aggregate principal amount of $25,000,000, a first lien senior secured tranche A $100,000,000 term loan facility, and a first lien senior secured tranche B $75,000,000 term loan facility. The First Lien Credit Facilities will be extended by Wells Fargo Principal Lending, LLC, SPF CDO I Ltd., and certain funds and accounts affiliated with Capital Research and Management Company. The New Tranche A Term Loan and Revolving Loans accrues at ABR plus 3.25% per annum or Adjusted LIBOR plus 4.25% per annum, at the Borrower's election, while the New Tranche B Term Loan accrues at ABR plus 7.75% per annum or Adjusted LIBOR plus 8.75% per annum, at the Borrower's election. The First Lien Credit Facilities will be secured on a first priority basis by the following: (a) a perfected pledge of 100% of the equity interests of each direct wholly-owned restricted subsidiary of the Borrower and of each Guarantor; and (b) perfected security interests in, and mortgages on, substantially all tangible and intangible personal property and material fee- owned real property of the Borrower and each Guarantor. The exit financial also includes a backstop commitment of a proposed second priority senior secured $157,500,000 term loan facility to be extended by Silver Point Finance, LLC, as administrative agent, Wells Fargo Bank, National Association, as collateral agent, and SPCP Group, LLC, Capital Research and Management Company, and certain funds and accounts affiliated with Venor Capital Management LP, as lenders. The Second Lien Credit Facility accrues at ABR plus 10.00% per annum or Adjusted LIBOR plus 11.00% per annum, at the Borrower's election, and is granted the same security as the First Lien Credit Facility. According to the Debtors, they would require aggregate funding of $332.5 million along with a $25 million revolving facility to consummate the Plan and provide sufficient liquidity to fund their post-emergence operations. The reorganized Debtors will use the proceeds of the Exit Facilities to fund distributions under the Plan, pay the fees and premiums and expenses associated with the Exit Facilities, and fund the reorganized Debtors' post-emergence working capital needs. James L. Patton, Jr., Esq., Robert S. Brady, Esq., Joseph M. Barry, Esq., and Travis G. Buchanan, Esq., at YOUNG CONAWAY STARGATT & TAYLOR, LLP, in Wilmington, Delaware, and Martin J. Bienenstock, Esq., Geoffrey T. Raicht, Esq., and Scott K. Rutsky, Esq., at PROSKAUER ROSE LLP, in New York, represent the Debtors. The Debtors request that a hearing on their motion be set for July 29, 2013, at 10:00 a.m. (ET), and objections on July 28. About Rotech Healthcare Based in Orlando, Florida, Rotech Healthcare Inc. (NASDAQ: ROHI) -- http://www.rotech.com/-- provides home medical equipment and related products and services in the United States, with a comprehensive offering of respiratory therapy and durable home medical equipment and related services. The company provides equipment and services in 48 states through approximately 500 operating centers located primarily in non-urban markets. The Company reported a net loss of $14.76 million in 2011, a net loss of $4.20 million in 2010, and a net loss of $21.08 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $255.76 million in total assets, $601.98 million in total liabilities, and a $346.22 million total stockholders' deficiency. On April 8, 2013, Rotech Healthcare and 114 subsidiary companies filed petitions seeking relief under chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 13-10741) to implement a pre- arranged plan negotiated with secured lenders. Attorneys at Proskauer Rose LLP, and Young, Conaway, Stargatt & Taylor serve as counsel to the Debtors; Foley & Lardner LLP is the healthcare regulatory counsel; Akin Gump Strauss Hauer & Feld LLP is the special healthcare regulatory counsel; Barclays Capital Inc. is the financial advisor; Alix Partners, LLP is the restructuring advisor; and Epiq Bankruptcy Solutions LLC is the claims agent. Prepetition term loan lender and DIP lender Silver Point Capital and other consenting noteholders are represented by Wachtell, Lipton, Rosen & Katz, and Richards Layton & Finger PA. The U.S. Trustee at the end of April appointed an official committee of equity holders. Members include Alden Global Recovery Master Fund LP, Varana Capital Master LP, Wynnefield Partners Small Cap Value LP I, Bastogne Capital Partners, LP, and Kenneth S. Grossman P.C. Pension Plan. The plan is supported by holders of a majority of the first- and second-lien secured notes. The $290 million in 10.5 percent second-lien notes are to be exchanged for the new equity. Trade suppliers are to be paid in full, if they agree to continue providing credit. The existing $23.5 million term loan would be paid in full, and the $230 million in 10.75 percent first-lien notes will be amended. The Official Committee of Unsecured Creditors tapped Otterbourg, Steindler, Houston & Rosen, P.C., as counsel; Buchanan Ingersoll & Rooney PC as Delaware counsel; and Grant Thornton LLP as financial advisor. ROTECH HEALTHCARE: Seeks Authority to Obtain Texas Surety Bonds --------------------------------------------------------------- Rotech Healthcare Inc., et al., seeks authority from the U.S. Bankruptcy Court for the District of Delaware to enter into an indemnity agreement with OneBeacon Surety Group to obtain surety bonds required to continue operations in the state of Texas and post the Texas Surety Bonds. The Debtors' counsel, Martin J. Bienenstock, Esq., at Proskauer Rose LLP, in New York, relates that in the ordinary course of operating their businesses, the Debtors regularly post and maintain surety bonds as collateral to secure certain of their obligations pursuant to state and federal law. The Debtors operate 42 "enrolled practice locations" providing durable medical equipment to patients in the state of Texas. To continue these operations and remain eligible for reimbursement through Texas Medicaid, the Debtors must comply with new state requirements, Mr. Bienenstock says. Thus, the Debtors were required to post and maintain 42 Texas Surety Bonds, in an aggregate amount of $2.1 million, on or before June 28, 2013. OneBeacon agreed to provide the Debtors with the Texas Surety Bonds within the requisite timeframe in exchange for the Debtors' agreement to: (i) enter into a standard general indemnity agreement with OneBeacon; (ii) to pay a two-percent annual premium, in an aggregate amount of approximately $42,000; and (iii) seek an order from the Court authorizing entry into the Indemnity Agreement. Mr. Bienenstock says in the event the Comfort Order is not obtained by the Debtors, OneBeacon may take actions to cancel the Texas Surety Bonds, which could negatively impact the Debtors' ability to provide DME services to patients in Texas and disrupt the Debtors' reorganization efforts. The Debtors believe the Premium charged by OneBeacon is reasonable and comparable to what other surety providers would charge to provide similar bonds. The Debtors are also represented by James L. Patton, Jr., Esq., Robert S. Brady, Esq., Joseph M. Barry, Esq., and Travis G. Buchanan, Esq., at YOUNG CONAWAY STARGATT & TAYLOR, LLP, in Wilmington, Delaware, and Geoffrey T. Raicht, Esq., and Vincent Indelicato, Esq., at PROSKAUER ROSE LLP, in New York. About Rotech Healthcare Based in Orlando, Florida, Rotech Healthcare Inc. (NASDAQ: ROHI) -- http://www.rotech.com/-- provides home medical equipment and related products and services in the United States, with a comprehensive offering of respiratory therapy and durable home medical equipment and related services. The company provides equipment and services in 48 states through approximately 500 operating centers located primarily in non-urban markets. The Company reported a net loss of $14.76 million in 2011, a net loss of $4.20 million in 2010, and a net loss of $21.08 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $255.76 million in total assets, $601.98 million in total liabilities, and a $346.22 million total stockholders' deficiency. On April 8, 2013, Rotech Healthcare and 114 subsidiary companies filed petitions seeking relief under chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 13-10741) to implement a pre- arranged plan negotiated with secured lenders. Attorneys at Proskauer Rose LLP, and Young, Conaway, Stargatt & Taylor serve as counsel to the Debtors; Foley & Lardner LLP is the healthcare regulatory counsel; Akin Gump Strauss Hauer & Feld LLP is the special healthcare regulatory counsel; Barclays Capital Inc. is the financial advisor; Alix Partners, LLP is the restructuring advisor; and Epiq Bankruptcy Solutions LLC is the claims agent. Prepetition term loan lender and DIP lender Silver Point Capital and other consenting noteholders are represented by Wachtell, Lipton, Rosen & Katz, and Richards Layton & Finger PA. The U.S. Trustee at the end of April appointed an official committee of equity holders. Members include Alden Global Recovery Master Fund LP, Varana Capital Master LP, Wynnefield Partners Small Cap Value LP I, Bastogne Capital Partners, LP, and Kenneth S. Grossman P.C. Pension Plan. The plan is supported by holders of a majority of the first- and second-lien secured notes. The $290 million in 10.5 percent second-lien notes are to be exchanged for the new equity. Trade suppliers are to be paid in full, if they agree to continue providing credit. The existing $23.5 million term loan would be paid in full, and the $230 million in 10.75 percent first-lien notes will be amended. The Official Committee of Unsecured Creditors tapped Otterbourg, Steindler, Houston & Rosen, P.C., as counsel; Buchanan Ingersoll & Rooney PC as Delaware counsel; and Grant Thornton LLP as financial advisor. ROTECH HEALTHCARE: Objects to Delay of Aug. 20 Plan Hearing ----------------------------------------------------------- Rotech Healthcare Inc., et al., object to the motion filed by the Official Committee of Equity Security Holders for continuance of the valuation hearing and argue that "the Equity Committee's game plan is now abundantly clear: it intends to use any and all extended time to unnecessarily run up fees and expenses taking depositions and pursuing document discovery on both valuation and confirmation." The Debtors also maintain that they are "hopelessly insolvent." The Debtors also argue that the Aug. 20, 2013 confirmation hearing cannot be adjourned in order to allow for the Equity Committee to finish their deposition of experts in relation to the valuation. The Debtors point out that further adjournment of the confirmation hearing would cause a default under the DIP Loan, which would necessitate a payment to the DIP Lenders to change the date -- all at the expense of creditors. Capital Research and Management Company, Fidelity Investment, Silver Point Capital, LP, and Venor Capital Management LP, in their capacity as holder of second lien notes, agree with the Debtors and argue that the Equity Committee has not shown that there is cause for delay of the confirmation hearing. Accordingly, the Debtors and the Second Lien Noteholders ask the U.S. Bankruptcy Court for the District of Delaware to deny the Equity Committee's motion for continuance of the valuation hearing and adjourn the confirmation hearing in the process. The Debtors are represented by James L. Patton, Jr., Esq., Robert S. Brady, Esq., Joseph M. Barry, Esq., and Travis G. Buchanan, Esq., at YOUNG CONAWAY STARGATT & TAYLOR, LLP, in Wilmington, Delaware, and Martin J. Bienenstock, Esq., Geoffrey T. Raicht, Esq., and Vincent Indelicato, Esq., at PROSKAUER ROSE LLP, in New York. The Second Lien Noteholders are represented by Mark D. Collins, Esq., at RICHARDS, LAYTON & FINGER, P.A., in Wilmington, Delaware, and Scott K. Charles, Esq., Michael A. Kleinhaus, Esq., and Michael S. Benn, Esq., at WACHTELL, LIPTON, ROSEN & KATZ, in New York. About Rotech Healthcare Based in Orlando, Florida, Rotech Healthcare Inc. (NASDAQ: ROHI) -- http://www.rotech.com/-- provides home medical equipment and related products and services in the United States, with a comprehensive offering of respiratory therapy and durable home medical equipment and related services. The company provides equipment and services in 48 states through approximately 500 operating centers located primarily in non-urban markets. The Company reported a net loss of $14.76 million in 2011, a net loss of $4.20 million in 2010, and a net loss of $21.08 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $255.76 million in total assets, $601.98 million in total liabilities, and a $346.22 million total stockholders' deficiency. On April 8, 2013, Rotech Healthcare and 114 subsidiary companies filed petitions seeking relief under chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 13-10741) to implement a pre- arranged plan negotiated with secured lenders. Attorneys at Proskauer Rose LLP, and Young, Conaway, Stargatt & Taylor serve as counsel to the Debtors; Foley & Lardner LLP is the healthcare regulatory counsel; Akin Gump Strauss Hauer & Feld LLP is the special healthcare regulatory counsel; Barclays Capital Inc. is the financial advisor; Alix Partners, LLP is the restructuring advisor; and Epiq Bankruptcy Solutions LLC is the claims agent. Prepetition term loan lender and DIP lender Silver Point Capital and other consenting noteholders are represented by Wachtell, Lipton, Rosen & Katz, and Richards Layton & Finger PA. The U.S. Trustee at the end of April appointed an official committee of equity holders. Members include Alden Global Recovery Master Fund LP, Varana Capital Master LP, Wynnefield Partners Small Cap Value LP I, Bastogne Capital Partners, LP, and Kenneth S. Grossman P.C. Pension Plan. The plan is supported by holders of a majority of the first- and second-lien secured notes. The $290 million in 10.5 percent second-lien notes are to be exchanged for the new equity. Trade suppliers are to be paid in full, if they agree to continue providing credit. The existing $23.5 million term loan would be paid in full, and the $230 million in 10.75 percent first-lien notes will be amended. The Official Committee of Unsecured Creditors tapped Otterbourg, Steindler, Houston & Rosen, P.C., as counsel; Buchanan Ingersoll & Rooney PC as Delaware counsel; and Grant Thornton LLP as financial advisor. ROTECH HEALTHCARE: Seeks Approval of Exit Financing --------------------------------------------------- Michael Bathon, substituting for Bloomberg News bankruptcy columnist Bill Rochelle, reports that Rotech Healthcare Inc. is seeking as much as $357.5 million in financing to help it exit bankruptcy protection and fund operations once it emerges. According to the report, the company wants court permission to enter into a commitment letter for a first-lien senior secured revolving credit facility of $25 million, a first-lien senior secured tranche a term loan of $100 million and a first-lien senior secured tranche B term loan of $75 million, court papers show. The report notes that Rotech is also seeking authority to enter into a backstop agreement for a second-lien senior secured term loan of $157.5 million, according to court filings. "To be in a position to consummate the plan expeditiously" and within the timeframe required by its bankruptcy loan, the company needs to enter into the exit financing commitments, it said in court papers. The report relates that the exit financing has "reasonable terms and conditions, and upon becoming effective will ensure the debtors have in place sufficient financing to emerge from Chapter 11 as expeditiously as possible," Rotech said. The company on Aug. 20 will seek court approval of its restructuring plan that pays first-lien noteholders in full in cash and gives second-lien noteholders all of the reorganized company's equity, according to court documents. About Rotech Healthcare Based in Orlando, Florida, Rotech Healthcare Inc. (NASDAQ: ROHI) -- http://www.rotech.com/-- provides home medical equipment and related products and services in the United States, with a comprehensive offering of respiratory therapy and durable home medical equipment and related services. The company provides equipment and services in 48 states through approximately 500 operating centers located primarily in non-urban markets. The Company reported a net loss of $14.76 million in 2011, a net loss of $4.20 million in 2010, and a net loss of $21.08 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $255.76 million in total assets, $601.98 million in total liabilities, and a $346.22 million total stockholders' deficiency. On April 8, 2013, Rotech Healthcare and 114 subsidiary companies filed petitions seeking relief under chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 13-10741) to implement a pre- arranged plan negotiated with secured lenders. Attorneys at Proskauer Rose LLP, and Young, Conaway, Stargatt & Taylor serve as counsel to the Debtors; Foley & Lardner LLP is the healthcare regulatory counsel; Akin Gump Strauss Hauer & Feld LLP is the special healthcare regulatory counsel; Barclays Capital Inc. is the financial advisor; Alix Partners, LLP is the restructuring advisor; and Epiq Bankruptcy Solutions LLC is the claims agent. Prepetition term loan lender and DIP lender Silver Point Capital and other consenting noteholders are represented by Wachtell, Lipton, Rosen & Katz, and Richards Layton & Finger PA. The U.S. Trustee at the end of April appointed an official committee of equity holders. Members include Alden Global Recovery Master Fund LP, Varana Capital Master LP, Wynnefield Partners Small Cap Value LP I, Bastogne Capital Partners, LP, and Kenneth S. Grossman P.C. Pension Plan. The plan is supported by holders of a majority of the first- and second-lien secured notes. The $290 million in 10.5 percent second-lien notes are to be exchanged for the new equity. Trade suppliers are to be paid in full, if they agree to continue providing credit. The existing $23.5 million term loan would be paid in full, and the $230 million in 10.75 percent first-lien notes will be amended. The Official Committee of Unsecured Creditors tapped Otterbourg, Steindler, Houston & Rosen, P.C., as counsel; Buchanan Ingersoll & Rooney PC as Delaware counsel; and Grant Thornton LLP as financial advisor. RURAL/METRO CORP: S&P Lowers Corporate Credit Rating to 'SD' ------------------------------------------------------------ Standard & Poor's Ratings Services said it lowered its corporate credit rating on Rural/Metro Corp. to 'SD' from 'CCC'. At the same time, S&P lowered its rating on the company's $200 million and $108 million senior unsecured notes to 'D' from 'CC' as a result of the missed interest payment due July 15. The recovery rating on this debt is '6', indicating S&P's expectation for negligible (0% to 10%) recovery in the event of a payment default. In addition, S&P lowered its rating on the $100 million senior secured revolving credit facility and the $325 million term loan B to 'CC' from 'CCC+'. The recovery rating on the first-lien notes is '2', indicating S&P's expectation for substantial (70%-90%) recovery in the event of a payment default. "The rating actions stem from the company's missed interest payment on its senior unsecured bonds," said Standard & Poor's credit analyst Lucy Patricola. "According to our timeline of payment criteria, we are taking this action now because payment was not made within five days of its due date," she added. If the company enters Chapter 11 bankruptcy protection, S&P will lower all ratings to 'D'. SCC KYLE: Court Confirms Second Amended and Modified Plan --------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Texas confirmed on July 1, 2013, SCC Kyle Partners, Ltd.'s Second Amended and Modified Plan of Reorganization, dated June 28, 2013. Pursuant to the Plan, the secured claim of the Lender group (Class III) will be paid over 5 years from the Effective Date from cash proceeds on hand at the time of confirmation and ongoing sales of the remaining Property and future tax incentive revenues, with interest-only payments to be made monthly beginning on the 15th day after the Effective Date at 7% per annum, or such other rate as is determined by the Court not to exceed 8%. All remaining principal, interest and costs will be due on the 15th day of the 60th month from the Effective Date. Holders of General Unsecured Claims (Class IV) will receive payments of their claims, in full, in equal quarterly payments beginning 90 days from the Effective Date and continuing each quarter for 16 quarters on the same date of the months as the initial payment until paid; provided, however, that the claim of Seton Hospital will receive payments totaling $250,000 during the 16 quarters, with the balance payable after the Class III Allowed Claim is paid in full. The source of the payments will be the revenue received from the Incentive Agreements above amounts necessary for the Debtor's business operations. Holders of Equity Interests in the Debtor will retain their interests, but will not receive any payments or distributions on account of those interests until all senior classes are paid in full. A copy of the Confirming Order is available at: http://bankrupt.com/misc/scckyle.doc133.pdf Counsel for SCC Kyle can be reached at: Eric J. Taube, Esq. Mark C. Taylor, Esq. HOHMANN, TAUBE & SUMMERS, L.L.P. 100 Congress Avenue, 18th Floor Austin, TX 78701 Tel: (512) 472-5997 Fax: (512) 472-5248 About SCC Kyle Partners Austin, Tex.-based SCC Kyle Partners, Ltd., filed for Chapter 11 (Bankr. W.D. Tex. Case No. 12-11978) on Aug. 31, 2012. Judge H. Christopher Mott presides over the case. Cleveland R. Burke, Esq., Eric J. Taube, Esq., and Mark Curtis Taylor, Esq., at Hohmann, Taube & Summers, LLC, in Austin, Tex., represent the Debtor as counsel. In its petition, the Debtor disclosed both assets and debts of between $10 million and $50 million. The petition was signed by Scott A. Deskins, president of SCC Kyle Partners, GP, LLC, general partner. SEVEN COUNTIES SERVICES: May Hire & Pay Peritus Public Relations ---------------------------------------------------------------- Bankruptcy Judge Joan A. Lloyd granted the Motion for Nunc Pro Tunc Authority (I) to Employ and Compensate Peritus Public Relations, LLC Pursuant to 11 U.S.C. Sec. 1108 and (II) to Issue Payment for Reimbursable Expenses Incurred Pre-Petition, filed by Seven Counties Services, Inc., over the objection of Kentucky Employers Retirement Systems and Kentucky Retirement Systems. When it filed for bankruptcy in April, the Debtor also filed a number of "first day motions" including a Motion for an Order Authorizing Banks to Honor Pre-Petition Checks. The Checks Motion sought an order authorizing the payment of more than 100 pre- petition checks listed on an attached exhibit which the Debtor represented were necessary to the Debtor's ongoing operations. The checks ranged in value from $5.31 to $256,597.22. Included in that list was a check issued to Peritus on April 4 in the amount of $14,839. On April 5, 2013, following an expedited hearing, the Court entered an Order approving the Checks Motion which authorized Fifth Third Bank and Republic Bank to honor the pre-petition checks listed therein. Subsequent to entry of the Order, the Debtor states it was contacted by the United States Trustee's office which indicated it would object to the employment of any professional who negotiates a check listed in the Order. Therefore, the Debtor instructed Peritus to hold the check until the matter was clarified by the Court. On May 17, 2013, Debtor filed the Application. On June 10, 2013, KERS and KRS filed their Objection to the Application. They contend that 11 U.S.C. Sec. 327 applies and Peritus cannot be employed because it is not a "disinterested person" as required by the statute. Judge Lloyd said the Debtor may employ and compensate. Peritus and the Debtor entered into an Agreement for Services on March 15, 2012. The Agreement summarizes Peritus' task as providing "public relations and public affairs support in Kentucky on all issues related to the ongoing effort to affect changes in their [Debtor] involvement in the Kentucky Retirement System." The work is to include lobbying, third party advocacy and support of the Debtor's efforts in restructuring its retirement plans and media relations. Peritus is to be paid a monthly retainer in the amount of $3,750, plus reimbursement for reasonable and necessary expenses. However, that $3,750 figure has been modified to a monthly retainer payment of $3,500, plus reimbursement of reasonable and necessary expenses. A copy of Judge Lloyd's July 15, 2013 Memorandum Opinion is available at http://is.gd/PBZDYxfrom Leagle.com. About Seven Counties Seven Counties Services Inc., a not-for-profit behavioral services provider from Louisville, Kentucky, filed for Chapter 11 protection (Bankr. W.D. Ky. Case No. 13-31442) in the hometown on April 4, 2013. The petition was signed by Anthony M. Zipple as president/CEO. The Debtor scheduled assets of $45,603,716 and scheduled liabilities of $232,598,880. Seiller Waterman LLC serves as the Debtor's counsel. Judge Joan A. Lloyd presides over the case. The agency generates more than $100 million a year in revenue and employs a staff of 1,400 providing services at 21 locations and 120 schools and community centers. SEVEN SEAS: CIBC Dodges $77M Suit Over Failed Oil Well ------------------------------------------------------ Jeremy Heallen of BankruptcyLaw360 reported that a Texas federal judge a subsidiary of CIBC World Markets Corp. cannot be held responsible for a bankrupt energy developer's decision to invest in a failed offshore prospect that contributed to the company's demise, ending a $77 million suit against the investment bank. According to the report, U.S. District Judge Nancy Atlas ruled that Seven Seas Petroleum Inc. could not prove that CMW Inc. rubber-stamped a fairness opinion on behalf of the oil and gas developer's financially interested board members to secure an investment in the risky well. Seven Seas Petroleum Inc. was an oil and gas exploration company operating in Colombia, South America. Seven Seas filed for Chapter 11 protection (Bankr. S.D. Tex. Case No. 02-45206) on Jan. 14, 2003. The Official Committee of Unsecured Creditors retained McClain, Leppert & Maney, P.C. as counsel. Ben B. Floyd was named as Chapter 11 trustee. He was represented by Floyd, Isgur, Rios & Wahrlich, P.C., as his general bankruptcy counsel, and Andrews & Kurth LLP as his special counsel. The Debtor's Second Amended Plan of Reorganization was confirmed Aug. 4, 2003, and declared effective 10 days later. SOUTH LAKES DAIRY: Court Approves Accord With Seley and Cargill --------------------------------------------------------------- The Hon. W. Richard Lee of the U.S. Bankruptcy Court for the Eastern District of California signed off on two separate stipulations that South Lakes Dairy Farm entered into with each of Seley Co. and Cargill Incorporated. Both Seley and Cargill provided livestock feed to the Debtor prior to the Petition Date. The Seley stipulation provides that: 1. The value of collateral securing repayment of the amounts owed to Seley pursuant to the Dairy Cattle Supply Lien filed by Seley on Aug. 13, 2012, is $0. 2. Seley will be allowed a secured claim of $0. 3. Seley will be allowed a claim with administrative priority in the amount of $20,288, of which $13,413 has been paid as of May 31, 2013. 4. Seley will be allowed a general unsecured claim in the amount of $325,535. 5. Seley will retain its Dairy Cattle Supply Lien with the priority and enforceability that existed at the time of the filing of the Debtor's case. The Cargill stipulation provides that: 1. The value of collateral securing repayment of the amounts owed to Cargill pursuant to the Dairy Cattle Supply Lien filed by Cargill on Aug. 28, 2012, is $0. 2. Cargill will be allowed a secured claim of $0. 3. Cargill will be allowed a general unsecured claim in the amount of $134,945. 4. Cargill will retain its Dairy Cattle Supply Lien with the priority and enforceability that existed at the time of the filing of the Debtor's case. The Dairy Cattle Supply Lien attaches only to milk or milk products produced from the dairy cattle. About South Lakes Dairy South Lakes Dairy Farm is a California partnership engaged in the dairy cattle4 and milking business. The partnership filed a bare- bones Chapter 11 petition (Bankr. E.D. Calif. Case No. 12-17458) in Fresno, California on Aug. 30, 2012, disclosing $19.5 million in assets and $25.4 million in liabilities in its schedules. The Debtor said it has $1.97 million in accounts receivable charged to Dairy Farmers of America on account of milk proceeds, and that it has cattle worth $12.06 million. The farm owes $12.7 million to Wells Fargo Bank on a secured note. Bankruptcy Judge W. Richard Lee presides over the case. Jacob L. Eaton, Esq., at Klein, DeNatale, Goldner, Cooper, Rosenlieb & Kimball, LLP, in Bakersfield, Calif., represents the Debtor as counsel. The Debtor tapped A&M Livestock Auction, Inc., to auction livestock. August B. Landis, the Acting U.S. Trustee for Region 17, appointed seven creditors to serve in the Official Committee of Unsecured Creditors. The Official Committee of Unsecured Creditors tapped Blakeley & Blakeley LLP as its counsel. SOUTHERN MONTANA ELECTRIC: Beartooth Joins Liquidation Bid ---------------------------------------------------------- Clair Johnson at Billings Gazette reports that Beartooth Electric Cooperative in Red Lodge has joined efforts to liquidate, rather than re-organize, its troubled wholesale power supplier, Southern Montana Electric Generation and Transmission Cooperative. U.S. Bankruptcy Judge Ralph Kirscher has set a hearing on motions to liquidate Southern for July 31 in Missoula, the report says. According to the report, Beartooth's court notice comes after the Unsecured Creditors Committee, represented by Harold Dye of Missoula, filed a motion on June 27 to convert the bankruptcy to Chapter 7 liquidation. The next day, Southern's trustee, Lee Freeman, filed notice of a proposed settlement between the secured noteholders and Southern. Details of the plan are to be filed on Aug. 2, Billings Gazette relates. Mr. Freeman, however, and the secured noteholders each filed separate objections to the liquidation on July 18, the report notes. Billings Gazette reports that Mr. Dye said in court records that recent settlements between Southern and two former members, the city of Great Falls and the Yellowstone Valley Electric Cooperative, removed about 35 percent of Southern's future income with "no realistic chance" the income could be replaced by other sources. Further, Mr. Dye said, there appeared to be little chance of an agreement between Southern's noteholders, which are secured creditors, including Prudential Insurance Co. of America and others, and its remaining member co-ops for a payment plan the members could afford, the report relays. "The committee lays most of the blame for this situation on the noteholders who seem incapable of realizing that they made a bad loan and deal with it accordingly," Billings Gazette quotes Mr. Dye said. If noteholders got their demands in a confirmed plan, Mr. Dye said, then "confirmation would be rapidly followed by the bankruptcy of the member coops," the report adds. Billings Gazette relates that Arleen Boyd, a Beartooth board member, said her co-op agrees with Mr. Dye's position. According to Billings Gazette, a proposed settlement outlined by the trustee calls for $60 million, plus interest, to be treated as secured Highwood debt in a reorganization plan. The proposed settlement, Mr. Freeman said, will result in "fair and reasonable" power rates for Southern's remaining members and rates that are "far less" than projected rates Southern had approved before closing the deal with noteholders in February 2010, the report says. Under the proposed settlement, the noteholders and Southern's remaining members "will be treated fairly and equitably," Mr. Freeman said in court records, Billings Gazette reports. About Southern Montana Electric Based in Billings, Montana, Southern Montana Electric Generation and Transmission Cooperative, Inc., was formed to serve five other electric cooperatives. The city of Great Falls later joined as the sixth member. Including the city, the co-op serves a population of 122,000. In addition to Great Falls, the service area includes suburbs of Billings, Montana. Southern Montana filed for Chapter 11 bankruptcy (Bankr. D. Mont. Case No. 11-62031) on Oct. 21, 2011. Southern Montana estimated assets of $100 million to $500 million and estimated debts of $100 million to $500 million. Timothy Gregori signed the petition as general manager. Malcolm H. Goodrich, Esq., at Goodrich Law Firm, P.C., in Billings, Montana, serves as the Debtor's counsel. After filing for reorganization in October, the co-op agreed to a request for appointment of a Chapter 11 trustee. Lee A. Freeman was appointed as the Chapter 11 trustee in December 2011. He is represented by Joseph V. Womack, Esq., at Waller & Womack, and John Cardinal Parks, Esq., Bart B. Burnett, Esq., Robert M. Horowitz, Esq., and Kevin S. Neiman, Esq., at Horowitz & Burnett, P.C. Harold V. Dye, Esq., at Dye & Moe, P.L.L.P., in Missoula, Montana, represents the Unsecured Creditors' Committee as counsel. SPECIALTY PRODUCTS: Seeks Direct Appeal to 3rd Circuit ------------------------------------------------------ Specialty Products Holding Corp., et al., have asked the Bankruptcy Court for the District of Delaware to certify their appeal from an order estimating their asbestos liabilities for direct appeal to the United States Court of Appeals for the Third Circuit. On May 20, 2013, the Bankruptcy Court entered an order estimating the amount of the Debtors' asbestos liabilities, and a related memorandum opinion in support of the estimation order. The Bankruptcy Court estimated the current and future asbestos claims associated with Bondex International, Inc. and Specialty Products Holding at approximately $1.17 billion. The estimation hearing represents one step in the legal process in helping to determine the amount of potential funding for a 524(g) asbestos trust. On June 3, the Debtors filed a notice of appeal of the estimation decision. According to the Debtors, the appeal satisfies three of independently sufficient grounds namely: 1. certification would materially advance the progress of the cases, in which all parties from the beginning have focused on the need to obtain a proper and fair estimation of the Debtors' asbestos claims; 2. the Debtors' appeal involves a question of law on which no controlling precedent exists, as Third Circuit precedent on what estimations under 11 U.S.C. Section 502(c) would measure arises outside of the peculiar asbestos context; and 3. the Debtors' appeal, in seeking to correct the application of special rules to asbestos litigation, involves a matter of public importance. Party-in-interest RPM International Inc. joined in the Debtors' motion for certification of the estimation decision for immediate appeal to the Third Circuit. An Aug. 7, 2013, hearing at 10 a.m. has been set. Objections, if any, are due July 29, at 4 p.m. Stay Pending Ruling on Appeal Meanwhile, the Debtors also responded to the objection of the Official Committee of Asbestos Personal Injury Claimants and the Future Claimants' Representative to the Debtors' motion for certification of the estimation decision, and their other motion for stay pending the appeal. The Debtors note that by separate objections, the ACC and the FCR attempt to establish that the Debtors cannot meet any of the factors courts typically consider when confronted with a motion for stay pending appeal. The ACC's and the FCR's arguments with respect to each factor are groundless. The Debtors request that the Court grant the stay motion. RPM International also joined in the Debtors' motion for stay pending appeal. Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell LLP, represents RPM International Inc. as counsel. About Specialty Products Cleveland, Ohio-based Specialty Products Holdings Corp., aka RPM, Inc., is a wholly owned subsidiary of RPM International Inc. The Company is the holding company parent of Bondex International, Inc., and the direct or indirect parent of certain additional domestic and foreign subsidiaries. The Company claims to be a leading manufacturer, distributor and seller of various specialty chemical product lines, including exterior insulating finishing systems, powder coatings, fluorescent colorants and pigments, cleaning and protection products, fuel additives, wood treatments and coatings and sealants, in both the industrial and consumer markets. The Company filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Case No. 10-11780) on May 31, 2010. Gregory M. Gordon, Esq., Dan B. Prieto, Esq., and Robert J. Jud, Esq., at Jones Day, serve as bankruptcy counsel. Daniel J. DeFranceschi, Esq., and Zachary I. Shapiro, Esq., at Richards Layton & Finger, serve as co- counsel. Logan and Company is the Company's claims and notice agent. The Company estimated its assets and debts at $100 million to $500 million. The Company's affiliate, Bondex International, Inc., filed a separate Chapter 11 petition on May 31, 2010 (Case No. 10-11779), estimating its assets and debts at $100 million to $500 million. On May 20, 2013, the Bankruptcy Court entered an order estimating the amount of the Debtors' asbestos liabilities, and a related memorandum opinion in support of the estimation order. The Bankruptcy Court estimated the current and future asbestos claims associated with Bondex International, Inc. and Specialty Products Holding at approximately $1.17 billion. The estimation hearing represents one step in the legal process in helping to determine the amount of potential funding for a 524(g) asbestos trust. STOCKTON, CA: Leaders Expect Bankruptcy-Exit Plan in September -------------------------------------------------------------- Katy Stech, writing for Dow Jones Newswires' Daily Bankruptcy Review, reported that city leaders in Stockton, Calif., who put their struggling, 310,000-resident city in bankruptcy protection last year expect to propose a bankruptcy-exit plan to the court sometime in September -- with or without a debt-cutting deal from its municipal bondholders. About Stockton, Cal. The City of Stockton, California, filed a Chapter 9 petition (Bankr. E.D. Cal. Case No. 12-32118) in Sacramento on June 28, 2012, becoming the largest city to seek creditor protection in U.S. history. The city was forced to file for bankruptcy after talks with bondholders and labor unions failed. Stockton estimated more than $1 billion in assets and in excess of $500 million in liabilities. The city, with a population of about 300,000, identified the California Public Employees Retirement System as the largest unsecured creditor with a claim of $147.5 million for unfunded pension costs. In second place is Wells Fargo Bank NA as trustee for $124.3 million in pension obligation bonds. The list of largest creditors includes $119.2 million owing on four other series of bonds. The city is being represented by Marc A. Levinson, Esq., and John W. Killeen, Esq., at Orrick, Herrington & Sutcliffe LLP. The petition was signed by Robert Deis, city manager. Mr. Levinson also represented the city of Vallejo, Cal. in its 2008 bankruptcy. Vallejo filed for protection under Chapter 9 (Bankr. E.D. Cal. Case No. 08-26813) on May 23, 2008, estimating $500 million to $1 billion in assets and $100 million to $500 million in debts in its petition. In August 2011, Vallejo was given green light to exit the municipal reorganization. The Vallejo Chapter 9 plan restructures $50 million of publicly held debt secured by leases on public buildings. Although the Plan doesn't affect pensions, it adjusts the claims and benefits of current and former city employees. Bankruptcy Judge Michael McManus released Vallejo from bankruptcy on Nov. 1, 2011. The bankruptcy judge on April 1, 2013, ruled that the city of Stockton is eligible for municipal bankruptcy in Chapter 9. STREAMTRACK INC: Reports $27K Net Income in Third Quarter --------------------------------------------------------- StreamTrack, Inc., filed its quarterly report on Form 10-Q, reporting net income of $26,559 on $358,004 of revenue for the three months ended May 31, 2013, compared to a net loss of $523,905 on $509,157 of revenue for the three months ended May 31, 2012. The Company reported a net loss of $1.8 million on $1.2 million of revenue for the nine months ended May 31, 2013, compared with a net loss of $891,201 on $1.1 million of revenue for the period from incepction, Nov. 30, 2011, through May 31, 2012. Other (expense) income for the three months ended May 31, 2013, and May 31, 2012, totaled $586,904 and $(58,729) respectively. The Company recorded a gain of $663,372 from the change in fair value of derivatives in the three months ended May 31, 2013. No such gain was reported in the prior period. In addition, the Company reported a gain of $71,847 on disposal of assets in the current period, none in the prior period. The Company' balance sheet showed $1.2 million in total assets, $4.0 million in total liabilities, and a stockholders' deficit of $2.8 million. "For the nine months ended May 31, 2013, the Company recorded a net loss of $1,806,692. The net loss, along with the May 31, 2013 working capital deficit of $2,343,850, indicate that the Company may have difficulty continuing as a going concern." A copy of the Form 10-Q is available at http://is.gd/JP0bKv Santa Barbara, California-based SteamTrack, Inc., is a digital media and technology services company. The Company provides audio and video streaming and advertising services through the RadioLoyalty(TM) Platform to over a global group of over 1,500 internet and terrestrial radio stations and other broadcast content providers. SUNSHINE HOTELS: Ordered to Make Amendments to Plans ---------------------------------------------------- At a hearing held June 19, 2013, to approve the adequacy of the Disclosure Statement filed by Sunshine Hotels, LLC (Dkt. #66), and the Disclosure Statement filed by Sunshine Hotels II, LLC (Dkt #68) describing each Debtors' separately filed Joint Plan of Reorganization Dated April 30, 2013 (Dkt. #67 and #69), the U.S. Bankruptcy Court for the District of Arizona ordered Craig Solomon Ganz, Esq., attorney for the Debtors, to make the amendments to both plans which incorporate the concerns of the County of San Bernardo, CA, and Square Mile, and to upload the order approving the disclosure statements. David Cleary, Esq., Attorney for S2 Hospitality, LLC, and Martha Romero, Esq., attorney for the County of San Bernardino, CA, can sign off approving the disclosure statements as modified. The Confirmation hearing will be set for Aug. 28, 2013 at 10:00 a.m. As reported in the TCR on May 13, 2013, Sunshine Hotels, LLC, and Sunshine Hotels, II, LLC's separately filed Plans will be funded from the respective Debtors' ongoing business operations. After the Effective Date, the management of the Debtors will continue to be provided by Advance Management & Investment, LLC. Sunshine Hotels, LLC and Sunshine Hotels II, LLC sought Chapter 11 protection (Bankr. D. Ariz. Case Nos. 13-01560 and 13-01561) on Feb. 4, 2013, in Yuma Arizona. The Debtors' cases are jointly administered under Case No. 13-01560. Sunshine Hotels owns SpringHill Suites by Marriott hotel, a three- story building with 63 suites with indoor pool, spa, meeting room and fitness room on a 2.26-acre property in Hisperia, California. The property is valued at $9.20 million and secures a $5.72 million debt. Sunshine Hotels II owns the Courtyard by Marriott hotel, which has a four-story building with 131 rooms and 4 suites with restaurant and bar, indoor pool, conference center on a 2.74-acre property in Hisperia, California. The property is valued at $20.4 million and secures a $13 million debt. John R. Clemency, Esq., and Craig S. Ganz, Esq., at Gallagher & Kennedy, P.A., in Phoenix, Ariz., represent the Debtors as counsel. SYNAGRO TECHNOLOGIES: Confirmation Hearing Set for Aug. 20 ---------------------------------------------------------- Judge Brendan L. Shannon of the U.S. Bankruptcy Court for the District of Delaware will convene a hearing on Aug. 20, 2013 at 10:00 a.m. (Eastern), to consider approval of the disclosure statement explaining Synagro Technologies, Inc., et al.'s First Amended Plan of Reorganization. Objections are due Aug. 16. As previously reported, the Court has approved the Disclosure Statement after determining that it contains adequate information within the meaning of Section 1125(a) of the Bankruptcy Code. The Disclosure Statement order was entered over the objection of U.S. Bank National Association, as indenture trustee for certain revenue bonds, which complained that the Disclosure Statement and the Plan provide broad statements regarding the Debtors' performance of all transactions contemplated under the Plan Support Agreement. Moreover, U.S. Bank complained that the Disclosure Statement did not include any indication as to whether the reorganized Debtors will, and will cause their applicable non- debtor affiliates to, cooperate with the Trustee and any issuers of the Revenue Bonds in connection with any necessary or desirable steps, if any, to confirm or maintain the tax-exempt status of the Revenue Bonds. The Plan is sponsored by Synagro Infrastructure Company, Inc., and is intended to effectuate the Plan Sponsor's acquisition of the Debtors' business in exchange for approximately $480 million, including Cash of approximately $465 million, and the assumption of certain liabilities. The existing Equity Interests in Synatech and Synagro Drilling will be cancelled. The Synatech New Common Stock will be issued to the Plan Sponsor, and the Drilling New Common Stock will be issued to DrillCo. A full-text copy of the First Amended Plan, dated July 18, 2013, is available at http://bankrupt.com/misc/SYNAGROplan0718.pdf A full-text copy of the First Amended Disclosure Statement, dated July 18, 2013, is available at: http://bankrupt.com/misc/SYNAGROds0718.pdf Mark S. Chehi, Esq., and Jason M. Liberi, Esq., at SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, in Wilmington, Delaware, and George N. Panagakis, Esq., and Jessica S. Kumar, Esq., at SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, in Chicago, Illinois, represent the Debtors. Christopher S. Chow, Esq. -- chowc@ballardspahr.com -- at Ballard Spahr LLP, in Wilmington, Delaware, and Vincent J. Marriott, III, Esq. -- marriott@ballardspahr.com -- at Ballard Spahr LLP, in Philadelphia, Pennsylvania, represent U.S. Bank. About Synagro Synagro Technologies, Inc., based in Houston, Texas, is the recycler of bio-solids and other organic residuals in the U.S. and is one of the largest national companies focused exclusivity on biosolids recycling, which has a market size of $2 billion. The Company was formed in 1986, under the name RPM Marketing, Inc. Synagro's corporate headquarters is currently located in Houston, Texas but is in the process of being transferred to White Marsh, Maryland. The Company also has offices in Lansdale, Pennsylvania, Rayne, Louisiana, and Watertown, Connecticut. Synagro Technologies and 29 affiliates sought Chapter 11 protection (Bankr. D. Del. Case no. 13-11041) on April 24, 2013. Synagro was owned by The Carlyle Group at the time of the bankruptcy filing. It was acquired in April 2007 by Carlyle in a $741 million transaction. Synagro is being advised by the law firm of Skadden Arps Slate Meagher & Flom, along with financial adviser AlixPartners and investment bankers Evercore Partners. Kurtzman Carson & Consultants serves as notice and claims agent. SYNAGRO TECHNOLOGIES: Wants Stay Modified to Resolve Civil Action ----------------------------------------------------------------- Synagro Technologies, Inc., and its debtor affiliates ask the U.S. Bankruptcy Court for the District of Delaware to modify the automatic stay to allow Mace Contracting Corporation and Colonial Surety Company to proceed with the prosecution of counterclaims in an action pending in the U.S. District Court for the Southern District of New York captioned Synagro Northeast LLC v. Mace Contract Corp., et al., Case No. 7:12-CV-2251. The action was filed prepetition to recover monies due Synagro Northeast from Mace based on breach of contract and an account stated in the sum of $137,885, and to collect the unpaid amount from Mace's surety, Colonial, based on a payment bond issued by Colonial. According to the Debtors, absent an order modifying the automatic stay, the counterclaims would be stayed, delaying the full resolution of the civil action and entailing additional expense for the Debtors as Mac and Colonial may seek authorization to lift the stay or may assert set off rights with respect to any judgment obtained by the Debtors in the civil action. Mark S. Chehi, Esq., and Jason M. Liberi, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Wilmington, Delaware, and George N. Panagakis, Esq., and Jessica S. Kumar, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, represent the Debtors. Arthur J. Semetis, Esq., and Shannon P. Gallagher, Esq., at ARTHUR J. SEMETIS, P.C., in New York, represent Mace. Michael C. Delaney, Esq., at McELROY, DEUTSCH, MULVANEY & CARPENTER, LLP, in Morristown, New Jersey, represents Colonial. About Synagro Synagro Technologies, Inc., based in Houston, Texas, is the recycler of bio-solids and other organic residuals in the U.S. and is one of the largest national companies focused exclusivity on biosolids recycling, which has a market size of $2 billion. The Company was formed in 1986, under the name RPM Marketing, Inc. Synagro's corporate headquarters is currently located in Houston, Texas but is in the process of being transferred to White Marsh, Maryland. The Company also has offices in Lansdale, Pennsylvania, Rayne, Louisiana, and Watertown, Connecticut. Synagro Technologies and 29 affiliates sought Chapter 11 protection (Bankr. D. Del. Case no. 13-11041) on April 24, 2013. Synagro was owned by The Carlyle Group at the time of the bankruptcy filing. It was acquired in April 2007 by Carlyle in a $741 million transaction. Synagro is being advised by the law firm of Skadden Arps Slate Meagher & Flom, along with financial adviser AlixPartners and investment bankers Evercore Partners. Kurtzman Carson & Consultants serves as notice and claims agent. SYNAGRO TECHNOLOGIES: G. Villar Seeks Lift Stay Order ----------------------------------------------------- Gerardo Villar asks the U.S. Bankruptcy Court for the District of Delaware to lift the automatic stay to allow him to amend his complaint to add Debtor Synagro WCWNJ, LLC, as defendant in his complaint pending in the Superior Court of New Jersey, Law Division, Essex County. The complaint, filed prior to the Petition Date, alleges that during the course of Mr. Villar's employment with DJW Transport, Inc., he was injured, with 2010, with Synagro and Environmental Protection & Improvement Company being among the parties responsible for manufacturing, supplying and maintaining the equipment that he used at the time of the accident and which caused or contributed to the accident. Mr. Villar is represented by Michael D. DeBaecke, Esq., and Alan M. Root, Esq., at BLANK ROME LLP, in Wilmington, Delaware, and Larry K. Lesnik, Esq., at NORRIS McLAUGHLIN & MARCUS, P.A., in Bridgewater, New Jersey. About Synagro Synagro Technologies, Inc., based in Houston, Texas, is the recycler of bio-solids and other organic residuals in the U.S. and is one of the largest national companies focused exclusivity on biosolids recycling, which has a market size of $2 billion. The Company was formed in 1986, under the name RPM Marketing, Inc. Synagro's corporate headquarters is currently located in Houston, Texas but is in the process of being transferred to White Marsh, Maryland. The Company also has offices in Lansdale, Pennsylvania, Rayne, Louisiana, and Watertown, Connecticut. Synagro Technologies and 29 affiliates sought Chapter 11 protection (Bankr. D. Del. Case no. 13-11041) on April 24, 2013. Synagro was owned by The Carlyle Group at the time of the bankruptcy filing. It was acquired in April 2007 by Carlyle in a $741 million transaction. Synagro is being advised by the law firm of Skadden Arps Slate Meagher & Flom, along with financial adviser AlixPartners and investment bankers Evercore Partners. Kurtzman Carson & Consultants serves as notice and claims agent. SYNOVUS FINANCIAL: Moody's Rates New $130MM Preferred Stock Caa1 ---------------------------------------------------------------- Moody's Investors Service assigned a Caa1 (hyb) rating to Synovus Financial Corporation's planned issuance of $130 million of non- cumulative perpetual preferred stock. The rating outlook is positive. At the same time, Moody's also assigned the following shelf ratings to Synovus' recently filed shelf registration: senior unsecured of (P)B1, subordinate of (P)B2, cumulative preferred stock of (P)B3, and non-cumulative preferred stock of (P)Caa1. Moody's said that the preferred stock and shelf ratings reflect the rating agency's normal notching practice. The principal methodology used in these ratings was Global Banks published in May 2013. TALON INTERNATIONAL: Chairman Held 10.4% Equity Stake at July 12 ---------------------------------------------------------------- In a Schedule 13D filing with the U.S. Securities and Exchange Commission, Mark Dyne disclosed that as of July 12, 2013, he beneficially owned 9,484,000 shares of common stock of Talon International, Inc., representing 10.4 percent of the shares outstanding. Zipper Holdings, LLC, beneficially owned 8,333,333 common shares on that date. Mr. Dyne is the 100 percent member and sole manager of Zipper, and exercises voting and dispositive power over the securities held by Zipper. Mr. Dyne is also the Chairman of the Board of Directors of the Company. A copy of the regulatory filing is available at http://is.gd/wFFMfB About Talon International Woodland Hills, Cal.-based Talon International, Inc. (OTC BB: TALN) -- http://www.talonzippers.com/-- is a global supplier of apparel fasteners, trim and interlining products to manufacturers of fashion apparel, specialty retailers, mass merchandisers, brand licensees and major retailers. Talon manufactures and distributes zippers and other fasteners under its Talon(R) brand, known as the original American zipper invented in 1893. Talon also designs, manufactures, engineers, and distributes apparel trim products and specialty waistbands under its trademark names, Talon, Tag-It and TekFit, to more than 60 apparel brands and manufacturers including Wal-Mart, Kohl's, J.C. Penney, Victoria's Secret, Tom Tailor, Abercrombie and Fitch, Polo Ralph Lauren, Phillips-Van Heusen, Reebok and Juicy Couture. Talon has offices and facilities in the United States, United Kingdom, Hong Kong, China, and Bangladesh. Talon International disclosed net income of $679,347 for the year ended Dec. 31, 2012, as compared with net income of $729,133 during the prior year. The Company's balance sheet at March 31, 2013, showed $18.53 million in total assets, $10.17 million in total liabilities, $24.87 million in series B convertible preferred stock and $16.52 million total stockholders' deficit. TALON INTERNATIONAL: Perrtech Buys 8.3 Million Common Shares ------------------------------------------------------------ In a Schedule 13D filing with the U.S. Securities and Exchange Commission, Perrtech Pty Limited and Leonard Frederick Milner disclosed that as of July 12, 2013, they beneficially owned 8,333,333 shares of common stock of Talon International, Inc., representing 9.2 percent of the shares outstanding. On July 12, 2013, Perrtech used $750,000 to purchase from the Company 8,333,333 shares of common stock. A copy of the regulatory filing is available for free at http://is.gd/eGKxkN About Talon International Woodland Hills, Cal.-based Talon International, Inc. (OTC BB: TALN) -- http://www.talonzippers.com/-- is a global supplier of apparel fasteners, trim and interlining products to manufacturers of fashion apparel, specialty retailers, mass merchandisers, brand licensees and major retailers. Talon manufactures and distributes zippers and other fasteners under its Talon(R) brand, known as the original American zipper invented in 1893. Talon also designs, manufactures, engineers, and distributes apparel trim products and specialty waistbands under its trademark names, Talon, Tag-It and TekFit, to more than 60 apparel brands and manufacturers including Wal-Mart, Kohl's, J.C. Penney, Victoria's Secret, Tom Tailor, Abercrombie and Fitch, Polo Ralph Lauren, Phillips-Van Heusen, Reebok and Juicy Couture. Talon has offices and facilities in the United States, United Kingdom, Hong Kong, China, and Bangladesh. Talon International disclosed net income of $679,347 for the year ended Dec. 31, 2012, as compared with net income of $729,133 during the prior year. The Company's balance sheet at March 31, 2013, showed $18.53 million in total assets, $10.17 million in total liabilities, $24.87 million in series B convertible preferred stock and $16.52 million total stockholders' deficit. TALON INTERNATIONAL: Kutula Buys 38.8 Million Common Shares ----------------------------------------------------------- In a Schedule 13D filing with the U.S. Securities and Exchange Commission, Kutula Holdings Ltd. and Jean-Paul Defesche disclosed that as of July 12, 2013, they beneficially owned 38,888,889 shares of common stock of Talon International, Inc., representing 42.8 percent of the shares outstanding. On July 12, 2013, Kutula used $3,500,000 to purchase from the Company 38,888,889 shares of common stock. A copy of the regulatory filing is available for free at http://is.gd/xAJVFs About Talon International Woodland Hills, Cal.-based Talon International, Inc. (OTC BB: TALN) -- http://www.talonzippers.com/-- is a global supplier of apparel fasteners, trim and interlining products to manufacturers of fashion apparel, specialty retailers, mass merchandisers, brand licensees and major retailers. Talon manufactures and distributes zippers and other fasteners under its Talon(R) brand, known as the original American zipper invented in 1893. Talon also designs, manufactures, engineers, and distributes apparel trim products and specialty waistbands under its trademark names, Talon, Tag-It and TekFit, to more than 60 apparel brands and manufacturers including Wal-Mart, Kohl's, J.C. Penney, Victoria's Secret, Tom Tailor, Abercrombie and Fitch, Polo Ralph Lauren, Phillips-Van Heusen, Reebok and Juicy Couture. Talon has offices and facilities in the United States, United Kingdom, Hong Kong, China, and Bangladesh. Talon International disclosed net income of $679,347 for the year ended Dec. 31, 2012, as compared with net income of $729,133 during the prior year. The Company's balance sheet at March 31, 2013, showed $18.53 million in total assets, $10.17 million in total liabilities, $24.87 million in series B convertible preferred stock and $16.52 million total stockholders' deficit. THORNBURG MORTGAGE: Liberty Mutual Pays $2.1MM to Settle Row ------------------------------------------------------------ Daniel Wilson of BankruptcyLaw360 reported that Liberty Mutual Insurance Co. agreed to a settlement of at least $2.1 million with the trustee for bankrupt mortgage lender TMST Inc. in Maryland bankruptcy court, mostly ending a dispute over a mortgage surety bond indemnity agreement. According to the report, under the terms of the settlement, filed by TMST's Chapter 11 trustee Joel I. Sher, Liberty Mutual has agreed to drop its bankruptcy claims against TMST and immediately pay $2.275 million -- minus about $100,000 for previously incurred costs and up to another $100,000 for future costs. About Thornburg Mortgage Based in Santa Fe, New Mexico, Thornburg Mortgage Inc. (NYSE: TMA) -- http://www.thornburgmortgage.com/-- was a single-family residential mortgage lender focused principally on prime and super-prime borrowers seeking jumbo and super-jumbo adjustable rate mortgages. It originated, acquired, and retained investments in adjustable and variable rate mortgage assets. Its ARM assets comprised of purchased ARM assets and ARM loans, including traditional ARM assets and hybrid ARM assets. Thornburg Mortgage and its four affiliates filed for Chapter 11 bankruptcy (Bankr. D. Md. Lead Case No. 09-17787) on May 1, 2009. Thornburg changed its name to TMST, Inc. Judge Duncan W. Keir is handling the case. David E. Rice, Esq., at Venable LLP, in Baltimore, Maryland, served as counsel to Thornburg Mortgage. Orrick, Herrington & Sutcliffe LLP served as special counsel. Jim Murray and David Hilty of Houlihan Lokey Howard & Zukin Capital, Inc., served as investment banker and financial advisor. Protiviti Inc. served as financial advisory services. KPMG LLP served as the tax consultant. Epiq Systems, Inc., serves claims and noticing agent. Thornburg disclosed total assets of $24.4 billion and total debts of $24.7 billion, as of Jan. 31, 2009. On Oct. 28, 2009, the Court approved the appointment of Joel I. Sher as the Chapter 11 Trustee for the Company, TMST Acquisition Subsidiary, Inc., TMST Home Loans, Inc., and TMST Hedging Strategies, Inc. He is represented by his firm, Shapiro Sher Guinot & Sandler. TLO LLC: Seeks Continued Use of Cash Collateral Through Oct. 31 --------------------------------------------------------------- TLO, LLC, asks the U.S. Bankruptcy Court for the Southern District of Florida, West Palm Division, to continue to use through Oct. 31, 2013, the cash collateral on which Technology Investors, Inc., holds a first priority lien. The Debtor requires the continued use of the Cash Collateral for the continued operation of its business in the ordinary course, including payment of expenses attendant thereto. To adequately protect TTI in connection with the Debtor's continued use of the Cash Collateral, the Debtor offers a first priority postpetition lien on all cash of the Debtor generated postpetition. A full-text copy of the Debtor's motion with accompanying budget is available at http://bankrupt.com/misc/TLOcashcol0715.pdf Alvin S. Goldstein, Esq., at Furr and Cohen, P.A., in Boca Raton, Florida, represents the Debtor. About TLO LLC TLO LLC, a provider of risk-mitigation services, filed a petition for Chapter 11 reorganization (Bankr. S.D. Fla. Case No. 13-bk20853) on May 9, 2013, in West Palm Beach, Florida, near the company's headquarters in Boca Raton. The petition was signed by E. Desiree Asher as CEO. Judge Paul G. Hyman, Jr., presides over the case. Robert C Furr, Esq., and Alvin S. Goldstein, Esq. at Furr & Cohen serve as the Debtor's counsel. The Debtor disclosed assets of $46.6 million and liabilities of $109.9 million, including $93.4 million in secured claims. The principal lender is Technology Investors Inc., owed $89 million. TII is owned by the estate of Hank Asher, the company's primary owner who died this year. There is $4.6 million secured by computer equipment. Paul J. Battista, Esq., and Mariaelena Gayo-Guitian, Esq., at Genovese, Joblove & Battista, P.A., represent the Official Committee of Unsecured Creditors as counsel. TLO LLC: Seeks Authority to Obtain $2-Mil. More in DIP Loans ------------------------------------------------------------ TLO, LLC, filed a second motion asking authority from the U.S. Bankruptcy Court for the Southern District of Florida, West Palm Division, to obtain additional postpetition financing. The Debtor's current co-Chief Executive Officers are Eliza Desiree Asher and Caroline Asher Yoost, daughters of the Debtor's deceased founder, Hank Asher, are the makers of the DIP Loan and they have each agreed to loan an additional $2,000,000 to the Debtor immediately, payable interest only at 9% per annum, and will be secured by life insurance proceeds of Mr. Asher payable to the Debtor, along with all other assets of the Debtor. Technology Investors, Inc. has agreed to subordinate its loan to the loan from the Principals. According to the Debtor, it has an immediate need to obtain financing to permit, among other things, the orderly continuation of the operation of its business, to maintain business relationships with vendors, suppliers and customers, to make payroll, to make capital expenditures and to satisfy other working capital and operational needs. As previously reported, the Debtor received authority to obtain DIP Loan from its Principals in the amount of $1,000,000, up to a maximum of $2,000,000 in the aggregate, with interest at 9% per annum, which DIP Loan will be secured by Mr. Asher's life insurance proceeds, along with all other assets of the Debtor. Alvin S. Goldstein, Esq., at Furr and Cohen, P.A., in Boca Raton, Florida, represents the Debtor. Wells Fargo Objects to DIP Loan Documents Wells Fargo Bank, N.A., objects to the form of the Super Priority Debtor-in-Possession Credit Agreement dated May 14, 2013, to the extent it: (i) allows the Debtor to grant a lien in favor of the Lenders on the TLO, LLC Collateral Account; (ii) provides that the Lenders' lien on the TLO, LLC Collateral Account primes Wells Fargo's valid, perfected and non-avoidable lien on the TLO, LLC Collateral Account; (iii) gives the Superpriority Claim priority over the Wells Fargo Obligations; and (iv) allows the Debtor to use funds in the TLO, LLC Collateral Account in a manner inconsistent with the agreements with Wells Fargo that govern that account. Michael E. Demont, Esq. -- mdemont@smithhulsey.com -- and John R. Thomas, Esq. -- jthomas@smithhulsey.com -- at Smith Hulsey and Busey, in Jacksonville, Florida, represent Wells Fargo. About TLO LLC TLO LLC, a provider of risk-mitigation services, filed a petition for Chapter 11 reorganization (Bankr. S.D. Fla. Case No. 13-bk20853) on May 9, 2013, in West Palm Beach, Florida, near the company's headquarters in Boca Raton. The petition was signed by E. Desiree Asher as CEO. Judge Paul G. Hyman, Jr., presides over the case. Robert C Furr, Esq., and Alvin S. Goldstein, Esq. at Furr & Cohen serve as the Debtor's counsel. The Debtor disclosed assets of $46.6 million and liabilities of $109.9 million, including $93.4 million in secured claims. The principal lender is Technology Investors Inc., owed $89 million. TII is owned by the estate of Hank Asher, the company's primary owner who died this year. There is $4.6 million secured by computer equipment. Paul J. Battista, Esq., and Mariaelena Gayo-Guitian, Esq., at Genovese, Joblove & Battista, P.A., represent the Official Committee of Unsecured Creditors as counsel. TLO LLC: Hires Lawyer for Dispute With William Price, Greencook --------------------------------------------------------------- TLO, LLC asks the U.S. Bankruptcy Court for the Southern District of Florida for permission to employ James F. Carroll, Esq., and the law firm of Conrad & Scherer, LLP as special counsel to appear on behalf of the debtor in cases in state court regarding disputes between the Debtor, William H. Price and Greencook Management, LLC and Ken Hunter and Gary Schultheis. On April 3, 2013, the Debtor sued Mr. Price and Greencook for fraud, misappropriation of the Debtor's funds, breach of contract and breaches of fiduciary duty. The Debtor agrees to pay for Mr. Carroll's hourly rate of $525, plus reimbursement of actual and necessary expenses. To the best of the Debtor's knowledge, Mr. Carroll is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About TLO LLC TLO LLC, a provider of risk-mitigation services, filed a petition for Chapter 11 reorganization (Bankr. S.D. Fla. Case No. 13-bk20853) on May 9, 2013, in West Palm Beach, Florida, near the company's headquarters in Boca Raton. The petition was signed by E. Desiree Asher as CEO. Judge Paul G. Hyman, Jr., presides over the case. Robert C Furr, Esq., and Alvin S. Goldstein, Esq. at Furr & Cohen serve as the Debtor's counsel. The Debtor disclosed assets of $46.6 million and liabilities of $109.9 million, including $93.4 million in secured claims. The principal lender is Technology Investors Inc., owed $89 million. TII is owned by the estate of Hank Asher, the company's primary owner who died this year. There is $4.6 million secured by computer equipment. Paul J. Battista, Esq., and Mariaelena Gayo-Guitian, Esq., at Genovese, Joblove & Battista, P.A., represent the Official Committee of Unsecured Creditors as counsel. TMT USA: U.S. Trustee Appoints Creditors' Committee --------------------------------------------------- Judy A. Robbins, U.S. Trustee for Region 4, notified the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, that eligible creditors of TMT USA Shipmanagement LLC, et al., were appointed to a committee of unsecured creditors. The Committee members are: 1. China Shipping Car Carrier c/o Authorized Representative Interim Committee Chairman 3rd Floor, #277 Da Lian Road Shanghai, PR China Post Code 200082 Tel: +86-21-65967213 Fax: +86-21-65967215 Email: Cscc-operation@cbshipping.com 2. Hyundai Sambo Heavy Industries Co., Ltd. 1700 Yongdang-Ri Sambo-Eup, Youngam-Gun Chollanam-Do, Korea Tel: +82-52-250-2436 Fax: +82-52-250-3060 Email: insuchung@hmd.co.kr 3. KPI Bridge Oil Limited and KPI Bridge Oil Singapore Pte Ltd c/o Jan Obel 1 Raffles Place #41-02 OUB Centre Singapore 048616 Republic of Singapore Tel: +65 9833 7883 Fax: +65 6220 8155 Email: jan.obel@kpibridgeoil.co.uk 4. Omega Bunker S.R.L. c/o Mario Berghini, Finance Manager Via Circonvallazione 6 30171 Venice ? Mestre, Italy Tel: +39 041 2380411 Fax: +39 041 2380440 Email: finance@omegabunker.com 5. China Ocean Shipping Agency Shanghai d/b/a/ Panavico Shanghai c/o Tao Yangeng, Client Manager 11F No.531 Wusong Road Shanghai, China Tel: +86 21 63231363 Fax: +68 21 63291519 Email: agency@penavico.sh.cn 6. Songa Shipping Pte, Ltd. c/o Ms. Angie Kwek 1 Temasek Avenue #22-05, Millenia Tower Singapore, 039192 Republic of Singapore Tel: +65 6336 3841/112 Fax: +65 6339 0559 Email: ak@songa.com.sg 7. Universal Marine Service Co., Ltd. #330-110, Chunghak-Dong, Young Do-Gu Busan, Korea Tel: +82 51417 9837 Fax: +82 51417 9840 Email: supply@unimsc.kh An alternate (non-voting) member was also appointed: Scandinavian Bunkering c/o Erik Th. Salvesen Ovre Langgate 50 N-3110 Tonsberg, Norway Tel: +47 33 30 15 00 Fax: +47 33 30 15 50 Email: erik@scanb.no The U.S. Trustee is represented by Christine A. March, Esq. -- Christine.a.march@usdoj.gov -- trial attorney, at Houston, Texas. About TMT Group Known in the industry as TMT Group, TMT USA Shipmanagement LLC and its affiliates own 17 vessels. Vessels range in size from approximately 27,000 dead weight tons (dwt) to approximately 320,000 dwt. TMT USA and 22 affiliates, including C. Ladybug Corporation, sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 13- 33740) in Houston, Texas, on June 20, 2013 after lenders seized seven vessels. TMT has tapped attorneys from Bracewell & Giuliani LLP and AlixPartners as financial advisors. On a consolidated basis, the Debtors have $1.52 billion in assets and $1.46 billion in liabilities. TMT already filed a lawsuit in U.S. bankruptcy court aimed at forcing creditors to release the vessels so they can return to generating income. TMT USA: Lenders Object to Request for Cash Collateral Use ---------------------------------------------------------- Lenders Mega International Commercial Bank Co., Ltd., and Cathay United Bank filed separate objections to TMT USA Shipmanagement LLC and its affiliates' motion to use cash collateral to pay insurance premiums. Mega Bank states, "Continued maintenance of insurance with respect to Mega Bank's collateral, of course, is in Mega Bank's interest; however, Mega Bank will not consent to the use of its cash collateral until the Debtors provide a better understanding of the "emergency" that they have presented and why these non-debtor affiliates are not paying their obligations, especially in light of the decision by TMT to not include many of its non-debtor affiliates and their vessels in their bankruptcy filings in the United States presumably on the basis of their solvency." Cathy states, "The Second Cash Collateral Motion nakedly seeks such relief, however, without providing any documentation whatsoever, in support. Specifically, it did not include any copy of the relevant insurance policy, invoice, notice of default, or notice of cancellation." A hearing on the Debtors' motion is scheduled for July 29, 2013 at 03:00 PM, before the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division. Charles S. Kelley, Esq. -- ckelley@mayerbrown.com -- at MAYER BROWN LLP, Houston, Texas, and Frederick D. Hyman, Esq. -- fhyman@mayerbrown.com -- and Michael F. Lotito, Esq. -- mlotito@mayerbrown.com -- at MAYER BROWN LLP, in New York, serve as attorneys for Mega Bank. David W. Parham, Esq., and John E. Mitchell, Esq., at BAKER & McKENZIE LLP, in Dallas, Texas, serve as attorneys for Cathay. About TMT Group Known in the industry as TMT Group, TMT USA Shipmanagement LLC and its affiliates own 17 vessels. Vessels range in size from approximately 27,000 dead weight tons (dwt) to approximately 320,000 dwt. TMT USA and 22 affiliates, including C. Ladybug Corporation, sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 13- 33740) in Houston, Texas, on June 20, 2013 after lenders seized seven vessels. TMT has tapped attorneys from Bracewell & Giuliani LLP and AlixPartners as financial advisors. On a consolidated basis, the Debtors have $1.52 billion in assets and $1.46 billion in liabilities. TMT already filed a lawsuit in U.S. bankruptcy court aimed at forcing creditors to release the vessels so they can return to generating income. TMT USA: Judge Clears Shipper to Restructure in Chapter 11 ---------------------------------------------------------- Stephanie Gleason writing for Dow Jones' DBR Small Cap reports that the U.S. bankruptcy case of Taiwan-based shipping company TMT Group can proceed under Chapter 11 protection, a judge ruled Tuesday, affirming that the case was filed in good faith. About TMT Group Known in the industry as TMT Group, TMT USA Shipmanagement LLC and its affiliates own 17 vessels. Vessels range in size from approximately 27,000 dead weight tons (dwt) to approximately 320,000 dwt. TMT USA and 22 affiliates, including C. Ladybug Corporation, sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 13- 33740) in Houston, Texas, on June 20, 2013 after lenders seized seven vessels. TMT has tapped attorneys from Bracewell & Giuliani LLP and AlixPartners as financial advisors. On a consolidated basis, the Debtors have $1.52 billion in assets and $1.46 billion in liabilities. TMT already filed a lawsuit in U.S. bankruptcy court aimed at forcing creditors to release the vessels so they can return to generating income. TOUSA INC: J Beck Named as Liquidation Trustee ---------------------------------------------- The Official Committee of Unsecured Creditors in the Chapter 11 cases of TOUSA, Inc., et al., notified the Bankruptcy Court of the appointment of: J Beck & Associates, Inc. 433 Plaza Real, Suite 275 Boca Raton, FL 33432 Tel: (561) 288-0648 Fax: (561) 948-4796 E-mail: jbeck@becktrustee.com as Liquidation Trustee in connection with the Amended Joint Plan of Liquidation of the Debtors. The Committee and the Requisite Lenders said the appointment of J Beck is acceptable to the Plan Debtors. The firm's professional hourly rates are: Jeffrey H. Beck $725 Marilyn Beck $225 According to a Bloomberg News report, Tousa Inc. on July 12, 2013, received court approval of a $67 million settlement with several insurance companies allowing the former homebuilder to proceed with an Aug. 1 confirmation hearing for approval of the liquidating Chapter 11 plan co-proposed with the unsecured creditors committee. The dispute with the insurance companies involved pre-bankruptcy fraudulent transfers where Tousa operating subsidiaries were made liable on debts which previously hadn't been their responsibilities. A judgment in a separate lawsuit finding fraudulent transfers was upheld in the U.S. Court of Appeals in Atlanta. Tousa's creditors sued the company's directors and officers for authorizing the fraudulent transfers. There were also lawsuits with insurance companies that provided directors' and officers' liability insurance over the question of whether there was liability on the policies. The insurance companies included Federal Insurance Co., XL Specialty Insurance Co. and Zurich American Insurance Co. Tousa's secured lenders also sued the directors and officers, who turned the claims over to the insurance companies. According to Bloomberg, in settlement, the insurance companies will pay $67 million, with $47.9 million going to creditors of the Tousa companies that were forced to take on debt improperly. The first-lien lenders receive $7.66 million, while second-lien lenders take home $11.5 million. Some of the insurance companies also pay $8.27 million of the directors' and officers' defense costs. Bloomberg relates Tousa's Chapter 11 plan has recoveries ranging from 58 percent for senior noteholders to 5 percent for creditors with general unsecured claims. The plan was the result of the decision from the appeals court in May 2012 finding banks received fraudulent transfers exceeding $400 million. The opinion reinstated a ruling by U.S. Bankruptcy Judge John K. Olson which had been set aside on the first appeal in federal district court. Peter L. Borowitz served as mediator between the Debtors and the creditors. About TOUSA Inc. Headquartered in Hollywood, Florida, TOUSA, Inc. (Pink Sheets: TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. was a leading homebuilder in the United States. It operated in various metropolitan markets in 10 states located in four major geographic regions: Florida, the Mid-Atlantic, Texas, and the West. The Debtor and its debtor-affiliates filed for separate Chapter 11 protection on Jan. 29, 2008 (Bankr. S.D. Fla. Case No. 08-10928). Richard M. Cieri, Esq., M. Natasha Labovitz, Esq., and Joshua A. Sussberg, Esq., at Kirkland & Ellis LLP, in New York, N.Y.; and Paul S. Singerman, Esq., at Berger Singerman, in Miami, Fla., represent the Debtors in their restructuring efforts. Lazard Freres & Co. LLC is the Debtors' investment banker. Ernst & Young LLP is the Debtors' independent auditor and tax services provider. Kurtzman Carson Consultants LLC acts as the Debtors' Notice, Claims & Balloting Agent. TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba Eagle Homes, filed for Chapter 11 Protection on July 30, 2008 (Bankr. S.D. Fla. Case No. 08-20746). It estimated assets and debts of $1 million to $10 million in its Chapter 11 petition. Daniel H. Golden, Esq., and Philip C. Dublin, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, N.Y., represent the creditors committee. TOUSA INC: Jefferies, Castle Creek Seek "Senior Debt" Treatment --------------------------------------------------------------- Jefferies Leveraged Credit Products LLC and Castle Creek Arbitrage, LLC -- on behalf of the funds it manages, holders of claims against TOUSA Homes, Inc., an affiliate of TOUSA, Inc., et al. -- ask the Bankruptcy Court to classify and treat their lot option agreement claims and the model home claim as senior debt for purposes of the liquidating plan filed in the Debtors' cases. They argue that: -- the claims are obligations "assumed as the deferred purchase price of property" because under the agreements THI assumed the obligation to purchase property at a deferred future date; -- the claims are "conditional sale obligations" because the agreements impose numerous obligations relating to the conditional future sale of the lots; and -- the claims are obligations in respect of "debt for money borrowed because, as the plain language of the agreements and the Debtors' own admissions make clear, they were financings. About TOUSA Inc. Headquartered in Hollywood, Florida, TOUSA, Inc. (Pink Sheets: TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. is a leading homebuilder in the United States, operating in various metropolitan markets in 10 states located in four major geographic regions: Florida, the Mid-Atlantic, Texas, and the West. The Debtor and its debtor-affiliates filed for separate Chapter 11 protection on Jan. 29, 2008 (Bankr. S.D. Fla. Case No. 08-10928). Richard M. Cieri, Esq., M. Natasha Labovitz, Esq., and Joshua A. Sussberg, Esq., at Kirkland & Ellis LLP, in New York, N.Y.; and Paul S. Singerman, Esq., at Berger Singerman, in Miami, Fla., represent the Debtors in their restructuring efforts. Lazard Freres & Co. LLC is the Debtors' investment banker. Ernst & Young LLP is the Debtors' independent auditor and tax services provider. Kurtzman Carson Consultants LLC acts as the Debtors' Notice, Claims & Balloting Agent. TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba Eagle Homes, filed for Chapter 11 Protection on July 30, 2008 (Bankr. S.D. Fla. Case No. 08-20746). It estimated assets and debts of $1 million to $10 million in its Chapter 11 petition. Daniel H. Golden, Esq., and Philip C. Dublin, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, N.Y., represent the creditors committee. The unsecured creditors committee initially proposed a chapter 11 liquidating plan for Tousa. However, the committee decided not to pursue approval of its liquidation plan because of a pending appeal of its fraudulent transfer action in the U.S. Court of Appeals for the Eleventh Circuit. In May 2012, the Court of Appeals in Atlanta held that Tousa's bank lenders received fraudulent transfers exceeding $400 million. After mediation before Peter L. Borowitz, Tousa and the unsecured creditors committee, MatlinPatterson Global Advisers and Monarch Alternative Capital, as investment adviser to Monarch Master Funding, collectively reached an agreement in principle on a settlement proposal. The proposal would form the foundation for a joint bankruptcy-exit plan for the Debtors. In May 2013, Tousa and the unsecured creditors committee filed a proposed liquidating Chapter 11 plan. On July 12, 2013, Tousa won court approval of a $67 million settlement with several insurance companies allowing the Debtors to proceed with an Aug. 1 hearing to confirm the plan. The dispute with the insurance companies involved the pre-bankruptcy fraudulent transfers. The insurance companies included Federal Insurance Co., XL Specialty Insurance Co. and Zurich American Insurance Co. According to Bloomberg News, in settlement, the insurance companies will pay $67 million, with $47.9 million going to creditors of the Tousa companies that were forced to take on debt improperly. The first-lien lenders receive $7.66 million, while second-lien lenders take home $11.5 million. Some of the insurance companies also pay $8.27 million of the directors' and officers' defense costs. Bloomberg relates Tousa's Chapter 11 plan has recoveries ranging from 58 percent for senior noteholders to 5 percent for creditors with general unsecured claims. The plan was the result of the decision from the appeals court in May 2012 finding banks received fraudulent transfers exceeding $400 million. The opinion reinstated a ruling by U.S. Bankruptcy Judge John K. Olson which had been set aside on the first appeal in federal district court. TPF II LC: S&P Assigns Preliminary 'B+' Rating to $475MM Loan ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'B+' rating and preliminary '1' recovery rating to project finance entity TPF II LC LLC's proposed $475 million senior secured first- lien term loan due 2019 and $20 million senior secured first-lien revolver due 2018. TPF II Rolling Hills LLC is co-issuer with TPF II of the credit facilities and is joint and several obligor of the credit facilities with TPF II. "The 'B+' rating for TPF II's portfolio of three merchant peaking power plants in Illinois and Ohio reflects a high debt leverage that relies on merchant peaking energy revenues, which are inherently volatile, but also relies favorably on PJM Interconnection capacity market revenues that are much less risky than energy revenues," said Standard & Poor's credit analyst Terry Pratt. Revenues from capacity and ancillary services provide generally about 80% to 85% of revenue (depending on the future year), making the credit story mostly a view of long-term PJM capacity markets. The portfolio has limited geographic diversity--Crete with 328 megawatts (MW), and Lincoln with 656 MW, located south of Chicago, respectively, in the PJM-ComEd zone, and Rolling Hills with 850 MW, located in the PJM-AEP zone in southeast Ohio. Each plant earns the same base PJM RTO zone capacity price. "The stable outlook reflects our view that cash flows will be stable over the next several years based on most revenue coming from capacity payment that are known through mid-2017 and based on proven plant performance assumptions. Furthermore, we think it likely that the plants will show very low capacity factors, further mitigating operation risk. An improvement in the rating would require a track record of sound operational performance, continued comfort that quarterly covenants would not be tripped, and lower debt at maturity in our base case -- generally around $100 per kW -- that would come from energy revenues that well exceed our expectations or capacity prices from mid-2017 onwards well above $90/kW-month. Developments that could result in a rating downgrade would be operational problems that materially reduce availability, much lower-than-expected energy revenue from Rolling Hills, or debt at maturity of 2018 -- generally around the $200/kW mark," S&P said. TPO HESS: Wins Approval of $19.3 Million Sale --------------------------------------------- Michael Bathon, substituting for Bloomberg bankruptcy columnist Bill Rochelle, reports that TPO Hess Holdings Inc., a printer of commercial and educational materials, won court approval to sell virtually all its assets to Bang Printing of Ohio Inc. for about $19.3 million. According to the report, U.S. Bankruptcy Judge Kevin J. Carey granted approval of the sale at a hearing July 24 in Wilmington, Delaware, according to court documents. The company won court approval of its bankruptcy plan at July 24 hearing as well. Bang Printing's offer "constitutes the highest and best offer" for the assets, the judge said in court papers. The report notes that under the company's liquidation plan second- lien noteholders, owed about $74 million, are projected to recover about 2 percent on their claims. Unsecured creditors owed about $20.2 million are projected to recover nothing. About TPO Hess Commercial and educational printer TPO Hess Holdings Inc., D.B. Hess Co., The Press of Ohio and other affiliates sought Chapter 11 protection (Bankr. D. Del. Case No. 13-11327) on May 22, 2013, to seek approval of a liquidation plan that contemplates the sale of the business to Bang Printing of Ohio Inc., absent higher and better offers. D.B. Hess was founded 1797 in Woodstock, Illinois. D.B. Hess and its affiliates are now leading provider of print, related services, and technology. Hess ranks among the top 50 U.S. printers and has become one of the industry's most respected low- to-medium volume producers of commercial and educational materials. Hess Holdings, the ultimate parent, was formed after Wellspring Capital Management LLC and certain co-investors acquired D.B. Hess and The Press of Ohio in 2006. General Electric Capital Corp., already owed $13.4 million on a prepetition revolving credit, is financing the Chapter 11 effort. TRAVELPORT: New $120MM Credit Facility Gets Moody's B1 Rating ------------------------------------------------------------- Moody's Investors service has assigned a B1 rating to Travelport's $120 million super-senior revolving credit facility (RCF). Ratings Rationale: Assignment Of B1 to RCF The B1 rating assigned to Travelport's $120 million RCF reflects its contractual priority ranking in Travelport's capital structure. The revolving credit facility will benefit from the same guarantor and security package as the company's existing first lien facility, however, the RCF will have a super-priority claim in the waterfall. Moody's expects Travelport's liquidity profile to be adequate over the next 12 months. The company's recent refinancing has allowed for debt maturities to be pushed significantly out, however, the rating agency notes there is a springing maturity clause in the first lien documentation requiring existing debt to be refinanced or redeemed at least 91 days before maturity for the clause not to be triggered. Moody's expects headroom under the company's financial covenants to remain limited. Negative Outlook The negative outlook essentially reflects Travelport's continued high leverage, measured as adjusted debt/EBITDA. Whereas Moody's would expect Travelport's operating performance to improve in 2013, a stabilization of the outlook would require Travelport to show throughout 2013 that its capital structure is sustainable by achieving a reduction in its leverage towards 7.0x debt/EBITDA over time. What Could Change The Rating Up/Down Given Travelport's high leverage, any positive rating pressure is unlikely in the short term. However, Moody's could stabilize the ratings if the group succeeds in implementing the deleveraging trend. Conversely, negative pressure would likely be exerted on the rating if there were no improvement in Travelport's earnings in 2013. Finally, negative pressure could also result if Travelport's near-term liquidity were to become constrained. Given the group's lack of near-term debt maturities, constrained liquidity would likely result from a lack of covenant headroom on the company's loans. Principal Methodology The principal methodology used in this rating was the Global Business & Consumer Service Industry Rating Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Atlanta, Georgia, Travelport is a leading provider of transaction processing services to the travel industry through its global distribution system (GDS) business, which includes the group's airline information technology solutions business. During FY2012, the group reported revenues and adjusted EBITDA of $2.0 billion and $513 million, respectively. TXCO RESOURCES: Bankruptcy Court Vacates Ruling in Peregrine Suit ----------------------------------------------------------------- Peregrine Petroleum LLC, an oil and gas exploration company with offices in Dallas and Houston, has resolved a lawsuit filed by San Antonio-based TXCO Resources Inc. TXCO emerged from Chapter 11 bankruptcy in February 2010 after selling a majority of its assets to Houston-based Newfield Exploration Co. and The Woodlands, Texas-based Andarko Petroleum Co. During the bankruptcy proceedings, TXCO filed a trade secret lawsuit against Peregrine. The U.S. Bankruptcy Court for the Western District of Texas initially ruled in favor of TXCO, but later vacated the ruling and dismissed all claims against Peregrine. The same court also returned a $16.5 million cash deposit to Peregrine that was ordered in the court's earlier, now-vacated ruling. Peregrine and TXCO have amicably resolved all differences between the companies. About TXCO Resources TXCO Resources, Inc., was a publicly traded oil and gas exploration and production company based in San Antonio, Texas, which, along with its subsidiaries, filed a voluntary Chapter 11 case (Bankr. W.D. Tex. Case No. 09-51807) on May 17, 2009. Prior to confirmation, TXCO agreed to sell most of its oil and gas assets to Newfield Exploration Company and Anadarko E&P Company L.P. The sale was included in TXCO's Second Amended Plan of Reorganization. On Jan. 27, 2010, the Court entered an order confirming the Plan. On Feb. 11, 2010, the Plan became effective and Reorganized TXCO emerged from Chapter 11. All creditors were paid in full, including interest and attorney's fees, and equity holders received a distribution. The remaining oil and gas assets that were not transferred to Newfield or Anadarko were transferred to the TXCO Liquidating Trust. Newfield is the only shareholder of record in Reorganized TXCO and the sole beneficiary of the Liquidating Trust. U.S. RENAL: Moody's Rates $335MM First Lien Term Loan 'Ba3' ----------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to U.S. Renal Care, Inc.'s proposed $335 million first lien term loan add-on due 2019 and B3 rating to its proposed $160 million second lien term loan add-on due 2020. Proceeds will be used to acquire Ambulatory Services of America Inc. ASA is a renal disease management company that operates 76 outpatient dialysis centers and 38 home dialysis programs in 13 states. Concurrently, Moody's upgraded U.S. Renal's existing $305 million first lien term loan to Ba3 from B1 and its $120 million second lien term loan rating to B3 from Caa1. In addition, U.S. Renal's B2 Corporate Family Rating and B2-PD Probability of Default Ratings are confirmed. This rating action concludes the ratings review on U.S. Renal initiated on June 26, 2013. The confirmation of the CFR and PDR reflect Moody's view that the acquisition significantly improves U.S. Renal's scale and geographic footprint. And despite an increase in financial leverage, Moody's believes that U.S. Renal will delever to more comfortable levels over the next 18 months The upgrade of the company's existing term loans reflects the company's issuance of $166 million in new senior secured Holdco PIK notes (unrated) issued at Ranger Renal Intermediate Holdings, Inc. The loss absorption provided by the PIK notes adds cushion to the existing senior secured credit facilities in accordance with Moody's loss given default methodology. The change in outlook to negative reflects the risks associated with U.S. Renal's significant increase in debt resulting in pro forma debt to EBITDA leverage of 7.3 times, for the LTM period ending March 31, 2013. Furthermore, the Center for Medicare & Medicaid Services ("CMS") has proposed a reimbursement rate cut of a 11.9% for fiscal 2014 that -- if fully implemented as proposed - - would weaken cash flow metrics materially and delay U.S. Renal's ability to delever over the next twelve to eighteen months. The following is a summary of Moody's rating actions: U.S. Renal Care, Inc. Ratings assigned: $335 million first lien term loan due 2019 at Ba3 (LGD 2, 28%) $160 million second lien term loan due 2012 at B3 (LGD 2, 28%) Ratings upgraded: $60 million senior secured revolving credit facility to Ba3 (LGD 2, 28%) from B1 (LGD 3, 37%) $305 million senior secured first lien term loan to Ba3 (LGD 2, 28%) from B1 (LGD 3, 37%) $120 million senior secured second lien term loan to B3 (LGD 5, 77%) from Caa1 (LGD 5, 88%) Ratings confirmed: Corporate Family Rating at B2 Probability of Default Rating at B2-PD Rating Rationale: The B2 Corporate Family Rating reflects U.S. Renal's high financial leverage, which will increase following the acquisition of Ambulatory Services of America. Moody's estimates that the pro form debt to EBITDA for the LTM period ending March 31, 2013 would have approximated 7.3 times. The rating is also constrained by Moody's expectation of modest free cash flow after considering higher interest expense and capital spending related to investments in newly established facilities as opposed to debt repayment. Furthermore, the company has relatively small scale compared to the larger players in the sector, and a high concentration of revenue from government based programs. Moody's notes that the ASA acquisition doubles U.S. Renal's patient scale and provides a modest level of geographic diversification. Ratings benefits from a stable industry profile characterized by the increasing incidence of end stage renal disease ("ESRD") and the medical necessity of the service provided. If the 11.9% reimbursement rate cut as proposed by CMS were to be implemented in fiscal 2014 as currently proposed, delaying U.S. Renal's ability to delever, the rating could be downgraded. More specifically, Moody's expects leverage (debt/EBITDA) to decline to below 6.0 times over the next eighteen months. Any delay, whether by an increase in debt financed acquisitions or shareholders initiatives, could result in a downgrade Although an upgrade is unlikely in the near-term, the ratings could be upgraded should the company reduce and sustain adjusted debt/EBITDA below 5.0 times. Additionally, for Moody's to consider an upgrade, US Renal would need greater top line revenues along with free cash flow to debt around 10%. The principal methodology used in rating U.S. Renal Care, Inc. was the Global Healthcare Service Provider Industry Methodology published in December 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. U.S. Renal Care, Inc. provides dialysis services to patients who suffer from chronic kidney failure. Incorporating Ambulatory Services of America acquisition, the combined companies provide dialysis services through 176 outpatient facilities in 20 states. In addition, the company provides acute dialysis services through contractual relationships with hospitals and dialysis centers to patients in their homes. U.S. Renal is owned by private equity sponsors, Leonard Green & Partners, L.P., Cressey & Company, SV Life Science and existing management. U.S. RENAL: S&P Assigns 'B' Rating to $335MM Incremental Loan ------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'B' credit rating to Plano, Texas-based dialysis provider U.S. Renal Care Inc.'s (USRC) proposed $335 million incremental first-lien secured term loan and its 'CCC+' credit rating to USRC's proposed $160 million incremental second-lien secured term loan. S&P removed its rating on USRC's existing first-lien debt from CreditWatch and lowered it to 'B' from 'B+' because the amount of first-lien debt will increase relative to its estimate of the enterprise's value in the event of default. S&P's 'B' corporate credit rating on USRC is unchanged and the rating outlook is negative. S&P also assigned its '3' recovery rating to the new first-lien debt, indicating its expectation of meaningful (50% to 70%) recovery of principal, and its '6' recovery rating to the new second-lien debt, indicating its expectation of negligible (0 to 10%) recovery of principal, both in the event of payment default. S&P's recovery rating on the existing first-lien debt was revised to '3' from '2', which indicated its previous expectation of substantial (70% to 90%) recovery of principal in the event of default. USRC will use proceeds of the new debt, along with other funds, to finance its acquisition of Ambulatory Services of America (ASA), also a dialysis services provider. Following the ASA acquisition, USRC will operate in 19 states and Guam, serving about 14,000 dialysis patients. "Our ratings on USRC reflect its "vulnerable" business risk profile, distinguished by its dependence on the treatment of a single disease, pressure from third-party payors to reduce payments, an unfavorable payor profile with a heavy reliance on Medicare, and still relatively small scale. The "highly leveraged" financial risk profile incorporates pro forma lease- adjusted debt leverage of about 8x (including holding company debt), including ASA's EBITDA for the past 12 months (and adjusting for USRC's nonrecurring expenses in 2012), with expectations for gradual deleveraging. Our negative rating outlook reflects the potential for leverage to remain elevated, given the combination of higher financial risk during the upcoming rebasing of Medicare reimbursement rates," S&P said. RATINGS LIST U.S. Renal Care Inc. Corporate Credit Rating B/Negative/-- New Ratings U.S. Renal Care Inc. Senior Secured Debt $335M incremental first-lien B Recovery Rating 3 $160M incremental second-lien CCC+ Recovery Rating 6 Rating Lowered/CreditWatch Action To From U.S. Renal Care Inc. Senior Secured Debt First-lien B B+/Watch Neg Recovery Rating 3 2 U.S. XPRESS: $250MM Sr. Notes Issuance Gets Moody's Caa1 Rating --------------------------------------------------------------- Moody's Investors Service assigned a Caa1 rating to U.S. Xpress Enterprises, Inc.'s proposed $250 million senior secured notes due 2020. The B3 corporate family and B3-PD probability of default ratings were affirmed. Concurrently, the stable rating outlook was maintained. Proceeds from the proposed notes together with a new five-year $190 million ABL revolving credit facility (unrated) are expected to be used to refinance the company's existing senior secured credit facilities and securitization as well as pay transaction- related fees and expenses. The proposed notes are expected to be secured by a second lien on the assets that secure the ABL revolver and will be guaranteed by domestic subsidiaries, subject to certain exceptions. Ratings assigned: Proposed senior secured $250 million senior secured notes due 2020, Caa1 (LGD-4, 64%) Ratings affirmed: Corporate family rating, B3 Probability of default rating, B3-PD Existing $40 million senior secured revolving credit facility due 2015, B2 (LGD-3, 36%)* Existing $16.4 million ($16.2 million outstanding) senior secured term loan due 2014, B2 (LGD-3, 36%)* Existing $173.6 million ($168.7 million outstanding) senior secured term loan due 2016, B2 (LGD-3, 36%)* * Upon completion of the proposed transaction, ratings for U.S. Xpress' existing senior secured revolving credit facility and term loan will be withdrawn. The assigned ratings are subject to Moody's review of final documentation. Ratings Rationale: The proposed refinancing will improve the company's liquidity position and debt maturity profile. Although total funded debt will increase modestly pro forma for the proposed transaction, the company should have greater effective availability under its ABL facility due to the absence of ongoing maintenance covenants in the proposed debt structure. The B3 CFR continues to reflect the cyclical nature of the truckload industry and weak credit metrics that are largely in line with the rating category. Pro forma for the proposed refinancing, debt/EBITDA stands at 5.8x times (on a Moody's adjusted basis) while EBIT coverage of interest is under 1.0 time. The B3 CFR is supported by a relatively young fleet allowing the company to defer a portion of capital expenditures to preserve liquidity if needed, good scale, a diverse customer base/end markets and the expectation for further contractual rate increases due to limited capacity in the industry. A moderate improvement in credit metrics is expected to be attained through expense reductions from the implementation of a Six Sigma Lean program as well as the elimination of certain non-recurring costs which impacted 2012 results. Fiscal 2012 results were negatively affected by management time and effort related to the sale of the Arnold Transportation business in early 2013 (the company retains a minority interest) and a temporary change in the company's operating processes. However, the B3 CFR also incorporates the effects of the uncertain economic environment on volume growth and the potential for elevated driver and regulatory costs to partially offset some of the improvements expected to margin growth going forward. The stable rating outlook reflects Moody's expectation for modest revenue growth in 2013, largely driven by contractual price increases rather than volume. The ratings could be downgraded if credit metrics weaken such that debt to EBITDA exceeds 6.0x, or EBIT to interest declines to 0.5x. A ratings downgrade could also result from deterioration in the company's liquidity profile including continued negative free cash flow generation or limited availability under the ABL facility. The ratings could be upgraded if the company improves credit metrics such that debt to EBITDA improves to 5.0x, EBIT to interest is sustained above 1.5x and the company generates positive free cash flow. The principal methodology used in this rating was the Global Surface Transportation and Logistics Companies published in April 2013. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. U.S. Xpress Enterprises, Inc., a Nevada Corporation, headquartered in Chattanooga, Tennessee, provides truckload transportation services in North America, including line-haul, dedicated and inter-modal freight services. Gross revenues for the twelve months ended March 31, 2013 totaled approximately $1.7 billion. U.S. XPRESS: S&P Rates $250MM Senior Secured Notes 'B-' ------------------------------------------------------- Standard & Poor's Ratings Services stated that its 'B-' corporate credit rating and issue-level ratings on Chattanooga, Tenn.-based US Xpress Enterprises Inc. (US Xpress) remains on CreditWatch, where S&P placed them with negative implications on May 2, 2013. At the same time, S&P assigned a 'B-' rating to the company's $250 million senior secured notes due 2020, as well as a '4' recovery rating, indicating S&P's expectation that lenders would receive average (30%-50%) recovery of principal in a payment default scenario. S&P based all ratings on preliminary offering statements, and they are subject to review of final documentation. The company will use the notes, along with a $190 million asset- based revolver (unrated), to refinance the existing revolver, the securitization, and the term loan facilities. "Standard & Poor's ratings on US Xpress reflect the company's highly leveraged capital structure and its participation in the intensely competitive, highly fragmented, cyclical truck-load (TL) market," said credit analyst Anita Ogbara. US Xpress' significant business position as a major TL carrier with good customer, end- market, and geographic diversity partly offsets these factors. S&P categorizes the company's business profile as "weak," its financial profile as "aggressive," and its liquidity as "adequate," as defined in S&P's criteria. Privately held US Xpress does not release financial statements publicly. US Xpress is the fifth-largest TL carrier, measured by revenues, in the U.S. It operates a fleet of approximately 6,800 tractors and 17,000 trailers in more than 30 major terminals, primarily located in the U.S. Although the company maintains a sizeable market position, it operates in a very fragmented industry, where the top 10 TL companies account for less than 5% of the total for-hire TL market. Like other trucking companies, US Xpress' profitability is subject to changes in fuel costs. In periods of rising fuel costs, US Xpress, similar to most other large trucking companies, has been able to substantially mitigate the effect of higher prices through surcharges. However, the fuel surcharge involves a modest timing lag after fuel prices increase or decrease. With operating margins in the low-single-digit percent range, profitability is on the lower end of industry peers'. Although new regulatory requirements stemming from Comprehensive Safety Analysis (CSA) 2010 are increasing operating costs and wages for trucking companies, S&P believes US Xpress is better positioned to handle these costs than smaller carriers, which may find these costs onerous. As a result, S&P expects capacity to rationalize further and pricing to continue to gradually improve. For the 12 months ended March 31, 2013, adjusted debt (adjusted for operating leases) to EBITDA was 7x, compared with pro forma total debt to EBITDA of about 6x at the close of the management buyout in October 2007. Funds from operations (FFO) to total debt was 19%, in line with S&P's expectations of about 20%. Over the next few quarters, S&P expects slow GDP growth, rising fuel costs, and increasing wages to constrain earnings in the TL sector. Nevertheless, S&P expects the company's earnings to benefit from modest tonnage and pricing improvements. Given US Xpress' relatively young fleet, S&P also expects capital spending to moderate this year and to remain at reduced levels in 2014. S&P believes these factors will result in improved credit measures over the next couple of years, with total debt to EBITDA of about 6x and FFO to total debt in the 20% area. S&P's ratings and performance expectations do not incorporate any material debt- financed acquisitions. S&P will monitor developments in the company's refinancing and liquidity position. S&P could lower the ratings if US Xpress is unsuccessful in completing the proposed transaction. Alternatively, S&P could affirm the ratings and remove them from CreditWatch if the company is successful in completing the transaction and improves its liquidity position. UNIVERSAL COMPUTER: S&P Lowers CCR to 'B'; Outlook Stable --------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Kettering, Ohio-based The Reynolds & Reynolds Co. to 'B' from 'BB'. The outlook is stable. S&P subsequently withdrew the rating on Reynolds & Reynolds. At the same time, S&P assigned its 'B' corporate credit rating to parent Universal Computer Systems Holding Inc. (UCS). The outlook is stable. At the same time, S&P assigned a 'B+' issue rating with a recovery rating of '2' to the company's new $25 million senior secured revolving credit facility, $550 million first-lien term loan A, and $1.75 billion first-lien term loan B. The recovery rating of '2' indicates S&P's expectation for a substantial (70% to 90%) recovery of principal in the event of payment default. S&P also assigned a 'CCC+' issue rating with a recovery rating of '6' to the company's $1.1 billion second-lien term loan. The recovery rating of '6' indicates S&P's expectation for a negligible (0% to 10%) recovery of principal in the event of payment default. The company is using the loan proceeds together with $900 million of unrated holding company (HoldCo) pay-in-kind notes, as well as equity contribution to fund the proposed transaction, including refinancing existing debt. "The downgrade is based on the substantial increase in pro forma leverage following the transaction and our expectation that the company's leverage will remain high over the intermediate term," said Standard & Poor's credit analyst Katarzyna Nolan. The ratings on UCS reflect its "fair" business risk profile and "highly leveraged" financial risk profile, incorporating a relatively narrow and cyclical end market, coupled with high pro forma leverage. Consistent profitability, positive free cash flow generation following the transaction, and a solid market position in the North American automobile dealer management solutions (DMS) market are partial offsets. UCS provides integrated software and services to the automobile dealer management industry in North America. The company's products enable automobile dealers to manage a comprehensive array of functions, including customer relationships, finance and accounting, inventory levels, and enterprise resource planning. The stable outlook reflects USC's highly recurring revenue base, consistent profitability, and ability to generate FOCF. S&P expects the company to continue generating modest levels of FOCF, despite a cyclical nature of the auto industry. An upgrade is unlikely in the near term given its highly leveraged capital structure. S&P could consider a downgrade if UCS experiences higher-than- expected customer losses, leading to a profitability decline, or pursues more aggressive financial policies that lead to debt-to- EBITDA sustained in the mid-8x area or covenant headroom declining to below 15%. USA BROADMOOR: Files Proposed Reorganization Plan ------------------------------------------------- USA Broadmoor LLC filed with the U.S. Bankruptcy Court for the Middle District of Florida a Plan of Reorganization and Disclosure Statement, essentially contemplating the continued operation of the Debtor. The Plan provides for the classification and treatment of claims against and interest in the Debtor. Claim 1 Priority Claims will be paid in full. Claim 2 Wells Fargo Secured Claim will have a $12 million unpaid principal balance of the Note on the Plan Effective Date. Interest will accrue on the Principal Balance outstanding at the rate of 175 basis points of the 10-year treasury rate until the earlier of four years after the Plan Effective Date. On the Claim 3 Guardian Secured Claim, Class 4 Challenger Pools Secured Claim, Claim 5 All Saints Secured Claim, and Class 6 Superior Seal Secured Claim, the Debtor will make payment installments for 48 months. On Class 7 Other Secured Claims, the Debtor will surrender to all Class 7 Claimholders all Collateral securing all Class 7 Claims in full satisfaction of those Claims. The Reorganized Debtor will pay, on four successive years, 10% of Allowed Class 8 Unsecured Claims. It will pay the balance of the Allowed Class 8 Claims by the Maturity Date. Holders of Allowed Class 9 Membership Interests will retain their Membership Interests. A copy of the Disclosure Statement dated July 9, 2013 is available for free at http://bankrupt.com/misc/USABROADMOOR_DSJul9.pdf Hugh L. Caraway, Jr., chief executive officer, signed the Plan. Scott A. Stichter, Esq., at Stichter, Riedel, Blain & Prosser, P.A., represents USA Broadmoor LLC. About USA Broadmoor USA Broadmoor, LLC, filed a Chapter 11 petition (Bankr. M.D. Fla. Case No. 13-04880) on April 16, 2013. The petition was signed by Hugh L. Caraway, chief executive officer of Internacional Realty, Inc., member. The Debtor estimated assets and debts of at least $10 million, respectively. Judge Michael G. Williamson presides over the case. The Debtor is represented Stichter Riedel Blain & Prosser, P.A. VERTIS HOLDINGS: World Graphic to Help Pursuing Insurance Claim --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Vertis Holdings, Inc. et al., to expand the scope of employment of World Graphic Services as consultant to the Debtors; and approved addendum No. 1 to independent contractor agreement in connection therewith. According to the Debtor, World Graphic concluded providing services under the independent contractor agreement with the closing of the sale of substantially all of the Debtors' assets to Quad/Graphics Marketing, LLC. World Graphics' additional services will include assisting the Debtors in filing (including amendments or supplements), and prosecuting any insurance claims relative to the fire that damaged a facility of the Debtors located at 7619 Doane Drive, Manassas, Virginia. About Vertis Vertis Holdings Inc. -- http://www.thefuturevertis.com/-- provides advertising services in a variety of print media, including newspaper inserts such as magazines and supplements. Vertis and its affiliates (Bankr. D. Del. Lead Case No. 12-12821), returned to Chapter 11 bankruptcy on Oct. 10, 2012, this time to sell the business to Quad/Graphics, Inc., for $258.5 million, subject to higher and better offers in an auction. As of Aug. 31, 2012, the Debtors' unaudited consolidated financial statements reflected assets of approximately $837.8 million and liabilities of approximately $814.0 million. Bankruptcy Judge Christopher Sontchi presides over the 2012 case. Vertis is advised by Perella Weinberg Partners, Alvarez & Marsal, and Cadwalader, Wickersham & Taft LLP. Quad/Graphics is advised by Blackstone Advisory Partners, Arnold & Porter LLP and Foley & Lardner LLP, special counsel for antitrust advice. Kurtzman Carson Consultants LLC is the Debtors' claims agent. Quad/Graphics is a global provider of print and related multichannel solutions for consumer magazines, special interest publications, catalogs, retail inserts/circulars, direct mail, books, directories, and commercial and specialty products, including in-store signage. Headquartered in Sussex, Wis. (just west of Milwaukee), the Company has approximately 22,000 full-time equivalent employees working from more than 50 print-production facilities as well as other support locations throughout North America, Latin America and Europe. Vertis first filed for bankruptcy (Bankr. D. Del. Case No. 08-11460) on July 15, 2008, to complete a merger with American Color Graphics. ACG also commenced separate bankruptcy proceedings. In August 2008, Vertis emerged from bankruptcy, completing the merger. Vertis against filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 10-16170) on Nov. 17, 2010. The Debtor estimated its assets and debts of more than $1 billion. Affiliates also filed separate Chapter 11 petitions -- American Color Graphics, Inc. (Bankr. S.D.N.Y. Case No. 10-16169), Vertis Holdings, Inc. (Bankr. S.D.N.Y. Case No. 10-16170), Vertis, Inc. (Bankr. S.D.N.Y. Case No. 10-16171), ACG Holdings, Inc. (Bankr. S.D.N.Y. Case No. 10-16172), Webcraft, LLC (Bankr. S.D.N.Y. Case No. 10-16173), and Webcraft Chemicals, LLC (Bankr. S.D.N.Y. Case No. 10-16174). The bankruptcy court approved the prepackaged Chapter 11 plan on Dec. 16, 2010, and Vertis consummated the plan on Dec. 21. The plan reduced Vertis' debt by more than $700 million or 60%. GE Capital Corporation, which serves as DIP Agent and Prepetition Agent, is represented in the 2012 case by lawyers at Winston & Strawn LLP. Morgan Stanley Senior Funding Inc., the agent under the prepetition term loan, and as term loan collateral agent, is represented by lawyers at White & Case LLP, and Milbank Tweed Hadley & McCloy LLP. On Jan. 16, 2013, Quad/Graphics completed the acquisition of Vertis Holdings for a net purchase price of $170 million. This assumes the purchase price of $267 million less the payment of $97 million for current assets that are in excess of normalized working capital requirements. VILLAGIO PARTNERS: Chapter 11 Reorganization Case Closed -------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas entered on June 28, 2013, a final decree closing the Chapter 11 cases of Villagio Partners, Ltd., et al. The Debtors won confirmation of their First Amended Joint Plan of Reorganization on June 6. Pursuant to the Plan, each of the Debtors' assets will vest in that Debtor on the Plan Effective Date. The Debtors have said in court papers that all potential claims objections were resolved prior to confirmation of the First Amended Plan, and there is no avoidance litigation to be initiated by any of the Debtors. About Villagio Partners et al. Villagio Partners Ltd., along with six affiliates, filed separate Chapter 11 petitions (Bankr. S.D. Tex. Case Nos. 12-35928, 12-35930 to 12-35932, 12-35934, 12-35936 and 12-35937) in Houston on Aug. 6, 2012. The affiliated debtors are Compass Care Holdings Ltd., Cinco Office VWM, Greens Imperial Center, Inc., Marcel Construction & Maintenance, Ltd., Tidwell Properties, Inc., and Research-New Trails Partners, Ltd. The Debtors are engaged primarily in the business of owning and operating commercial retail shopping centers and offices. The Debtors' commercial real properties are located in and around the Houston Metropolitan area, including Katy, Humble and The Woodlands. The petitions were signed by Vernon M. Veldekens, CEO for The Marcel Group. The Marcel Group -- http://www.themarcelgroup.com/ -- is an integrated commercial real estate firm specializing in development, construction, design, engineering, master planning, leasing and property management. Village Partners, a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101(51B), estimated assets and debts of at least $10 million. It says that a real property in Katy, Texas, is worth $24.6 million. Bankruptcy Judge Marvin Isgur presides over the cases. Simon Richard Mayer, Esq., and Wayne Kitchens, Esq., at Hughes Watters Askanase, LLP, in Houston, represent the Debtors as counsel. VPR CORP: Texas Judge Clears to Auction Oil and Gas Wells --------------------------------------------------------- Katy Stech writing for Dow Jones' DBR Small Cap reports that executives at VPR Corp., which drills for oil and natural gas throughout Oklahoma and New Mexico, got permission from a bankruptcy judge to auction its business as they try to pay back some of its at least $95 million in debt. About VPR Operating VPR Operating, LLC, and three related entities sought Chapter 11 protection (Bankr. W.D. Tex. Lead Case No. 13-10599) in Austin on March 29, 2013. Brian John Smith, Esq., at Patton Boggs LLP, serves as the Debtor's counsel. Judge Craig A. Gargotta presides over the case. The Debtor disclosed $13,400,000 in assets and $11,119,045 in liabilities as of the Chapter 11 filing. Privately owned VPR is an oil and gas company focused on acquiring and developing assets in the domestic onshore basins of the United States. It has 53 producing wells, which generate revenue of approximately $375,000 per month on average after royalty payments. VPR was founded in 2008, and maintains producing oil and gas properties in Oklahoma and New Mexico. The U.S. Trustee appointed five entities to an official committee of creditors. Kell C. Mercer, Esq., at Brown McCarroll, L.L.P. represents the Official Committee of Creditors. W.R. GRACE: Reports $82.8-Mil. Net Income in Second Quarter ----------------------------------------------------------- W. R. Grace & Co. on July 25 reported second quarter net income of $82.8 million, or $1.07 per diluted share. Net income for the prior-year quarter was $69.3 million, or $0.90 per diluted share. Adjusted EPS was $1.12 per diluted share compared with $1.14 per diluted share in the prior-year quarter. "Earnings for the quarter came in as expected," said Fred Festa, Grace's Chairman and Chief Executive Officer. "Materials Technologies and Construction Products had solid quarters, benefiting from good growth in emerging regions and strong pricing and margins. In Catalysts Technologies, the customer operational issues that impacted the first quarter were successfully resolved. However, our refinery catalyst pricing initiative has not produced the results we wanted, with negative effects to our sales and earnings outlook in the second half." Second Quarter Results Second quarter net sales of $802.8 million decreased 2.9 percent compared with the prior-year quarter. The decrease was due to lower pricing (-2.5 percent) and unfavorable currency translation (-1.5 percent), partially offset by higher sales volumes (+1.1 percent). Base pricing increased compared with the prior-year period, but was more than offset by lower rare earth surcharges. Gross profit of $303.3 million decreased 0.3 percent compared with the prior-year quarter primarily due to lower sales, partially offset by lower raw material and manufacturing costs. Gross margin was 37.8 percent, an increase of 100 basis points compared with the prior-year period. Adjusted EBIT of $142.1 million decreased from $143.6 million in the prior-year quarter due to lower gross profit and higher operating expenses, partially offset by higher earnings from the Advanced Refining Technologies (ART) joint venture. Adjusted EBIT margin of 17.7 percent increased 30 basis points compared with the prior-year quarter. Adjusted EBIT Return On Invested Capital was 33.6 percent on a trailing four-quarter basis, a decrease of 250 basis points from the prior-year quarter, primarily reflecting lower earnings in Catalysts Technologies for the trailing four-quarter period. Six Month Results Sales for the six months ended June 30, 2013, decreased 4.3 percent to $1.513 billion as lower pricing (-3.7 percent) and unfavorable currency translation (-1.2 percent) partially were offset by higher sales volumes (+0.6 percent). Gross profit of $567.1 million decreased 2.4 percent compared with the prior-year period primarily due to lower sales and unfavorable currency translation partially offset by lower raw material and manufacturing costs. Gross margin of 37.5 percent increased 70 basis points compared with the prior-year period. Adjusted EBIT was $247.0 million compared with $254.9 million in the prior-year period. The decline was due to lower gross profit, partially offset by higher earnings from the ART joint venture. Adjusted EBIT margin of 16.3 percent increased 20 basis points compared with the prior-year period. Grace Catalysts Technologies Sales down 11.5 percent; segment operating income down 6.5 percent Second quarter sales for the Catalysts Technologies operating segment, which includes specialty catalysts and additives for refinery, plastics and other chemical process applications, were $290.9 million, a decrease of 11.5 percent compared with the prior-year quarter. The decrease primarily was due to lower pricing (-9.4 percent), lower sales volumes (-1.5 percent) and unfavorable currency translation (-0.6 percent). The decrease in pricing was attributable to lower rare earth surcharges. The decrease in sales volumes was primarily due to the scheduled conclusion of a multi-year toll manufacturing contract for a polyolefin catalyst customer, partially offset by higher chemical catalyst sales volumes. Refinery catalyst sales volumes were unchanged. Segment gross margin was 42.0 percent, an increase of 160 basis points compared with the prior-year quarter. The increase in gross margin primarily was due to lower raw material and manufacturing costs which more than offset lower pricing and sales volumes. Segment operating income was $93.8 million compared with $100.3 million in the prior-year quarter, a 6.5 percent decrease primarily due to lower gross profit, partially offset by higher earnings from the ART joint venture. Segment operating margin was 32.2 percent, an increase of 170 basis points compared with the prior-year quarter. In March 2013, Grace announced a 10 percent increase to the base prices of its refining catalysts, as contract terms allow. The company undertook this pricing initiative with the objective of increasing the returns in its refining catalyst business to support continued investments in new product development, technical service and manufacturing capability. During the second quarter, Grace achieved certain of its objectives for this initiative, but the overall results were well below expectations. Grace has lost about $60 million in annualized sales volumes due to industry response to the pricing initiative, significantly greater than was forecast. The company will continue to pursue the announced base price increases as industry conditions allow, although significant benefits are not expected until 2014. In addition, Grace is announcing that it will permanently close its 35,000 metric ton silica sol refining catalyst manufacturing capacity in the 2013 third quarter. Silica sol catalysts have been in use since the late 1970s and are at the end of their technical and economic life. Grace's current silica sol customers, who represent about 1% of total refining catalyst sales, will be transitioned to Grace's industry-leading alumina-based technology. Grace expects to record a non-cash charge of $3-$4 million during the third quarter related to the net book value of its silica sol manufacturing assets. Grace Materials Technologies Sales up 2.0 percent; segment operating income down 3.4 percent Second quarter sales for the Materials Technologies operating segment, which includes engineered materials for consumer, industrial, coatings and pharmaceutical applications, and packaging technologies, were $228.7 million, an increase of 2.0 percent compared with the prior-year quarter. The increase was due to improved pricing (+2.5 percent) and higher sales volumes (+1.8 percent), which offset unfavorable currency translation (- 2.3 percent). Sales in emerging regions increased 4.5 percent compared with the prior-year quarter due to strong growth in emerging Asia. Sales in advanced regions increased 0.2 percent compared with the prior- year quarter. Sales of packaging technologies products, particularly can sealants, were unfavorably impacted by lower demand for canned beverages due to wet weather in North America. Segment gross margin was 33.7 percent, an increase of 20 basis points compared with the prior-year quarter. Gross margin for the first half of the year was on-target at over 34 percent. Segment operating income was $44.8 million compared with $46.4 million in the prior-year quarter, a 3.4 percent decrease primarily due to the timing of certain annual operating expenses and unfavorable currency costs. Segment operating margin was 19.6 percent, a decrease of 110 basis points compared with the prior- year quarter. Segment operating margin for the first half of the year was on-target at over 20 percent. Grace Construction Products Sales up 3.4 percent; segment operating income up 27.6 percent Second quarter sales for the Construction Products operating segment, which includes Specialty Construction Chemicals (SCC) products and Specialty Building Materials (SBM) products used in commercial, infrastructure and residential construction, were $283.2 million compared with $273.8 million in the prior-year quarter. The sales increase was due to higher sales volumes (+3.6 percent) and improved pricing (+1.8 percent), which more than offset unfavorable currency translation (-2.0 percent). Sales in the emerging regions, which represented 35.9 percent of sales, increased 11.5 percent primarily due to strong sales in emerging Asia. Sales in North America, which represented approximately 40 percent of sales, were unchanged. Western Europe, which represented approximately 14 percent of sales, declined 4.1 percent compared with the prior-year quarter. Across all regions, sales of SCC products increased 1.4% and sales of SBM products increased 8.4%. Segment gross margin of 36.8 percent improved 170 basis points compared with the prior-year quarter. The increase in gross margin primarily was due to improved pricing and higher sales volumes. Segment operating income was $45.3 million compared with $35.5 million for the prior-year quarter, a 27.6 percent increase primarily due to higher gross margin and lower operating expenses. Segment operating margin improved to 16.0 percent, an increase of 300 basis points compared with the prior-year quarter. Other Expenses Total corporate expenses were $23.7 million for the second quarter, an increase of approximately $2 million primarily due to the timing of certain expenses in 2012 and 2013. Defined benefit pension expense for the second quarter was $18.1 million compared with $16.8 million for the prior-year quarter. Interest expense was $10.9 million for the second quarter compared with $11.3 million for the prior-year quarter. The annualized weighted average interest rate on pre-petition obligations for the second quarter was 3.5 percent. Income Taxes Income taxes were recorded at a global effective tax rate of approximately 34 percent before considering the effects of certain non-deductible Chapter 11 expenses, changes in uncertain tax positions and other discrete adjustments. Grace generally has not had to pay U.S. Federal income taxes in cash in recent years since available tax deductions and credits have fully offset U.S. taxable income. Grace expects to generate significant U.S. Federal net operating losses upon emergence from bankruptcy. Grace generally does pay cash taxes in foreign jurisdictions and in a limited number of states. Income taxes paid in cash, net of refunds, were $26.9 million during the six months of 2013, or approximately 13 percent of income before income taxes. Cash Flow Net cash provided by operating activities for the first six months of 2013 was $170.3 million compared with $119.7 million in the prior-year period. The increase primarily resulted from lower accelerated defined benefit pension plan contributions and improved working capital performance. Adjusted Free Cash Flow was $157.0 million for the six months of 2013 compared with $146.6 million in the prior-year period. The year-over-year increase primarily was due to improved working capital performance. Pension Accounting Change Grace has elected to change its method of accounting for deferred actuarial gains and losses relating to its global defined benefit pension plans to a more preferable method under U.S. generally accepted accounting principles (GAAP). This accounting method, referred to as mark-to-market accounting, will be adopted in the 2013 fourth quarter and will be retrospectively applied to the company's financial results for all periods to be presented in its annual report on Form 10-K for the year ended December 31, 2013. This change will not affect 2013 third quarter results when initially reported. Under this new method of accounting, the company expects its 2013 defined benefit pension expense to be lower than under the current accounting method by approximately $45 million (before the effects of the annual mark-to-market adjustment in the fourth quarter) due to the elimination of the amortization of deferred gains and losses. The annual fourth quarter mark-to-market adjustment will be excluded from the company's non-GAAP Adjusted EBIT earnings measure. Grace believes that the mark-to-market accounting method is preferable as it better aligns the economics of the defined benefit pension plans with their accounting measures, eliminates delays in recognizing gains and losses within operating results, and improves transparency within Grace's operating results by immediately recognizing the effects of economic and interest rate trends on plan investments and assumptions in the year these gains and losses are actually incurred. 2013 Outlook As of July 25, 2013, Grace expects 2013 Adjusted EBIT to be in the range of $560 million to $570 million, and Adjusted EBITDA to be in the range of $685 million to $695 million. The following updated assumptions are components of Grace's updated 2013 outlook: -- Consolidated sales of approximately $3.1 billion, including sales headwinds of approximately $130 million from lower rare earth surcharges and unfavorable currency translation. -- Lower sales in Catalysts Technologies primarily due to lower sales volumes and lower base pricing than previously expected, resulting in lower segment operating income of approximately $35 million. -- Lower pension expense of approximately $45 million resulting from the company's 2013 fourth quarter adoption of mark-to-market pension accounting, Chapter 11 Proceedings On April 2, 2001, Grace and 61 of its United States subsidiaries and affiliates, including its primary U.S. operating subsidiary, W. R. Grace & Co.-Conn., filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware in order to resolve Grace's asbestos-related liabilities. On January 31, 2011, the Bankruptcy Court issued an order confirming Grace's Joint Plan of Reorganization. On January 31, 2012, the United States District Court issued an order affirming the Joint Plan, which was reaffirmed on June 11, 2012, following a motion for reconsideration. Four parties have appeals pending before the U.S. Court of Appeals for the Third Circuit. Oral arguments for these appeals were heard by a Third Circuit panel of judges on June 17, 2013. The timing of Grace's emergence from Chapter 11 will depend on a favorable ruling by the Third Circuit court and the satisfaction or waiver of the remaining conditions set forth in the Joint Plan. The Joint Plan sets forth how all pre-petition claims and demands against Grace will be resolved. See Grace's most recent periodic reports filed with the SEC for a detailed description of the Joint Plan. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. Roger Frankel serves as legal representative for victims of asbestos exposure who may file claims against W.R. Grace. Mr. Frankel, a partner at Orrick Herrington & Sutcliffe LLP, replaces David Austern, who was appointed to that role in 2004. Mr. Frankel has served as legal counsel for Mr. Austern who passed away in May 2013. Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. W.R. Grace obtained confirmation of a plan co-proposed with the Official Committee of Asbestos Personal Injury Claimants, the Official Committee of Equity Security Holders, and the Asbestos Future Claimants Representative. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. Implementation of the Plan has been held up by appeals in District Court from various parties, including a group of prepetition bank lenders and the Official Committee of Unsecured Creditors. District Judge Ronald Buckwalter on Jan. 31, 2012, entered an order affirming the bankruptcy court's confirmation of the Plan. Bankruptcy Judge Judith Fitzgerald had approved the Plan on Jan. 31, 2011. The plan can't be implemented because pre-bankruptcy secured bank lenders filed an appeal currently pending in the U.S. Court of Appeals in Philadelphia. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). WALTER ENERGY: Liquidity Concern Cues Moody's to Cut CFR to Caa1 ---------------------------------------------------------------- Moody's Investors Service downgraded Walter Energy Inc.'s long- term ratings, including the Corporate Family Rating to Caa1 from B2, and affirmed the short-term liquidity rating at SGL-4. The downgrade was prompted by continued deterioration in market fundamentals for metallurgical coal, increasing evidence that the market will remain oversupplied for at least several quarters, and potential liquidity concerns in such a scenario. These market- related factors outweigh the positive steps taken recently by the company to idle high-cost production, lower costs at key mines, and improve financial flexibility. The rating outlook is stable. "The recent amendment to the company's credit agreement alleviates near-term covenant compliance issues, but its structure prevents the company from using most of its revolving credit commitment without prompting additional lender negotiations and in light of recent worsening in market conditions the effective liquidity cushion is not sufficient to maintain the existing ratings," said Ben Nelson, Moody's Assistant Vice President and lead analyst for Walter Energy. Issuer: Walter Energy, Inc. Corporate Family Rating, Downgraded to Caa1 from B2; Probability of Default Rating, Downgraded to Caa1-PD from B2-PD; Speculative Grade Liquidity Rating, Affirmed SGL-4; $375 million Senior Secured Revolving Credit Facility due 2016, Downgraded to B2 (LGD3 31%) from Ba3; $657 million Senior Secured Term Loan A due 2016, Downgraded to B2 (LGD3 31%) from Ba3; $978 million Senior Secured Term Loan B due 2018, Downgraded to B2 (LGD3 31%) from Ba3; $500 million Senior Unsecured Notes due 2020, Downgraded to Caa2 (LGD5 83%) from B3; $450 million Senior Unsecured Notes due 2021, Downgraded to Caa2 (LGD5 83%) from B3; Outlook, Stable Moody's expects the metallurgical coal industry will remain weak in the near-term following substantive deterioration in recent months. Benchmark pricing for low-volatility hard coking coal have fallen dramatically to $145/tonne for third quarter deliveries from $172/tonne for second quarter deliveries. While some domestic and international producers have announced production cuts, the net impact on the global market is modest and the anticipated supply/demand balance is unlikely to support meaningful price improvement in the near-term. Domestic met coal producers reliant on exports remain disadvantaged in the global seaborne market and, in part due to debt-funded acquisitions near the peak of the market in early 2011, remain particularly vulnerable to the extending trough cycle environment. Moody's believes that the structure of the credit agreement amendment leaves the company with only a modest effective liquidity cushion in an environment in which it will be difficult to avoid cash burn. Moody's views the company as capable of generating $100-$250 million of EBITDA in the current pricing environment with well over $300 million required to fund cash interest and maintenance capital. The company may be able to avoid cash burn over the next few quarters by managing its cost structure and reducing high inventories in western Canada, but fundamentally an improvement in pricing is necessary to avoid cash burn. Lenders have imposed through the amendment a minimum liquidity requirement of $225 million that reduces the company's revolver availability to about $99 million from $324 million which, combined with $236 million of balance sheet cash, results in an effective liquidity cushion of $335 million on a pro forma basis at March 31, 2013. This effective liquidity cushion is quite modest relative to Moody's view of the company's operating prospects and compared to many of its rated peers. In addition, notwithstanding a covenant holiday that assuages near-term concerns about covenant violations, compliance could become an issue once again upon the resumption of testing in the second quarter of 2014. These factors drive the negative rating actions. Ratings Rationale: The Caa1 CFR reflects the difficulties of operating in an extending trough cycle environment with a highly-leveraged balance sheet and a modest effective liquidity cushion. The rating is also constrained by reliance on a few key mines for the majority of earnings and cash flow and very weak credit measures. The value of the company's metallurgical coal assets in Alabama, potential to generate strong earnings and cash flow on a mid-cycle basis, and recent steps taken to improve liquidity support the rating. The stable outlook reflects the view that market conditions will not worsen meaningfully. Moody's could downgrade the rating with further deterioration in market conditions, expectations for more substantive erosion in the company's cash position, or heightened concerns related to an upcoming loan amortization in 2015. Moody's could upgrade the rating with an improved liquidity position and evidence of positive momentum in the met coal market. The principal methodology used in this rating was the Global Mining Industry Methodology published in May 2009. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Walter Energy, Inc. is primarily a metallurgical coal producer with additional operations in metallurgical coke, steam and industrial coal, and natural gas. Headquartered in Birmingham, Alabama, the company generated $2.3 billion in revenue for the twelve months ended March 31, 2013. WOODSIDE HOMES: Fitch Assigns 'B' Issuer Default Rating ------------------------------------------------------- Fitch Ratings has assigned the following rating for Woodside Homes Company, LLC: -- Issuer Default Rating (IDR) 'B'. The Rating Outlook is Stable. Additionally, Fitch also expects to assign a 'B/RR4' rating to Woodside's proposed issuance of $200 million senior unsecured notes due 2021. Proceeds from the notes issuance will be used to redeem all of the company's $127.7 million 9.75% senior secured notes due 2017. Key Rating Drivers The ratings and Outlook for Woodside reflect the company's execution of its business model in the current housing environment, improving financial and operating results, customer and price point diversity, adequate liquidity position, and the cyclically improving industry outlook for 2013 and 2014. While the company has an established presence in Arizona, Nevada, Texas and Utah, the company's operations remain heavily weighted to California, albeit spread out through a variety of submarkets. Woodside emerged from bankruptcy at the end of 2009 with a new senior management team and successfully recapitalized its balance sheet during the third quarter of 2012. The company raised $127.7 million of debt and $75 million of equity last year. Proceeds from these transactions were used in part to repay existing debt and to fund the company's land and development spending. The Industry The housing recovery should advance this year and next with a continued, below-trend-line, cyclical rise off a very low bottom. In a slowly growing economy with somewhat diminished distressed home sales competition, less-competitive rental cost alternatives, local permitting delays, labor imbalances, developed lots less readily available, and new home inventories near historically low levels, 2013 single-family starts should improve about 18%, while new home sales increase 24% and existing home sales grow 7.5%. Multifamily starts should gain almost 25%. For 2014, total housing starts are projected to expand 18% to 1.1 million as single-family starts advance 22% and multifamily starts gain 9%. New home sales should improve 24%, while existing home growth should moderate in volume to 5%. However, there are still challenges facing the housing market that are likely continue to moderate the early stages of this recovery. Realized demand will continue to be affected by some narrowing of affordability, relatively widespread negative equity, challenging mortgage qualification standards, lot shortages, materials and labor costs pressuring home prices, and excess supply due to foreclosures in certain markets. As Fitch has noted in the past, recovery will occur in fits and starts. Liquidity Woodside currently has adequate liquidity, with $44.4 million of unrestricted cash on the balance sheet as of March 31, 2013. On a proforma basis assuming the company completes the proposed $200 million offering and redeems its existing $127.7millionsenior secured notes, unrestricted cash as of March 31, 2013 would have been $105.5 million. The company also currently expects to enter into a new $45 million 3-year secured revolving credit facility (with an accordion feature to increase the facility up to $100 million) to support working capital needs and enhance its liquidity position. Fitch believes that the proposed notes issuance and the new revolving credit facility provide the company with adequate liquidity to increase its land and development spending this year. Fitch currently projects the company will be cash flow negative by approximately $100 million to $150 million during 2013. Management Strategy Following its emergence from bankruptcy, the management team focused on the company's core homebuilding operations and transitioned from a national builder to a western regional homebuilder, with operations in California, Nevada, Arizona, Utah and Texas. As part of this process, the company sold projects and land holdings in 5 Eastern Divisions in the states of Florida and Minnesota and in metropolitan Washington DC. Woodside has a relatively heavy exposure to California, albeit spread out through a variety of submarkets. The state of California represented roughly 55% of latest-twelve-month closings ending March 31, 2013. Fitch expects the reliance on California will remain material in the near to intermediate term, although its significance is expected to diminish slightly as the company's land acquisitions of 2012 and purchases in 2013 and 2014 are projected to be weighted more heavily to markets outside California. As of March 31, 2013, Woodside controlled 6,867 lots, of which 5,547 (80.8%) were owned and 1,320 (19.2%) were controlled through options. On a trailing twelve-month basis, Woodside controlled 5.1 years of land and owned roughly 4.1 years of land. Improving Financial Results The company's financial results and credit metrics improved in 2012 relative to 2011 levels. Woodside reported a 43.9% increase in home closings during 2012 and homebuilding revenues grew 44.4% compared to 2011. Home closings for the first half of 2013 grew 28.6% while net sales (orders) improved 14.3% compared with the first half of 2012. The company also reported improvement in net sales year-over-year in each of the last eight quarters, contributing to a 29.1% increase in homes in backlog at June 30, 2013 compared with year earlier levels. Leverage as measured by debt to EBITDA (calculated by Fitch) improved to 4.7x at the end of 2012 from 10.4x at year-end 2011 while interest coverage advanced to 2.3x during fiscal 2012 from 0.9x during fiscal 2011. Fitch expects these credit metrics will improve slightly during 2013. Rating Sensitivities Future ratings and Outlooks will be influenced by broad housing market trends as well as company specific activity, such as trends in land and development spending, general inventory levels, speculative inventory activity (including the impact of high cancellation rates on such activity), gross and net new order activity, debt levels, free cash flow trends and uses, and the company's cash position. The Outlook or rating for Woodside could be raised in the next 12 months if the company performs in line with Fitch's expectations (including leverage in the 4.0x-4.5x range and interest coverage at or above 3x), the various housing metrics are trending towards our macro forecast and the company has liquidity (combination of cash and revolver availability) of at least $75 million. Negative rating actions could occur if the recovery in housing dissipates; revenues fall in the 15%-20% range; and Woodside maintains an overly aggressive land and development spending program. This could lead to consistent and significant negative quarterly cash flow from operations and meaningfully diminished liquidity position (below $40 million). The 'RR4' Recovery Rating (RR) on the company's unsecured debt indicates average recovery prospects for holders of these debt issues. Woodside's exposure to claims made pursuant to performance bonds and joint venture debt and the possibility that part of these contingent liabilities would have a claim against the company's assets were considered in determining the recovery for the unsecured debt holders. Fitch applied a liquidation value analysis for these RRs. WORLD IMPORTS: Can Use Cash Collateral Thru Aug. 2 -------------------------------------------------- The Honorable Stephen Raslavich entered a second interim order approving a cash collateral use stipulation by World Imports, Ltd, et al., with PNC Bank, National Association, and PNC Equipment Finance, LLC. Under the stipulation, the Banks consent to the Debtors' use of the cash collateral to pay approved expenses set forth in a prepared budget through Aug. 2, 2013 at 5:00 p.m. The Debtors may exceed the approved expenses in the budget by an amount not to exceed, on a weekly basis, either (a) 5% of the aggregate amount of Approved Expense for that week, or (b) as otherwise agreed to among the Debtors and Banks. As adequate protection for any diminution in the value of the Prepetition Liens in favor of the Banks, the Banks are granted replacement liens on and security interests in all of the Debtors' property. A copy of the Budget is available for free at: http://bankrupt.com/misc/WORLDIMPORTS_BudgettruAug16.pdf A further hearing on the Cash Collateral Use will be held on July 31, 2013. John E. Kaskey, Esq., at BRAVERMAN KASKEY PC, serves as counsel for World Imports, Ltd., et al. Matthew E. Tashman, Esq., at REED SMITH LLP, serves as counsel for the Banks. World Imports filed a Chapter 11 petition (Bankr. E.D. Pa. Case No. 13-15929) on July 3, 2013, in Philadelphia. John E. Kaskey, Esq., at Braverman Kaskey, P.C., in Philadelphia, serves as counsel. The Debtor estimated assets and debts of $10 million to $50 million. WORLDCOM INC: Must Pay Federal Excise Taxes, 2nd Cir. Says ---------------------------------------------------------- INTERNAL REVENUE SERVICE, Appellant, v. WORLDCOM, INC., Debtor- Appellee, Docket No. 12-803 (2nd Cir.), calls on the U.S. Court of Appeals for the Second Circuit to decide if the bankrupt telecommunications company WorldCom must pay federal excise taxes on the purchase of a telecommunications service that connected people using dial-up modems to the Internet. Appellant, the Internal Revenue Service, appeals from a judgment of the United States District Court for the Southern District of New York (Forrest, J.), which upheld the decision of the Bankruptcy Court (Gonzalez, C.J.) to grant the objection of the reorganized debtors to the IRS's proof of claim for taxes owed and the Debtors' refund motion for the taxes WorldCom had already paid. In the late 1990s, WorldCom purchased a service from local telephone companies called "central-office-based remote access," or "COBRA," that gave people the ability to use their modems to connect to WorldCom's network (and the Internet) over their regular telephone line. The tax code adds a 3 percent excise tax to the purchase of a "local telephone service." A "local telephone service" is any service that provides "access to a local telephone system, and the privilege of telephonic quality communication with substantially all persons having telephone or radio telephone stations constituting a part of such local telephone system." On appeal, the IRS contends that the district and bankruptcy courts erred in concluding that COBRA was not taxable as a local telephone service. The Second Circuit held that WorldCom purchased a "local telephone service" when it paid for COBRA services, and that WorldCom must therefore pay federal communication excise taxes on those transactions. Accordingly, the Second Circuit reversed the judgment of the district court and remanded the case for further proceedings consistent with its Opinion. After the bankruptcy court confirmed the plan for WorldCom, the IRS filed a proof of claim requesting that the Debtors pay $16,276,440 in excise taxes on WorldCom's purchase of COBRA services. The Debtors objected to the IRS's claim and additionally moved for a refund of $38,297,513 in excise taxes WorldCom had already paid on COBRA. Alfredo R. Perez, Esq., at Weil, Gotshal & Manges LLP, in Houston, Texas, represents WorldCom in the appeal. A copy of the July 22, 2013 decision by Second Circuit Judges Amalya Lyle Kearse Kearse and Robert Katzmann, and the Hon. Jed S. Rakoff, of the U.S. District Court for the Southern District of New York, sitting by designation, is available at http://is.gd/2iRsPVfrom Leagle.com. Judge Katzmann wrote the decision. WorldCom, Inc., a Clinton, Mississippi-based global communications company, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 02-13532) on July 21, 2002. On March 31, 2002, WorldCom disclosed $103,803,000,000 in assets and $45,897,000,000 in debts. The Debtors were represented by Weil, Gotshal & Manges LLP. The Bankruptcy Court confirmed WorldCom's Plan on Oct. 31, 2003, and on April 20, 2004, the Company formally emerged from Chapter 11 protection as MCI, Inc. On Jan. 6, 2006, MCI merged with Verizon Communications, Inc. MCI is now known as Verizon Business, a unit of Verizon Communications. YARWAY CORP: Wants Deadline to Remove Actions Moved Until Nov. 18 ----------------------------------------------------------------- Yarway Corporation asks the U.S. Bankruptcy Court for the District of Delaware to extend until Nov. 18, 2013, its time to file notices of removal of claims and causes of action. The Debtor's deadline to file notices to remove claims or causes of action was scheduled to expire on July 22. The Debtor is a defendant in more than 5,000 asbestos-related lawsuits commenced prior to the Petition Date by plaintiffs seeking damages for personal injuries purportedly caused by exposure to asbestos-containing products allegedly manufactured, distributed and/or sold by the Debtor. An Aug. 20, 2013, hearing at 1 p.m., has been set. Objections, if any, are due Aug. 5, at 4 p.m. About Yarway Corporation Yarway Corporation sought Chapter 11 protection (Bankr. D. Del. Case No. 13-11025) on April 22, 2013, to deal with claims arising from asbestos containing products it allegedly sold as early as the 1920s. Yarway was founded in 1908 by Robert Yarnall and Bernard Waring as the Simplex Engineering Company and originally manufactured pipe clamps, steam traps, valves and controls. Based in Pennsylvania, Yarway was a privately-owned company until 1986 when KeyStone International, Inc. bought equity in the company. Yarway became a unit of Tyco International Ltd. when Tyco purchased KeyStone in 1997. Yarway's asbestos-related liabilities derive from Yarway's (i) purported use of asbestos-containing gaskets and packing, manufactured by others, in its production of steam valves and traps from the 1920s to 1970s, and (ii) alleged manufacture of expansion joint packing that was allegedly made up of a compound of Teflon and asbestos from the 1940s to the 1970s. Over the past five years, about 10,021 new asbestos claims have been asserted against Yarway, including 1,014 in Yarway's 2013 fiscal year ending March 31, 2013. The Debtor estimated assets and debts in excess of $100 million as of the Chapter 11 filing. Attorneys at Cole, Schotz, Meisel, Forman & Leonard, P.A. and Sidley Austin LLP serve as the Debtor's counsel in the Chapter 11 case. Logan and Co. is the claims and notice agent. On May 6, 2013, the U.S. Trustee for Region 3, appointed an official committee of asbestos personal injury claimants. The Committee tapped Elihu Inselbuch, Esq. at Caplin & Drysdale, Chartered, as lead bankruptcy counsel. YONKERS RACING: Moody's Assigns 'Ba3' Rating to New $245MM Loan --------------------------------------------------------------- Moody's Investors Service assigned a Ba3 to Yonkers Racing Corporation's proposed $245 million 6-year 1st lien term, and a B3 to the company's proposed $70 million 7-year 2nd lien term loan. Proceeds from the proposed credit facilities will be used to refinance Yonkers' existing $302.5 million 11 3/8% 2nd lien notes due 2016 in full. Moody's also affirmed Yonkers' B1 Corporate Family Rating and B1-PD Probability of Default Rating. The rating outlook is stable. The affirmation of Yonkers' B1 Corporate Family Rating considers that the proposed refinancing could substantially lower the company's interest costs and have a significant positive benefit to Yonkers' free cash flow. The refinancing is aimed at taking out high cost 2nd lien notes due 2016 with lower cost bank debt. At the same time, the refinancing will extend the Yonkers nearest debt maturity three years to 2019 when the proposed 1st lien term loan matures. Yonkers' existing and currently undrawn $10 million revolver (not-rated) that expires in 2014 will remain in effect. The affirmation also considers that New York Governor Andrew Cuomo unveiled gaming legislation on 19 June that would permit four new casinos in New York State, but none in the New York City metropolitan area -- Yonkers Racing's key market -- for the first seven years. That would leave downstate New York largely to Yonkers Racing and Resorts World Casino in Queens. The New York City area constitutes the largest regional gaming market in the US in terms of number of adults per gaming position. Announcement of the gaming legislation and constitutional referendum came as Yonkers Racing is seeing an upswing in gaming revenues at its Empire City Casino following a $52 million expansion earlier this year. It is also benefiting from the overall growth in the New York metro area gaming market since Genting Berhad's (Baa1 stable) Resorts World Casino opened in the New York borough of Queens in fall 2011. The Ba3 rating assigned to Yonkers' proposed $245 million 1st lien term loan, one notch higher than the company's Corporate Family Rating, considers the modest credit support it receives from the proposed $70 million of proposed second lien debt in the pro forma capital structure. The B3 rating on the proposed $70 million 2nd lien notes -- two notches lower than the company's Corporate Family Rating, reflects the significant amount of senior secured debt ahead of it in the pro forma capital structure. Ratings affirmed: Corporate Family Rating, at B1 Probability of Default Rating, at B1-PD New ratings assigned: $245 million 6-year 1st lien term, at Ba3 (LGD 3, 37%) $70 million 7-year 2nd lien term loan, at B3 (LGD 5, 87%) Existing rating affirmed and to be withdrawn upon closing of proposed refinancing: $302.5 mil 11 3/8% 2nd lien notes 2016, at B1 (LGD 4, 51%) Ratings Rationale: Yonkers' B1 Corporate Family Rating reflects its small size, single property concentration risk, and high leverage. Debt/EBITDA for the latest 12-month period ended June 30, 2013 was about 5.5 times. Positive ratings consideration is given to the favorable demographics of Yonkers' primary market area that has contributed significantly to the company's high EBITDA margins relative to other single gaming asset operators in the northeast US. Empire City is one of only two properties in the New York City market that are authorized to operate a casino under New York State law. The stable rating outlook also incorporates Moody's expectation of further improvement in Yonkers' monthly gaming revenue, a statistic that Moody's sees as a leading indicator of company profitability. Since the first anniversary of Resorts World's full opening -- December 2012 -- Yonkers' comparable year-over-year monthly gaming revenue, for the most part, has grown consistently. In the months of April 2013, May 2013 and June 2013, the company's comparable year-over-year monthly gaming revenue grew 5.1%, 9.4% and 3.2%, respectively. The stable rating outlook also considers Moody's view that Yonkers will be able to reduce its debt/EBITDA to at/below 5.25 times by the end of fiscal 2014, a level Moody's believes is more suitable for Yonkers current rating given the company's asset characteristics. The company's gaming floor expansion, completed in January 2013, allowed the company to re-deploy about 400 gaming machines, bringing the total gaming machine count to 5,372, and the company continues to add other amenities that Moody's expects will improve its revenues and earnings. Rating improvement is limited at this time given Yonkers' small scale and limited diversification. Ratings could improve if Yonkers' operating performance continues to demonstrate further resilience to competition from the much larger Resorts World casino, and can achieve and maintain EBIT/interest expense of more than 2.5 times and debt/EBITDA below 3.5 times. Ratings could be lowered if it appears that Yonkers, for any reason, will not be able to reduce and maintain debt/EBITDA to at/or below 5.25 times. The principal methodology used in this rating was the Global Gaming 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. Yonkers owns and operates a gaming and entertainment facility comprised of Empire City Casino -- a 176,000 square-foot casino featuring 5,372 gaming positions (including slot machines and electronic table games), and Yonkers Raceway -- a harness race track featuring pari-mutuel wagering on live and simulcast horse races. The facility, which is located in Yonkers, New York, is owned and operated by the Rooney family of Pittsburgh. Yonkers is a private company and does not disclose detailed financial information to the public. The company currently generates annual net revenue of about $200 million. YONKERS RACING: S&P Rates $245MM First Lien Loan 'BB-' ------------------------------------------------------ Standard & Poor's Ratings Services affirmed all ratings on New York-based gaming operator Yonkers Racing Corp., including the 'B+' corporate credit rating. The outlook is positive. At the same time, S&P assigned the company's proposed $10 million first-out revolving credit facility due 2018 an issue-level rating of 'BB', with a recovery rating of '1', indicating S&P's expectation for very high (90% to 100%) recovery in the event of a payment default. In addition, S&P assigned the company's proposed $245 million first-lien term loan due 2019 its 'BB-' issue-level rating, with a recovery rating is '2', indicating S&P's expectation for substantial (70% to 90%) recovery in the event of a payment default. S&P also assigned the proposed $70 million second-lien term loan due 2020 its 'B-' issue-level rating, with a recovery rating of '6', indicating its expectation for negligible (0% to 10%) recovery in a payment default. S&P expects the company to use proceeds from the proposed term loans, along with cash on hand, to fully repay the $302.5 million senior notes due 2016, and to pay for fees and expenses. The 'B+' corporate credit rating reflects S&P's assessment of Yonkers' business risk profile as "weak," and its assessment of the company's financial risk profile as "aggressive," according to its criteria. "Our assessment of Yonkers business risk profile as weak reflects the company's reliance on a single property for cash flow generation, which we view as a risk given the increased vulnerability to event risk, regional economic weakness, and adverse changes to the competitive environment. Our assessment also reflects the stringent revenue allocation structure with New York State, which limits profitability, and the potential for increased competition in Yonkers' regional market. We believe these risks are mitigated by our view that the New York metropolitan area market is deep enough to support the current capacity," S&P said. The positive outlook reflects S&P's expectation that, over the next few years, modest EBITDA improvement and debt reduction will result in adjusted leverage improving to about 4.5x, a level S&P views as in line with a one-notch higher rating for Yonkers. "We could raise the rating by one notch if we believe the company can maintain adjusted leverage of about 4.5x or below over the long run and interest coverage over 2x. This would likely be a function of continued modest EBITDA growth, driven by increased visitation and customer spend following the expansion efforts, and from modest debt reduction through required term loan amortization and cash flow sweeps. Ratings upside is limited to one notch because of Yonkers' limited diversity as an operator of a single property and because of New York State's stringent revenue allocation structure, which limits profitability, and since we do not expect material deleveraging over the next few years," S&P said. S&P could consider revising the outlook to stable or lowering the ratings if EBITDA were to meaningfully decline and remain at a level that would result in adjusted leverage remaining above 5.5x and interest coverage remaining in the mid-1x area. A meaningful decline in EBITDA would likely be a function of Resorts World Casino competitively affecting Yonkers' operations. YRC WORLDWIDE: Plans to Offer $350 Million Worth of Securities -------------------------------------------------------------- YRC Worldwide Inc. said it may sell up to an aggregate of $350,000,000 of any combination of its debt securities, warrants to purchase debt securities, shares of common stock, warrants to purchase common stock, shares of preferred stock, depositary shares, purchase contracts, units, subscription rights or any combination of these securities. The Company's common stock is traded on the Nasdaq Global Select Market under the symbol "YRCW." A copy of the Form S-3 prospectus is available for free at http://is.gd/TGglq7 About YRC Worldwide Headquartered in Overland Park, Kan., YRC Worldwide Inc. (NASDAQ: YRCW) -- http://www.yrcw.com/-- is a holding company that offers its customers a wide range of transportation services. These services include global, national and regional transportation as well as logistics. After auditing the 2011 results, the Company's independent auditors expressed substantial doubt about the Company's ability to continue as a going concern. KPMG LLP, in Kansas City, Missouri, noted that the Company has experienced recurring net losses from continuing operations and operating cash flow deficits and forecasts that it will not be able to comply with certain debt covenants through 2012. For the year ended Dec. 31, 2012, the Company incurred a net loss of $136.5 million on $4.85 billion of operating revenue, as compared with a net loss of $354.4 million on $4.86 billion of operating revenue during the prior year. The Company's balance sheet at March 31, 2013, showed $2.20 billion in total assets, $2.84 billion in total liabilities and a $642.6 million total shareholders' deficit. * * * As reported in the Aug. 2, 2011 edition of the TCR, Moody's Investors Service revised YRC Worldwide Inc.'s Probability of Default Rating ("PDR") to Caa2\LD ("Limited Default") from Caa3 in recognition of the agreed debt restructuring which will result in losses for certain existing debt holders. In a related action Moody's has raised YRCW's Corporate Family Rating to Caa3 from Ca to reflect modest but critical improvements in the company's credit profile that should result from its recently-completed financial restructuring. The positioning of YRCW's PDR at Caa2\LD reflects the completion of an offer to exchange a substantial majority of the company's outstanding credit facility debt for new senior secured credit facilities, convertible unsecured notes, and preferred equity, which was completed on July 22, 2011. In August 2011, Standard & Poor's Ratings Services raised its corporate credit rating on YRC Worldwide Inc. to 'CCC' from 'SD' (selective default), after YRC completed a financial restructuring. Outlook is stable. "The ratings on Overland Park, Kan.-based YRCW reflect its participation in the competitive, capital-intensive, and cyclical trucking industry," said Ms. Ogbara, "as well as its meaningful off-balance-sheet contingent obligations related to multiemployer pension plans." "YRCW's substantial market position in the less- than-truckload (LTL) sector, which has fairly high barriers to entry, partially offsets these risk factors. We categorize YRCW's business profile as vulnerable, financial profile as highly leveraged, and liquidity as less than adequate." * Biggest Banks Face Fed Restoring Barriers in Commodities ---------------------------------------------------------- Michael J. Moore, writing for Bloomberg News, reported that the Federal Reserve's review of its decision to let banks store, transport and trade raw materials signals a potential rebuilding of the wall between banking and commerce that legislation and rulemaking have eroded. According to the report, the central bank said July 19 that it's reviewing a decade-old decision that physical commodities are "complementary" to banking, allowing lenders such as Citigroup Inc. and JPMorgan Chase & Co. to operate in both industries. Goldman Sachs Group Inc. and Morgan Stanley may be less at risk from the review as some businesses owned before the firms became bank holding companies in 2008 are grandfathered. The move into physical commodities exposed the biggest banks to additional risks and allegations of price manipulation, creating potential legal liabilities and threatening to damage their reputations, the report said. The shift also weakened the barrier between government-insured banks and other commerce established by the 1956 Bank Holding Company Act. "What the Fed has to do, what they are doing, is setting boundaries where the banks really will pull back into what their primary business is," Marty Mosby, an analyst at Guggenheim Securities LLC in Memphis, Tennessee, told Bloomberg. Regulators are "trying to re-envision how they should draw these boundaries. They got kind of blurred." The Senate Banking Committee's Subcommittee on Financial Institutions and Consumer Protection, led by Ohio Democrat Sherrod Brown, held a hearing on July 23 on banks' investments in physical commodities assets, the report further related. * Calif. Court Battle Sets Stage for Pension Reform Showdown ------------------------------------------------------------ Jim Christie, writing for Reuters, reported that California's third-largest city, San Jose, and its employee unions faced off in court over public pension reforms in a case that has major implications for other local governments across the state trying to rein in the costs of retirement benefits. According to the report, the lawsuit, led by San Jose's police union, shows how difficult it is for local governments to break benefit promises to current and past employees even when other public services are being cut to pay for them. San Jose's pension overhaul was promoted by Democratic Mayor Chuck Reed and approved by nearly 70 percent of voters in 2012 but city unions argue the move violates the rights of its members and is in breach of the California constitution, the report said. They want the court to block the measure from going into effect and to maintain the current pension plan. "If the unions prevail it will give local leaders elsewhere reason to pause. If Mayor Reed prevails, they may get even more ambitious in finding new ways to reduce pension outlays," Larry Gerston, a political science professor at San Jose State University, told the news agency. In opening remarks in court, Arthur Hartinger, a lawyer for the city of San Jose, said that the pension measure was necessary given the city's strained finances, the report related. "Retirement cost increases have gone through the roof," he said. * Calls For Policy Fix Grow As NY Rulings Limit Trustee Power ------------------------------------------------------------- Pete Brush of BankruptcyLaw360 reported that New York rulings that have sharply limited the ability of trustees to go after bankers, accountants and other corporate agents accused of exacerbating Ponzi schemes, bankruptcies and corporate meltdowns have led some attorneys to call for lawmakers to step in and expand trustees' power. According to the report, the Second Circuit's June decision stripping Irving H. Picard -- the federal trustee in the bankruptcy of Bernard L. Madoff's brokerage -- of the ability to target banks that some say aided the scheme marked yet another roadblock for victims seeking substantial recoveries. * CFTC Charges High-Speed Trader Under New Powers ------------------------------------------------- Scott Patterson and Jamila Trindle, writing for The Wall Street Journal, reported that U.S. and U.K. regulators accused a New Jersey high-speed trader of manipulating commodities markets in 2011, the latest sign of heightened global scrutiny of computerized trading across financial markets. According to the report, the Commodity Futures Trading Commission accused Panther Energy Trading LLC and its owner, Michael J. Coscia, of disrupting markets by improperly placing trades allegedly designed to lure other investors into buying and selling futures contracts tied to corn, oil and other commodities at bogus price levels. In a related action, the U.K. Financial Conduct Authority fined Mr. Coscia for alleged deliberate manipulation of commodities markets, the report said. The efforts mark a first for both regulators: The FCA took its initial action against a high-frequency trader, and the CFTC used new enforcement powers granted under the Dodd-Frank financial law to go after "disruptive practices" for the first time, the report noted. The CFTC levied a $1.4 million fine against Panther Energy and is requiring the company pay back another $1.4 million in profits from its trades to the exchanges it traded on and to the CFTC, the report related. The FCA fined Mr. Coscia $903,176, saying Mr. Coscia made a profit of $279,920 in a six-week period though an abusive trading strategy. * Dealmakers Focus on Quality Execution, PwC's M&A Outlook Reveals ------------------------------------------------------------------ The fundamentals for strong M&A activity remain in place despite a slowdown in U.S. merger and acquisition (M&A) activity in the first half of 2013, according to PwC US. Buyers remain extremely active in identifying, evaluating and competing to acquire assets in the market. Dealmakers are placing a premium on deal certainty, speed and agility to ensure successful deal outcomes that deliver long term value, according to PwC's U.S. mid-year M&A outlook, released today. In the first half of 2013, there were a total of 4,587 total transactions, representing $528 billion in disclosed deal value, according to data compiled by Thomson Reuters and analyzed by PwC. Accelerated deal flow in the final months of 2012, a constrained supply of assets for sale, and a lack of confidence in executing on transactions contributed to a drop in deal activity in the second quarter of 2013. As PwC expected in its 2012 year-end M&A outlook, the middle market continued to prop up activity, accounting for 28 percent of value through June 30, 2013. "Challenges in the M&A market are being driven by a lack of well- positioned assets for sale, not poor deal fundamentals," said Martyn Curragh, PwC's U.S. Deals Leader. "A shortage of quality assets and a growing list of willing acquirers dictate a need for confidence and greater preparation to execute, from deal strategy through integration. Greater competition is driving valuations and deal timelines, leaving some would-be acquirers to reflect on missed opportunities, and others with buyers' remorse for failure to capture deal value." According to PwC's 16th annual CEO Survey, CEOs are bullish with at least 75 percent expecting growth over the next year through both organic means and acquisitions. Nearly half of U.S. CEOs said they plan to do a deal in 2013, indicating that dealmaking remains top of mind for business leaders, however, less than one third of those U.S. CEOs seeking a deal completed one in the preceding 12 months. This shift in frequency -- and the pace of individual deal participants -- is one factor impacting how deals are being executed in today's increasingly competitive market. With readily available financing, corporate cash levels at $1.29 trillion, and strong equity markets, PwC expects the combination of these critical factors to support sustained deal activity through the remainder of 2013. "Corporates are seeking opportunities to grow with a strong focus on strategic fit, value creation, and execution certainty. Companies of all sizes, and across all industries and regions, are looking for the right synergies to provide long term growth," added PwC's Curragh. "In this slow growth environment, buyers are taking on an ownership mindset earlier in the process, with a focus on agility, speed and flawless execution. Those who are unable to adjust their strategies and integrate quickly may be left second guessing their decisions." Integration As stakeholders place greater pressure and emphasis on companies to deliver deal value, companies are focusing on a more thoughtful and comprehensive integration process to quickly deliver on their investment rationale. According to PwC, early capture of deal synergies and value, increasing the knowledge around an asset, and flexible, rapid execution of the integration plan is critical to maximizing the return on an investment. Divestitures Divestitures remain a key driver of M&A activity, making up 31 percent of disclosed deal value in the first half of 2013. However, according to PwC, changes in buyer expectation, shareholder pressure and evolving industry and regulatory considerations are among the factors impacting the level of preparation needed on both the buy and sell side for deal certainty. Companies that develop robust divestiture preparation processes are better positioned to successfully exit their businesses in a shorter time frame, avoid sale price erosion, minimize distractions and derive the desired value from the sale. Private Equity Private equity deals accounted for 20 percent of total deal value in the first half of 2013, representing a total of $103 billion in disclosed deal value. "Private equity firms are continuing to look at a range of opportunities to monetize their existing investments and are having success by preparing their portfolio companies to tap the debt and equity markets," said Tim Hartnett, PwC's Global and U.S. Private Equity leader. "At the same time, private equity players are looking to improve the performance and efficiencies of their portfolio companies' operations and gain greater industry knowledge to enhance longer term prospects." Industry Sectors Several sectors are ripe for deals, especially those where technology-driven convergence is a key driver and companies look to complete deals outside of their core competency. Notable sectors that continue to present opportunities include: -- Technology - While deal activity in the technology industry over the last several years has helped larger integrated companies build out platforms on new generation IT offerings -- such as social, mobile, analytics, and cloud -- there is a tremendous amount of opportunity to drive more acquisition of innovators to either establish or maintain leadership positions. As such, software transactions will likely continue to dominate volumes because of the importance of the shifts in cloud, mobile and needed security to businesses both inside and outside the technology industry. Private equity funds continue to play an active role and divestitures are expected to continue as hardware- centric technology players refocus on a software-centric future. The ongoing cloud/mobile convergence, coupled with record levels of cash, lend confidence that deal activity will likely rebound in the quarters to come. -- Health Industries - Health industry consolidation has increased more than 50 percent since 2009 and is expected to continue through 2014. As the nation prepares for implementation of major provisions of the Affordable Care Act, innovative healthcare partnerships can lead to improved efficiency and provide high- value care to discerning customers. In the pharmaceuticals industry, companies continue to acquire innovative technologies and products via licensing to supplement the R&D pipeline and diversify portfolios with new markets and products. Pharma companies are looking beyond BRIC nations into 'frontier markets' to seek growth and innovation. As companies complete spin off activity, PwC expects to see an uptick in pharma deal volume based on available assets. -- Financial Services - Financial services M&A will continue to face both uncertainty and opportunities in the second half of 2013 due to several factors including increased regulatory costs, depressed organic growth and the greater availability of attractive financing. However, M&A desire remains high among buyers, and there is increasing interest in quality financial services assets. Valuation gaps remain, and differences between buyer and seller perception of future profitability will likely continue to present a challenge. At the same time, deal activity in 2013 is expected to be driven by ongoing divestiture of non- core assets by major European institutions as well as restructuring activity as U.S. financial services companies comply with increased regulations, motivating businesses in the space to consider a range of transactions from asset sales to spinoffs. -- Retail & Consumer - Retail industry deal fundamentals remain solid in terms of corporate interest in accelerating growth and private equity funds availability. Challenges include availability of quality businesses for sale and mismatches between buyer and seller expectations around price. PwC is cautiously optimistic for the second half of 2013 given the recent pick up in businesses starting to come to market for sale and relatively positive trends in consumer sentiment and retail sales. For the balance of 2013, continued cross-border retail activity to access certain demographics in the global marketplace is anticipated. About PwC US PwC US helps organizations and individuals create the value they're looking for. It is a member of the PwC network of firms in 158 countries with more than 180,000 people. It provides assurance, tax and advisory services. * SEC Accuses Miami of Misleading Investors in Muni Bonds --------------------------------------------------------- Joshua Gallu & James Nash, writing for Bloomberg News, reported that the U.S. Securities and Exchange Commission accused the city of Miami and Michael Boudreaux, a former budget director, with securities fraud related to several municipal bond offerings about four years ago. According to the report, Florida's second-largest city and Boudreaux shifted money from a projects account to the general fund to mask budget gaps and win higher grades from ratings companies on three 2009 debt sales totaling $153.5 million, the SEC said on July 19. Boudreaux's lawyer said he's being made into a scapegoat. In 2010, the SEC began cracking down on state and local governments for not giving investors accurate information about their financial condition prior to bond sales, focusing on pension deficits, the report said. Since then, Illinois and New Jersey have both settled with the agency over such issues. The agency has since broadened its focus beyond retiree obligations, as in Miami. "Miami actively marketed bonds to the investing public while hiding the true reason for interfund transfers to boost the image of its primary operating fund," George S. Canellos, co-director of the SEC's enforcement division, said in a statement, the report related. The agency said in a court complaint that Miami had been ordered to stop violating anti-fraud laws in 2003. "The fact that a city official would enable these false and misleading disclosures to investors merely a few years after Miami had been reprimanded by the SEC for similar misconduct makes this repeat behavior all the more appalling and unacceptable," Canellos said, the report further related. The agency said the transfers began no later than 2007. * Senate Told Federal Courts In Dire Straits Under Sequestration ---------------------------------------------------------------- Erica Teichert of BankruptcyLaw360 reported that federal courts will be unable to complete their constitutional duties if their funding remains stagnant or declines next year, given that staffing levels are already at a 14-year low, Sixth Circuit Judge Julia S. Gibbons told a Senate Judiciary subcommittee. According to the report, Judge Gibbons, who is also the chairwoman of the Judicial Conference of the United States' budget committee, noted that federal courts have already incurred 36,000 furlough hours this fiscal year and the continuing budget deficiencies have led to significant delays primarily for civil and bankruptcy cases. * Fitch: Increased Activity Diminishes US Refinancing Cliff Risk ---------------------------------------------------------------- Loan refinancing activity and robust high yield bond issuance extended or diminished $750 billion of loans within the refinancing cliff timeframe over the last 12 months ended June 28, 2013, according to Fitch Ratings' 'Bridging the Refinancing Cliff, Volume VII,' published July 24. The refinancing cliff peak, which once represented the most intimating portion of the cliff back in 2009 at approximately $750 million (2013-2014), has been diminished to just $340 million. Of the $970 billion of loan issuance over the last four quarters, approximately 66% has been directed towards loan refinancing. The U.S. high-yield bond market has also contributed greatly in redistributing loans as bond-for-loan takeout volume totaled $105 billion over the last four quarters. Fitch notes that issuers have been intensity focused on extending longer dated loan maturities in 2016 and beyond. Over the last 12 months, approximately 40% of all loan refinancing issuance has gone to refinance a loan maturity in 2016 or 2017. As a result, the total amount of loans coming due beyond 2016 has increased substantially. This installment of the series also provides a breakdown and analysis of the some of the larger leveraged buyout (LBO) concentrations that dated back from the pre-crisis time period. Fitch believes these large concentrations posed one of the greatest risks to the market's ability to successfully extend the refinancing cliff. Since the end of 2009, the top 10 LBO companies with the largest debt concentrations in 2013 and 2014 have reduced the total amount of debt coming due in these years by 90% and 84%, respectively. * Fitch: Charter Schools Fail to Meet Investment-Grade Expectation ------------------------------------------------------------------ The average Fitch-rated charter school will remain speculative- grade for the foreseeable future as expectations for investment- grade ratings are generally beyond reach, particularly in leverage and financial flexibility, according to a new Fitch Ratings special report. A majority of Fitch's March 2013 charter school downgrades reflect the schools' inability to meet baseline financial and debt measures laid out in the September 2012 criteria as the minimum requirements for an investment grade rating. Most Fitch rated charter schools demonstrate burdensome financial leverage with a high pro forma debt burden and a high pro-forma debt to net income available for debt service ratio. In most cases, these weak debt metrics limit ratings improvement. Heavy reliance on state support exposes charter schools to broader economic conditions including budgetary shortfalls and funding cutbacks. Therefore, focused expense management remains necessary to consistently generate a breakeven margin. Many Fitch rated schools are unable to achieve neutral to positive margins consistently. Surplus generation remains a challenge, and most charters are unable to consistently generate annual operating surpluses. Under Fitch's criteria, an investment grade charter school, among other financial measures, is expected to generate at least 1.0x pro-forma maximum annual debt service coverage (DSC), possess a debt burden lower than or equal to 15%, and debt-finance less than eleven years of operating cash flow. Fitch found that many of the rated charters, while able to meet the DSC requirement, were unable to meet the latter two leverage thresholds. * S&P Applies Revised Insurance Criteria to 26 Insurance Groups --------------------------------------------------------------- Standard & Poor's Ratings Services said that it reviewed its ratings on 26 insurance groups by applying its new ratings criteria for insurers, which were published on May 7, 2013. S&P will publish individual analytical reports on the insurance groups identified below, including a list of ratings on affiliated entities, as well as the ratings by debt type--senior, subordinated, junior subordinated, and preferred stock. The research updates will be available at http://www.standardandpoors.com/insurancecriteriaand on RatingsDirect. Ratings on specific issues will be available on RatingsDirect and at http://www.standardandpoors.com RATINGS LIST (All ratings are affirmed, except where a "from" rating is indicated.) To From CNO Financial Group Inc. Counterparty Credit Rating BB/Stable/-- BB-/Stable/-- Bankers Conseco Life Insurance Co. Bankers Life & Casualty Co. Colonial Penn Life Insurance Co. Washington National Insurance Co. Counterparty Credit Rating BBB/Stable/-- BBB-/Stable/-- Financial Strength Rating BBB/Stable/-- BBB-/Stable/-- Conseco Life Insurance Co. Counterparty Credit Rating B/Stable/-- B+/Stable/-- Financial Strength Rating B/Stable/-- B+/Stable/-- StanCorp Financial Group Inc. Counterparty Credit Rating BBB+/Negative/-- Standard Insurance Co. Counterparty Credit Rating A+/Negative/-- Financial Strength Rating A+/Negative/-- Symetra Financial Corp. Counterparty Credit Rating BBB/Stable/-- Symetra Life Insurance Co. First Symetra National Life Insurance Co. New York Counterparty Credit Rating A/Stable/-- Financial Strength Rating A/Stable/-- Oil Casualty Insurance Ltd. Counterparty Credit Rating BBB+/Stable/-- Financial Strength Rating BBB+/Stable/-- Oil Insurance Ltd. Counterparty Credit Rating A-/Stable/-- Financial Strength Rating A-/Stable/-- To From ProAssurance Corp. Counterparty Credit Rating BBB+/Stable/-- BBB/Positive/- - R.V.I. Guaranty Co. Ltd. R.V.I. America Insurance Co. R.V.I. National Insurance Co. Counterparty Credit Rating BBB/Stable/-- Financial Strength Rating BBB/Stable/-- To From Delphi Financial Group Inc. Counterparty Credit Rating BBB+/Negative/-- BBB/Stable/-- Reliance Standard Life Insurance Co. First Reliance Standard Life Insurance Co. Safety National Casualty Corp. Counterparty Credit Rating A+/Negative/-- A/Stable/-- Financial Strength Rating A+/Negative/-- A/Stable/-- To From Philadelphia Indemnity Insurance Co. Tokio Marine Specialty Insurance Co. Counterparty Credit Rating A+/Stable/-- A+/Negative/-- Financial Strength Rating A+/Stable/-- A+/Negative/-- Texas Municipal League Intergovernmental Risk Pool Counterparty Credit Rating A/Stable/-- A/Stable/-- Fireman's Fund Insurance Co. American Automobile Insurance Co. American Insurance Co. Associated Indemnity Corp. Chicago Insurance Co. Fireman's Fund Indemnity Corp. Fireman's Fund Insurance Co. of Ohio Interstate Fire & Casualty Co. National Surety Corp. Counterparty Credit Rating A/Stable/-- A/Stable/-- Financial Strength Rating A/Stable/-- A/Stable/-- Fireman's Fund County Mutual Insurance Co. Fireman's Fund Insurance Co. of Hawaii Inc. Financial Strength Rating A/Stable/-- A/Stable/-- To From Hochheim Prairie Casualty Insurance Co. Hochheim Prairie Farm Mutual Insurance Assoc. Counterparty Credit Rating BB/Negative/-- BB/Stable/-- Financial Strength Rating BB/Negative/-- BB/Stable/-- Mapfre U.S.A. Corp. Counterparty Credit Rating BBB-/Negative/-- BB+/Negative/- - Citation Insurance Co. (MA) Commerce Insurance Co. Counterparty Credit Rating A-/Negative/-- BBB+/Negative/-- Financial Strength Rating A-/Negative/-- BBB+/Negative/-- Penn Mutual Life Insurance Co. Penn Insurance & Annuity Co. Counterparty Credit Rating A+/Stable/-- AA-/Stable/-- Financial Strength Rating A+/Stable/-- AA-/Stable/-- Security Benefit Life Insurance Co. Counterparty Credit Rating A-/Stable/A-2 Financial Strength Rating A-/Stable/A-2 First Security Benefit Life Insurance and Annuity Co. of New York Counterparty Credit Rating A-/Stable/-- Financial Strength Rating A-/Stable/-- To From The First Rehabilitation Life Insurance Co. of America Counterparty Credit Rating A-/Stable/-- A-/Negative/-- Financial Strength Rating A-/Stable/-- A-/Negative/-- Pacific Guardian Life Insurance Co. Ltd. Counterparty Credit Rating A-/Stable/-- Financial Strength Rating A-/Stable/-- USAble Life Counterparty Credit Rating A-/Stable/-- Financial Strength Rating A-/Stable/-- Mutual of America Life Insurance Co. Counterparty Credit Rating AA-/Stable/-- Financial Strength Rating AA-/Stable/-- To From HealthNow New York Inc. Counterparty Credit Rating BBB/Stable/-- BBB-/Stable/-- Financial Strength Rating BBB/Stable/-- BBB-/Stable/-- Health Insurance Plan of Greater New York Counterparty Credit Rating BBB/Stable/-- BBB-/Stable/-- Financial Strength Rating BBB/Stable/-- BBB-/Stable/-- ConnectiCare Inc. ConnectiCare of Massachusetts Inc. ConnectiCare of New York Counterparty Credit Rating BBB-/Stable/-- BB+/Stable/-- Financial Strength Rating BBB-/Stable/-- BB+/Stable/-- Group Health Inc. Counterparty Credit Rating BB/Stable/-- Financial Strength Rating BB/Stable/-- Medical Card System Inc. Counterparty Credit Rating B/Stable/-- MCS Advantage Inc. MCS Life Insurance Co. Counterparty Credit Rating BB/Stable/-- Financial Strength Rating BB/Stable/-- To From MCS Health Management Options Inc. Counterparty Credit Rating NR BB/Stable/-- Financial Strength Rating NR BB/Stable/-- Maiden Specialty Insurance Co. Counterparty Credit Rating BBB+/Negative/-- BBB+/Stable/-- Financial Strength Rating BBB+/Negative/-- BBB+/Stable/-- Delta Dental of New Jersey Inc. Counterparty Credit Rating A+/Stable/-- Financial Strength Rating A+/Stable/-- Noridian Mutual Insurance Co. (d/b/a Blue Cross Blue Shield of North Dakota) Counterparty Credit Rating A-/Stable/-- Financial Strength Rating A-/Stable/-- Forethought Financial Group Inc. Counterparty Credit Rating Local Currency BBB-/Stable/-- Forethought Life Insurance Co. Counterparty Credit Rating Local Currency A-/Stable/-- Financial Strength Rating Local Currency A-/Stable/-- * S&P Applies Revised Insurance Criteria to 14 Marine Mutuals ------------------------------------------------------------- Standard & Poor's Ratings Services said that it has reviewed its ratings on 14 marine mutual insurers by applying its new ratings criteria for insurers, which were published on May 7, 2013. S&P will publish individual analytical reports on the marine mutual insurers identified below, including a list of ratings on affiliated entities, as well as the ratings on subordinated debt. RATINGS LIST (All ratings are affirmed, except where a "from" rating is indicated.) To From American Steamship Owners Mutual P&I Assoc. Inc. Counterparty Credit Rating Local Currency BBB-/Stable/-- BB+/Stable/-- Financial Strength Rating Local Currency BBB-/Stable/-- BB+/Stable/-- Assuranceforeningen Gard - gjensidig - Gard P&I (Bermuda) Ltd. Gard Marine & Energy Ltd. Gard Marine & Energy Forsakring AB Counterparty Credit Rating Local Currency A+/Stable/-- Financial Strength Rating Local Currency A+/Stable/-- Assuranceforeningen SKULD (Gjensidig) Counterparty Credit Rating Local Currency A/Stable/-- Financial Strength Rating Local Currency A/Stable/-- To From The Japan Ship Owners' Mutual Protection & Indemnity Association Counterparty Credit Rating Local Currency BBB+/Stable/-- BBB/Stable/-- Financial Strength Rating Local Currency BBB+/Stable/-- BBB/Stable/-- The North of England Protecting & Indemnity Association Ltd. Counterparty Credit Rating Local Currency A/Stable/-- Financial Strength Rating Local Currency A/Stable/-- Norwegian Hull Club Counterparty Credit Rating Local Currency A-/Stable/-- Financial Strength Rating Local Currency A-/Stable/-- Shipowners' Mutual Protection & Indemnity Association (Luxembourg) Counterparty Credit Rating Local Currency A-/Stable/-- Financial Strength Rating Local Currency A-/Stable/-- The Shipowners' Mutual Strike Assn. (Bermuda) Ltd. Counterparty Credit Rating Local Currency BBB+/Stable/-- Financial Strength Rating Local Currency BBB+/Stable/-- To From The Standard Club Europe Ltd. The Standard Club Asia Ltd. Standard Reinsurance (Bermuda) Ltd. Counterparty Credit Rating Local Currency A/Negative/-- A/Stable/-- Financial Strength Rating Local Currency A/Negative/-- A/Stable/-- Steamship Mutual Underwriting Association Ltd. The Steamship Mutual Underwriting Assn. (Bermuda) Ltd. Counterparty Credit Rating Local Currency A-/Stable/-- Financial Strength Rating Local Currency A-/Stable/-- Sunderland Marine Mutual Insurance Co. Ltd. Counterparty Credit Rating Local Currency BBB+/Stable/-- Financial Strength Rating Local Currency BBB+/Stable/-- Sveriges Angfartygs Assurans Forening (The Swedish Club) Counterparty Credit Rating Local Currency BBB+/Stable/-- Financial Strength Rating Local Currency BBB+/Stable/-- United Kingdom Mutual Steamship Assurance Association (Europe) Ltd. (The) The United Kingdom Mutual Steamship Assurance Association (Bermuda) Ltd. Counterparty Credit Rating Local Currency A-/Positive/-- Financial Strength Rating Local Currency A-/Positive/-- To From West of England Mutual Insurance Association (Luxembourg) Counterparty Credit Rating Local Currency BBB/Stable/-- BBB-/Stable/-- Financial Strength Rating Local Currency BBB/Stable/-- BBB-/Stable/-- * Delaware Slated for New Judge Amid Court Money Crunch ------------------------------------------------------- Michael Bathon, substituting for Bloomberg News bankruptcy columnist Bill Rochelle, reports that Delaware's Bankruptcy Court, the busiest in the country for Chapter 11 filings, is getting an additional judge to help handle what officials see as a "full- blown crisis," the subject of a Senate hearing July 23. According to the report, the court, based in Wilmington, has a caseload justifying a dozen judges, while it has only half that number now, Chief Delaware U.S. District Judge Gregory M. Sleet, who oversees the bankruptcy unit, said in his 2013 annual report. "The seventh judgeship is important and funding it is obviously necessary," Democratic Delaware U.S. Senator Chris Coons, chairman of the Senate Judiciary Subcommittee on Bankruptcy and the Courts, said in a statement. The report notes that Sen. Coons was slated to hold a hearing on July 23 in Washington to discuss impact of the federal government's spending sequestration on the courts. "A full-blown crisis awaits us" in Delaware as the bankruptcy court deals with 28 percent in budget cuts over three years, necessitating the elimination of 23 of 72 office employees and a furlough program "whereby all staff of the clerk's office take one day every two weeks, without pay, equating to a 10 percent decrease in their salaries," Judge Sleet wrote. The report discloses that some of the largest bankruptcies filed in 2013 in Delaware include marketing solutions company, Dex One Corp., which filed on March 17 with assets of $2.84 billion and debt of $2.79 billion; lead battery maker, Exide Technologies, which filed June 10 with assets of $1.89 billion and debt totaling $1.14 billion; and Vodka seller Central European Distribution Corp., which filed April 7 with assets of $1.98 billion and $1.73 billion in debt. * BOOK REVIEW: Jacob Fugger the Rich: Merchant and Banker of Augsburg, 1459-1525 -------------------------------------------------------------- Author: Jacob Streider Publisher: Beard Books Hardcover: 227 pages List Price: $34.95 Review by Gail Owens Hoelscher Buy a copy for yourself and one for a colleague on-line at http://is.gd/UAP0Zb Quick, can you work out how much $75 million in sixteenth century dollars would be worth today? Well, move over Croesus, Gates, Rockefeller, and Getty, because that's what Jacob Fugger was worth. Jacob Fugger was the chief embodiment of early German capitalistic enterprise and rose to a great position of power in European economic life. Jacob Fugger the Rich is more than just a fascinating biography of a powerful and successful businessman, however. It is an economic history of a golden age in German commercial history that began in the fifteenth century. When the book was first published, in 1931, The Boston Transcript said that the author "has not tried to make an exhaustive biography of his subject but rather has aimed to let the story of Jacob Fugger the Rich illustrate the early sixteenth century development of economic history in which he was a leader." Jacob Fugger's family was one of the foremost family in Augsburg when he was born in 1459. They got their start by importing raw cotton, by mule, from Mediterranean ports. They later moved into silk and herbs and, for a long while, controlled much of Europe's pepper market. Jacob Fugger diversified into copper mining in Hungary and transported the product to English Channel and North Sea ports in his own ships. A stroke of luck led to increased mining opportunities. Fugger lent money to the Holy Roman Emperor Maximilian I to help fund a war with France and Italy. Mining concessions were put up as collateral. The war dragged on, the Emperor defaulted, and Fugger found himself with a European monopoly on copper. Fugger used his extensive business network in service of the Pope. His branches all over Europe collected payments due the Vatican and issued letters of credit that were taken to Rome by papal agents. Fugger is credited with creating the first business newsletter. He collected news of evolving business climate as well as current events from his agents all across Europe and distributed them to all his branches. Fugger's endeavors wee not universally applauded. The sin of usury was still hotly debated, and Fugger committed it wholesale. He was sued over his monopoly on copper. He was involved in some messy bribes in bringing Charles V to the throne. And, his lucrative role as banker in the sale of indulgences, those chits that absolve the buyer of sin, raised the ire of Martin Luther himself. Luther referred to Fugger specifically in his Open Letter to the Christian Nobility of the German nation Concerning the Reform of the Christian Estate just before being excommunicated in 1521. Fugger went on, however, to fund Charles V's war on Protestanism and became even richer. Fugger built many churches and buildings in Augsburg. He was generous to the poor and designed the world's first housing project. These buildings and lovely gardens, called the Fuggerei, are still in use today. A New York Times reviewer said that Jacob Fugger the Rich, a book "concerned with the most famous, most capable, and most interesting of all [the members of the Fugger family] will be as interesting for the general reader as for the special student of business history." This observation is just as true today as in 1931, when first made. Jacob Streider was a professor of economic history at the University of Munich. ********* 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, Valerie Udtuhan, Howard C. Tolentino, 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 ***